2004 Interim Results Corporate Presentation
Dec 15, 2015
2004 Interim Results
Corporate Presentation
Highlights
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Summary of Interim Results
2003 2004 Change(%)
Turnover
Gross Profit
EBITDA
Net Profit
Basic EPS (US cents) Per Share
Interim Dividend (US cent) Per Share
94.8
24.0
26.7
9.9
0.94
0.321
109.4
37.4
31.8
15.7
1.04
0.506
+15.5%
+56.0%
+19.2%
+57.9%
+10.6%
+57.6%
Six months ended 30 June, USD million
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Continuous Improvementin Profitability
0
5
10
15
20
25
30
35
40
2003 1H 2003 2H 2004 1H
Gross Profit
Net Profit
%
24.0M
12.2 M15.7 M
25.3%
9.9M
10.5%
30.7M
28.2%
11.2%
37.4M
34.2%
14.3%
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Strong Balance Sheet
Cash 35.4 39.6
Short-term Debt 31.5 37.2
Long-term Debt 24.3 19.5
Total Debt 55.8 56.7
Shareholders’ Equity 225.1 232.4
As of31 Dec 2003(USD million)
As of30 Jun 2004(USD million)
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31 Dec 2003 30 June 2004
Current Ratio (Times)
Net Gearing Ratio* (%)
ROE Ratio (%)
2.09
9.0%
4.7%(30 June)
2.12
7.4%
6.7%
Key Financial Ratio
* net debt / equity
Business
Review
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Market Analysis
Turnover by Geographical Location
ASEAN* & other regions
7.8%
Vietnam56.0%
PRC10.6%
Japan23.8%
Taiwan 3.5%
Vietnam57.6%
Japan24.4%
PRC9.3%
20032004
Six Months Ended 30 June
ASEAN* and other regions
5.2%
* Other than Vietnam
Taiwan1.8%
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Major Market Analysis
Vietnam
2004 1H economic growth at 7.1%
Operations unaffected by bird flu outbreak due to implementation of precautionary measures
Higher sales due to effective nationwide promotional activities and deeper market penetration to cover more areas
Double digit growth in all major products including MSG, lysine and starch products
GA sales lower due to customers’ switch to buying MSG for direct processing
12.0% to US$61.1 million
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Major Market Analysis
Japan
Main boost came from growing lysine sales at higher prices
MSG sales temporarily down due to stock adjustment of a major customer; expected to pick up again in 2nd half
12.9% to US$26.1 million
ASEAN
Contribution rising rapidly due to phenomenal sales growth of 52% and 138% for MSG and starch products respectively
Identified by the Group as a major growth market:- comprised of some of Asia’s fastest growing economies with total
population of over 500 million - free trade agreement in place with Vietnam
59.9% to US$4.0 million
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Major Market Analysis
PRC
MSG sales 19.4% higher as people’s dining expenditure grew
Sales of starch products rocketed by over 15 times due to increased orders from large industrial customers as well as new customer
Price of corn (main ingredient of GA) rose due to higher international grain prices which resulted in higher production cost
32.1% to US$11.6 million
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Major Market Analysis
PRC (con’t)
Acquisition of Shanghai Vedan Foods:Multiple benefits: significant boost in MSG production capacity in
China. establishment of flagship head quarter in most
efficient manner. ready infrastructure and facilities to allow speedy
set up of new production lines. additional brand value from “Hoping” ( 皇品 ), a
leading MSG brand in Greater Shanghai area.
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Product Analysis
MSG66.2%
Lysine17.2%
G.A.4.1%
Cassava starch based products
7.8%
Others4.7%
MSG68.5%
Lysine12.4%
G.A.8.1%
Cassava starch based
products5.6%
Others5.4%
Turnover by Products
2003 2004Six Months ended 30 June
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Major Product Analysis
MSG
Stable pricing environment on the back of solid demand
Significant sales increase in several major markets including Vietnam, China, other ASEAN countries and Europe. ASEAN and Europe recorded an increase of 52% and 40.6% respectively
Lysine
Continual strong demand despite bird flu resulting in higher prices
Orders up in Vietnam as well as other marketsStarch
Sales of modified starch rose remarkably by 108%
Ability to customize diversified product types render increased orders from existing customers
Secured news customers from China, Europe and Australia
11.6% to US$72.5 million
60.4% to US$18.8 million
63.2% to US$8.6 million
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Summary of Performance
Achieved great leap in turnover due to higher sales in MSG, lysine and starch based products
Reaped significant cost saving benefits from switch to natural gas as fuel at Vietnam plant
Higher efficiencies also contributed to higher profit margins
Penetrated new markets including Europe, Australia, Russia and South Africa
Important progress made in PRC market expansion
Stronger financial position : higher liquidity and lower net gearing ratio
Prospects For 2H 2004
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Favorable MarketEnvironment in Asia
ASEAN Free Trade Area (AFTA) promotes trade flow within the region
Low per capita MSG consumption in the PRC and ASEAN countries presents huge potential
High Economic Growth Forecasts for 2004
Vietnam 7.5%
Strong Demand for Vedan’s Products
Asia 6.1% PRC 7.0%
Market outlook in Asia expected to remain positive:
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Existing Capacity(Tons)
Capacity AfterExpansion (Tons)
MSG 148,000 180,000
Starch
Modified Starch 40,000 60,000
Native Starch 216,000 324,000
Phased expansion in various fast growth products:
Boost Sales :Capacity Expansion
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Lower Costs: Enhance Cost Structure
Energy Source
Full switch to natural gas implemented in Vietnam: significant cost saving of at least US$4 million per year
Materials
Cassava
Set up 3 more starch raw material processing plants in central part of Vietnam and also near border area to Cambodia
Molasses
Currently, mostly procured through third party trading agents, in the future, will purchase directly from large suppliers
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Improve Margins:New Product Launch
Wide applications for food, cosmetic, agriculture,
pharmaceutical, environmental and water treatment
Started testing market response since 2003 through trial production
Application for patent rights in process
Commercial production to start by end of 2004 or early 2005Versatile flavor enhancers made from MSG and various natural seasonings
Product launch expected by end of 2004
Successfully innovated 4-5 different products
Enjoys strong demand due to diverse tastes of Asian dishes
PGA
High Value-addedSeasonings
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Our PRC Expansion Strategy
• Enhance operation of Shanghai Vedan Enterprise - Consolidation of brand and marketing resources
- Integration of sales network with Xiamen Vedan
- Recruitment of local talents to support expansion
• Merger and acquisition strategy remains: identify
suitable targets with considerable brand awareness
and established sales network
• Strategic alliance with local GA suppliers to secure raw
material supplies
• Localization of business: invest in local talents
• Strengthen sales and marketing network
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“To be Asia’s leading manufacturer of
fermentation-based amino acids,
food additive products and
cassava starch based products”
Mission
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Q & A Session