results presentation 1h 2011 for analyst final...

MegaChem LimitedResults Presentation

Half Year Ended 30 June 2011

1H 2011 Industry Overview

No Boundaries Only Possibilities

1H 11 Economy continued its recovery

Mar 2011

Japan Disaster : Supply Shortage & Price Increase

June 2011

Supply begin to normalise. Prices softened

Inspiring Performance

Financial Performance


Financial Highlights


Record Half-Yearly Sales

* Sales S$57.3 mil

Record Half-yearly Profit

* NPAT S$3.0 mil

Record Half-yearly Earnings per share

* EPS : 2.23 cents

P&L Highlights


8.00.23.02.8NPAT

0.7% pts15.815.1ROE %

12.1%0.242.231.99EPS(cents)

26.30.120.580.46Share of Assoc Profit

-(1.4% pts)20.321.7Gross Profit Margin %

(18.2)(1.3)8.47.1Expenses

(87.4)(0.34)0.050.39Other Income

8.90.33.83.5NPBT

18.61.811.69.8Gross Profit

26.712.157.345.2Sales

Var %Var

Fav/(Unfav)

1H 111H 10S$’mil

P&L Highlights


51.8%1.03.02.0NPAT

4.9% pts15.810.9ROE %

50.7%0.752.231.48EPS(cents)

(8.9)(0.06)0.580.64Share of Assoc Profit

-0.420.319.9Gross Profit Margin %

(5.7)(0.4)8.48.0Expenses

(42.7)(0.04)0.050.09Other Income

45.51.23.82.6NPBT

17.61.711.69.9Gross Profit

15.07.557.349.8Sales

Var %Var

Fav/(Unfav)

1H 112H 10S$’mil

Sales


54.458.6 57.7

68.3

59.3 59.7

73.677.7

70.6

95.0

0

10

20

30

40

50

60

70

80

90

100

FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10

S$’mil

1H sales growth higher than CAGR over last 10 years.

CAGR : 6.4%

Sales


S$’mil

34.536.8

31.9

38.7

45.249.8

57.3

40.939.1

0

10

20

30

40

50

60

1H 07 2H 07 1H 08 2H 08 1H 09 2H 09 1H 10 2H 10 1H 11

4 consecutive half-yearly sales growth

Record sales in 1H 11

Sales


Consecutive Quarterly Sales Growth since 4Q 09

15.8

18.6

20.1

19.0

20.4 20.420.9

15.9

13.5

18.4

19.719.0

21.4

23.824.7

25.1

28.329.0

10

12

14

16

18

20

22

24

26

28

30

1Q

07

2Q

07

3Q

07

4Q

07

1Q

08

2Q

08

3Q

08

4Q

08

1Q

09

2Q

09

3Q

09

4Q

09

1Q

10

2Q

10

3Q

10

4Q

10

1Q

11

2Q

11

$'m

il

Sales by Geographic markets


1H 11 vs 2H 10 : growth driven largely by ASEAN

1H 11 vs 1H 10 : growth across all regions except Europe

0

5

10

15

20

25

30

35

40

1H 10

2H 10

1H 11

1H 10 32.1 2.5 3.5 2.2 2.0 1.1 1.7

2H 10 32.0 2.4 6.1 3.2 2.5 1.1 2.4

1H 11 37.4 2.5 6.7 3.3 3.4 1.7 2.3

ASEAN Europe N Asia S Asia America Oceania ME

S$’mil

Sales by Industry


Growth across all industry groupings

S$’mil

0

5

10

15

20

25

30

PCP APC SF Biotech Oil&Gas Lifestyle

1H 08

2H 08

1H 09

2H 09

1H 10

2H 10

1H 11

PCP:Performance Coatings & Polymer APC:Advanced Polymer Composites SF:Surface Technology

Gross Profit


Lower Gross Profit margin in 2H 20 and 1H 11 due to change in market mix.

5

6

7

8

9

10

11

12

13

14

15

8%

10%

12%

14%

16%

18%

20%

22%

24%

G r o s s P r o f i t 7 . 9 7 . 8 6 . 8 8 . 5 9 . 8 9 . 9 1 1 . 6

G P M a r g i n 1 9 . 3 % 2 1 . 2 % 2 1 . 3 % 2 2 . 0 % 2 1 . 7 % 1 9 . 9 % 2 0 . 3 %

H 1 0 8 H 2 0 8 H 1 0 9 H 2 0 9 H 1 1 0 H 2 1 0 H 1 1 1

S$’mil

Expenses


50.9%139411272Travelling & Transport

18.2%1,2998,4407,141Total Expenses

17.2%50343293Depreciation

20.9%138801663Rental

(21.0%)(56)211267Professional Fees

100%149149-FX *

14.9%6214,8004,179Staff Cost

Var %Var1H 111H 10S$’000

Total expenses increased S$1.3 mil or 18.2% to S$8.4 mil.

* FX gain of $125,000 in 1H 2010

Expenses


Total expenses increased S$0.45 mil or 5.7% compared to 2H 10.

(6.6%)(29)411440Travelling & Transport

5.7%4528,4407,988Total Expenses

0.6%2343341Depreciation

4.3%33801768Rental

(39.2%)(136)211347Professional Fees

(59.7%)(221)149370FX

14.3%5984,8004,202Staff Cost

Var %Var1H 112H 10S$’000

Expenses


0.2%1390.09%42Interest Expense

0.6%3430.6%293Depreciation

14.7%8,44015.8%7,140Total Expenses

0.6%

1.5%

9.2%

% of Sales

0.7%411272Travelling & Transport

1.4%801663Rental

8.4%4,8004,179Staff Cost

% of SalesH1 2011H1 2010S$’000

Expenses/Sales to cap at 15%

Other Income


(100%)(125)-125FX Gain*

(87.4%)(338)49387Total Other Income

(96.7%)(47)249Grant Income

(91.3%)(126)12138Bad Debt Recovered

Var %Var1H 111H 10S$’000

Other Income decreased S$338,000 or 87.4%.

* 1H 2011 : FX Loss S$149,000

Other Income


100.0%125-(125)FX Gain reversal*

(42.4%)(36)4985Total Other Income

(95.1%)(39)241Grant Income

(90.0%)(108)12120Bad Debt Recovered

Var %Var1H 112H 10S$’000

Other Income decreased S$36,000 or 42.4% compared to 2H 10.

* 2H 2010 : reversal of H1 2010 FX Gain S$125,000. Additional FX Loss S$370,000 recorded as FX Loss

Net Profit After Tax


2.1

3.3 3.4

3.7

2.7

1.8

2.3 2.3

2.7

4.8

0.0

1.0

2.0

3.0

4.0

5.0

6.0

$'mil

FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10

CAGR : 9.6%



Record NPAT in 1H 11

1.4

1.0

1.6

0.8 0.8

1.9

2.8

2.0

3.0

0

0.5

1

1.5

2

2.5

3

S$mil

1H 07 2H 07 1H 08 2H 08 1H 09 2H 09 1H 10 2H 10 1H 11



Highest Quarterly profit in 2Q 2011

14811562

801 784

622

927

123

658709

46

323

494

1015

873

14371381

1050955

0

200

400

600

800

1000

1200

1400

1600

1800

1Q

07

2Q

07

3Q

07

4Q

07

1Q

08

2Q

08

3Q

08

4Q

08

1Q

09

2Q

09

3Q

09

4Q

09

1Q

10

2Q

10

3Q

10

4Q

10

1Q

11

2Q

11

S$’000

Balance Sheet


S$7.8 mil 11.9% of total

assets

S$25.5 mil38.9%

S$21.4 mil32.7%

S$2.8mil4.3%

S$4.5 mil6.9%

S$3.5 mil

5.3%

S$0.03 mil0.05%

� Cash

� Receivables

� Inventory

� Other Current Assets

� Investment in Assoc

� Property, Plant & Equipment

� Other LT Assets

S$10.9 mil 16.7% of total

Liabilities & equity

S$14.7 mil22.4%

S$39.0 mil59.5%

S$0.9 mil1.4%

� Payables

� Borrowings

� Shareholders Equity

� Other Liabilities

Assets Liabilities & Equity

Balance Sheet


27.1

86

22.8

84

18.2

2.4

0.27

36.1

9.7

5.1

6.8

2010

28.1

78

24.8

84

21.4

2.2

0.39

39.0

14.7

5.9

7.8

June 2011

21.0Trade Receivables

Improved Credit Management106Trade Receivables T/O (days)

14.1Inventory

103Inventory T/O (days)

4.9Cash/share (cents)

25NTA/share (cents)

Sound liquidity2.8Current ratio (times)

Higher gearing supports growth0.2Gearing (times)

33.3Shareholders Equity

Higher borrowings 6.8Borrowings

6.6Cash

2009S$’mil

Cashflow


(0.3)

1.7

(0.05)

(2.0)

1H 10

1.2

3.8

(0.7)

(2.0)

1H 11

Partial Payment for Factory purchase – (0.4)

Plant & Equipment – (0.3)

Cash used in investing activities

Net increase in cash

Dividends paid – (0.9)

Increase in borrowings – 5.0

Cash from financing activities

Changes in working capital :

Operating Profit before WC changes : 3.8

Increase in Receivables - (2.1)

Increase in Inventory - (3.2)

Increase in Payables – 0.2

Cash used in operating activities

S$’mil

Financial Summary


P&L Summary

• Record Sales

• Lower Gross Profit Margin

• Higher operating expenses

• FX losses

• Higher Contribution from associate

• Higher Profit

Balance Sheet Summary

• Increasing working capital needs

• Higher borrowings

• Gearing higher

• Liquidity sound

Sustaining Momentum

Prospects


+ normal chemical supply from Japan has gradually resumed

+ chemical prices likely to stabilise

+ on-going debt concerns in US and Europe may dampen business sentiment

+ investment in factory expansion

+ demand for Custom Blending and integrated services increasing

Cloudy economic outlook may have an impact on our growth in 2H 11

Outlook 2H 2011

Share Statistics


Share Information (as at 21 July 2011)

Listing Date 17-Oct-2003

IPO Price 28 cents

Historical High 68 cents

Historical Low 13 cents

52 weeks High 22.0 cents

52 weeks Low 18.0 cents

Price 19.5 cents

No of Shares 133,300,000

Historical P/E 5.6x

Market Capitalisation $25.99 mil

NTA/share (cents) 28.1 cents

Share Price Performance


Dividend


6.0%

34.6%

1.20

20

2010

2.7%

13.0%

0.30

22

1H 11

5.1%1.7%2.8%4.9%3.6%3.3%1.8%Dividend Yield (%)-Net

50.6%24.1%35.1%62.2%30.2%31.9%23.1%Dividend payout (%)-net

1.000.400.5950.810.5760.8640.56Dividend / share (cents) - net

19.523.521.516162631.5Price/sh(as at 31 Dec, 30 Jun)

2009200820072006200520042003

Investment Merits


• Profitable track record since inception

• Resilient business model � tested through several crises

• Diversification � stability in business

• Global network and Manufacturing � Growth drivers for coming years

• Share Price/book value : 0.69 *

• P/E : 5.6 x *

(* Based on share price of 19.5 cents as at 21 July 2011)

For analyst reports on our company, you may refer to our website at http://www.megachem.com.sg


This document has been prepared by the Company and the contents have been reviewed by the Company’s Sponsor, SAC Capital Private Limited, for compliance with the relevant rules of theSingapore Exchange Securities Trading Limited (“Exchange"). The Company’s Sponsor has not independently verified the contents of this document.

This document has not been examined or approved by the Exchange and the Exchange assumes noresponsibility for the contents of this document, including the correctness of any of the statements oropinions made or reports contained in this document.

The contact person for the Sponsor is Mr Bernard Lim (Tel : 65 6221 5590) at 79 Anson Road, #15-03, Singapore 079906.


This presentation may contain forward-looking statements based on current assumptions and

forecasts. Various known and unknown risks, uncertainties and other factors could lead to

material differences between the actual future results, financial situation, development or

performance of the company and the estimates given here. The company assumes no liability

whatsoever to update these forward-looking statements or to conform them to future events or

developments. You are cautioned not to place undue reliance on these forward looking

statements.

Thank You

results presentation 1h 2011 for analyst final...

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