FY2010 Results Briefing - Investormasteel.investor.net.my/wp-content/uploads/2011/03/... ·...
Transcript of FY2010 Results Briefing - Investormasteel.investor.net.my/wp-content/uploads/2011/03/... ·...
(Company No.: 7878-V)
FY2010 Results Briefing
Presented by:
Dato’ Sri Tai Hean Leng, Managing Director / CEO
25 February 2011
IR Adviser
AQUILAS
FY2010 Financial Highlights
Industry Highlights
Growth Strategies
Investment Merits
Appendix Corporate Profile
FY2010 Financials
Back on track…
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FY2010 Income Statement
Record sales for FY2010…but bottom line affected by write-offs of
RM14 mil of bond investment and disposal of stake in subsidiary
Quantum leaps in FY2007 and
FY2008 from improvements in
operational efficiency through new
processes & technology upgrades
Remarks 4Q10 4Q09 Change RM’000 FY10 FY09 Change Remarks
Highest quarterly sales; tonnage
up by 41%, and ASP up by 8%291,977 191,686 +52.3% Revenue 1,004,785 687,263 +46.2%
Higher sales due to 32% increase
in sales tonnage and 11% rise in
ASP
4Q10 EBITDA shaved off
RM4.34mil due to provision of a
legal suit
19,247 18,198 5.8% EBITDA 63,979 21,461 +198.1% Would have been higher if not
affected by RM14mil write-offs of
bond investment impairment and
disposal of stake in subsidiary6.6% 9.5% -2.9 pt
EBITDA
margin6.4% 3.1% +3.3pt
Lower due to 44% higher finance
costs
9,686 10,608 -8.7% PBT 30,080 (8,542) - After accounting for 13.0% higher
fixed costs of Dep & Amort and
Finance Costs3.3% 5.5% -2.2ptPBT
margin3.0% - -
Low effective tax rate due to
utilization of Reinvestment
Allowance
8,990 10,586 -15.1% PATMI 28,176 (8.092) - Low effective tax rate due to
utilization of Reinvestment
Allowance 3.1% 5.5% -2.4% Net margin 2.8% - -
In line with PATMI 4.35 5.44 -20.0%Basic EPS
(sen)13.62 (4.35) -
In line with PATMI
13
0.1
16
9.8
19
5.7
19
1.7
19
2.1
23
5.7
28
5.0
29
2.0
0
100
200
300
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10
Qtrly Revenue (RM’mil)
-30
.4
-2.0
13
.4
10
.6
6.7
8.3
5.4
9.7
-40
-30
-20
-10
0
10
20
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10
Qtrly PBT (RM’mil)
-30
.4
-2.0
13
.4
10
.6
6.4
8.1
4.8
9.0
-40
-30
-20
-10
0
10
20
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10
Qtrly PATMI (RM’mil)
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Revenue Segmentation: Location
78.9
%
78.9
%
85.1
%
86.9
%
81.5
%
79.5
%
21.1% 21.1% 14.9% 13.1% 18.5% 20.5%
0%
20%
40%
60%
80%
100%
FY2005 FY2006 FY2007 FY2008 FY2009 FY2010
Revenue Segmentation: Geographical Location Local Overseas
Unabated growth in export sales at 26.1% CAGR…domestic market
back on the uptrend
RM ‘mil FY2005 FY2006 FY2007 FY2008 FY2009 FY2010
Local 241.8 285.8 466.1 765.7 560.0 798.8
Overseas 64.7 76.4 81.9 115.5 127.3 206.0
Total 306.4 362.2 548.0 881.2 687.3 1,004.8
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Revenue Segmentation: Products
34.3% 40.0% 31.6%41.2% 36.7% 35.2%
65.7% 60.0% 68.4%58.8% 63.3% 64.8%
0%
20%
40%
60%
80%
100%
FY2005 FY2006 FY2007 FY2008 FY2009 FY2010
Revenue Segmentation: Products Billets Bars
Sales mix remains relatively stable throughout the years…FY2010
saw faster growth in bars due to increased construction activities
RM ‘mil FY2005 FY2006 FY2007 FY2008 FY2009 FY2010
Billets 105.0 145.0 173.0 363.0 252.0 354.0
Bars 201.4 217.2 375.0 518.2 435.3 650.8
Total 306.4 362.2 548.0 881.2 687.3 1,004.8
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Revenue Trend
306.4
362.2
548.0
881.2
687.3
1004.8
0
200
400
600
800
1,000
FY2005 FY2006 FY2007 FY2008 FY2009 FY2010
RM’mil Group Revenue
Unfazed by FY2009 blip, the Group is regaining momentum…
Quantum leaps in FY2007 and
FY2008 from improvements in
operational efficiency through new
processes & technology upgrades
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EBITDA & Net Profit Trends
44.8 55.8 75.4 114.6 21.6 64.023.3 30.0 44.3 79.3
-8.1
28.2
14.6% 15.4%13.8% 13.0%
3.1%
6.4%
7.6% 8.3% 8.1%9.0%
-1.2%
2.8%
-10%
-5%
0%
5%
10%
15%
20%
-20
0
20
40
60
80
100
120
FY2005 FY2006 FY2007 FY2008 FY2009 FY2010
Margins (%)RM’mil
EBITDA & Net ProfitEBITDA Net Profit EBITDA Margin Net Margin
Earnings on a strong rebound…EBITDA margin trending back up
Excluding write-offs
and legal suit
provision, EBITDA
margin at 7.8%
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Balance Sheet
Balance sheet has room for leveraged expansion…
Balance Sheet (‘mil) As at 31.12.2010 As at 31.12.2009
Property, Plant &
Equipment
436.2 422.9
Current Assets 378.2 317.7
Current Liabilities 261.5 264.9
Non-Current Liabilities 86.3 67.4
Shareholders’ Equity 478.6 417.3
Borrowings (ST+LT) 258.0 264.8
Cash & Cash Equivalents 48.4 43.7
Gearing (net of cash) 0.44x 0.53x
Industry Highlights
Masteel in advantageous position
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Industry Highlights – Supply Side
Recent environmental catastrophe causing tight supply of iron ore,
compounding the already-high prices of iron ore
Global crude steel production surged 15% in 2010 to 1.414 billion MT and is expected to have same growth momentum in 2011 (Source: World Steel).
High price of iron ore may last another 2-5 years, No substantial new capacity coming on (according to BHP & Rio Tinto
chiefs)
Recent flooding in Australia and Brazil affected the supply of iron ore and coking coal
Australia exports over 140m MT of coking coal in 2010; due to loss of production estimated to be 20-30m MT during the flood
In Brazil, iron ore production might see a 30% reduction in February, 2011
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Industry Highlights – Demand Side
But worldwide demand for steel products is ever increasing…
Continued economic recovery in developed markets in 2011, giving the steel market a strong case in terms of demand and prices
Furthermore, with China’s implementation of central plan for next five years, the country is likely to be front-end loaded with infrastructure investments that need large amount of steel. China has 626m MT of steel output in 2010, and exports about 6m
MT of long products (constituting less than 1% of China total production capacity); therefore any economic slow down in China is not likely to see China dumping large quantity of steel bars to Malaysia
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Raw Material Price Trend
The expected increase in iron ore & coking coal prices have minimum
impact on Masteel’s steel production costs…
Period Scrap %
Change
Iron
Ore
%
Change
Coking
Coal
%
Change
December, 2010 USD420 USD172 USD225
January, 2011 USD470 12% USD185 7.5% USD290 29%
February, 2011 USD460 -2% USD198 7% USD321 11%
85% of steel producers in the world use Blast Furnace while remaining 15% use Electric Arc Furnace (EAF).
Most local mills use iron ore, gas and coking coal as major feedstock
Masteel uses scrap which are mainly sourced locally
Corporate Profile Project Brief Financials Investment Merits …
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Steel Prices
Growth Strategies
Expanding capacity for local and overseas demand
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Investment MeritsCorporate Profile Project Brief Financials
Continued investment in CAPEX to increase production capacity &
revenue base…aiming to be the 2nd largest bar producer in Malaysia
Installed
Capacity/
(Utilization
Rate)
2009 (A) 2010 (A) 2011 (F) 2012 (F)
Billet Plant 450,000 (60%) 500,000 (70%) 550,000 650,000
Rolling Mill 350,000 (65%) 350,000 (75%) 350,000 500,000
Expansion Plan
CAPEX of RM50 million in FY10 for Billet Plant expansion
Further CAPEX of RM180 million to increase capacity of both billet plant and rolling mill over FY11 & FY12
Rolling mill to be the 2nd largest in Malaysia by 2012 (currently 3rd)
Investment Merits
Strong Core Business with Future Catalyst
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Investment MeritsCorporate Profile Project Brief Financials
Upside potential from re-rating on core earnings from steel business
and growth catalyst from rail transit project…
Investment Merits
Core business of steel milling to continue to provide Group’s
baseline growth
New business of Rail Transit to add new dimension to Group’s revenue model with recurring
income
Local steel industry to be spurred by huge fiscal projects
by the Government
Currently trading at single digit 5.1x FY11 earnings (excluding construction profits from Rail
Project)
Dividend paying since listing in 2005; to continue to pay in
respect of FY10
Strong competitive edge of Group’s mill due to more
stable inputs of scrap metal and energy (vs peers’ mills that uses iron ore, gas and
coking coal)
Thank Youhttp://www.masteel.com.my
IR Contacts:
Tommy Sim E: [email protected] T: +603 - 7781 1611
Terence Loo E: [email protected] T: +6012 – 6295 618
Corporate Profile
Pivotal Role in 40 years of Nation’s Growth
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Corporate Information
Listed since 2005…
Malaysia Steel Works (KL) Bhd (MASTEEL)
Listed Bursa Malaysia Main Board (on 7 Feb 2005)
Sector Industrial Products
Stock Codes 5098 (Bursa); MSWK.KL (Reuters); MSW:MK (Bloomberg)
Share Capital RM105.4 mil (210.8 mil shares of RM0.50 par)
Market Capitalization RM265.6 mil (RM1.26 as at 23 Feb 2011)
MASTEEL Warrants 2010/2015
Warrant Codes MASTEEL-WA
No. of Warrants 105.4mil at 23 Feb 2011
Terms of Warrants Expires 26 October 2015; Exercise price of RM0.67 each
Market Capitalization RM66.9 mil (RM0.635 as at 23 Feb 2011)
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Corporate Profile
Established in 1971, Masteel began operations inPetaling Jaya producing commercial mild steel roundbars
Petaling Jaya rolling mill is a fully-continuous millwith reheating furnace; capacity of 350K MT/pa
Group expanded upstream in 1998 with Bukit Rajameltshop, which houses Malaysia’s first electricarc furnace billet plant; capacity of 500K MT/pa
Today, Masteel is one of the top 5 integrated steelmills in Malaysia
Masteel’s finished products adhere to SIRIM(MS 146), ISO 9001 and Australia CertificationAuthority for Reinforcing Steels Ltd (ACRS) standards
Masteel distributes its products locally (via a widenetwork of >60 dealers nationwide) and direct exports
Group exports 20%-30% of its products, including to Australia, Singapore, New Zealand, Fiji, Vietnam, Philippines, Thailand and Bangladesh
40-year track record in steel milling…
Steel billets Steel bars
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Operations
Integrated operations…
MELTSHOP AT BUKIT RAJA ROLLING MILL AT PETALING JAYA
SCRAP
METAL
ELETRIC
ARC
FURNACE
CONTINUOUS
CASTING
MACHINE
BILLETSREHEAT
FURNACEROLLING BAR
DELIVERYDELIVERY
Capacity: 500,000MT pa Capacity: 350,000MT pa
Corporate Profile Project Brief Financials Investment Merits …
Core Competencies
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Leading player with entrenched capabilities, certifications and
reputation…
•Integrated business model allows for better control of input raw material for milling operations and therefore margin containment; improving production efficiency as a result of increased capacity utilization
Integrated operations
•Compliance to stringent quality standards opens up markets for Masteel locally and abroad
Ability to produce high-quality products
•40-year track record in supplying high-quality products enables Masteel to retain and expand customer base
Established track record
•>60 dealers nationwide provide gateway to local construction market; established relationships with overseas dealers to facilitate export sales
Wide dealership network
•Experienced and prudent management team equipped with industry know-how
Hands-on management