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integration
innovation
intimacy
Opportunity DayCompany’s Performance Year 2018
19 March 2019
integration
innovation
intimacy
integrationinnovationintimacy
AGENDA
Our Business
2 YE2018 Financial Performance
3 Business Outlook for 2019
1
22
Our Business
AIR FREIGHT
SEA FREIGHT& INLAND
TRANSPORT
LOGISTICSMANAGEMENT
CHEMICAL& SPECIALTY
LOGISTICS
3
▪ Cargo General Sales Agent (GSA): exclusive sales agent of
• Thai AirAsia & Thai AirAsiaX airline for all routes from and to Thailand
• Sri Lankan, Lan Cargo, Bhutan and Jeju Airlines for all routes from Thailand
▪ Wholesale Freight Forwarder : providing domestic and international air freight services for co-loaders
▪ Air Cargo Terminal : International and domestic cargo terminal at Don Muang Airport
AIR FREIGHT
4
▪ Shipping Line Agencies :
• Thailand sole agent for Rizhao Port Shipping Line
• Thailand Joint Venture : CK Line
▪ Wholesale Freight Forwarder : Thailand Joint Venture with ECU Worldwide, global leader in Less-than Container Load (LCL) services with network in over 160 countries
▪ Inland Container Trucking Services: transport containers to and from seaport / container depot
SEA FREIGHT &INLAND TRANSPORT
5
▪ Integrated Freight Forwarder : International freight forwarding services for both sea & air transport and customs clearance for retail customers
▪ Warehousing : storage, inventory management, and real-time reporting
▪ Distribution Management : modern trade, shops, home delivery
▪ Fulfillment Service : focus on E-Commerce and end to end supply chain services
LOGISTICS MANAGEMENT
6
▪ Integrated Freight Forwarder : International freight forwarding services for both sea & air transport and customs clearance for chemical & dangerous goods
▪ Dedicated Chemical Warehouse : storage, inventory management, and real-time reporting
▪ Inland and Distribution Management : for industrial and B2B market
▪ DG Packaging : sale of packing materials, DG declaration and repacking services
▪ ISO Tank Business : as agent for Nippon Concept Co., Ltd, a Japanese based ISO tank operator for liquid chemical
CHEMICAL & SPECIALTYLOGISTICS
integration
innovation
intimacy
integrationinnovationintimacy
AGENDA
Our Business
2 YE2018 Financial Performance
3 Business Outlook for 2019
1
8
2,294.6
2,770.6
YE17 YE18
YoY 21%
Performance YE2018 – Revenue
YE17 vs YE18
Revenue YE17 YE18 YoY
Airfreight 1,863.9 2,279.6 22%
Sea freight 87.0 116.6 34%
Logistics 105.4 135.0 28%
Chemical 539.7 561.9 4%
Total Revenue 2,596.1 3,093.1 19%
Revenue Consol 1/ 2,294.6 2,770.6 21%
Remark : 1/ After eliminating inter-company transactions.
Unit : Million Baht
YE17
YE18
▪ Overall revenue grew from increasing services
▪ BU Chemical revenue slightly grew due to decreasing of Packaging sale business
% Revenue Contribution YE17 vs YE18YE17 vs YE18
9
YoY -9%
Performance YE2018 – Gross Profit
Remark : 1/ After eliminating inter-company transactions.
YE17 vs YE18
Unit : Million Baht
Gross Profit YE17 YE18 YoY
Airfreight 320.7 249.9 (22%)
Sea freight 38.5 71.7 86%
Logistics 37.2 36.1 (3%)
Chemical 142.1 132.9 (7%)
Total Gross Profit 538.5 490.6 (9%)
Gross Profit Consol1/ 531.4 484.6 (9%)
GPM 23.2% 17.5%
YE17
YE18
▪ Sea freight BU shows outstanding performance in terms of GP growth
▪ Impacts to GP from Airfreight BU
▪ Change of cost recognition (Selling expense to COGS)
▪ Adjustment of accrued expenses in 2017
% Gross Profit Contribution YE17 vs YE18
531.4484.6
23.2%17.5%
YE17 YE18
10
Performance YE2018 – Net Profit
YE17 vs YE18
Unit : Million Baht
129.6150.7
5.6% 5.4%
YE17 YE18
YoY 16%
Unit : Million Baht YE17 YE18%
Change
Total Revenue 2,294.6 2,770.6 20.7%
Gross Profit 531.4 484.6 (8.8%)
GPM (%) 23.2% 17.5% (5.7%)
Other Income 15.5 18.7 20.8%
Selling Expense 110.9 77.2 (30.4%)
Admin Expense 281.0 295.2 5.0%
(Loss) Gain – Exchange rate (10.2) 7.0 n.m.
P/L from JV & Associate 16.7 33.1 98.2%
EBITDA 202.9 219.1 8.0%
Net Profit Consol 129.6 150.7 16.2%
NPM(%) 5.6% 5.4% (0.2%)
EPS (Baht per share) 0.21 0.25 16.2%
11
Performance Y2018 Analysis
Unit : Million BahtAudited Performa Analysis
YE17 YE18 % Change YE17 YE18 % Change
Total Revenue 2,294.6 2,770.6 20.7% 2,294.6 2,770.6 20.7%
Gross Profit 531.4 484.6 (8.8%) 498.2 /1 484.6 (2.7%)
GPM (%) 23.2% 17.5% (5.7%) 21.7% 17.5% (4.2%)
Selling Expense 110.9 77.2 (30.4%) 77.7 /1 77.2 (0.7%)
Admin Expense 281.0 295.2 5.0% 281.0 295.2 5.0%
P/L from JV & Associate 16.7 33.1 98.2% 16.7 33.1 /2 98.2%
Net Profit Consol 129.6 150.7 16.2% 129.6 150.7 16.2%
NPM(%) 5.6% 5.4% (0.2%) 5.6% 5.4% (0.2%)
Note
1. Change of cost recognition (“Selling expense” to “Cost of sales and services”) resulting in decreasing Gross Profit Margin, while selling expense significantly decreased by 30.4%
2. Recognized 2H18 profit of DG Packaging Pte amount of 10.9 million baht, while existing Company’s Associated and Joint Ventures profit increased by 33%
12
Quarterly Performance Since Y2017
Net Profit
Gross Profit Margin
Daily THB:USD
Gross Profit
36.07 THB:USD
Cancel domestic airfreight of Thai Post
Appreciation of Thai Baht
26.8% 25.4%22.4%
17.5% 20.2%16.6%
YoY 113%
16.5%17.3%
32.61THB:USD
Note : Exchange rate as of 26 Feb 2019 = 31.29 THB:USDExchange rate Average Y17 = 34.10 THB:USD Exchange rate Average Y18 = 32.49 THB:USD
32.85THB:USD
40.3 43.1
26.1 20.1 25.938.4 43.7 42.7
146.5 143.2
123.6 117.8 120.4 116.2 121.0 126.9
Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18
Net Profit Total Gross Profit
13
1,900
1,202
698
Asset Liability andEquity
YE2018
Financial Health YE2018
Financial Status Financial Ratio
Liability
EquityAsset
Ratio YE17 YE18
Company Performance
ROE (%) 1/ 17.8% 13.0%
Collection Period (days) 56.9 42.1
Payment Period (days) 93.7 61.1
Debt Performance
Current Ratio (times) 3.1x 2.1x
D/E Ratio (times) 0.4x 0.6x
IBD/E Ratio (times) 0.0x 0.0x
Interest Coverage Ratio (times) 27.0x 89.7x
Profitability Performance
Gross Profit Margin (%) 23.2% 17.5%
EBITDA Margin (%) 8.8% 7.9%
Net Profit Margin (%) 5.6% 5.4%
EPS (Baht per share) 0.21 0.25
Trailing 12M EPS (Baht per share) 2/ 0.21 0.25
Remark : 1/ Trailing 12M Net Profit2/ Adjusted EPS based on existing shares at that time
Asset THB mm
Cash 732
AR 420
PPE 239
Lia THB mm
AP 443
IBD 33
14
Outstanding Performance with Highest Revenues and Net Profit
2,295
2,771
YE17 YE18
130 151
5.6%* 5.4%*
YE17 YE18
Net
pro
fit
Rev
en
ue
JV & Associated
✓ Recognized half year 2018 performance of DG Packaging (SN) more than 10.9 MB
✓ Performance from other JV&Associated growth 33%98%
86%✓ Outstanding performance in terms of GP growth
through strategic alliance with Rizhao Shipping Lines
✓ Airfreight’s revenue whom is core business still continue growth 22%
✓ International warehouse business at DMK is more successful than expected and continue growth
0.17✓ Dividend payment of 0.17 Baht per share in May 2019
✓ Dividend pay-out ratio is 68.2% (Consolidated NI2019)
Unit : MB
Remark : * Net Profit Margin
22%
integration
innovation
intimacy
integrationinnovationintimacy
AGENDA
Our Business
2 YE2018 Financial Performance
3 Business Outlook for 2019
1
16
Triple I Logistics 2021 Aspirations and Strategy
Enablers • IT/Operations: Leverage digital technology to increase efficiencies, reduce costs and provide services to customers and provide business intelligence for decision making
• HR/People: Fill key critical positions, review governance model
BUStrategy
Strategic directions
Aspirations
Leading Thai Logistics House with sustainable growth in SEA and achieving significant growth by 2021
Organic growth
Inorganic Growth
Partner-driven growth:• Lock in key long term partners (airlines, network,
authorities)• Wholesale business model and related services• Create new innovative products with partners (master
piece for Thailand)
Customer-driven growth:• Maintain leadership position in DG as integrated
logistics provider and grow regionally• Integrated logistics provider for import businesses
• Partnership with Air Asia (grow and maximize utilization)
• Air cargo terminal at DMK and HKT
Inorganic
1. Air Freight
• Growth with CK Line and Rizhao
2. Sea Freight
Inorganic
• Growth by further penetration of its current customer base and acquisition of new customers
3. Chemical
Inorganic
4. Logistics
• Growth via the current customer base and new customers in import businesses by leveraging new IT platform
Inorganic
17
Business Outlook - Air Freight Business (1)
▪ Continually expand customer based in International E-Commerce business from
China and Hong Kong
▪ Expect to regain Domestic business from Thailand Post in 2H/2019
Cargo General Sales Agent
(GSA)
▪ Anticipating an increase in revenue at a higher growth rate from services inDMK
▪ Intend to expand and duplicate its services to other domestic airports inThailand
WholesaleFreight
Forwarder
▪ Increase volume from the expansion of new routes and number of flights of main alliance airlines ― Thai AirAsia & Thai AirAsia X
▪ Maximize the utilization capacity of existing service routes
Inorganic Growth- SAL
▪ In January 2019, the company invested in 14.95% shares of SAL Group, a company conducting airline and passenger ground services, as our strategic partner to increase opportunities and grow our businesses.
Airport Cargo Terminal
18
Business Outlook - Air Freight Business (2)
Inorganic Growth- Around Logistics
▪ Acquisition of 50% shares in Around Logistics Management Co., Ltd, a company
is registered in Hong Kong
Benefits to iii
Expansion and Growth
1
Diversification
2
▪ A remarkable stepping stone to further expand Air GSA regional network
▪ To capture growth and volume of transportation and logistics services in one of the
biggest trading hub in the world, Hong Kong and Singapore
▪ To expand Airline Services coverage, covering 24 countries and more than 22 airlines,
with Hubs in Hong Kong, Singapore and high economic growth country like Vietnam
▪ To boost iii’s net profit by an estimated 50% of HKD 20 mm through accounting
consolidation of the JV
▪ Manage iii’s risk of reliance on one airline (Thai Air Asia and Thai Air Asia X) and diverse
its revenue stream
19
Airline Services Coverage
III’s and Around Logistics ’s Airline services coverage
20
▪ Continual growth in 2019. Surge in services due to an increase in vessel space by 30%, and expand new servicing ports
▪ Plan to expand businesses related to containers transportation by utilizing partners’ strengths and opportunities in EEC project
▪ Thai― China sisters ports
Rizhao Port
Business Outlook – Sea Freight & Inland Transport
Sea Freight
21
▪ Focus on acquiring Key Accounts ― export/import―customers, especially
importers that are potential user of other related logistics services.
▪ Plan to develop services for E-Commerce customers with domestic
distributions through Air transportations.
International Freight
Forwarding Service
Warehouse and Distribution
Service
Business Outlook – Logistics Management
22
▪ Looking for new strategic location for warehouse expansion since the existing one is already fully utilized.
▪ Develop warehousing and related services specialized for Hazardous and Chemical goods by focusing on areas with service potentials such as East Economic Corridor (EEC)
▪ Company will fully recognize profit from its investment in DG Packaging (DGP) Pte. (Singapore) from 2019 and onward.
Warehouse Expansion
Performance from JV
Business Outlook – Chemical & Specialty Logistics
23
▪ In 2019, despite a more active transportation volume in both Air and Sea, the international freight rates trend is expected to maintain and holds close to the rates in the latter half of 2018.
▪ Nonetheless, the Company concentrates on its Logistics Management, which focuses on service qualities, and profits from the selling margin allowing the Company to reduce the impact from the declining freight rates.
▪ Exchange rates is still in fluctuation. Nevertheless, the Company manages it exchange rate risks by engaging in forward FX contracts and balancing its foreign incomes and expenses (Natural hedging)
▪ Moreover, the Company will also focuses on increasing THB income from export and domestic services.
International Freight Trends
Currency Exchange
Business Outlook – Ongoing Business