Transcript 2004 - VEDAN International

2004 Interim Results
Corporate Presentation
Highlights
Summary of Interim Results
Six months ended 30 June, USD million
2003
2004
Change
(%)
Turnover
94.8
109.4
+15.5%
Gross Profit
24.0
37.4
+56.0%
EBITDA
26.7
31.8
+19.2%
9.9
15.7
+57.9%
0.94
1.04
+10.6%
0.321
0.506
+57.6%
Net Profit
Basic EPS (US cents)
Per Share
Interim Dividend (US cent)
Per Share
-3-
Continuous Improvement
in Profitability
%
34.2%
40
28.2%
35
30
25.3%
37.4M
30.7M
25
20
15
24.0M
14.3%
11.2%
10.5%
10
9.9M
Gross Profit
Net Profit
15.7 M
12.2 M
5
0
2003 1H
2003 2H
2004 1H
-4-
Strong Balance Sheet
As of
31 Dec 2003
(USD million)
As of
30 Jun 2004
(USD million)
Cash
35.4
39.6
Short-term Debt
31.5
37.2
Long-term Debt
24.3
19.5
Total Debt
55.8
56.7
Shareholders’ Equity
225.1
232.4
-5-
Key Financial Ratio
31 Dec 2003
30 June 2004
Current Ratio (Times)
2.09
2.12
Net Gearing Ratio* (%)
9.0%
7.4%
4.7%
(30 June)
6.7%
ROE Ratio (%)
* net
debt / equity
-6-
Business
Review
Market Analysis
Turnover by Geographical Location
Taiwan
3.5%
ASEAN* and
other regions
5.2%
PRC
9.3%
Taiwan
1.8%
Vietnam
57.6%
ASEAN* &
other regions
7.8%
PRC
10.6%
Vietnam
56.0%
Japan
23.8%
Japan
24.4%
2003
* Other than Vietnam
Six Months Ended 30 June
2004
-8-
Major Market Analysis
Vietnam
12.0% to US$61.1 million
2004 1H economic growth at 7.1%
Operations unaffected by bird flu outbreak due to
implementation of precautionary measures
Higher sales due to effective nationwide promotional activities
and deeper market penetration to cover more areas
Double digit growth in all major products including MSG, lysine
and starch products
GA sales lower due to customers’ switch to buying MSG for
direct processing
-9-
Major Market Analysis
Japan
12.9% to US$26.1 million
Main boost came from growing lysine sales at higher prices
MSG sales temporarily down due to stock adjustment of a major
customer; expected to pick up again in 2nd half
ASEAN
59.9% to US$4.0 million
Contribution rising rapidly due to phenomenal sales growth of
52% and 138% for MSG and starch products respectively
Identified by the Group as a major growth market:
- comprised of some of Asia’s fastest growing economies with total
population of over 500 million
- free trade agreement in place with Vietnam
- 10 -
Major Market Analysis
PRC
32.1% to US$11.6 million
MSG sales 19.4% higher as people’s dining expenditure grew
Sales of starch products rocketed by over 15 times due to
increased orders from large industrial customers as well as new
customer
Price of corn (main ingredient of GA) rose due to higher
international grain prices which resulted in higher production
cost
- 11 -
Major Market Analysis
PRC (con’t)
Acquisition of Shanghai Vedan Foods:
Multiple benefits:




significant boost in MSG production capacity in
China.
establishment of flagship head quarter in most
efficient manner.
ready infrastructure and facilities to allow speedy
set up of new production lines.
additional brand value from “Hoping” (皇品), a
leading MSG brand in Greater Shanghai area.
- 12 -
Product Analysis
Turnover by Products
Cassava starch
based products
7.8%
Cassava starch Others
based products 5.4%
5.6%
MSG
68.5%
Lysine
12.4%
Others
4.7%
MSG
66.2%
Lysine
17.2%
G.A.
8.1%
G.A.
4.1%
2003
Six Months ended 30 June
2004
- 13 -
Major Product Analysis
MSG
11.6% to US$72.5 million
Stable pricing environment on the back of solid demand
Significant sales increase in several major markets including Vietnam,
China, other ASEAN countries and Europe. ASEAN and Europe recorded
an increase of 52% and 40.6% respectively
Lysine
60.4% to US$18.8 million
Continual strong demand despite bird flu resulting in higher prices
Orders up in Vietnam as well as other markets
Starch
63.2% to US$8.6 million
Sales of modified starch rose remarkably by 108%
Ability to customize diversified product types render increased orders from
existing customers
Secured news customers from China, Europe and Australia
- 14 -
Summary of Performance
Achieved great leap in turnover due to higher sales in MSG, lysine
and starch based products
Reaped significant cost saving benefits from switch to natural gas
as fuel at Vietnam plant
Higher efficiencies also contributed to higher profit margins
Penetrated new markets including Europe, Australia, Russia and
South Africa
Important progress made in PRC market expansion
Stronger financial position : higher liquidity and lower net gearing
ratio
- 15 -
Prospects
For 2H 2004
Favorable Market
Environment in Asia
Market outlook in Asia expected to remain positive:
High Economic Growth Forecasts for 2004
Vietnam 7.5%
Asia 6.1%
PRC 7.0%
Strong Demand for Vedan’s Products
ASEAN Free Trade Area (AFTA) promotes trade flow
within the region
Low per capita MSG consumption in the PRC and
ASEAN countries presents huge potential
- 17 -
Boost Sales :
Capacity Expansion
Phased expansion in various fast growth products:
Existing Capacity
(Tons)
MSG
Capacity After
Expansion (Tons)
148,000
180,000
40,000
60,000
216,000
324,000
Starch
Modified Starch
Native Starch
- 18 -
Lower Costs:
Enhance Cost Structure
Energy Source
Full switch to natural gas implemented in Vietnam: significant
cost saving of at least US$4 million per year
Materials
Cassava
Set up 3 more starch raw material processing plants in central
part of Vietnam and also near border area to Cambodia
Molasses
Currently, mostly procured through third party trading agents, in
the future, will purchase directly from large suppliers
- 19 -
Improve Margins:
New Product Launch
Wide applications for food, cosmetic, agriculture,
pharmaceutical, environmental and water
treatment
PGA
Started testing market response since 2003
through trial production
Application for patent rights in process
Commercial production to start by end of 2004 or
early 2005
Versatile flavor enhancers made from MSG and
various natural seasonings
High Value-added
Seasonings
Product launch expected by end of 2004
Successfully innovated 4-5 different products
Enjoys strong demand due to diverse tastes of
Asian dishes
- 20 -
Our PRC
Expansion Strategy
• Enhance operation of Shanghai Vedan Enterprise
- Consolidation of brand and marketing resources
- Integration of sales network with Xiamen Vedan
- Recruitment of local talents to support expansion
• Merger and acquisition strategy remains: identify
suitable targets with considerable brand awareness
and established sales network
• Strategic alliance with local GA suppliers to secure raw
material supplies
• Localization of business: invest in local talents
• Strengthen sales and marketing network
- 21 -
Mission
“To be Asia’s leading manufacturer of
fermentation-based amino acids,
food additive products and
cassava starch based products”
- 22 -
Q & A Session
- 23 -