results presentation for 2nd quarter 2019 (2q19) · 2019-08-30 · results presentation for 2nd...

1PRESENTATION DECK

LEONG HUP INTERNATIONAL BERHAD

RESULTS PRESENTATION FOR 2nd QUARTER 2019 (2Q19)

30 August 2019

2PRESENTATION DECK

This presentation is for information purposes only. The past performance of Leong Hup International Berhad (“LHI” or the “Company”) and its subsidiaries (the “Group”) is not indicative of the future performance of LHI and/or the Group. Reliance should not be placed on the information and opinion contained herein or on its completeness. Such information may be subject to change without prior notice, its accuracy is not guaranteed and it may not contain all material information concerning the Group.

This presentation may contain projections and “forward-looking statements” relating to the Group’s business and the sectors in which the Groupoperates. These forward-looking statements include statements relating to the Group’s performance. These statements reflect the current views of the Group with respect to future events and are subject to certain risks, uncertainties and assumptions. It is important to note that actual results could differ materially from those anticipated in these forward-looking statements. Actual results may differ materially from those projected and there can be no assurance on the occurrence of certain events, achievability of projections or accuracy of assumptions made by the Group.

Accordingly, neither the Group nor its directors or officers make any representation regarding, and assume no responsibility or liability for, the accuracy or completeness of, any errors or omissions in, any information contained herein.

DISCLAIMER

Issued by: Leong Hup International Berhad (Investor Relations Office)

Address: 3rd Floor, Wisma Westcourt, No.126, Jalan Klang Lama, 58000 Kuala Lumpur, Malaysia.

Tel: +603-7980 8086 / +603-7980 3817Email: [email protected]

Website: https://www.leonghupinternational.com

Note: Unless otherwise stated, all figures stated herein are for the second (2nd) quarter ended 30 June 2019, i.e. between 1 April 2019 and 30 June 2019 (“2Q19”) and the second (2nd) quarter ended 30 June 2018, i.e. between 1 April 2018 and 30 June 2018 (“2Q18”), as extracted from LHI's unaudited consolidated financial results for the financial period ended 30 June 2019.

3PRESENTATION DECK

Market Outlook• Healthy economic growth in our growth markets during 2019Q2 despite delicate market sentiments arising from

concerns over Sino-US trade tension and possibility of a global recession …• Consumer confidence for our developing markets continue to remain well above the global average during 2019Q2 …

2019Q2 GDP growth

rate

Consumer confidence

index (2019Q2)

Malaysia 4.9% 110

Singapore -3.3% 92

Vietnam 6.7% 123

Indonesia 5.1% 126

Philippines 5.5% 130

Global average = 107

(Sources: Bank Negara Malaysia, Bank Indonesia, Ministry of Trade and Industry of Singapore, General Statistics Office of Vietnam, Philippine Statistics Authority and The Conference Board Global Consumer Confidence Survey by The Conference Board and Nielsen)

Steady economic outlook with consumer expenditure expected to continue drive economic growth in our markets

(Source: The Edge Financial Daily dated 20 August 2019)

4PRESENTATION DECK

Financial Highlights: Revenue

12.3 16.7

453.1563.9

269.1

335.2

256.1

191.1

426.5

368.0

2Q18 2Q19

Revenue(1) by Country

(RM million)

Philippines Indonesia Vietnam

Singapore Malaysia

Note: 1) Excluding revenue from other sources.

• Overall group revenue increased during 2Q19• Vietnam and Indonesia recorded higher revenue whilst revenue fell in Malaysia and Singapore • Strong performance by Feedmill segment helped to cushion headwinds felt by Livestock segment

1,417.11,474.9

0.9%

32.0%

18.1%

19.0%

1.1%

38.2%

13.0%

22.7%

30.1%25.0%

Revenue(1)

by Country2Q18 (RM

million)2Q19 (RM

million)Variance

Malaysia 426.5 368.0 -13.7%

Singapore 256.1 191.1 -25.4%

Vietnam 269.1 335.2 +24.6%

Indonesia 453.1 563.9 +24.5%

Philippines 12.3 16.7 +35.2%

LHI Group 1,417.1 1,474.9 +4.1%

910.7803.6

506.4 671.3

2Q18 2Q19

Revenue(1) by Segment

(RM million)

Livestock and poultry relatedFeedmill

64.3%

35.7%

54.5%

45.5%

5PRESENTATION DECK

780.9882.4

Group Production Capacity

(‘000 MT)

2Q18 2Q19

66% 67%

Avg

. U

tilis

ati

on

Rate

Operating Highlights: Feedmill

512.4

583.7

Group Feed Sales (‘000 MT)

2Q18 2Q19

44% 39%

56% 61%

2Q18 2Q19

Sales Split

Internal Sales External Sales

6PRESENTATION DECK

Operating Highlights: Livestock

114.3123.5

Group Broiler DOC Sales

(million chicks)

2Q18 2Q19

28.1

31.2

Group Broiler Sales

(million birds)

2Q18 2Q19

406.2430.1

Group Eggs Sales

(million eggs)

2Q18 2Q19

7PRESENTATION DECK

129.6

45.7

48.3

87.6

-1.5 -3.5

2Q18 2Q19

EBITDA(1) by Segment (RM million)

Livestock and poultry related

Feedmill

Inter segment elimination

176.4

129.9

65.7%

34.3%

Financial Highlights: EBITDA

• EBITDA retreated as Livestock segment dragged down the group’s overall performance in 2Q19• Malaysia led the decline in EBITDA, due to depressed prices of broiler chickens and day-old-chicks (“DOC”)• Vietnam and Indonesia were similarly affected by slump in broiler chickens’ prices.

72.9%

27.1%

Note: 1) EBITDA contribution by segment (in percentages) are computed based on gross EBITDA only.

0.9 1.7

53.5 45.8

31.429.0

32.7 29.3

57.9

24.0

2Q18 2Q19

EBITDA by Country (RM million)

Philippines Indonesia Vietnam

Singapore Malaysia

0.5%

30.3%

18.6%

17.8%

32.8%

1.3%

35.3%

22.6%

22.4%

18.5%

8PRESENTATION DECK

Financial Highlights: Earnings

74.8

26.6

5.3%

1.8%

2Q18 2Q19

Profit After Tax (RM million)

PAT PAT Margin

65.7

16.1

4.6%

1.1%

2Q18 2Q19

Profit After Tax and Minority

Interest (PATMI) (RM million)

PATMI PATMI Margin

102.7

39.9

7.2%

2.7%

2Q18 2Q19

Profit Before Tax (RM million)

PBT PBT Margin

9PRESENTATION DECK

Operating Expenses• Group operating costs (“OPEX”) remain relatively stable group-wide• Disciplined cost structure allowed the Group to maintain fairly stable OPEX in 2Q19

72.8% 73.3%

9.7% 9.6%

3.8% 3.9%

13.7% 13.2%

2Q18 2Q19

(RM million)

COGS Staff Benefit Depreciation & Amortisation Others

1,412.81,302.6 (1) COGS refer to cost of goods sold which is inclusive of purchases and net changes of inventories and biological assets.

(2) Others inclusive of below components:(a)Gain/(loss) on disposal of assets

& liabilities(b)Utilities costs(c) Repair and maintenance(d)Transportation expenses(e)Other operating expenses(f) Upkeep of motor vehicle(g)Packaging material(h)Foreign worker levy(i) Depletion and culling cost

(2)(1)

10PRESENTATION DECK

Income Statement: Summary

2Q19 2Q18 Variance

Financial quarter ended (RM million) (RM million)

Revenue 1,477.2 1,423.1 +3.8%

EBITDA 129.8 176.4 -26.4%

Depreciation and amortisation 55.1 48.9 +12.7%

Finance cost 35.0 24.9 +40.6%

Profit before tax 39.9 102.7 -61.2%

Profit after tax and minority interest 16.1 65.7 -75.5%

Earnings per share (sen) 0.46 1.93 -1.47

EBITDA margin 8.8% 12.4% -360 bps

11PRESENTATION DECK

Balance Sheet: Summary

Note: (1) Including finance lease and lease liabilities for MFRS 16.

As at30 June 2019

As at31 December 2018

(RM million) (RM million)

Assets

Non-current assets 2,746.9 2,576.1

Biological assets and inventories 987.2 925.2

Trade receivables 542.4 649.2

Other receivables 176.5 224.6

Cash and bank balances 726.9 458.9

Total Assets 5,180.0 4,834.0

Equity and Liabilities

Total equity 2,150.9 1,765.4

Trade payables 225.8 248.9

Other payables and liabilities 392.8 448.7

Short term borrowings (including leases(1)) 1,382.1 1,326.6

Long term borrowings (including leases (1)) 1,028.4 1,044.3

Total Equity and Liabilities 5,180.0 4,834.0

12PRESENTATION DECK

Working Capital Management

34.4 32.9

-19.0 -16.4

65.4 71.5

80.8 88.0

FYE 2018 FPE 30 June 2019

Cash Conversion Cycle

Average biological assets / inventory turnover

Average trade payable turnover

Average trade receivable turnover

Cash conversion cycle

(days)

2.9x

1.3x 1.1x 1.2x

2.5x

1.1x

0.8x

1.3x

Net debt / EBITDA Gross Gearing Net Gearing Current ratio

Key Ratios

FYE 2018 FPE 30 June 2019

(3)

• Stable cash conversion cycle and gearing levels though effective working capital management..

Notes: (1) For the financial year ended 31 December 2018(2) For the 6-month financial period ended 30 June 2019(3) EBITDA annualized based on 1H2018 and 1H2019 results

(1) (2)

(1) (2)

13PRESENTATION DECK

Snapshot of Liquidity Position

2,316

42%

3,179

58%

Fixed Asset Equity + LT Loan

FPE 30 June 2019(2)

(RM million)

2,239

44%2,810

56%

Fixed Asset Equity + LT Loan

FYE 2018(1)

(RM million)

1,327

37%

2,258

63%

Short Term Loan Current Asset

FYE 2018(1)

(RM million)

1,382

36%

2,433

64%

Short Term Loan Current Asset

FPE 30 June 2019(2)

(RM million)

Notes: (1) For the financial year ended 31 December 2018(2) For the 6-month financial period ended 30 June 2019(3) Fixed assets inclusive of investment properties.

(3)(3)

14PRESENTATION DECK

PurposesProposed

utilisation Actual utilisation

(as at 30 June 2019) %(1) Balance

unutilised

Intended timeframe for utilization from the date of listing(2)

(RM million) (RM million) (RM million)

Capital expenditure 207.7 (25.8) 12.4 182.0 within 24 months

Working capital 33.0 (1.5) 4.6 31.4 within 6 months

Defray fees and expenses for IPO and Listing

34.3 (24.4) 71.1 9.9 within 3 months

Total 275.0 (51.7) 18.8 223.3

• A total of RM275 million of primary proceeds were raised from the IPO, out of which RM207.7 million was earmarked for capex purposes in Malaysia, Vietnam and Philippines

• Status of the company’s utilisation of IPO proceeds as at 30 June 2019 as follows:

Utilisation of IPO Proceeds

Notes:(1) As a proportion of the proposed utilisation, details of which are set out in the Company’s Prospectus dated 25 April 2019.(2) LHI was listed on Main Market of Bursa Malaysia Securities Berhad on 16 May 2019.

15PRESENTATION DECK

Capex Updates• Capex for FY2019 are being executed as per planned using a combination of internal funds, bank borrowings and IPO

proceeds• Capex projects due for completion in FY2019 are on track, with commissioning of the same expected thereafter

Location Segment ProjectCommencement

date

Target completion

dateTotal

investment

Philippines Livestock Construction of new hatchery 4Q2018 3Q2019 RM8.5 million

Vietnam FeedmillConstruction of a spent grain drying facility at Dong Naifeedmill

1Q2019 3Q2019 RM1.6 million

Philippines General Purchase of new ERP system 1Q2019 4Q2019 RM6.4 million

Malaysia Livestock Expansion of closed-house broiler farms 1Q2019 4Q2020 RM86.8 million

Vietnam LivestockConstruction of additional 3 parent stock (“PS”) closed-house farms and machinery at Dong Nai farm


Vietnam Feedmill Third pelleting line at Dong Nai feedmill 3Q2019 4Q2019 RM2.6 million

Vietnam FeedmillInstallation of automatic bagging & robotic pelletiser at Tien Giang feedmill


16PRESENTATION DECK

Capex Updates (Cont’d)• New hatchery in Central Luzon, Philippines began construction in early January 2019• Installation of equipment making good progress• Expected completion by end of September 2019

17PRESENTATION DECK

Capex Updates (Cont’d)• Vietnam’s Dong Nai feedmill undergoing further expansion with the addition of spent grain drying facility• Third pelleting line on target to be completed by end FY2019

18PRESENTATION DECK

Capex Updates (Cont’d)• Construction of closed-house broiler farm in Tanjung Malim, Perak, Malaysia• Completion expected in November 2019

19PRESENTATION DECK

Capex Updates (Cont’d)Warehouse in Kandal province, Cambodia began operation in August 2019 to serve the increasing sales in Cambodia

20PRESENTATION DECK

Strategic Focus

LHI’s outlook remains positive, backed by robust volume growth and rising consumption of meat protein in ASEAN

Our Strategies

Cost control

Volume growth

Diversified geographical

exposure

Increasing market share

Moving further

downstream (RTE & RTC)

Livestock

• Execution of capex plan remains on track for FY2019 • Growth in group capacity for DOC, broiler and eggs in tandem

with the rise in demand for poultry products • Greater benefit of efficiencies through economies of scale• Supported by upgrade / modernisation of farms with

automation features to drive cost savings agenda• Further exploration towards downstream capabilities by

capitalizing on Singapore’s expertise in RTE and RTC sectors.

Feedmill

• Dong Nai feedmill in Vietnam commenced production in January 2019

• Feed production ramp up in Indonesia and Vietnam to satisfy uptake in demand from external customers

• Group capacity to expand further by end FY2020 / early FY2021, supported by new feedmills in:• Lampung, Indonesia; • Central Luzon, Philippines,plus an additional line in Dong Nai.

Outlook and strategies

21PRESENTATION DECK

Dividend

• Total dividend amounts to RM58.4 million for the current financial year ending 31 December 2019

• Dividend entitlement date: 17 September 2019(1)

• Dividend payment date: 30 September 2019(1)

Interim single tier dividend of 1.6 sen per ordinary share declared

Note: (1)The dividend will be paid on 30 September 2019 to shareholders whose names appear in the Record of Depositors at the close of business on 17 September 2019.

22PRESENTATION DECK

3rd Floor, Wisma Westcourt,126, Jalan Klang Lama,58000 Kuala Lumpur,Malaysia.

Address

For enquiries, please contact:

Stay in touch with us

THANK YOU

Leong Hup International Berhad

Mr. Victor Geh, Investor RelationsTel: +603-7980 8086 Email: [email protected]

Esente Communications (M) Sdn Bhd

Ms. Ashley ChewMr. Cassidy TanTel: +603-6201 4110Email: [email protected]

[email protected]

Websitehttps://www.leonghupinternational.com

results presentation for 2nd quarter 2019 (2q19) · 2019-08-30 · results presentation for 2nd...

Documents