a.j. plast -...
TRANSCRIPT
March 2018
A.J. PLAST OPPORTUNITY DAY
World Class Film Product For
Ultimate Customer Satisfaction
Disclaimer
The information contained in this presentation is intended solely for your personal
reference only. If you are not an intended recipient, you must not read, disclose, copy, circulate,
retain, distribute or take any action in reliance upon this material.
The information contained in this presentation does not constitute or form any part of
any offer or invitation to purchase any securities and neither the issue of the information nor
anything contained herein shall form the basis of, or be relied upon in connection with, any
contract or commitment on the part of any person to proceed with any transaction.
This presentation is not intended to substitute your own analysis and investigation,
and should not be considered a recommendation to any recipient of this presentation. Some
information contains projections and forward-looking statements that reflect the company’s current
views with respect to future events and financial performance. These views are based on current
assumptions which are subject to various risks and which may change over time. No assurance
can be given that future events will occur, that projections will be achieved, or that the company’s
assumptions are correct. Actual results may differ materially from those projected.
AJ snapshot: One-stop BO (biaxially-oriented) film manufacturer
Business description
Top 10 Shareholders
• AJ is a BO (biaxially-oriented) film manufacturer, offering one-stop service for BO film
used primarily in flexible packaging
• Expanded into CPP film and off-line chemical coating film to enhance product
portfolio and add value to existing products
• AJ is capable of producing full range of flexible packaging films which are:
• AJ is founded in 1987 and listed on the SET in 1990
• SET Ticker - AJ
• Bloomberg Code - AJ:TB
Value chain
Upstream
petrochem.
industry
Resin
producer
e.g. IVL,
PTTCH,
UBE,
TPC
BO film
producer
Product
manuf.
e.g. food
processor
(CPF, TUF)
Converter
/ PrinterConsumer
Plastic
resin
Plastic
film
Packaging Finished
goods
1.กลมครอบครวสทธสมพทน 1 56.52
2.กลมครอบครวฉตรพรยะพนธ 6.36
3.กลมครอบครว ชลคดด ำรงกล 3.65
4. บรษท ไทยเอนวดอำร จ ำกด 1.30
5. นำงปรญญำ ขนเจรญสข 1.04
6.นำยทตนนท นำคะศร 1.00
7.นำงรณต ศภพพฒน 0.88
8.นำยโชคชย ธรรมยตกำร 0.69
9.นำยสมเกยรต เทดทลทวเดช 0.68
10.นำยสนตชย เตยวสมบรณกจ 0.63
Financial highlight
(as of 1Q2017)
Product BOPP BOPET BOPA CPP
Capacity (MT/yr) 132,000 62,000 18,000 16,000
0
20000
40000
60000
80000
100000
120000
140000
Production Capacity
Unit: MB 2017 2016 2015 2014 2013
Revenue 7,879 7,032 6,259 6,545 5,452
Net profit 443 121 4 -248 -98
Total
assets8,549 8,495 8,244 8,243 7,542
D/E ratio 1.43 1 .62 1.6 1.62 1.22
P/E 11.32 47.11 - - 54.69
Market
cap.4,793 4,553 2,397 3,535 3,695
Receive promotional
privileges from the Board
of Investment Zone3,
Chonburi Province.
Factory area of over 27.5
acres (112,000 m²)
Strategically located on
Eastern part of Thailand
within the same estate as
Laem Chabang Port, the
main deep sea port of
Thailand
PRODUCTION FACILITY
Schematic of BO Film Industry
BOPA
BOPET
BOPP
Pri
ce/F
unction
Consumption
BOPP BOPET BOPA CPP MET BOPLA COATED
136,000Metric Tons
4 Lines
64,000Metric Tons
2 Lines
18,000Metric Tons
2 Lines
16,000Metric Tons
1 Line
5.8 Meter Y2016
22,000Metric Tons
4 Lines (Wire)1 Line
(Crucible)
5,000Metric Tons
Utilize Another Production
Line’s Capacity
6,000Metric Tons
1 Line
2.5 Meter Y2017
A.J. PLAST’S CAPACITY
TOTAL INSTALLED CAPACITY 262,000 MT per annum
• In-process inspection system for defect detection
• In-line gauge control system
BOPA( LISIM )
MET
12,000Metric Tons
2019
6,000Metric Tons
2018
A.J. PLAST’S NEW INVESTMENT
* Capacity per annum
Well-planned capacity expansion
SEA’s largest BO film producer
in all segments since 2014
Year BOPP BOPET BOPA CPPVALUE
ADDED LINE
1987 • 1st BOPP
1995 • 2nd BOPP • 1st BOPET
2001 • 1st Metallizer
2003 • 3rd BOPP • 2nd BOPET • 2nd Metallizer
2006 • 1st BOPA
2008 • 4th BOPP
2010 • 3rd Metallizer
2011 • 3rd BOPET • 2nd BOPA
2013 • 5th BOPP • 4th BOPET
2014 • 6th BOPP • 1st CPP• 4th & 5th
Metallizer
2015 • 6th Metallizer
2016 • 1st Coater
2018 • 7th Metallizer
2019 • 3rd BOPA
Additional capacity towards leadership
Total Capacity
Equipped with engine to achieve growth: Leader in Southeast Asia
254,000
30,000
• Protect the product from chemical /
biological exposure
Health
• Minimum use of resources
• Easy to empty / recycle
Environment
• Easy to handle, store & transport
Logistics
U.S. packaging industry (2009)
Source: U.S. Census Bureau data & Flexible
Packaging Association estimates
The market is overwhelmed by
various packaging alternatives
Key requirements for packaging
• Easy to manufacture & cost efficient
Economy
• Easy to open, hold & close
• Inform consumers about the product
Usability
• Contain, Inform, Protect, Transport &
Display
Basics
Flexible packaging has gradually
replaced conventional ones
Conventional
Flexible
Flexibility and functionality at competitive cost for producer and affordable price for consumer is key driver of flexible
packaging trend at present
What is the BEST one?
Flexible packaging provides many consumer
conveniences including extended shelf life, easy
storage, microwaveability & resealability
Recent structural changes of packaging industry: Catalyst for BO film demand
FLEXIBLE
PACKAGING (FP)
Resource
Recovery
Sustainability
Advantages
Light
Weighting
FP reduces
waste, energy
consumption &
greenhouse gas
emission
FP waste can be
reproduced into
new FP
FP waste may be
used as feedstock
to produce
gaseous & liquid
fuel
The lightweight package produces “less waste at the first place”
Examples of light weighting between 2005 -2011:
• Barrier enhancement: resulted in 50% less material for the same barrier
• Material toughness: layers reduced up to 50%
• Coextrusion technologies: enable weight reduction of up to 33%
• Equipment innovation: allows some film thickness to be reduced to 50%
Beverage packaging example
Glass bottle
& metal capPlastic PET bottle & cap
Aluminum can
Stand-up flexible pouch
Product weight (g) 236 236 236 199
Packaging weight (g) 198.4 22.7 11.3 5.7
Product-to-Packaging Ratio
1:1 10:1 21:1 35:1
Packaging weight per 100 g product (g)
83.9 9.6 4.7 2.8
MSW /1 landfill per 100 g product (g)
54.5 6.0 2.4 2.8
Energy consumption (MJ/8 oz)
3.36 3.00 0.99 0.45
Emissions (Kg Co2e/8 oz)
0.29 0.18 0.08 0.02
1 2 3 4
Advantages of FP over alternative packaging
Remark: /1 MSW stands for municipal solid waste
Source: FPA (Flexible Packaging Association) Case Studies
• The flexible beverage pouch consumes ½ the amount of energy compared
to the closet alternative
• The flexible beverage pouch generates ¾ less emission than the closet
alternative
• The flexible beverage pouch uses less space in shipping than other
alternatives, reducing transportation emission while saving costs
Flexible packaging (FP) sustainability initiatives
Flexible packaging: Significant value and benefits to the market
Global Flexible Packaging
Industry growing at CAGR
of 4.1% to reach $231
billion by 2018
The global flexible packaging market
will grow at a rate of 3.5% PA until the
year 2018, according to a major new
study by Smithers Pira.
Flexible packaging: Promising growth industry
“The world consumer flexible packaging market has picked up significantly since the global
economic downturn of 2008-9 and is forecast to grow at CAGR of 4.1% during the period
2013-2018, to reach a total of 29.8 million tonnes.”
Flexible packaging: Promising growth industry
BIOBASED PORTFOLIO
BIOMASS for reduction of CO2
BOPP Film
• Anti-fog (cold & hot conditions)• Compose of bio-based polymer• Both sides heat-sealable
U.S.21 CFR FDA Regulation Part 177.1520
HBF Film
• Excellent transparent properties• Available for food contact
World 1st Bio-PA film: EN
A.J. PLAST PLC
Bio-based film for a better tomorrow: GP
No.1 in Southeast AsiaThe lowest cost
producerSustainable growth
• Offer comprehensive range of film products
• Diversify business risk and mitigate volatile
profit
One-stop service
Premium market penetration
• High value-added product
• Target Japanese market
- Massive demand of 280k MT/yr
- Premium price opportunity
- High level of quality requirement
- Technical know-how improvement
• Global shift from traditional to flexible
packaging
• Flexible packaging mainly correlates with
food and consumer product sectors, thereby
indicating sustainable & resilient demand
Flexible packaging trend
• Invest in the state-of-the-art machinery
- Increase productivity
- Reduce energy consumption
- Reduce plastic waste
- Able to produce higher grade films
• Invest at the right timing
• Gain promotional privileges (esp. tax
incentives) from the Board of Investment
Right investment
• Realize greater level of economy of scale as
the company grows
• Deepen sourcing skills to obtain advantage
of material cost minimization
Efficiency improvement
• Continuous Expansion from 2010-2018
• Achieve the largest capacity in all BO film
segments in 2014
Capacity expansion
• Cautiously expand product portfolio to be
the industry leader:
BOPP since 1987, BOPET since 1995,
Metallizer since 2001, BOPA since 2006,
CPP since 2016, and Chemical Coated Film
since 2017
Portfolio enlargement
• Fully dedicate to quality excellence at all
levels of production
Quality excellence
Ho
w t
o A
ch
ieve
th
e G
oa
ls
AJ Plast: Strategies
Complete Product Line Latest Production Fleet
• AJ Plast offers customers with complete product lines for flexible
packaging including BOPP, BOPET, BOPA, CPP and metallized
film.
• Product ranges from high volume commodify products to high
value-added specialized products such as transparent barrier
films
• AJ Plast replaced old machines with smaller capacity, less
efficiency, higher production cost with new ones with larger
capacity, higher efficiency, and lower production cost at
appropriate periods.
• Currently, 70% of production capacity is coming our from
Production line with ages less than 6 years
Benefits Benefits
• One-stop supply for local and export customers
• Lower sales and administration costs per sales value
• Smoother business cycles with less volatility
• Enjoys more frequent product cycles compared with relying on
only one product cycles
• Becomes a lowest cost producer with better efficiency in both
raw material, energy consumption, and manpower
• Enhance competitiveness in local and global market
• Better quality - a ticket to enter and stay in premium market
• More flexibility to produce high value-added products
• Better spare part management – less cost and high machine
reliability
AJ Plast: Unique Positioning
79,427.62
92,795.63 98,689.09
121,263.53
129,362.64
2013 2014 2015 2016 2017
AJ sales quantity (MT)
Financial Results: AJ Sales Quantities (MT)
AJ Total Sales (M. Baht)
5,403.75
6,418.44 6,204.24
6,910.87
7,695.85
2013 2014 2015 2016 2017
Financial Results: AJ Total Sales (M. Baht)
(97.98)
(247.86)
3.79
121.25
443.44
(300.00)
(200.00)
(100.00)
-
100.00
200.00
300.00
400.00
500.00
2013 2014 2015 2016 2017
AJ Net Profit (M. Baht)
Financial Results: AJ Net Profit (M. Baht)
Financial Results: AJ EBITDA (M. Baht)
1,077.05 1,096.60
307.39
156.36
12.28
401.61
478.82
735.02
2010 2011 2012 2013 2014 2015 2016 2017
AJ sales mix by proportion (%)
Diversified customer base: To decrease reliance on any particular economy
• Demand for BOPP production was growing stronger (CAGR (1998-2017) of 8.6%
globally, 15% in China)
• Largest share in packaging film with a huge market of more than 9 million MT per year
• Various kind of specialty film for packaging such as Anti-Fog heat-sealable film, Pearlized
Film, and Matt Film.
• Great opportunity for high future growth due to the better possibility to use environmental-
friendly material and better post-consumer packaging recycling ability.
Source: Industrial Source
BOPP film industry
Source: Industrial Source
BOPP WORLD Demand / Production
BOPP film industry
$546
$516
$465
$369$358
$333
$382
$411 $416
$380$371 $373
$200
$300
$400
$500
$600
Ja
n-1
7
Fe
b-1
7
Ma
r-17
Ap
r-17
Ma
y-1
7
Ju
n-1
7
Ju
l-17
Au
g-1
7
Se
p-1
7
Oct-1
7
Nov-1
7
Dec-1
7
Source: China Industrial Source
BOPP SPREADS
Market Update: Spreads Insight Jan 2017 – Dec 2017
• CAGR (1998 – 2017) of 7.5% for BOPET
•BOPET production capacity was increased drastically during 2011-2015, especially in China
and India causing serious global oversupply of BOPET film
•As investment in new machines was slow down since 2015, and the consumption growth of
BOPET film is growing rapidly, the excess capacity has been mostly absorbed by the
demand.
•As a result, the Spread between BOPET film and PET resin is improving recently indicating
a good sign for BOPET market recovery.
Source: Industrial Source
BOPET film industry
Source: Industrial Source
BOPET WORLD Demand / Production
BOPET film industry
Source: China Industrial Source
$344
$296
$317
$250
$192
$224$234
$244
$306
$331
$365
$405
$100
$200
$300
$400
$500
Ja
n-1
7
Fe
b-1
7
Ma
r-17
Ap
r-17
Ma
y-1
7
Ju
n-1
7
Ju
l-17
Au
g-1
7
Se
p-1
7
Oct-1
7
Nov-1
7
Dec-1
7BOPET SPREADS
Market Update: Spreads Insight Jan 2017 – Dec 2017
•Since 2016, the demand of BOPA film in China was increased by 15% PA while BOPA
production capacity expansion was not fast enough to serve the sudden change in demand,
causing the spike in the spread to abnormal level.
•Moving to end of 2016, BOPA film was under shortage especially in China, bumping the
price up 25% in fourth quarter and the trend continued until mid of 2017 when the market
started becoming more stable.
•New BOPA production capacity will be coming out in 2018 making more balance between
market demand and supply causing spread came down to more reasonable and realistic
level, but still much higher than average spread in the last 5 years (approx. USD 600-
700/MT).
Source: Industrial Source
BOPA film industry
Source: Industrial Source
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
To
ns
Demand Production Demand Production
BOPA WORLD Demand / Production
BOPA film industry
$3,397
$3,312$3,343
$3,258
$2,373
$2,200$2,258
$2,603
$2,765
$2,460$2,512
$2,410
$2,000
$2,300
$2,600
$2,900
$3,200
$3,500
Ja
n-1
7
Fe
b-1
7
Ma
r-17
Ap
r-17
Ma
y-1
7
Ju
n-1
7
Ju
l-17
Au
g-1
7
Se
p-1
7
Oct-1
7
Nov-1
7
Dec-1
7BOPA SPREADS
Source: China Industrial Source
Market Update: Spreads Insight Jan 2017 – Dec 2017
• Largest, Fastest, and most technologically advanced BOPA line in the World
equipped with Linear Motor Simultaneous Stretching technology.
• Most productive BOPA line with best quality BOPA film ever exists.
• No local competitor in this film market segment.
• Schedule to start up end of 2018 and commercially launch in 1st Quarter 2019
Line No. 1 & 2 Line No. 3
Final Width 5 meter 6.6 meter
Line Speed 220 m/min 250 m/min
Stretching Technology Sequential Stretching Simultaneous Stretching
Productivity and Efficiency Good Best
Film Mechanical Properties
and Printability
Good Best
New BOPA Line (No.3): Simultaneous Stretching Line
Foundation Installation StartupStart check
2Q 2018 3Q 2018 Dec 2018
Project’s Milestone
30% Progress
Foundation work
Recent status
New BOPA Line (No.3): Progress Update
30% Progress
Foundation work
Recent status
Progress on-site on 27 Mar 2018
New BOPA Line (No.3): Progress Update
• Flexible Packaging industry is a continuously growing industry with consistent historical
track record of 7%-8% growth per annum
• AJ Plast is one of three comprehensive packaging film manufacturer in the World
providing a complete range of plastic packaging films to cover all market segments.
• With economy of scale and the newest fleet of production lines, together with its
competitive supply chain, A.J. Plast could achieve lowest production cost to compete
worldwide.
• AJ Plast is immune to high volatility business cycle risk due to its product variety.
• BOPA market is still highly profitable while BOPET market is moving uptrend. Keeping
eyes on the next cycle of BOPP.
Conclusions
AJ Customer Base
Reduce dependency and minimize particular country risk
Avoid anti-dumping measure enforcement
Individual country (except TH & JP) is targeted to contribute
no greater than 5% of AJ’s total sales
Taiwan
Vietnam
Japan
China
Malaysia
U.S.A. Hong Kong
Australia
Switzerland
Italy
Philippines
SingaporeIndonesia
Thailand
England
Germany
Nigeria
Mexico
Diversified customer base: To decrease reliance on any particular economy