Highlights on Samyang Packaging

Highlights on Samyang Packaging

IR meeting

May 2018

Samyang Packaging Co., Ltd.

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3 /13

Ⅰ. Executive Summary

Ⅱ. Who we are

Ⅲ. Business performance

Ⅳ. Growth potential

Table of contents

4 /13 Executive Summary

Samyang packaging is running 2 main businesses. One is PET bottle/preform

manufacturing business and the other is aseptic beverage OEM/ODM

manufacturing business

All two businesses are growing along with Korean PET beverage market at a speed

around 5% per annum with a strong market leadership position in both businesses

Regarding upside potential, Samyang is expected to grow faster in both sales and

profit with the capacity expansions underway

∙ Market share of PET bottle/preform business and aseptic beverage business

recorded 58% and 100% respectively in 2017

∙ Expansions in aseptic beverage manufacturing plants expected to add up KRW 60

billion sales/year after completing lamping up periods for 4 years

∙ Expansion in high speed preform injection plant expected to add up KRW 20

billion sales/year from 2019

- The 4th PET aseptic line and the cartocan aseptic line

- The 144 cavity high speed injection lines

5 /13 Table of contents


Ⅱ. Who we are



6 /13 History of company

After the merger in 2015, Samyang Packaging Co., Ltd. obtained an overwhelming

leadership position of over 50% market share in both PET Packaging business

and Aseptic beverage business

1979

Production of PET

bottle for the first time

in Korea

1983

Developed pressure vessel

for the first time in Korea

1988

Developed heat resistant

container

for the first time in Korea

2002

Developed Multi-layer PET

bottle for the first time in

Korea

April 5, 2014

SCPE acquired Hyosung

PET biz and launched

Asepsys global Co., Ltd.

1995

Start to export PET

bottle to Japan

2007

Launched Aseptic

beverage

business

Nov. 1, 2014

Samyang carved out PET biz

division and established

Samyang Packaging Co., Ltd.

November 2017

listed on KOSPI

July 1, 2015

Samyang

Packaging /

Asepsys

global merger

Samyang Corporation / Hyosung Corporation SYC/ SCPE

(51%) (49%)

Main

shareholders

SYC(51%)/SCPE

(16.7%)/Others

(32.3%)

7 /13 Business domain

• Overall market MS 38%

• Competitive market MS 58%

Market

Leader-

ship

Key

Charact-

eristics

• Holds 3 times more PET bottle molds

and production lines than the 2nd

largest competitor

• Korean PET beverage market is

growing at 5% per annum

• Overall market MS 83%

• Competitive market MS 100%

PET bottle/preform manufacturing and Aseptic Beverage OEM/ODM

manufacturing are the two major business pillars

* Source : Industry expert interview

PET Aseptic Beverage OEM/ODM

business

PET Packaging business

• Holds a world class hygiene & quality

control standard required for operating

highly sensitive aseptic facilities

- proved for 12 years’ accident

free operation record

• Korean aseptic beverage market is

growing at 12% per annum



Ⅱ. Who we are



9 /13 Sales / Profit Trend

Company’s sales/profit performance reflects the strong seasonality of the Korean

beverage market

668

915 872

646

732

961 969

672

755

8

180

164

58 45

189 175

18 18

0

50

100

150

200

250

300

0

200

400

600

800

1000

1200

16.1Q 16.2Q 16.3Q 16.4Q 17.1Q 17.2Q 17.3Q 17.4Q 18.1Q

Sales & Operating profit

(Unit : 100 million won ) Sales Operating

profit

10 /13 Balance sheet, Cash Flow

(Unit : 100 million won )

The company’s balance sheet is getting healthier

(Unit : %, 100 million won )

Total Assets(2015~2017)

Key figures(2015~2017)

710 710 710

71 313

591 383

484

440

2,531 2,256 1,966

2015 2016 2017

* IB dept : Interest bearing dept

* 2015FY performance is sum of Samyang Packaging, Asepsys global Co., Ltd.

* Asepsys global Co., Ltd’s performance from 01/2015~06/2015 is written in K-GAAP

2,510

2,081

1,716

2015 2016 2017

150

8.5

11.1 11.4

2015 2016 2017

ROE(%)

126 102

Commercial dept

Dept ratio(%) IB dept*

Retained earning

Paid in capital

Net dept(%)



Ⅱ. Who we are



12 /13 Capacity expansions underway

Aseptic PET/preform

* Assumed 4 years lamp-up period for aseptic expansions

• KRW 20 billion

• Sales KRW 20 billion/year

• Building/utility completed

• 1st line machine installation

completed and under verifying

operation

• KRW 55 billion


• Building/utility completed

• Machine installation scheduled

to complete Dec, 2018

• KRW 12 billion


• 1st machine installation completed

• 2nd machine installation scheduled

to complete Jul, 2018

Capex

Incremental

Sales&Profit*

Status

For upcoming 4~5 years, Samyang expects to add KRW 80 billion

sales with decent profit on top of an organic growth

13 /13 Overseas export

From 2017, Samyang’s export of figures are taking off

21 18 14 - 21

2015 2016 2017 2018(F) 2019(F)

Export sales trend

21

(Unit : 100 million won )

35 18

The company is expecting to hold a competitive cost advantage over a

potential new comer in aseptic business with the increasing exporting volume

Bottle&Preform

Aseptic

Appendix

15 /13 Financial Statements

Title 2017 2016 2015

Current assets 102,635 89,688 65,105

Non-current assets 394,759 402,265 420,173

Total assets 497,394 491,953 485,278

Current liabilities 78,473 73,457 35,099

Non-current

liabilities 173,151 200,476 256,286

Total liabilities 251,624 273,933 291,385

Capital 71,049 71,049 71,049

Capital surplus 115,703 115,706 115,706

Accumulated other

comprehensive

income

1 1 1

Profit surplus 59,017 31,264 7,137

Total capital 245,770 218,020 193,893

Total liabilities and

capital 497,394 491,953 485,278

* NOTE : 2015FY is non-audited financial statements

Summary balance sheet

(Unit: Million Won)

Title 2017 2016 2015

Sales 333,440 310,125 184,943

Sales cost (258,063) (238,154) (150,626)

Total sales profit 75,377 71,971 34,317

Distribution cost (18,838) (18,716) (12,090)

Management cost (13,885) (12,300) (6,616)

Operating profit 42,654 40,955 15,611

Financial income 224 76 936

Financial cost (8,095) (9,867) (6,279)

Other non-operating

income 2,777 2,461 2,569

Other non-operating

expenses (1,434) (2,348) (1,595)

Net income before

corporate income

taxes

36,126 31,277 11,242

Corporation tax (8,187) (7,057) (2,544)

Current net income 27,939 24,220 8,698

Summary income statement

(Unit: Million Won)

16 /13 PET Packaging business market leadership

Market share status (as of 2016) Comments from Beverage Clients

Overall

market 1)

Competitive

market 2)

* Source: Samyang Packaging Sales Team Market Survey

* Note:

1) Beverage company's PET bottles are included

2) PET bottle specialized manufacturer production only

Samyang holds overwhelming share and acclaiming reputations from beverage

clients

“ I can`t imagine to develop a new PET Packaging

design without supports from Samyang Packaging.”

- Beverage client (K company) marketer

“ Samyang Packaging is the unrivaled trustworthy

PET Packaging supplier especially for the peak season.”

- Beverage company (L company) procurement team leader

38%

58%

17 /13 Aseptic beverage business market leadership

Samyang Packaging

83%

Market share status

in Aseptic beverage market

Samyang Packaging

100%

Competiti

ve market

Entire

market

7%

14%

48%

전체음료시장대비 PET음료시장대비 음료OEM시장대비

Samyang Aseptic Beverage

Supply Contribution

Samyang holds dominant leadership position not only in Aseptic beverage

OEM/ODM market but also in total Korean OEM beverage market

* Source: Samyang Packaging Planning Team Analysis

Total Korean

market

PET beverage

market

OEM beverage

market

18 /13 PET Packaging business market leadership Sustainability (Ⅰ)

Capacity of major PET Packaging suppliers

Sum of 4

companies

2.16 billion

Major

5 companies

21.3

Samyang

Packaging

6.7

No. 2

Company

6.5

No. 3

Company

5.7

2.7

No. 4

Company No. 5

Company

42.9

PET beverage Market Seasonality vs. Capacity

Samyang

Packaging

Beverage

company's own

production

volume

No. 4 Company

No. 5 Company

No. 3 Company

No. 2 Company

Considering the seasonality of Korea the beverage market,

Samyang Packaging selected as the top PET Packaging supplier

Competitors

Annual sales

(100 Million EA)

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

7.5

8.0

* Source: Samyang Packaging Sales Team Market Survey, Planning Team Analysis

Monthly market demands for PET bottle

Capacity

19 /13 PET Packaging business market leadership Sustainability(Ⅱ)

-

10

20

30

40

50

60

70

80

90

100

Annual beverage sales volume by SKU

Samyang

Packaging

No. 2

Company

No. 3

Company

No. 4

Company

No. 5

Company

Number of

Production

line

35 5 8 8 6

Number of

Bottle

molds

113 39 16 32 4

Utilization 73% 48% 55% 61% 43%

Flexibility / Operational efficiency

Samyang Packaging has been successfully responding to the domestic beverage

industry, which is characterized by a long-tailed market

with a superior flexible production management capability

Annual sales

volume (million EA)

SKU

10

30

50

100

28%

16%

14%

15%

28%


% of section

20 /13 Aseptic Beverage Business Market Leadership Sustainability

Samyang`s Aseptic production lines Preoccupation status

in PET beverage OEM market

Unit 1 Unit 2 Unit 3 Unit 4

Production

CAPA 150 Million EA 150 Million EA 150 Million EA 150 Million EA

Utilization 95% 77% 69% -

Investment

timing Sept. 2007 Feb. 2010 March 2014 Dec. 2018

Through the preemptive capacity investment and preoccupancy of Aseptic market,

Samyang successfully built up a strong entry barrier

Teas

(3.1)

Juice

(1.6)

Children

(0.9)

Carbonic

acid

(0.6)

Coffee

(0.5)

Others

(0.8) Demand

(100 Million EA)


Other

Coca POWERade

Lotte

Delmont

Others

Other

Others

(Dongseo Boricha, Woongin

Oksusu tea and others)

Paldo

Pororo Binggrae

Acafera

Namyang 17cha

Woogin

Victoria

CJ Hutgaesu

Others

(Lotte Delmont) Woongjin Haneulbori

Woongjin Kaya Farm

Kwangdong

Hutgae tea

Kokatoreta

Coca

Jamong

Soda

Others

(Crude oil,

soy milk,

and others)

Coca

minutemaid

Others

Others

Others

Others

Kwangdong

Oksusu Suyeomcha

Coca

home style

Samyang`s share

21 /13 Aseptic beverage business market leadership (Ⅰ)

“Longer

Shelf Life”

135OC

35~120 Sec.

Sterilization Cooling Cooling

Hot

filling

Aseptic

filling

Aseptic

benefit

Cool down to

85~90OC

Non-aseptic

environment,

85~90OC filling

135OC

5~65 Sec.

Cool down to

25~30OC

Fill in the sealed chamber

Maintain aseptic condition

Hot filling Vs. Aseptic filling

“Lower

Packaging Cost”

Filling

Cooling to 35~40OC,

about 30~40 minutes

“Better

Taste”

Samyang has successfully grown the Aseptic business

by replacing existing hot-fill beverages and launching new beverage categories

* Source: Industry expert interview

22 /13 Organic growth potential

41.1% 42.6% 44.2% 47.0% 49.1%

25.2% 25.3% 26.3% 24.4% 23.3%

13.1% 12.4% 11.2% 10.7% 10.1%

8.1% 7.5% 6.7% 6.0% 5.3%

12.5% 12.2% 11.6% 11.9% 12.2%

2012 2013 2014 2015 2016

Others Glass bottle Pack Can PET

Korean beverage market growth trend Trend of proportion by container type

0.3 0.3 0.3 0.3 0.3 0.4 0.4 0.5 0.6 0.7

3.0 3.1 3.3 3.4 3.6 4.0

4.3 3.8

4.0

4.5

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Soft drick (soda) Natural water

* Source: National Statistical Office and Korea Spring Water Association, AC Neilsens survey data

4.6%

9.8%

3.3 3.4 3.6

3.7 3.9

4.4

4.7

4.3 4.6

5.2

(Unit : Trillion Won)

Samyang, as a dominant market leader expected to enjoy a stable organic growth

With the steady growth of Korean beverage market and growing proportion of PET

Packaging

Highlights on Samyang Packaging

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