We care Mega Lifesciences Public Company Limited (MEGA) Financial year 2018
Disclaimer The presentation contains forward-looking statements which are based on MEGAs’ current expectations, estimates and projections about its industry, management’s beliefs and certain assumptions. These forward-looking statements are subject to various risks and uncertainties. No assurance is given that future events will occur or that our assumptions are correct. Actual results may differ materially from those projected. For any further queries please contact: Email : investor@megawecare.com Telephone: +66 27694222 Ext. 4230 Fax: +66 27694244 We care 2
Agenda FY18 Financial Highlights Future Outlook Q&A We care 3
What we do… Mega Lifesciences PCL * OEM Business Branded Products Business Distribution Business We develop, manufacture, market We market, sell and distribute In addition to manufacturing our and sell our own brand of market various branded prescription own branded products, our leading nutraceutical products, pharmaceutical products, OTC and manufacturing facilities in Thailand prescription products and self consumer products in Myanmar, and Australia accept various production orders from third-party medication products, mostly sold in Vietnam and Cambodia. Our clients THB 2,179 mn customers. developing countries with market include leading domestic and 73.6% leading presence in Southeast Asia international pharmaceutical and THB 3,428 mn 48.8% and growing presence in Sub- consumer goods companies. This TH373 mn Saharan Africa. business also includes products sold 6.7% in other countries where MEGA has distribution rights for third party products. We care 4 * The information under this segment includes products where we own perpetual license to third party trademarks and new projects which are at their nascent stage.
Revenue up by 7.8% YoY Operating revenues (THBmn) Overall revenue growth driven by Maxxcare and Mega We Care business. Mega We Care • Mega We Care branded products revenue grew by Gr. 10,342 7.8% Maxxcare 6.7% YoY in FY18; mainly driven by 6.9% YoY growth 9,597 OEM in Southeast Asia. Gr. • Maxxcare distribution business revenue was up by 6.7% 14.5% YoY in FY18; driven by growth in Myanmar. • OEM revenue which was 2.7% of overall operating revenue was down by 39.4% YoY, given lower order Gr. book. 14.5% Gr. (39.4%) We care 5
A closer look at revenue growth.. Revenue by geography (THBmn) Southeast Asia Africa Others Mega We Care revenue Gr.+ Gr.+ Gr. Gr.+ 6.7% 6.9% (2.2%) 17.0% 496 589 5,417 576 4,344 5,078 4,064 424 Revenue mix (%) across segments • Southeast Asia constituted 87% of the overall operating revenue Mega We Care while Indochina contributed 79% in FY18. Maxxcare • Mega We Care revenue grew by 6.7% YoY in FY18, mainly driven OEM by growth of 6.9% YoY in Southeast Asia. • Mega We Care revenue as a proportion to overall operating was 52% in FY18 and 53% in FY17 while Maxxcare revenue proportion increased from 42% in FY17 to 45% in FY18. We care 6
Steady overall gross margins …. Overall gross margins are influenced by segmental Overall gross margin (%) gross margins and revenue mix in the given period • Overall gross margins mostly remained steady at 44.4% in FY18 compared to 45% in FY17; slight decline in overall gross margins was mainly a result of change in revenue mix. • Looking by segments: • Mega We Care gross margin in FY18 and FY17 remained stable at 64.8%. • Maxxcare gross margins came in at 21.5% in FY18 compared to 22.4% in FY17; change was mainly led by principal and service mix. • OEM gross margin was 30.2% in FY18 compared to 26.5% in FY17; improvement mainly led by customer mix. We care 7
Slightly higher SG&A expenses expected to ease with scale up in revenue…. SG&A as a percentage to revenue • SG&A expense came in at 31.4% of operating revenue in FY18 compared to 30.9% in FY17. • In absolute terms, SG&A expenses were slightly higher, growing by 9.4% YoY in FY18, mainly due to planned marketing spending and strengthening resources to support growing distribution business which is expected to leverage as revenue scales up. We care 8
Net profits continue to grow….. Figures inTHBmn 4Q17 3Q18 4Q18 YoY Gr. FY17 FY18 YoY Gr. Operating revenue 2,699 2,635 2,869 6.3% 9,597 10,342 7.8% Gross profits 1,262 1,100 1,308 4,320 4,591 3.6% 6.3% Gross margin (% ) 46.8% 41.8% 45.6% 45.0% 44.4% Selling and Admin. exp (SGA) 790 845 839 6.2% 2,965 3,243 9.4% SGA (% to operating revenue) 29.3% 32.1% 29.2% 30.9% 31.4% EBITDA 499 352 522 1,479 1,595 4.7% 7.9% Profit before tax 455 302 470 3.4% 1,299 1,409 8.5% Net profit 384 254 407 1,113 1,206 5.9% 8.4% Add: New project expenses 8 7 7 26 28 na na Adjusted net profit 393 261 415 5.6% 1,139 1,234 8.4% Net profits for FY18 came in at THB 1,206mn reflecting a growth of 8.4% YoY; adjusting for one-time gain of THB 62mn arising from sale of land in FY18, the net profit stood at THB 1,144mn, reflecting growth of 2.8% YoY; modest growth in FY18 was partly a result of relatively higher SG&A expenses to support growing distribution business which is expected to leverage as business scales up in ensuing year. Board of Directors proposed final dividend of THB 40 satang per share taking FY18 dividends to 71 satang per share representing 51.1% of FY18 net profits. New projects caused a net outflow of THB 28mn in FY18. We care 9
Strong balance sheet and healthy cash flows Cash flow 1 THBmn Cash cycle (days) 135 Cash cycle days of 135 123 days in Dec’ 18 compared to 123 days in Dec’ 17. Increase was mainly a result of higher inventory days driven by business growth and expected demand in 4Q18 671 Dec'17 Dec'18 Leverage ratios Dec'17 Dec'18 • Operating cash remained steady at THB 919mn in FY18 compared to THB IBD to equity (times) 0.10 0.17 927mn in FY17. Net-debt to equity (times) (0.13) (0.03) • Capex spending in FY18 of THB 769mn consisted, spending towards Interest bearing to debt to equity stood at 0.17 construction of state-of-art distribution center in Myanmar and in Thailand times and net-debt to equity at (0.03) times as at towards construction of warehouse and rebuilding product development and December’ 18 quality control center. THB 258mn was spent towards investment in MEGA MSN joint venture and THB 295mn towards acquisition of ownership rights in designated pharmaceutical products in Myanmar and Ethiopia. • In FY18, net cash outflow from financing activities was THB 177mn, mainly arising from dividend payout of THB 615mn, partially off-set by increase in working capital loans. 1. Cash and bank balance includes non -restricted term deposits with banks. We care 10
Future Outlook... The future of our past and present …. 1985 1994 2014 2019 Became the largest OEM supplier of soft gel caps out of Southeast Asia OEM Business Achieved leadership position in Indochina Mega We Care TM Branded Products Business Expect to double Nutraceutical, OTC and prescription products business Became leading international distribution company in Myanmar, Vietnam and Cambodia Maxxcare TM Distribution Business Expect to double Pharma and consumer products business We care 11
Future Outlook... Mega We Care TM branded products business • Emerging trends in consumer health care, disease prevention than MEGA expects to struggling for cure is the way forward … .. a sunrise industry. grow by expansion • Market leading positions in Southeast Asia and growing presence in Sub- Saharan Africa. of customer base • Products sold in developing countries which are underpenetrated markets in its existing with significant growth opportunities. underpenetrated • 342 unique products and 1,077 product registrations across the world. developing Strong pipeline of 73 new products under registrations and 59 new products under development. markets, launching • Manufacturing capacity adequate to meet growth requirements of new products, ensuing 3-4 years. strengthening • A strong balance sheet with net cash position and business generating healthy cash flows. product categories, • Fundamental growth drivers in place to help deliver the expected growth. acquisitions and entering new MEGA plans to invest over 500 million baht in Thailand to rebuild R&D and quality control center, develop new technologies for medicine delivery and improve supply chain countries. Create integration by constructing a new warehouse next to existing manufacturing plant. Work significance in SEA has begun and a capex of THB 425mn (out of total planned capex) is expected to be spent over 2 years besides improvement and maintenance capex. and Sub-Saharan Improvement and maintenance capex to be incurred in addition to aforementioned Africa. Notwithstanding tremendous future opportunity. Due to the nature of the industry and the capex. markets we are in, growth may not be a straight line up but with occasional disruptions that may be caused by economic, political and other factors. We care 12
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