Transcript JINPAN INTERNATIONAL LTD.

JINPAN INTERNATIONAL LTD.
(NASDAQ “JST”)
March 2013
Forward-Looking Statements
•
This presentation and oral statements made in conjunction with it may contain or incorporate by reference information that includes or is
based upon forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements include, among other things the information concerning our possible or assumed future results of operations, business
strategies, financing plans, competitive position, potential growth opportunities and the effects of future regulation and competition.
•
These statements are only our current expectations. They are based on our management’s beliefs and assumptions and on information
currently available to our management. Forward-looking statements involve risks, uncertainties and assumptions. Although we do not make
forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. Actual results
may differ materially from those expressed in these forward-looking statements due to a number of uncertainties and risks, including the risk
s described in our latest annual report on Form 20-F and other risks, including:
– our ability to successfully implement our business strategy;
– uncertainties about the future growth in electricity consumption and infrastructure development in the markets in which we operate;
– inability to attract and retain qualified management and personnel;
– increases in the costs of our raw materials;
– the impact of existing and new competitors in the markets in which we compete, including competitors that may offer less expensive
products and services, more desirable or innovative products or technological substitutes, or have more extensive resources or better
financing;
– the effects of rapid technological changes and vigorous competition in the markets in which we operate;
– the effects of additional or higher taxes in the countries in which we operate;
– changes in competition and the pricing environments in the countries in which we operate;
– the failure to keep pace with technological changes in our industry;
– potential product liability claims;
– the effects of the higher degree of regulation in the markets in which we operate;
– general economic and political conditions in the countries in which we operate or other countries which have an impact on our
business activities or investments;
– inability to successfully adapt our internal controls over financial reporting to changes in circumstance;
– the monetary and interest rate policies of the countries in which we operate; and
– exchange rates.
•
You should not rely on any forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise, after we distribute this presentation, except as otherwise
required by law.
Use of Non-GAAP Financial Measures
This presentation contains non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange
Commission. Refer to the Appendix for a discussion of these numbers and a reconciliation to their nearest equivalent financial measures
calculated in accordance with GAAP.
Management Presenters
Mark Du
Chief Financial Officer
Albert Sheng
Vice President of Investor Relations
Company Highlights
Products
Markets
Contents
Growth Drivers
Management & Sales
Financials
Investor Relations
Company Highlights
 Jinpan is a manufacturer of specialized
power distribution equipment.
 Leading supplier of cast resin
transformers in China.
 Supplier of choice to leading global
OEMs for innovative power
distribution solutions.
 Jinpan is well positioned to capitalize on
growth in –

China’s electrical infrastructure
market; and

Global green energy markets
Company Highlights
This is a simplified organization
JINPAN INTERNATIONAL LTD.
chart. Please refer to the
Company’s 20F filing for detailed
information on its legal
organization structure.
HAINAN JINPAN
ELECTRIC CO., LTD.
JINPAN ELECTRIC
CHINA CO., LTD.
JINPAN INT’L (USA),
LTD.
Guilin Jun Tai Fu
Construction and
WUHAN JINPAN
Development Co. Ltd.
ELECTRIC CO. LTD.
SHANGHAI JINPAN
ELECTRIC CO. LTD.
Company Highlights
Guilin Manufacturing
Facility Operational
Shanghai
Manufacturing
Facility Operational
JINPAN
INTERNATIONAL
LTD.
Carlstadt NJ Facility Opened
2007
2006
1998
1993
2009
2008
Expansion of Haikou Facility
Buyout of Minority Interest
UL Certification
2013
Wuhan Manufacturing
Facility Operational
Move listing to NASDAQ
PIPE raised $25 million
IPO & Listing on
Amex
SHANGHAI
JINPAN
ELECTRIC CO. LTD.
Company founded in Haikou Hainan PRC
1993
7
Products
Transformer Substations
MAX
CUSTOMER
VALUE
Switchgears
VPI Transformers and
Reactors
Cast Resin Transformers
8
Dry Type Cast Resin Transformer
Description: Cast Resin Transformer is
a type of transformer designed to use
air to cool its induction coils.
Key Applications:
 Transmission and distribution of
electricity.
Transformer (2.5 MW
 JST offers a range of medium
Wind Towers)
Isolation Transformer
voltage cast resin transformers for
(Gas Turbines)
commercial & residential
developments, transportation
infrastructure projects, industrial
applications, and wind towers.
Specifications:
Voltage: Max 35 KV
Transforming Capacity: Max 40 MVA
Dry Type Cast Resin Transformer

Our transformer products meet
the following international codes
and standards:
 GB
 IEC
 ANSI/IEEE/NEMA
 CSA
 JEC
 Our transformer products have
been certified by:
 UL (US)
 KEMA (Holland and US)
 CE (EU)
 GOST-R (Russia)
UL&KEMA Certificates
VPI Transformer and Reactors
Description: VPI transformers and
reactors are components of converters
and inverters. They are used to change
voltage and filter electricity.
Application: wind, solar, rail
transportation.
Reactor
Reactor
VPI
VPI Transformer
Transformer
(2.5MW
(2.5MW Wind)
Wind)
Specification:
Voltage: Max 1 KV
Transforming Capacity: Max 500KVA
Reactor(1.5MW Wind)
Reactor (2.5MW Wind)
Switchgear & Transformer Substation
Switchgear
Description: Switchgears are used to
isolate electric equipment in the grid and
de-energize equipment to allow technicians
to perform maintenance.
BLOKSET Switchgear
Transformer Substation
Gas Insulated
Switchgear
(Ring Main Unit
12KV)
Description： Integrated assembly of low
and high voltage switchgears, transformers,
and monitoring and control systems in a
compact fully, enclosed unit. Lowers the
voltage of electricity drawn from the grid to
levels that can be fed into general purpose
transformers
Transformer Substation
Markets
•
Revenue
– 2012: US$ 210.5M
•
Jinpan’s products are used in a wide
range of applications:
– Industrial
Factories, refineries, ship yards, etc.
– Utilities and Infrastructure
Utilities: power plants , wind farms,
electrical distribution networks.
Infrastructure: airports, train/subway
stations, and other municipal
projects.
– Residential and Commercial
Office buildings, shopping centers,
high rise apartments, etc.
• Wind Energy
•
Jinpan manufactures VPI reactors
and cast resin transformers for
wind energy applications.
•
Jinpan has been a qualified supplier
for a leading global OEM for wind
energy equipment.
•
Sales of equipment for wind energy
contribute approximately 12% of
total sales.
Markets
Markets
Growth Drivers
Growth in Electricity Consumption & Infrastructure

•
Jinpan manufactures equipment for the
distribution of electrical power. Demand for our
products is driven by demand for electricity.
In 2012, total electricity consumption in China
reach approximately 4.95 trillion KWH.
Source: Compiled based on data sourced from China
Electric Council releases. Year 2012 data is sourced from
“2012 Electricity Industry Operations Brief” China Electricity
Council on January 17, 2013.
 Sales of electrical equipment is also driven
by infrastructure development.
 The completed investment in fixed assets of the
country in 2012 was 37,467.6 billion yuan, up by
20.3 percent over the previous year. The real
growth was 19.0 percent after deducting the
price factors.
Source:”Statistical Communiqué of the People's Republic of
China on the 2012 National Economic and Social Development”
released by the China National Bureau of Statistics on February
22, 2012.
Growth Drivers
Wind Energy
• Sales of transformers and
reactors for wind energy
applications is a significant
contributor to our revenue.
• Jinpan has been a qualified
supplier to a leading global
wind power OEM for more
than half a decade. We
continue to cultivate
relationships with new
customers that specialize in
wind.
Source: “Global Wind Energy Statistics”, Global Wind
Energy Council (Feb 2013)
Growth Strategy

Leverage R&D and engineering
capabilities to increase the sale of
high margin custom transformers.

Increase capacity and automation
to enhance efficiency and lower the
cost of standard transformers.
Leverage economy of scale to
compete in the market for standard
products.

Diversify our product offerings by
through new product development.
(e.g. Gas Insulated Switchgears)

Increase sales by partnering with
OEM customers to supply new
markets.
Manufacturing Facilities
JST USA
Established: 1998 [Carlstadt NJ
Facility Built 2009]
Products: Cast Resin
Transformers*
JST Wuhan
Established: 2008
Products: Cast Resin
Transformers
JST Shanghai
Established: 2009
Products: VPI
Transformers &
Reactors; Gas
Insulated Switchgears
1
JST Guilin
Established: 2011
Construction Completed 2013
Products: Cast Resin
Transformers
*Jinpan’s Carlstadt NJ facility supports product
testing, after sales service, and limited scale
manufacturing on site.
JST Haikou
Established: 1993
Products: Cast Resin
Transformers /
Conventional
Switchgears
Management
Strict implementation of international
quality, environmental, and work health
and safety standards enables us to
efficiently manage manufacturing on a
large scale.
ISO 9001 Certified
ISO 14001 Certified
OHSAS 18001 Certified
Run Enterprise Resource Planning
system (SAP) that combines
management information, inventory
control and cost control into a single
integrated platform.
Engineering
 Jinpan Electric has more than 200
engineers and technicians.
 State of the art CAD tools allow our
engineers to build 3D models and 2D
projections, to verify design
constraints, and to collaborate online.
 Proprietary software to design the
electromagnetic system in dry type
cast resin transformers.
Sales
International Market Strategy
China Market Strategy
•
•
Leverage our engineering and R&D capabilities
to increase sale of customized transformers for
advanced industrial and alternative energy
applications.
Increase capacity and leverage our economy of
scale to increase sales of standard distribution
transformers.
•
Direct sales network consisting 35 regional
sales offices located in major cities in China.
•
Diversified customer base
Jinpan’s extensive sales
network is a significant barrier
to entry for foreign and
domestic competitors seeking
to enter the China market.
•
Supply the international market through OEMs.
•
Leverage the marketing reach of large
international OEMs and our expertise in
manufacturing power distribution equipment to
expand our presence in international market.
•
Currently, Jinpan is one of two manufacturers of
UL certified cast resin transformers in the world.
•
Established a transformer assembly and testing
facility in Carlstadt NJ.
•
In 2012, North America is our top export market
followed by Europe.
Compelling Growth Strategy

Continue to focus on China’s growing electrical infrastructure market.

Promote and develop high end products (transformers for alternative energy and
industrial applications and complementary power control and distribution
products).

Invest in new, state-of-the-art facilities to increase manufacturing capacity and
efficiency . Leverage the resulting economy of scale to expand market share of
standard power distribution transformers.

Leverage our relations with OEMs and UL certification to expand our global
reach.
2
Financial Performance
($Millions, except per share
data)
FYE December 31
2007
2008
2009
2010
2011
2012
Net Sales
119.6
154
158.9
144.0
218.9
210.5
% Growth
45.4%
28.8%
3%
-9.4%
52.2%
-3.8%
41.6
48.9
67.2
56.0
80.3
68.8
34.8%
31.7%
42.3%
38.8%
36.7%
32.7%
20.9
24.8
35.6
20.9
31.4
21.6
17.4%
16.1%
22.4%
14.5%
14.3%
10.3%
19.6
23.1
32.0
17.3
27.1
16.3
16.4%
15.0%
20.1%
12.0%
12.4%
7.7%
16.4
19.8
28.9
13.4
23.8
14.1
13.7%
12.9%
18.2%
9.3%
10.9%
6.7%
1.01
1.21
1.78
0.81
1.45
0.84
Gross Profit
% Margin
EBITDA
% Margin
EBIT
% Margin
Net Income
% Margin
Diluted Earnings per
share
Financial Performance
($Millions)
Balance Sheet
Statement of cash flow
31-Dec-12
Cash
Current assets
Other assets
Total assets
31-Dec-12
18.5
190.3
Net Cash provided by
operating activities
100.5
Net cash used in investing
activities
309.3
Net cash provided by financing
activities
Net decrease in Cash
Current liabilities
86.7
L/T Liability
29.7
Equity
192.9
Total liabilities &
equity
309.3
19.3
(43.1)
18.0
(5.8)
Albert Sheng
Vice President of Investor Relations
Jinpan International (USA) Ltd.
390 Veterans Blvd.
Carlstadt, NJ 07072
T: 201 460 8778 (x135)
F: 201 460 8775
E: [email protected]
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