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IR Adviser
3Q FY2017 Results Presentation
21 November 2017
3QFY17 OPERATIONS REVIEW
3DAIBOCHI MYANMAR UPDATE
Myanmar operations officially on board and off to a good start…
Daibochi Packaging (Myanmar) Co. Ltd.(Daibochi Myanmar) commenced operationson 1 July 2017
Plant with built-up area of 3,500 sq m and total land area of36,000 sq m
Workforce of 113 employees; 85% of employees work inproduction
Annual output of 75 mil meters; current utilisation at 50%
Strategically-located operationsSituated <30 minutes from centre of Yangon with access tomajor roads; approx. 90 minutes from Port of Yangon
Operating in industrial zone with supporting industries
4DAIBOCHI MYANMAR UPDATE (CONT’D)
Plant machinery and layout conducive for highly cost-effective operations…
5DAIBOCHI MYANMAR UPDATE (CONT’D)
Already obtained the necessary quality and food safety certifications to target MNC
clientele from the F&B sector…
Currently supplies Myanmar’s burgeoningFMCG sector
Clientele include a popular Home Personal Care brand
Myanmar sales team making good progress; confident ofentering the qualification process for various companies andnew product lines of existing customers in 4QFY17
Ready to supply global F&B and FMCGbrands with recently obtained certifications
Obtained ISO 9001:2015 accreditation and Hazard Analysisand Critical Control Point Food Safety Management System(HACCP FSMS) certification in October 2017
Business-friendly environmentSecured 5-year tax exempt status from Myanmar authorities
54.7% RM55.8m
3QFY17
RM102.0m
Exports
54.4%
Exports
Malaysia Plant RM49.4m
Myanmar Plant RM 6.5m
+9.0% yoy
63QFY17 CORE REVENUE (YOY CHANGE)
Higher total export revenue in 3QFY17 due to maiden contributions from Myanmar plant…
domestic sales up on uptick in demand from the Malaysia market
3QFY17 total exports rose 9.0% yoy on maiden contributions from Myanmar plant; exportsfrom Malaysia plant marginally lower
3QFY16
RM94.1m
46
43
38
38 42
40 43
42
43
40 46
1Q
15
2Q
15
3Q
15
4Q
15
1Q
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2Q
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3Q
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Quarterly Domestic Revenue(RM ‘mil)3QFY17 domestic sales increased due to stronger demand from the local market
Domestic
RM46.2m 45.3%
+7.8% yoy
Domestic45.6%
41 47
48
45 48 57
51
48 51
47 49
6
1Q
15
2Q
15
3Q
15
4Q
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1Q
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Quarterly Export Revenue(RM ‘mil)
Myanmar plant
Exports (excl. Myanmar plant)
17.6% RM1.8m
73QFY17 PBT (YOY CHANGE)
Group 3QFY17 PBT surges on improved efficiency and contributions from Daibochi
Myanmar…
3QFY17 saw Myanmar plant make maiden PBT contributions; lean-and-mean operationsbodes well for future growth
3QFY16
RM7.2m3QFY17
RM10.5m
8 10 9 9 8 7 7 7 7 7
9
9%11%11%11%
9%8%8%8%8% 8%
9%
1Q
15
2Q
15
3Q
15
4Q
15
1Q
16
2Q
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3Q
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Quarterly PBT & PBT MarginMalaysia Plant (RM ‘mil)
2
29%
3Q
17
Quarterly PBT & PBT MarginMyanmar Plant (RM ‘mil)
3QFY17 Malaysia plant’s PBT rose at faster pace compared to revenue growth due tobetter wastage control, improved operating efficiency, and better sales mix
Malaysia Plant
RM8.6m 82.4%
+20.3% yoy
Myanmar Plant
Malaysia Plant100.0%
GROWTH STRATEGIES
9GROWTH STRATEGIES
Malaysia plant to maintain strong growth momentum through new export contracts…
Daibochi Myanmar aims to achieve RM100 million revenue in two years’ time
Eyeing exports to regional markets
Collaborating with a new MNC customer tomanufacture packaging for an FMCG brand in ANZ;targets to commence supply by 2QFY18
Trial production runs for two prominent brands inIndonesia going smoothly; expects to commenceexports in 1QFY18
CAPEX
Investing RM10.5 mil in FY18 for new machinerycomprising:
Printing machine, high-speed slitter, andsupporting machinery
MALAYSIA PLANT MYANMAR PLANT
Low-cost manufacturing base opens new markets
Targeting new business in local and export markets
Focused on mass market product range
Aiming to reach RM100 mil revenue in two years’time
CAPEX
Planned CAPEX of USD1.7 mil in FY18 comprising:
Printing machine, extrusion machine, slittingand rewinding machine
3QFY17 FINANCIAL REVIEW
INCOME STATEMENT
Group revenue and profitability experienced brisk expansion quarter-on-quarter… growth
expected to continue in the future
RM'mil
3Q17 to
30.09.17
2Q17 to
30.06.17 % chg qoq
9M17 to
30.09.17
9M16 to
30.09.16 % chg yoy
Revenue 102.03 86.84 17.5% 282.99 280.80 0.8%
EBITDA 14.67 10.76 36.4% 36.57 34.35 6.5%
Operating Profit 11.19 7.36 52.1% 26.32 24.91 5.6%
Share of Associate Results 0.06 (0.03) n/m 0.38 (0.15) n/m
Profit Before Tax 10.48 6.65 57.6% 24.57 22.68 8.3%
Net Profit to Shareholders 7.22 5.05 43.0% 18.03 18.59 (3.0%)
Basic EPS (sen)* 2.20 1.54 42.9% 5.50 5.68 (3.2%)
EBITDA margin 14.4% 12.4% 2.0 pt 12.9% 12.2% 0.7 pt
PBT margin 10.3% 7.7% 2.6 pt 8.7% 8.1% 0.6 pt
Net margin 7.1% 5.8% 1.3 pt 6.4% 6.6% (0.2 pt)
*Adjusted to reflect the bonus issue of 2 for every 10 ordinary shares held by the entitled shareholders, which was completed on June 28, 2017
11
9M17 Review (yoy comparison)
Revenue increased on maiden contributions fromDaibochi Myanmar; also due to exceptional 2Q16exports
PBT expanded on maiden contributions fromDaibochi Myanmar as well as improvements inwastage control and enhanced operating efficiencyat the Malaysia plant, partially offset by higher rawmaterial costs
Net profit declined due to higher effective tax rate onlower reinvestment allowances
EBITDA margins strengthened due to similar factorsthat drove PBT higher
0
50
100
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Quarterly Revenue(RM ‘m)
Malaysia Myanmar
0
5
10
1Q
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2Q
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3Q
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Quarterly PAT(RM ‘m)
0
20
1Q
14
2Q
14
3Q
14
4Q
14
1Q
15
2Q
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3Q
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4Q
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Quarterly PBT(RM ‘m)
Malaysia Myanmar
12BREAKDOWN BY FINANCIAL CONTRIBUTION
Daibochi’s Malaysia plant showing strong growth momentum quarter-on-quarter…
Myanmar plant made maiden contributions with high PBT margin of 28.6%
RM'mil
3Q17 to
30.09.17
2Q17 to
30.06.17 % chg qoq
9M17 to
30.09.17
9M16 to
30.09.16 % chg yoy
Contribution Breakdown
Malaysia Plant
Revenue 95.58 86.84 10.1% 276.53 280.80 (1.5%)
Profit Before Tax 8.64 6.65 29.8% 22.72 22.68 0.2%
Profit Before Tax Margin 9.0% 7.7% 1.4 pt 8.2% 8.1% 0.1 pt
Myanmar Plant
Revenue 6.45 - 6.45 - n/m
Profit Before Tax 1.85 - 1.85 - n/m
Profit Before Tax Margin 28.6% - 28.6% - n/m
9M17 Review (yoy comparison)
Decrease in revenue attributed to lower exports in2QFY17
PBT increased due to continued improvements inwastage control and enhanced operating efficiency,mitigating higher raw material costs
Daibochi Myanmar’s high PBT margin is attributed toits cost-effective plant operations
BALANCE SHEET
Balance sheet maintains strength after consolidation of Daibochi Myanmar’s financial
statements… double-digit returns sustained
* The Group carried RM36.7 mil in intangible assets associated with the acquisition of its 60% interest in Daibochi Myanmar
**Based on net profit for the trailing twelve months
13
As at 30.09.2017 As at 31.12.2016
(Unaudited) (Audited)
Fixed Assets (excl associate investment & deferred tax) 177.06 141.22 Due to recognition of RM36.72 million in intangible assets*
Associate Investment 20.62 20.25
Current Assets 172.04 146.81 Due to increase in inventories, and trade and other receivables
Current Liabilities 114.49 92.44 Due to increase in borrowings
Shareholders’ Equity 197.95 189.17 Due to higher retained earnings
Total Borrowings 87.12 53.99Due to Daibochi Myanmar acquisition and increased working
capital requirements
Cash & Bank Balances 12.32 15.83 Due to increase in stock holding
Net Gearing 0.38 x 0.20 x
Return on Average Shareholders’ Equity** 12.5% 13.2%
Return on Average Total Assets** 7.1% 8.1%
Remarks
DIVIDENDS
Third interim single-tier dividend of 1.15 sen per share payable on 28 December 2017 (ex-
date on 5 December 2017)…
4.52 4.90 4.52 3.25
FY14 FY15 FY16 9M17
14.8 16.0 14.810.6
62%
60% 60%
62%
FY14 FY15 FY16 9M17
Total Dividend Payout Ratio^
Payment HistoryDividend Payout RM’m
Dividend Per Share* sen
Dividend policy revised to pay out at least 60% of
net profit attributable to shareholders, excluding
net profit contributions from Daibochi Myanmar
14
FY2016 FY2017 FY2016 FY2017
1st Interim (single tier) 1.21* 1.10* 3.95 3.61
2nd Interim (single tier) 1.11* 1.00 3.62 3.28
3rd interim (single tier) 1.10* 1.15 3.59 3.76
4th interim (single tier) 1.10* 3.60
Total 4.52 3.25 14.76 10.64
Dividend per share
(sen)
Dividend Payout
(RM 'm)
*Adjusted to reflect the bonus issue of 2 for every 10 ordinary shares held by
the entitled shareholders, which was completed on June 28, 2017
^Excludes net profit contribution from Daibochi Myanmar
INVESTMENT MERITS
VALUATIONS AND MERITS (as at 20 November 2017)
Led by innovation and efficiency… a market leader in supplying top quality consumer
flexible packaging to MNCs in the region
16
MNCs make up 80% of total revenue(benefitting from steady and large orders, strong creditworthiness)
Exports to SEA & ANZ exceed 50% of revenue
Supplier to renowned F&B and FMCG brands(supporting highly-resilient sectors)
Contribution from Myanmar to see earnings boost
Industry-leading R&D and product innovation
Highly-experienced management team
KEY MERITS
16.7x
4.4x
2.1%
Price Market Cap
P/E (ttm)
EV/EBITDA (ttm) FY16 Div. Yield
P/B
RM2.19 RM717m
29.9x
Contact Information
Investor Relations
Low Jin Wei, Executive Director
Daibochi Plastic and Packaging Industry Berhad
+606-231 9779
Julia Pong, Manager
Aquilas Advisory (M) Sdn Bhd
+6012-390 9258
APPENDIX
CORPORATE PROFILE
20OVERVIEW
Leading consumer flexible packaging player in Malaysia and South East Asia with 45-year
track record… serving leading MNC brands in the F&B and FMCG sectors
Daibochi established since 1972A leading provider of consumer flexible packaging to majorinternational brands in the F&B and FMCG industries
Focused on quality and innovationExperienced R&D team supported by well-equippedlaboratory testing facilities
Increasing exports prowessGrowing exports across South East Asia, Australia and NewZealand markets; exports make up >50% of group revenue
Daibochi’s Malaysia plant certificationsAttained ISO:9001 and ISO:14001 certifications
Hazard Analysis Critical Control Points (HACCP)compliant to ensure adherence to food safety requirements
Obtained Food Safety System Certification (FSSC:22000)
Daibochi’s Myanmar plant certificationsSecured the ISO 9001:2015 accreditation and the HACCPFSMS certification in October 2017
21PRODUCTION FACILITIES
Internationally-certified production facilities that comply with all factory audits by MNC
clientele… strength in innovation
22PRODUCTION FACILITIES (CONT’D)
Strategically located production facilities… sizable floor space allows Daibochi to cater
for increasing orders from MNCs
Daibochi Plastic Plant 1Located in Ayer Keroh, Melaka, Malaysia
Production floor space of 385,000 sq ft
Daibochi Plastic Plant 2Located in Jasin, Melaka, Malaysia
Commenced operations in 2Q14
Production floor space of 135,000 sq ft
23PRODUCTION FACILITIES (CONT’D)
Addition of Myanmar operations since July 2017 represents the Group’s first expansion of
its manufacturing facilities outside of Malaysia…
Yangon, Myanmar PlantDaibochi and Myanmar Smart Pack Industrial CompanyLimited (MSP) incorporated Daibochi Myanmar
MSP is a leading flexible consumer packaging manufacturerin Myanmar focusing on Home Personal Care products
Consumer packaging plant located 30 minutes from Yangon,with built-up of 6,000 sq m and land area of 36,000 sq m
Quick Facts on Myanmar
Population of >50 mil
Low flexible packaging consumption of<USD1 per capita (Indonesia USD13,Vietnam USD9, India <USD5)1
1PCI Wood Mackenzie, 2015
24OPERATIONAL SYNERGIES
Leveraging strengths & synergies to accelerate expansion in high-growth markets…
WIDER PRODUCT RANGE
• Daibochi Myanmar to benefit from technology transfer from Daibochi Malaysia (CPP & metalliser)
• Daibochi Malaysia to fulfil product line gap in the interim
• Expand F&B packaging line leveraging on Daibochi Malaysia’s strengths and long-term relationships with MNCs
SIGNIFICANT LOW-COST ADVANTAGE
• Capitalise on low manufacturing cost advantage to export to cost-sensitive customers in SEA
• Benefit from bulk purchases of raw materials (e.g. resin)
• Enjoy cost savings from production of in-house film
HUMAN CAPITAL DEVELOPMENT
• Access to ample workforce pool; opportunities for skillset upgrading and optimisation
• To tap into Daibochi’sR&D and specialty films, develop sales team, & enhance production efficiency
• To attain international certifications in food safety, quality & environment management
STRONG CASHFLOW & DIVIDENDS
• Able to fund future growth, without requiring additional capital injection from shareholders
• Targeting dividend payment from Year 3 onwards
• 5-year tax exempt status
25PRODUCTION PROCESS
Integrated end-to-end packaging process… equipped with specialized in-house
capabilities
PrepressCylinder Making
Gravure Printing
Lamination (Extrusion /
Dry)
Slitting / Bagging
CPP Film Metallizer
Up to 9-colour 2-sided printingIn-house capabilities Solvent-based/free Capabilities incl Standing Pouch
The only player with in-house cylinder-making, and one of the few with metallizing and
sealing films capabilities for quality assurance and constant improvement at key stages
To build high barriersPolypropylene sealing films
26PRODUCT APPLICATIONS
Wide range of packaging solutions for various product functions… constantly innovating
for changing requirements
Film Type Applications / Use
High Permeability Barrier / Performance Coffee, Nuts, Potato Chips
Cost Effective Barrier Snacks, Biscuits, Wafer, Chocolate,
Cakes
General Packaging Outer Pack, Noodles, Biscuits, Wafers
Specialty Application Labelling, Retort Packaging, Ice-cream,
Frozen Food, Cereal Peel Seal,
Seasoning Oil, Powder/Liquid Detergent,
Shower Foam, Tobacco, Pet food
27REGIONAL PRESENCE
Commendable track record in serving a wide number of MNC clientele in the F&B industry
with stringent quality control…
Supplier to leading global brands
The Largest Supplier of Milo packaging in S.E.A
The Sole Supplier to Nestle’s Chembong confectioneryfactory in Malaysia
Daibochi is also the ONLY S.E.A company on Nestle’sRegional Food Safety Committee
Supplier of >90% of Cadbury’s flexible packaging inMalaysia
The Major Supplier of Mondelez International’s (formerlyknown as Kraft) biscuits and snacks packaging in Malaysia
Major Supplier of flexible packaging to PepsiCo’s ChiangMai plant for potato chips manufacturing
28INDUSTRIES SERVED
Diversified clientele of leading brands across various industries…
Food
BeverageFMCG
Specialty
• Confectionary
• Biscuits
• Snack Foods
• Dairy
• Frozen Food
• Cereal
• Shampoo
• Detergent
• Personal Care
• Sanitary
• Coffee/Tea
• Dairy
• Soft Drink
• Tobacco
• Medical Packaging
• ESD / Anti-Static
• Pet Food
Worldwide consumer flexible packaging market worth $92 bil in 2015
Estimated to grow 4% p.a. to reach $114 bil in 2020
Growth to be led by Asia Pacific & other emerging regions (e.g. South & Central America)
Growth catalysts for Asia’s flexible packaging market
Higher demand for cheaper and smaller pack sizes in line with affordability of general population(especially post economic slowdown)
Increase in working mothers / dual-income households leading to preference for convenience packaging
Development of multinational food retailers and manufacturers in the region; indicating the long-termgrowth potential in Asia
29INDUSTRY INSIGHT
Growth in flexible packaging to be led by the Asian region… penetration into new product
categories to bring next wave
Source: Smithers’ Pira – The Global Flexible Packaging Market – Trends and Forecasts
Source: The Asia Pacific Flexible Packaging Market to 2016 by PCI Consulting Films Ltd
30CORPORATE INFORMATION
Market cap of more than RM700 million…
DAIBOCHI PLASTIC & PACKAGING INDUSTRY BERHAD
Exchange Main Market, Bursa Malaysia since 1990
(transferred from Second Board in 2003)
Sector Industrial Products
Codes Bursa: 8125 / DAIBOCI
Bloomberg: DPP:MK
Reuters: DPPM.KL
Share Capital RM164.1 mil (327.9 mil shares)
Market Capitalization RM716.6 mil (RM2.19 as at 20 November 2017)
31MANAGEMENT TEAM
Experienced management with industry expertise…
Thomas Lim Soo Koon, Managing Director
Holds a degree in Bachelor of Science Industrial Engineering and Management from Oklahoma State University, &
Master of Business Administration degree from Oklahoma State University.
Joined Daibochi in 1995, and was appointed as Managing Director in February 2005.
Played a key role in building Group’s MNC clientele.
Low Jin Wei, Executive Director
Holds a degree in Bachelor of Commerce (Major in Finance & Marketing) from University of Sydney, NSW, Australia.
Prior to this, Mr. Low was the Managing Director / Project Director of GlassKote (Malaysia) Sdn Bhd from 2005 to
September 2010.
32MAJOR SHAREHOLDERS
Institutional investors holding approximately 33%...
No. of shares (‘mil)(30.09.2017)
Percentage
Low Chan Tian 33.8 10.3%
Apollo Asia Fund Ltd 30.7 9.4%
Lim Koy Peng 27.7 8.5%
Halley Sicav – Halley Asian Prosperity 19.3 5.9%
Datuk Wira Wong Soon Lim 19.1 5.8%
