Avarga Limited · SGX:X5N
Avarga — Investor Presentation (June 2020)
28 slides from Avarga's investor presentation, June 2020
Slide 1: Creating Sustainable Value
Creating Sustainable Value Corporate Presentation 2020 The material presented is for your general information only. No representation, warranty or recommendation whatsoever as to the merits of investing in any company is to be read or inferred from any material presented herein. Prospective investor
Slide 2: Shareholder questions
Shareholder questions How has Covid-19 affected Avarga with regards to revenues, expenses, and operations? Has Avarga adopted any extraordinary measures or new ways of conducting business due to Covid-19? Has Covid-19 led to cancelled or deferred orders, as well as late or non-payments? What
Slide 3: Who are we?
Who are we? Our mission is to optimise Return on Equity through building sustainable value for our shareholders We adopt a disciplined approach to evaluating investments, risks and opportunities, led by an entrepreneurial and experienced management team We build business models that are long-t
Slide 4: Our core businesses
Our core businesses 100% 100% 69.7% Paper manufacturing 50 MW power plant Wholesale distribution of building in Ijok, Selangor, in Yangon, Myanmar materials in Canada & USA Malaysia Listed on Toronto Stock Exchange
Slide 5: Our core businesses
Our core businesses Building Materials Distribution Taiga Building Products is Canada’s largest wholesale distributor of building material products by sales We have wood preservation plants, distribution centres and reload stations strategically located across Canada and USA Paper Manufacturing
Slide 6: Where are we?
Where are we? S$1.4 billion revenue 3 Core Businesses 5 Countries (Singapore, Canada, USA, Malaysia, Myanmar) 1 Vision - Creating sustainable value
Slide 7: Dividend policy
Dividend policy We will pay out a minimum of 40% of annual net profit, subject to capital allocation opportunities and risk management We will pay dividends quarterly We will return excess cash where available
Slide 8: How have we performed?
How have we performed?
Slide 9: Our financial performance
Our financial performance FY Dec (S$ million) 2019 2018 2017 2016 2015 2014 2013 2012 2011 Revenue 1,403.9 1,572.7 1,455.2 63.3 61.1 116.9 48.1 50.0 51.1 EBITDA 68.4 58.2 61.3 14.1 12.1 10.7 4.4 5.4 2.4 Pre-tax Profit 53.3 31.1 25.1 13.1 13.3 9.7 1.5 2.4 (0.4) Net Profit after MI 32.6 11.2 13.7 12.6
Slide 10: Segmental performance
Segmental performance Segmental Revenue FY Dec (S$ million) 2019 2018 2017 2016 2015 2014 2013 2012 2011 Paper Manufacturing (Malaysia) 48.1 55.9 54.3 50.0 49.2 47.9 46.8 48.7 49.8 Power plant (Myanmar) 18.7 10.5 11.7 13.3 11.9 68.3 - - - Taiga (Canada & USA) 1,337.1 1,506.3 1,389.2 Others - - - - -
Slide 11: Revenue; Pre-tax and net profit
Revenue Pre-tax and net profit 1,800 60.0 1,600 50.0 1,400 1,200 40.0 1,000 30.0 800 600 20.0 400 10.0 200 0 - 2011 2012 2013 2014 2015 2016 2017 2018 2019 2011 2012 2013 2014 2015 2016 2017 2018 2019 Revenue jumped from $51m in 2011 to (10.0) $1,403m in 2019 Pre-tax profit Net profit after MI Pre-t
Slide 12: EBITDA; Net cash generated from operations
Net cash generated from EBITDA operations 80.0 70.0 70.0 60.0 60.0 50.0 50.0 40.0 40.0 30.0 30.0 20.0 20.0 10.0 10.0 - 2011 2012 2013 2014 2015 2016 2017 2018 2019 - 2011 2012 2013 2014 2015 2016 2017 2018 2019 EBITDA increased from $2.4m in 2011 to $68.4m in 2019 Cash flow from operations jumped to
Slide 13: EPS and ROE
EPS increased to 3.44 cents in 2019 from a loss per share of 0.11 cent in 2011 ROE rose to 12.9% in 2019 from negative 0.5% in 2011 *Excluding one-off property gain of $10.9m in 2019, EPS was 2.3 cents and ROE 9%
Slide 14: How have we invested?
How have we invested?
Slide 15: How did we use our cash from 2012-2019?
How did we use our cash from 2012-2019? S$m Net cash from operating activities 207.9 What did we use it for? Capex - net PPE (15.1) Investment in Myanmar Power Plant (58.7) Acquisition of minority interests in UPP Pulp & Paper (4.9) Acquisition of Taiga shares and notes (87.1) Investing activities m
Slide 16: Without stretching our balance sheet
Without stretching our balance sheet Using minimal debt to expand from paper to adding the IPP, Taiga and Exterior Wood Net cash / (debt) 100.0 80.0 60.0 40.0 20.0 - 2011 2012 2013 2014 2015 2016 2017 2018 2019 (20.0) (40.0) (60.0) Excluding Taiga’s revolving credit facilities (RCF) and finance leas
Slide 17: Return on capital employed
Return on capital employed ROCE (Pre-tax profit ) ROCE (Net profit ) 2019 2018 2019 2018 Paper 12.1% 15.3% 9.2% 10.9% Power 14.7% 18.0% 12.3% 18.0% Building Materials 25.7% 24.5% 18.5% 17.1% Avarga Group 21.5% 12.1% 12.9% 4.3% Our three core businesses generate high returns on capital employed ROCE
Slide 18: Key phases of our transformation
Key phases of our transformation Improving the Paper business Pre-tax profit was just RM3 million in 2011 We strengthened internal processes, workflows , controls and efficiency We upgraded the plant in 2015, increasing capacity by 7% In 2017, we divested Kajang land and acquired remaining 7
Slide 19: Key phases of our transformation
Key phases of our transformation Investment in Myanmar power plant We invested US$46.5m in the plant, using our existing cash reserves and the private placement proceeds of S$40.3m MOU signed in 2012, PPA and commercial operations in 2014 30 year PPA with Electricity Power Generation Enterpris
Slide 20: Key phases of our transformation
Key phases of our transformation Taiga acquisition and restructuring We acquired a substantial stake in Taiga’s shares and loan notes for C$72m in 2017 Taiga then undertook a restructuring exercise by converting the loan notes to shares, significantly strengthening its balance sheet and earnings
Slide 21: Key phases of our transformation
Key phases of our transformation Taiga’s Exterior Wood acquisition Acquired by Taiga in 2018 for US$42m at EV/EBITDA of 6x Supplies to 13 states in the US West Coast, significantly extending Taiga’s USA distribution footprint. Also expands Taiga’s wood treatment operations to USA and establishes
Slide 22: Taiga Building Products
Taiga Building Products
Slide 23: Taiga Building Products
Taiga Building Products Canada’s largest wholesale distributor of building material products with annual sales of over C$1 billion Established since 1973 and listed on Toronto Stock Exchange Wide footprint in Canada and growing network in the USA: 3 wood preservation plants in Canada 15 di
Slide 24: Our "Highway" Penetration Strategy
Our “Highway” Penetration Strategy Taiga: The H1 (Highway 1) strategy: West to East Coast Canada coverage Exterior Wood: The I-5 (Interstate 5) strategy: Pacific Coast & Western USA coverage from North to South USA
Slide 25: Taiga's Distribution Process
Taiga’s Distribution Process Taiga’s treated Exterior Wood’s wood plants - treated wood plant Canada Mills Mills - USA (3 plants) Manufacturers Taiga Canada Taiga USA distribution Suppliers distribution Imports 15 distribution 2 distribution centres in California (Taiga) centres in Canada 1 distribu
Slide 26: Covid-19
Covid-19 • COVID-19 RESPONSE • COVID-19 IMPACT PLEASE REFER TO THE WEBCAST RECORDING OR TRANSCRIPT
Slide 27: Outlook
Outlook PLEASE REFER TO THE WEBCAST RECORDING OR TRANSCRIPT
Slide 28: Thank you
Thank you “Predicting rain doesn’t count. Building arks does” – Warren Buffett AVA R G A LT D 1 KIM SENG PROMENADE #13-10 GREAT WORLD CITY WEST TOWER SINGAPORE 237994 TEL : (65) 6836 5522, FAX: (65) 6836 5500 WWW.AVARGA.COM.SG