China Specialty Glass AG

Transcription

1 German Equity Forum Frankfurt am Main, November 2013 Mr. Chun Li Shi (Co-CEO), Ms. Jing He (CFO) August 2010 Page 1

2 Section header Agenda 1 2 About Financial analysis 3 Strategy & outlook

3 Section header Key message to go First Line Secon Line dsdf About China Specialty Glass November 2013 Page 3

4 1. About Experienced management team Nang Heung Sze, Chairman, CEO and founder More than 25 years of experience in the security glass industry Chun Li Shi, Co-CEO Joined China Specialty Glass in 2001 as Head of Sales and Administration, has worked in several positions at CSG Chao Zhou, Chief Operating Officer More than 16 years of experience at CSG, in charge of overall business operation Jing He, Chief Financial Officer Several years of work experience as financial consultant in Guangzhou, China, and as Senior Tax Accountant at Ernst & Young US LLP November 2013 Page 4

5 1. About CSG s corporate history Gold prize of New High-tech products 1998 Newly incorporated in Guangzhou as a manufacturer of car glass products Launch of 1 st Chinese automotive bulletproof glass Recognition of Guangzhou Hightech Enterprise 2008 Patent of PRC antiexplosion and bulletproof glass Approved to be a wholly-owned Foreign Enterprise Guangdong 100 Fortune enterprises Top 20 Most Respected Brands Market leading position confirmed by 48% sales growth 2011 Guangzhou Liwan Science and Technology Bureau authorized to establish Hing Wah R&D Center 2013 IPO in Germany, Frankfurt stock exchange (Prime Standard) 2010 Innovation and commenced production of intruder resistant automotive glass Establishment of Sichuan Hing Wah and construction of new production site New production facility in Sichuan, phase 1 went into operation Accumulated corporate knowledge set stage for the future growth Management s vision to accelerate the evolution of the Company as the leading provider of bulletproof glass products Consolidate the Company s market leadership, continue the growth path and expand into new markets November 2013 Page 5

6 1. About Current shareholder structure (as of 1 Nov 2013) Luckyway Global Group Ltd.* 27.2% Sea Dragon Investments Ltd. 4.6% 5.0% 63.2% Quick Reach Group Ltd. Free float * Sole shareholder: Mr. Nang Heung Sze (CEO) November 2013 Page 6

7 1. About CSG at a glance Strong revenue growth Revenue in m and % yoy growth rate +48% +10% Σ High profitability Σ77 10 Σ Net income in m and % net income margin 31% 27% 14% Construction glass Automotive security glass Financial institution security glass Net income Net income margin Strongly growing producer and distributor of specialty glass in two main categories: Security glass and high-quality specialty glass for the construction industry Core market segments: Automotive and Financial institution security glass, growing importance of glass for construction Industry s pioneer: leader in terms of sales and capacity in Chinese security glass market with a market share of 42%, products mainly sold in China Hing Wah brand well-established in China and known for high quality standards Main operations in Guangzhou and Sichuan Workforce of approx. 588 people in 2012 and 752 people in H November 2013 Page 7

8 1. About Dominant position in the Chinese security glass market Large production capacity 2012 number of production lines (rhs) and high profitability 2012 revenue in m and net profit margin in % (rhs) 10 China Specialty Glass Beijing Mingdun Tongchuang Shenzhen Liaoyuan Glass % 20% 17% Production lines Revenue Net profit margin More production lines than our competitors One of the few domestic companies supplying security glass for both financial services and automobile sector New site in Sichuan with one additional production line for tempering glass, one for laminated glass and two for hollow glass Sichuan expected to contribute EUR 28 m to the group revenues in 2013 Market share of 42% in the security glass market in 2012 in terms of revenues Closest competitors reached 5% and 2%, respectively Net profit margin decreased in 2012 due to negative one-off effect with regard to the valuation of the convertible loan Excluding this one-off effect, the net profit margin would amount to 25% November 2013 Page 8

9 1. About Innovative product portfolio for core markets Security glass product portfolio Financial institution security glass Intruder resistant, bomb blast resistant, self-defence,... Automotive security glass Intruder resistant windshield, SGP and PC model,... New Products Sentry boxes, ATM boxes, jewellery showcases, security doors,... 41% of FY 2012 revenues 41% gross margin 40% of FY 2012 revenues 54% gross margin Constant development of new products for security glass to meet the markets demands November 2013 Page 9

10 1. About Well-diversified product mix for construction glass Construction glass product portfolio Construction glass New Products Tempered and laminated, fire resistant, colour-changing,... Furniture, washbasin, shower room series,... 19% of FY 2012 revenues 39% gross margin New construction glass products are going into production November 2013 Page 10

11 1. About Broad customer base in the financial institution, automotive and construction sector November 2013 Page 11

12 Section header Key message to go First Line Secon Line dsdf Financial analysis November 2013 Page 12

13 2. Financial analysis Financial results reflect successful growth Revenue ( m) Revenue H / 2013 ( m) % % % H H Revenue of 114m in 2012 and 65.8m in H Strong revenue growth of 48% in 2012 and 36% in H with growth in all product categories November 2013 Page 13

14 2. Financial analysis Strong sales growth in all business segments Revenue by business ( m) 8 30 Construction glass Automotive security glass Financial institution security glass +25% +17% +0% % +30% +46% Gross profit by business( m) 3 16 Construction glass Automotive security glass Financial institution security glass +0% +19% % % +29% +46% Comments Financial institution security glass CSG benefits from Government regulations which require the installation of specialty glass Automotive security glass Banks, security institutions and private persons as main customers Growing demand for modified vehicles with new performance features, CSG as OEM in the future Construction glass Sustained growth of the real estate industry China launched the "Green City project in 2013 stipulating that high-rise buildings should use hollow glass or other eco-friendly materials Lower margin products November 2013 Page 14

15 2. Financial analysis Gross margin has been continuously improved Gross profit ( m) Gross profit H / 2013 ( m) Gross profit Gross profit margin Gross profit Gross profit margin % % % % 45% 46% 48% 48% H H Gross profit of 52m in 2012 and 31.5m in H Year-on-year growth of 48% in 2012 and 36% in H Gross profit margin stable at 46% in 2012 and 48% in H November 2013 Page 15

16 2. Financial analysis with profit margins at a high level and EBIT ( m) EBIT H / 2013 ( m) EBIT EBIT margin EBIT EBIT margin +0% +9% % % 31% 24% % H1 8% 2012 H EBIT of 27m in 2012 and 26.8m in H EBIT margin at 24% in 2012 and 41% in H November 2013 Page 16

17 2. Financial analysis an attractive bottom line Net profit ( m) Net profit H / 2013 ( m) Net profit Net profit margin Net profit Net profit margin -5% 22-22% % 27% 14% H earnings impacted by one-off initial recognition of convertible loan % 0.5 1% H H Net profit of 16.3m in 2012 and 20.3m in H Year-on-year decline of 22% in 2012 due to loss arising from fair value change of the convertible loan and increased selling and distribution expenses, but net profit margin still at a good level of 14% Excluding this one-off effect net profit margin 2012 would amount to 25% Net profit margin in H at a high level of 31% November 2013 Page 17

18 2. Financial analysis Strong financial position enables further growth Balance sheet ( m) H Assets Non-current assets Current assets Cash & cash equivalents Comments Cash & cash equivalents increased significantly Minor increase in loans & borrowings Solid equity ratio of 68% Inventories Trade & other receivables Other receivables Equity & liabilities Equity Loans & borrowings Current liabilities Trade payables Loan payables Net working capital* Net working capital % 14% % of sales CB conversion Other payables H H * Net Working Capital = (Trade receivables + inventories + other receivables) (Trade payables + other payables) November 2013 Page 18

19 2. Financial analysis CSG s mid-term investment plan CAPEX Budget ( m) 2014e 2016e Guangzhou 88 Including: Land 31 Plant 37 Equipment 20 Sichuan 44 Including: Plant 28 Equipment 16 Total 132 Comments According to a non-binding notification of the Guangzhou government CSG may need to relocate its premises by 2016 CSG s Management Team intends to acquire a suitable piece of land in the suburban area of Guangzhou in 2014 New factory in Guangzhou is planned to have the same size as the one in Sichuan; construction phase I is planned to be completed by 2015 Sichuan Phase II & III are expected to be completed by 2015 (including all necessary machinery) Sichuan plant is expected to go into full operation in November 2013 Page 19

20 2. Financial analysis CSG share price development does not reflect strong operating performance XETRA closing prices as of Nov, 1, 2013 CSG share: EUR CSG SDAX Entry Standard DAX November 2013 Page 20

21 Section header Key message to go First Line Secon Line dsdf Strategy & outlook November 2013 Page 21

22 3. Strategy & Outlook CSG s business driven by increasing demand for specialty glass Key market drivers Expansion of financial institution infrastructure Growing demand for specialty glass for money transport vehicles and ATM s Higher incomes and living standards Growing demand for security glass for private houses and cars, public buildings such as museums Higher security requirements on behalf of police, public transport etc. Huge potential for the sale of specialty glass used for police vehicles, trains etc November 2013 Page 22

23 3. Strategy & Outlook New production facilities as major step to strengthen market position Expand production capacity and market reach New production site: Sichuan Hing Wah Glass Co. Ltd New production lines for tempered, laminated glass and hollow glass Additional production capacity of production site in Chengdu, Sichuan Province, is expected to be about 2 million m 2 for tempered and 0.9 million m 2 for laminated glass by 2014 Expected revenue contribution Chengdu: EUR 28m in 2013 Increase production capacity and efficiency Current operating entity: Guangzhou Hing Wah Glass Industry Co. Ltd Modernization and automation of current production capacity in Guangzhou to counter the trend of increasing labor costs Upgrading of current facilities in Guangzhou to increase production efficiency and improve performance margin Just-in-time production based on orders to minimize inventory November 2013 Page 23

24 3. Strategy & Outlook Capture growth momentum by further expansion of our production capacity and sales network Market development Chinese economy is likely to experience slower growth in 2013 than in 2012 Potential risks from debt-financed investment of the past years Demand for bulletproof glass is expected to increase Demand for energy efficient construction glass is expected to increase due to stimulating Government policies Specialty glass industry s sales volume is expected to increase further and reach around RMB 3.97 billion in 2015 Strategic goals Increase product sales through expansion of our sales network both domestically and internationally Maintain the high profit margin level Focus on automotive security glass in selected Asian countries Expand production capacity in Sichuan and Guangzhou Further broaden glass product portfolio in line with demand Financial guidance Increase revenues by around 40% Net profit is expected to grow by 40% November 2013 Page 24

25 Financial calendar & IR contact Financial calendar 2013 / 2014 Investor Relations contact 29 November 2013 Interim Report 9M 2013 Jing He CFO 30 April May 2014 June/July August November 2014 Annual Report 2013 Interim Report 3M 2014 Annual General Meeting Interim Report 6M 2014 German Equity Forum 2014, Frankfurt am Main jing.he@csg-ag.com Nicole Schüttforth Senior Consultant Investor Relations Kirchhoff Consult AG (Hamburg) Tel: Fax: nicole.schuettforth@kirchhoff.de 28 November 2014 Interim Report 9M November 2013 Page 25

26 Disclaimer This presentation includes forward-looking statements that are subject to risks and uncertainties, including those pertaining to the anticipated benefits to be realized from the proposals described herein. This presentation contains a number of forward-looking statements including, in particular, statements about future events, future financial performance, plans, strategies, expectations, prospects, competitive environment, regulation and supply and demand. ( CSG ) has based these forward-looking statements on its views with respect to future events and financial performance. Actual financial performance of the entities described herein could differ materially from that projected in the forward-looking statements due to the inherent uncertainty of estimates, forecasts and projections, and financial performance may be better or worse than anticipated. Given these uncertainties, readers should not put undue reliance on any forward-looking statements. Forward-looking statements represent estimates and assumptions only as of the date that they were made. The information contained in this presentation is subject to change without notice and CSG does not undertake any duty to update the forward-looking statements, and the estimates and assumptions associated with them, except to the extent required by applicable laws and regulations November 2013 Page 26