Applied DB Public Company Limited ADB Opportunity Day March 28, 2018
Agenda Business Overview 1 Market Trend and Business Opportunity 2 Business Update for 2018 3 Financial Highlight 4 Q&A 5
1 Business Overview
ADB Business Overview • Applied DB was formed in 2005, from the joint venture Applied plied DB of Applied Chemical Industry Co., Ltd. (Plastic compound manufacturer since 1985) and DB Chemical Co. Ltd. (Adhesive manufacturer, since 1983). PCL • ADB become public company in 2017. • Major product includes plastic compounds, professional adhesives, silicone sealants, and DIY products for household end-users. • Our products have been exported to major markets worldwide i n c l u d i n g A s i a , A m e r i c a s , E u r o p e , A u s t r a l i a , Middle East, & Africa.
Shareholding structure Shareholding structure Shareholdin Shareholder Group 24.97% g (%) 30.00% Wongcharoensin family 24.97 Wongtangtrakul family 15.61 Mr. Wang Wanapaison’s family 21.30 15.61% Other shareholders 8.12 8.12% IPO 30.00 21.30% Total 100.0 Wongcharoensin family Wongtangtrakul family Mr. Wang Wanapaison’s family Other shareholders IPO As of January 31, 2018
Major Products ADB Adhesive & Sealant Plastic Compound • ADB Adhesives are specially manufactured • ADB is one of the leading manufacturer of to meet international standards for industrial plastic compound especially for wire & cable use and household use. industry. • Wire & Cable PVC compound • We sell under our house brand and OEM for customers well-known brand names. • General Grade PVC • ADB Sealant is currently repackaged from • Medical PVC Compound bulk package and resell in smaller package. • Polypropylene split yarn (PPY) • Future project supports the expansion of a d h e s i v e & s e a l a n t p r o d uc t l i n e corresponding to increasing demand and profitability. *Products manufactured by the Company under OEM brands cannot be publicly disclosed due to non-disclosure agreements and confidentiality
Proportion of Adhesive & Sealant and Plastic Compound 2017 Sales Revenue Adhesive & Sealant Plastic Compound Adhesive & Sealant Plastic Compound sales THB 679.08 mm. Sales THB 693.33 THB mm equivalent to 48.63% to total sales equivalent to 49.65% to total sales Other 1.06% Plastic Compound Adhesive and 49.65% Sealant 48.63%
Proportion of domestic and export sales for 2015-2017 Domestic sales 2017’s Domestic sales = THB 972.47 mm; equivalent to 70.86% of total sales Proportion of domestic s ales by customer’s industry 80% 76% 72% 71% Majority plastic compound products 60% are domestic sale 40% 19% 20% 15% 12% 9% 7% 7% 3% 3% 2% 2% 1% 1% The distribution channels for 0% Construction Shoes & Leather Furniture Automotives Others domestic sales include: 1) manufacturers 73% 2) distributors 18% 2015 2016 2017 3) OEM 8% of domestic sales 4) Other 1% Note 1. Only take sales which has value more THB1.0 million into account 2. Other industries include sports, jewelry, and others
Proportion of domestic and export sales for 2015-2017 Export sales 2017’s Export Sales = THB 399.94 THB mm; equivalent to 29.14% to total sales Proportion of export sales by customer’s industry 50% 40% 39% 39% 38% 40% Majority of adhesive 35% & sealant products 31% are export sale 30% 20% 17% 16% The proportion of export sales 10% 10% 10% 8% can be classified into 7% 4% 1) distributor clients 67.37% 3% 2% 2) OEM 16.48% 0% Automotives Shoes & Construction Furniture Others 3) manufacturers 16.15% of Leather export sales 2015 2016 2017 Note 1. Only take sales which has value more THB1.0 million into account 2. Other industries include sports, jewelry, and others
Business Opportunity 2 and Market Trend
Market Trend & Business Opportunity In order to enhance the Company’s growth and competitive advantage within the industry, the Company has prepared to capture the prospect opportunities EASTERN ECONOMIC CORRIDOR DEVELOPMENT and ASEAN RAIL EXPRESS 1 The EEC is an organization which focuses on the implementation of infrastructural development projects and seamless operation of transportation in providing vital linkages for air , land, rail and sea routes. Infrastructure investment will drive economic growth and constructions demand for PVC and sealant as well. The Big Trend Construction PVC Compound & Sealant Source: https://www.eeco.or.th/en/content/infrastructure-overview
Market Trend & Business Opportunity Plastic Compound Market 2 U.S. plastic compound market size, by end-user, 2013 - 2024 (USD Billion) Source: www.gminsights.com/industry-analysis/plastic-compounding-market Plastic Compound Industry Trend 2013 - 2024 • Plastic Compound Market size was more than USD 32 billion in 2016 and will witness 6.0% CAGR during the projected time span. • Future construction projects, including roads & highways, commercial buildings, residential projects, urban transportation, hydropower, etc. will further boost the plastic compound market. Source: https://www.gminsights.com/industry-analysis/plastic-compounding-market
Market Trend & Business Opportunity Adhesive and Sealant Market Trend 3 Rapid urbanization and population growth propels growth in infrastructure and construction activity in Asia thus also boosting growth of adhesives and sealants market as well.
Market Trend & Business Opportunity Adhesive and Sealant Market Trend 3 Global Adhesive Market 2017-2022 • The global adhesives market will grow at a CAGR of 4.5% to reach USD 53,503 million by 2022. • Increasing need for eco-friendly, low VOC, & green sustainable adhesives offers significant opportunities. Source: The Adhesives Market - Global Opportunity Analysis and Industry Forecasts to 2022 Global Sealant Market 2017-2022 • The global sealant market is expected to register a CAGR of 6.42% in terms of revenue. • Longer-term demand is expected to be evinced in South America and Asia, where major construction and infrastructure projects are planned. Source: www.mordorintelligence.com/industry-reports/sealants-market
Market Trend & Business Opportunity Key Strategic Direction in 2018 1. Investing in Sealant Compound business in order to capture new business opportunity. 2. Increasing capacity of PVC Compound to meet foreseeable growing demand.
3 Business Update for 2018
Business Update for 2018 Sealant Project PVC Compound Capacity Boosting Project
Business Update for 2018 In order to enhance the Company’s growth and competitive advantage within the industry, the Company has planned to increase production capacity. Progress of new factory to support sealant products (Sealant Project) 1 Construction Updated of March 2018 • Factory Structure is 90% completed. • Warehouse Structure is 85% completed. • Next process is surface adjustment for infrastructure including roads and laying sewer pipe • Expected to start production in Q4/2018 • The factory mainly supports silicone sealant material to re-packer including ADB itself.
Business Update for 2018 Boosting PVC compound capacity (Machine Modification) 2 TPE PVC PVC Machine Modification • Due to PVC rising demand, our production capacity is currently operating at about 90% of capacity. • More capacity is required to meet increasing demand • Convert TPE production line to PVC production Line • Increase capacity 250 tons/month or 13% of PVC total current capacity
Business Update for 2018 Boosting PVC compound Capacity (Machine Upgrade) 3 Co-Kneading Extruder • Increase more than 50% higher in output comparing to traditional type. • Better quality control • 2 Production lines will be installed in 2018 and 2019 • Capacity 860MT/month
Business Update for 2018 Installation of 1 st Medical grade machine production line has finished. 4 PVC Medical Grade’s Production Status • One production line has been completed installation with capacity of 200 tons/month. • Expect to start production in April 2018. • Plan to increase one production line in Q3 to increase capacity 200 tons/month.
Business Update for 2018 Research and Development Project Update 5 5.1 Develop existing and new products, focusing on environmental friendly products to support future growth and market trends Research & Develop Update! 5.2 Continually research and enhance formula of Medical PVC and sell under ADB brand within 2018
Business Update for 2018 Research and Development Project Update 5 5.3 Develop chemical formula to create economy grade as alternative option for customers Research & Develop Update! 5.4 Conduct new research of Hybrid Sealant and Hybrid Technology for developing a new product
4 Financial Highlight
Financial performance for year 2015- 2017 Revenue structure The sales revenue in 2017 was slightly decreased leading by price adjustment with cost competitiveness and the slowdown of shoe industry. (Unit: million Baht) 1600 1,434 1,412 1,372 1400 1200 722 686 50% 49% 49% 679 1000 800 600 400 50% 726 712 51% 693 51% 200 0 2015 2016 2017 Plastic Compound Adhesive and Sealant
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