AGM 23 rd August 2012

AGM 23rd August 2012 Agenda AGENDA AGENDA • FY2012 Highlights • Business Overview • Financial and Operations Highlights • Outlook & Growth Strateg...
Author: Beverly Edwards
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AGM 23rd August 2012

Agenda AGENDA

AGENDA • FY2012 Highlights • Business Overview • Financial and Operations Highlights • Outlook & Growth Strategies • India Joint Venture • Redevelopment of 21/21A Lok Yang

FY2012 AGENDA HIGHLIGHTS

FY2012 HIGHLIGHTS • Revenue up 6.7% to S$364.1m – SEA market up 5.6% to S$276.4m – South Africa grew 5.6% to S$38.3m (up 18% in local currency terms)

• Gross margin stable at 22.1% (FY2011: 23.3%) • Dividend per share of S$1.5 cent recommended, representing 36.1% payout ratio comparing (FY2011: 26.5%) • Expects FY2013 to be profitable

Business AGENDA Overview

BUSINESS OVERVIEW • One of the largest independent tyre and wheel distributors in South East Asia • Presence in 9 countries; with 4,000 dealers • Sole distributor for major international brands:

• International export of proprietary brands

OUR BUSINESS MODEL Distribution

Manufacturing

Overseas Distribution Network

Retail Network (tyres for passenger cars, wheels, car services & accessories)

Commercial Tyres and Services (Truck and Off the Road “OTR” tyre management services)

Proprietary Brand Tyres (passenger car radial, light truck, truck bus radial)

Central warehousing and distribution in 9 countries

25 Retail Outlets in South East Asia

2 Truck Centers 3 Contract Customer Workshops 7 Mobile Fleet Service Vehicles

Export to over 90 countries

SSW Alloy Wheel (Manufacturing)

Retread of Truck and OTR Tyres

Financial & Operations AGENDA Highlights

STEADY SALES & GP MARGINS S$’mln

400

23.5%

23.3%

350

23.0% 22.7%

300

22.5% 22.1%

250

22.0% 200

150

296.9

364.1

21.4% 310.2

341.4

21.5%

21.0% 100

50

20.5%

0

20.0% FY2009

FY2010

FY2011

Revenue

FY2012

OVERSEAS EXPANSION • Growth in all key markets FY12

FY11

Change

Turnover by geographical segment

(S$'000)

%

(S$'000)

%

%

Southeast Asia

276,420

75.9

261,761

76.7

5.6

South Africa

38,255

10.5

36,231

10.6

5.6

North Asia

34,646

9.5

33,873

9.9

2.3

Others

14,753

4.1

9,491

2.8

55.4

Total

364,074

100.0

100.0

6.7

341,356

FOREX MANAGEMENT S$’mln 3.0 2.3 2.0

1.0

0.0 FY2009

FY2010

FY2011

FY2012

-1.0 -1.2 -2.0

-3.0 -2.9 -4.0

-5.0

-6.0

-7.0

-5.8

FOREX MANAGEMENT SGDZAR 2010/11 - 2011/12 6.600 6.400 6.200 SGDZAR 2010/11 2011/12

6.000 5.800

AVE FX RATE ZAR 5.600 5.400 5.200 5.000 May '10

Aug '10

Nov '10

Feb '11

May '11

Aug '11

Nov '11

Feb '12

FY10

5.38

FY11

5.40

FY12

6.01

FOREX MANAGEMENT To reduce Forex impact to Profit and Loss for South Africa, the Group is taking two steps: Increase equity in South Africa to reduce foreign currency denominated payables Increase local bank borrowings to reduce foreign currency denominated payables

GROUP’S NET PROFIT Net Profit & Margin S$’mln

16.0

4.5% 3.9%

4.0%

14.0

3.5% 12.0

3.1% 2.7%

10.0

3.0% 2.5%

8.0 2.0% 13.4 6.0 1.5% 9.8

9.5 4.0

1.0% 2.0

0.4%

0.5%

1.1 0.0

0.0% FY2009

FY2010

FY2011

FY2012

FINANCIAL RATIO FY12

FY11

158 days

133 days

96 days

86 days

Payables* Turnover

150 days

120 days

Cash Conversion Cycle

104 days

99 days

Current Ratio

1.42

1.45

Net Gearing (X)

1.12

0.86

Inventory Turnover Receivables Turnover

*Payables consists of trust receipts and short-term revolving loans

Outlook AGENDA & Growth Strategies

OUTLOOK AND GROWTH STRATEGIES Major Brands • Expansion in South East Asia and South Africa • Value-add to tyre business of major brands by improving warehousing and distribution capabilities • Increase number of retail outlets, truck centres and Truck and Earthmover Tyre Management contracts

OUTLOOK AND GROWTH STRATEGIES Entrance into new markets • Work closely with our principals to expand into new markets

India Joint Venture

Shareholdings Structure Sumitomo Rubber Industries 100% Sumitomo Rubber Asia (Tyre) Pte Ltd 60%

Stamford Tyres Corporation Limited 40%

Falken Tyres India Private

Rationale

India replacement tyre market has good potential

Leverage on SRI’s proprietary tyre technologies & Stamford’s distribution capabilities

Reflects the long standing relationship between SRI and Stamford Tyres in exploring new markets

Capital Outlay Total Capital Contribution to Joint Venture • INR550million • (approximately: S$12.3million)

Stake held by Stamford Tyres • 40% which translate to INR220million • (approximately: S$4.9million)

Estimated initial investment for the Joint Venture • INR110 million • (approximately S$2.5million)

Other Corporate Info

City of Incorporation

Commencement of Operations

Number of Employees

Proposed city is Delhi.

30 April 2013 onwards

Approximately 70 sales rep located across India

Redevelopment of 21/21A Lok Yang Way New Jurong Warehouse and Truck Centre

Artist Impression New warehouse

AYE / Jln Ahmad Ibrahim

Existing warehouse/office

Rationale For Redevelopment Builds up our capability for export expansion without being restricted by limited and costly warehousing options locally. Due to increasing need for storage space.  We are currently leasing approximately 12,000 m2 from third party warehouses.  We are constructing a 21,000 m2 warehouse at the cost of S$20.5million.  Prevailing market rental rates are S$1.50/ft2.

Leverages on current warehouse competence in optimising resources. Greater sustainability in operating profits in the long term (> 10 years); mitigates the impact of external rental rates growth.

Development Milestones Date July 2012

Milestone Letter of Award to main contractor - HPC Builders Pte Ltd. August 2012 Groundbreaking ceremony. September 2012 Expected commencement of piling works. October 2012 Expected commencement of main construction works. To be Announcement on the utilisation of proceeds announced from disposal of SRITP for redevelopment purposes. October 2013 Expected TOP clearance.

Thank You! Corporate Contacts: 19 Lok Yang Way, Jurong, Singapore 628635 Tel: +65 6268 3111 Fax: +65 6264 0148 Email: [email protected]

Investor Relations Contacts: Tel: +65 6438 2990 Email: [email protected]