1 SAN SHING FASTECH TW 5007
1 SAN SHING FASTECH TW 5007. 2 2011.01.11 SAN SHING FASTECH TW 5007 Shun-Sheng Wu Vice chairman.
Jan 11, 2016
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1
SAN SHING FASTECH TW 5007
22011.01.11
SAN SHING FASTECH
TW 5007
Shun-Sheng WuVice chairman
3
Brief Profile
Founded ： on July 2, 1965
GTSM ： on Jan. 17, 1998
Capital ： NT$ 2.2 billion
Employees ： 1,164 ( 2010.11.30)
Area of Plant and Buildings ：Land － 148,302.19M2 ，Buildings － 81,468.05M2
The net cost of land in book value is NT$1.325 billion.
4
Board of Directors
Li Family firm
Professionalmanagers
Board of Directors ：7 directors and 3 supervisors
Operations of board of directors ：•At least once a quarter
•The chief CPA is required to be present.
May. 2000
All graduated from All graduated from college or above andcollege or above and professional managersprofessional managers
They hold 38.50% They hold 38.50% of issued shares inof issued shares in total.( total.( Nov. 2010 Nov. 2010 ))
5
Management Team
Vice chairman Mr. Shun-Sheng WuAccounting background
Chairman of board Mr. Chi-Yuan Ko
Professional managers
President Mr. Wen-Chieh Lin
Sales background
6
Distribution of Stock Right
Distribution of Stock Right
Numbers of Shareholders
Holding Rate of Issued Capital Stock
0 ~ 10 4,826 2.91%
11 ~ 50 344 3.53%
51~ 100 62 2.06%
101 ~ 400 79 6.76%
401 ~ 1,000 27 7.65%
Above 1,000 18 77.09%
Total 5,356 100 %
Source：San Shing, Apr. 2010
7
Holding List by Main Group
Rank Relationship Group Holding Rate of
Issued Capital Stock
1 Director Taifas Corporation 46.15%
2 Director Shun-Sheng Wu 20.03%
3 Subsidiary Corporations
Subsidiary Corporations 6.84%
4 Director Connection Investment
Limited 6.75%
5 Supervisor Cheng-Dar Tsai 3.56%
Total 83.33 %
Source：San Shing, Nov. 2010
8
Introduction of Products
Products Net Sales Weight in 2009
Net Sales Weight
Jan ~ Nov,2010
Gross Profit Weight in 2009
Gross Profit Weight
Jan ~ Nov,2010
Nuts 81.27% 73.24% 76.72% 76.87%
Bolts 7.29% 9.39% 1.60% 7.85%
Machine & Parts 1.21% 1.36% 0.75% 0.88%
Tooling 4.29% 5.46% 15.27% 10.67%
Wire Rod for Trading 5.27% 10.21% 5.23% 2.06%
Other 0.67% 0.34% 0.43% 1.67%
Total 100.00% 100.00% 100.00% 100.00% Total revenue and Gross Profit (NT$ m) 2,695 4,122 188 729
9
Position of Nut Products
San Shing is the largest nuts manufacturer in the world.
More than 95% of our products are exported.
San Shing’s export to USA is about 4.6% of USA nut import volume.
10
Strategy of Product
Trend of Nut Products
5007 S.S. Unit 2006 2007 2008 2009 Jan ~ Nov
2010
Weighting Standard Nuts (%) 18% 19% 16% 16% 12%
Custom Nuts (%) 82% 81% 84% 84% 88%
Standard Nuts (NT$/KG) 40.90 44.91 53.56 58.64 56.89
ASP Custom Nuts (NT$/KG) 56.29 60.25 66.48 70.31 68.55
Average (NT$/KG) 53.48 57.38 64.06 68.09 66.87
Shipment All Ton 74,592 70,824 64,237 32,242 45,160
11
Nuts Trend of Unit Price in Shipment
螺帽出貨單價趨勢圖
41.6
54.71
0
10
20
30
40
50
60
70
80
90
2006/1 2006/7 2007/1 2007/7 2008/1 2008/7 2009/1 2009/7 2010/1 2010/7
YYYY/MM
Unit
pri
ce (N
T/K
G)
Standard
Custom83. 41
69. 44
12
Nuts Trend of Gross Profit Margin
23.63%
15.79%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
Gross Profi t Margi n
21. 73%
25. 03%
-0.76%
13
Distribution of Clients
Sales GrossProfi t
Sales GrossProfi t
Sales GrossProfi t
Top 10 63 63 64 25 66 63
Top 20 77 77 80 70 81 79
Top 60 95 95 96 95 97 96
Top 100 99 100 99 100 99 99
Al l Cl i ents 100 100 100 100 100 100
2009 J an ~ Nov 2010Unit %：
2008
14
Nuts Sales Breakdown of Main Countries by Amount 2010.01~2010.11
Others9%
U.S.A28%
Germany
42%
Canada13%
Holland7%
Japan 1%
15
Unit Price of Nuts Breakdown by Main Countries
49.91
70.70
76.97
67.58
56.4960.25
72.9773.37
64.76 64.33
50.00
55.00
60.00
65.00
70.00
75.00
80.00
2006 2007 2008 2009 2010.01~11
(NT/KG)
U. S. A
Germany
Canada
Hol l and
J apan
Others
16
Nut Sales Breakdown by Industrial Category
Unit：% 2005 2006 2007 2008 2009
Automobile Industry 75% 82% 82% 83% 83%
General Industry 18% 13% 15% 14% 14%
Construction & HeavyIndustry
7% 5% 3% 3% 3%
Total 100% 100% 100% 100% 100%
17
Cost Structure of Nuts
Unit：% 2005 2006 2007 2008 2009 Jan ~ Nov
2010
Gross Margin 19.8% 23.0% 22.1% 21.4% 6.3% 18.8%
Material 54% 50% 51% 52% 49% 54%
Labor 11% 13% 13% 12% 13% 12% COGS
Overhead 35% 37% 36% 36% 38% 34%
18
Operation Result ─Statements of Income
Unit：NT$m 2005 2006 2007 2008 2009 2010
Net Sales 6,640 5,637 5,439 5,780 2,695 4,565 Gross Profit 923 994 1,023 984 188 808 Operating Income 519 634 649 637 -36 489 Investment Income 64 93 75 71 25 78 Interest Expenses -51 -36 -37 -35 -25 -14 Pretax Income 597 720 716 669 7 591 Net Income 481 551 551 540 -8 EPS 2.55 2.81 2.81 2.68 -0.04
※Unaudited data in the fourth quarter of 2010.
19
Net Sales
Net Sales 1Q 2Q 3Q 4Q Total2009 718, 236 511, 431 639, 327 826, 140 2, 695, 134
2010 947, 554 1, 094, 672 1, 260, 156 1, 262, 739 4, 565, 121
718, 236511, 431 639, 327
947, 5541, 094, 672
1, 260, 156
4, 565, 121
826, 140
2, 695, 134
1, 262, 739
0
500, 000
1, 000, 000
1, 500, 000
2, 000, 000
2, 500, 000
3, 000, 000
3, 500, 000
4, 000, 000
4, 500, 000
5, 000, 000
1Q 2Q 3Q 4Q Total
2009
2010
20
Gross Profit
Gross profi t 1Q 2Q 3Q 4Q Total2009 41, 335 (12, 429) 57, 767 101, 363 188, 036
2010 131, 881 179, 373 261, 129 235, 793 808, 176
:單位 新台幣仟元
:單位 新台幣仟元
41, 335
(12, 429)
57, 767101, 363
131, 881179, 373
261, 129235, 793
808, 176
188, 036
(100, 000)
0
100, 000
200, 000
300, 000
400, 000
500, 000
600, 000
700, 000
800, 000
900, 000
1Q 2Q 3Q 4Q Total
2009
2010
21
Operating Income
Operati ngi ncome 1Q 2Q 3Q 4Q Total2009 (15, 698) (60, 996) 5, 268 35, 867 (35, 558)
2010 62, 035 103, 651 172, 705 150, 639 489, 030
( 15, 698)
(60, 996)
5, 26835, 867
62, 035
103, 651
172, 705150, 639
489, 030
(35, 558)
(100, 000)
0
100, 000
200, 000
300, 000
400, 000
500, 000
600, 000
1Q 2Q 3Q 4Q Total
2009
2010
22
Pretax Income
Pretax income 1Q 2Q 3Q 4Q Total2009 6, 495 (65, 220) 11, 240 54, 249 6, 764
2010 76, 590 129, 975 204, 425 180, 360 591, 349
6, 495
(65, 220)
11, 24054, 249
76, 590
129, 975
204, 425180, 360
591, 349
6, 764
(100, 000)
0
100, 000
200, 000
300, 000
400, 000
500, 000
600, 000
700, 000
1Q 2Q 3Q 4Q Total
2009
2010
23
Operation Result ─Statements of Cash Flow
Unit: NT$ m 2005 2006 2007 2008 2009 2010.09.30 Net Income 481 551 551 540 -8 350 Cash Flow － Operating 868 1,157 715 342 804 333 Cash Flow － Investing -223 -93 -212 -2 -42 -47 Cash Flow － Financing -487 -947 -704 -117 -889 -365 Cash & Cash Equivalent 306 424 223 446 319 241 Capital Expenses -221 -218 -239 -302 -56 -65 R & D Expenses -21 -22 -21 -24 -29 -25
24
Balance Sheets and Financial Ratio
Unit: NT$ m 2008 2009 2010
Current Assets 2,668 1,824 2,264
Fixed Assets 2,669 2,536 2,465
Total Assets 5,959 4,908 5,315
Current Liabilities 1,723 890 1,119
Total Liabilities 2,658 1,870 1,943
Capital 2,200 2,200 2,200
Bala
nce
Sheets
Stockholders' Equity 3,301 3,038 3,372
Liability Ratio 44.60 ↘ 38.10 ↘ 36.56
ROA 10.07 ↘ 0.20 ↗ 10.07
ROE 17.43 ↘ -0.25 ↗ 16.56
Fin
ancial
Ratio
Times Interest Earned 20.30 ↘ 1.27 ↗ 44.55 ※Unaudited data in the fourth quarter of 2010.
25
Sales Growth by Products
3,9734,035 4,053 4,104
2,190
3,019
0500
1,0001,5002,0002,5003,0003,5004,0004,5005,000
2005 2006 2007 2008 2009 Jan.~Nov.2010
Uni t: NT$ m
Nuts Bol tsWi re Rod Tool i ng
26
Gross Profit Growth by Products
868
757859 846
144
561
0
200
400
600
800
1,000
2005 2006 2007 2008 2009 Jan.~Nov.2010
Uni t: NT$ m
Nuts Bol tsWi re Rod Tool i ng
27
Gross Profit Margin Growth by
Products
1922 21 21
7
19
0 0
17
11
2
15
4 5 4 3
74
34
3941
2825
35
0
10
20
30
40
2005 2006 2007 2008 2009 Jan.~Nov.2010
Unit:%
Nuts Bol tsWi re Rod Tool i ng
28
COMPETITIVE EDGE
Comparatively Sufficient Supply of Material
We have a long-term contract with China Steel Corp. for the purchase of wire rods to prevent the risk of rising price and insufficient supply.
San Shing is the largest customer of China Steel Corp. in the wire rod. In 2010, 70% of the raw materials are procured from China Steel Corp.
The current inventory of wire rods can meet the order of nuts over 2 months.
29
COMPETITIVE EDGE
High Integration
Vertical Integration in Process The continuous manufacturing system allows San Shing to retain its competitive ability and position as the benchmark of the fastener industry. San Shing integrates R&D department, technical department, machine and tooling plant, quality test lab and boasts a self-contained production process from wire pickling, wire spheroid-zing and annealing, wire drawing, forming, to the finish treatment and heat treatment.
30
COMPETITIVE EDGE
Develop and Produce Tooling by Ourselves
The quality of forming tooling is the most important key technology of nut production process. If we can develop and produce excellent tooling, that will reduce the production cost and enhance the efficiency of nut process.
31
COMPETITIVE EDGE
Quality Reputation Makes High Entry Barrier In 1992, San Shing earned as ISO 9002.
In 1993, our Testing Lab. was certified by CNLA as an accredited Lab.
In 1996, we obtained the QS-9000 certification, required by USA Top Three Car makers.
In June 1997, our Testing Lab. was certified by NVLAP as an accredited lab for FQA.
In December 1997, our Environmental Management System obtained ISO 14001.
In 1999, we obtained AS-9000 certification of aerospace graded standard.
In 2002, we obtained OHSAS-18001 certification.
In 2004, we obtained TS16949 certification, required by auto companies of Europe and America market.
In 2006, we obtained QMI AS 9100B certification.
In 2006, we obtained ISO 9001： 2000 certification of bolts.
In 2007, we obtained ISO/TS 16949 certification of nuts and bolts from TUV Rheinland, Taiwan Branch, authorized by its headquarter in Germany.
32
FUTURE OUTLOOK
Focusing on Developing Core Business and Controlling Outsourcing
San Shing’s monthly maximum capacity can reach 6,000 tons now on custom nuts and bolts. Recently San Shing has actively and discreetly worked with subcontractors who can meet our requirements in production and quality so that we are fully capable of winning more orders and upgrading our service for customers’ satisfaction. Such a strategy extends San Shing’s capacity and increases our revenue and gross profit.
33
FUTURE OUTLOOKPromoting Business of Bolts to Lead the Market of Fasteners
Fasteners include three categories ： 70% bolts, 20% nuts and 10% washers.
San Shing has following existing advantages to enter the bolts domain ：
New plant is close to the existing factory and can be supported by existing organizational resources.
Having the abilities and equipments to produce tooling for bolts. 。Having the abilities and equipments for pre- and post- treatments of bolts.
With the same market channel as bolts and nuts.
34
FUTURE OUTLOOK
Selling Treasury Stocks to Reduce Liability Ratio
From 1998 to January 1999, two subsidiary corporations, hundred-percent owned by San Shing, bought San Shing’s stocks as long-term investment and never sold those stocks. These two subsidiary corporations hold 9,265 thousand stocks and 5,781 thousand stocks, respectively, total stock number is 15,046 thousand stocks, total cost is NT$ 543,073
thousand , average cost of stock is NT$36.09. In first quarter of 2002, those stocks holding by subsidiary corporations are regarded as treasury stocks in accordance with Taiwan Statement of Financial Accounting Standards No.30 Accounting for Treasury Stock. San Shing valued each treasury stock at $8.45 based on the average price on December,2001 and hasn’t changed the valuation ever since. These treasury stocks’ average price of stock becomes $7.29
after 4 times of ex-rights. If San Shing sells treasury stocks, we will have almost NT$543 million of cash to pay back long-term liabilities, to reduce the liability ratio below 26% and to increase shareholder’s right per share above
$17.5.
35
FUTURE OUTLOOK
Dividend Policy San Shing’s EPS was average NT$2 a year between 1994 and 1998, so that we paid NT$2 per share as dividends for four years including NT$6.8 stock dividends and NT$1.2 cash dividends. Share of San Shing firstly traded at NT$35, and P/E ratio 17.5 as the profits and dividends were stable. After first trading in the GTSM, San Shing’s P/E ratio had ever reached up to 20 ~ 30. In 2010, San Shing paid NT$0.96 of cash dividends per share. We expect to pay at least NT$2 dividends per share every year from 2011. Board of directors prefers to distribute cash dividends rather than stock dividends in the future.
36
Q & A
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