fy2010 results briefing - investormasteel.investor.net.my/wp-content/uploads/2011/03/... ·...

(Company No.: 7878-V)

FY2010 Results Briefing

Presented by:

Dato’ Sri Tai Hean Leng, Managing Director / CEO

25 February 2011

IR Adviser

AQUILAS

FY2010 Financial Highlights

Industry Highlights

Growth Strategies

Investment Merits

Appendix Corporate Profile

FY2010 Financials

Back on track…

4

Click to edit Master title styleClick to edit Master title styleFinancialsCorporate Profile Project Brief Investment Merits …

FY2010 Income Statement

Record sales for FY2010…but bottom line affected by write-offs of

RM14 mil of bond investment and disposal of stake in subsidiary

Quantum leaps in FY2007 and

FY2008 from improvements in

operational efficiency through new

processes & technology upgrades

Remarks 4Q10 4Q09 Change RM’000 FY10 FY09 Change Remarks

Highest quarterly sales; tonnage

up by 41%, and ASP up by 8%291,977 191,686 +52.3% Revenue 1,004,785 687,263 +46.2%

Higher sales due to 32% increase

in sales tonnage and 11% rise in

ASP

4Q10 EBITDA shaved off

RM4.34mil due to provision of a

legal suit

19,247 18,198 5.8% EBITDA 63,979 21,461 +198.1% Would have been higher if not

affected by RM14mil write-offs of

bond investment impairment and

disposal of stake in subsidiary6.6% 9.5% -2.9 pt

EBITDA

margin6.4% 3.1% +3.3pt

Lower due to 44% higher finance

costs

9,686 10,608 -8.7% PBT 30,080 (8,542) - After accounting for 13.0% higher

fixed costs of Dep & Amort and

Finance Costs3.3% 5.5% -2.2ptPBT

margin3.0% - -

Low effective tax rate due to

utilization of Reinvestment

Allowance

8,990 10,586 -15.1% PATMI 28,176 (8.092) - Low effective tax rate due to

utilization of Reinvestment

Allowance 3.1% 5.5% -2.4% Net margin 2.8% - -

In line with PATMI 4.35 5.44 -20.0%Basic EPS

(sen)13.62 (4.35) -

In line with PATMI

13

0.1

16

9.8

19

5.7

19

1.7

19

2.1

23

5.7

28

5.0

29

2.0

0

100

200

300

1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10

Qtrly Revenue (RM’mil)

-30

.4

-2.0

13

.4

10

.6

6.7

8.3

5.4

9.7

-40

-30

-20

-10

0

10

20

1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10

Qtrly PBT (RM’mil)

-30

.4

-2.0

13

.4

10

.6

6.4

8.1

4.8

9.0

-40

-30

-20

-10

0

10

20

1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10

Qtrly PATMI (RM’mil)

5


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Revenue Segmentation: Location

78.9

%

78.9

%

85.1

%

86.9

%

81.5

%

79.5

%

21.1% 21.1% 14.9% 13.1% 18.5% 20.5%

0%

20%

40%

60%

80%

100%

FY2005 FY2006 FY2007 FY2008 FY2009 FY2010

Revenue Segmentation: Geographical Location Local Overseas

Unabated growth in export sales at 26.1% CAGR…domestic market

back on the uptrend

RM ‘mil FY2005 FY2006 FY2007 FY2008 FY2009 FY2010

Local 241.8 285.8 466.1 765.7 560.0 798.8

Overseas 64.7 76.4 81.9 115.5 127.3 206.0

Total 306.4 362.2 548.0 881.2 687.3 1,004.8

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Revenue Segmentation: Products

34.3% 40.0% 31.6%41.2% 36.7% 35.2%

65.7% 60.0% 68.4%58.8% 63.3% 64.8%

0%

20%

40%

60%

80%

100%

FY2005 FY2006 FY2007 FY2008 FY2009 FY2010

Revenue Segmentation: Products Billets Bars

Sales mix remains relatively stable throughout the years…FY2010

saw faster growth in bars due to increased construction activities

RM ‘mil FY2005 FY2006 FY2007 FY2008 FY2009 FY2010

Billets 105.0 145.0 173.0 363.0 252.0 354.0

Bars 201.4 217.2 375.0 518.2 435.3 650.8

Total 306.4 362.2 548.0 881.2 687.3 1,004.8

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Revenue Trend

306.4

362.2

548.0

881.2

687.3

1004.8

0

200

400

600

800

1,000

FY2005 FY2006 FY2007 FY2008 FY2009 FY2010

RM’mil Group Revenue

Unfazed by FY2009 blip, the Group is regaining momentum…

Quantum leaps in FY2007 and

FY2008 from improvements in

operational efficiency through new

processes & technology upgrades

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EBITDA & Net Profit Trends

44.8 55.8 75.4 114.6 21.6 64.023.3 30.0 44.3 79.3

-8.1

28.2

14.6% 15.4%13.8% 13.0%

3.1%

6.4%

7.6% 8.3% 8.1%9.0%

-1.2%

2.8%

-10%

-5%

0%

5%

10%

15%

20%

-20

0

20

40

60

80

100

120

FY2005 FY2006 FY2007 FY2008 FY2009 FY2010

Margins (%)RM’mil

EBITDA & Net ProfitEBITDA Net Profit EBITDA Margin Net Margin

Earnings on a strong rebound…EBITDA margin trending back up

Excluding write-offs

and legal suit

provision, EBITDA

margin at 7.8%

9


Balance Sheet

Balance sheet has room for leveraged expansion…

Balance Sheet (‘mil) As at 31.12.2010 As at 31.12.2009

Property, Plant &

Equipment

436.2 422.9

Current Assets 378.2 317.7

Current Liabilities 261.5 264.9

Non-Current Liabilities 86.3 67.4

Shareholders’ Equity 478.6 417.3

Borrowings (ST+LT) 258.0 264.8

Cash & Cash Equivalents 48.4 43.7

Gearing (net of cash) 0.44x 0.53x

Industry Highlights

Masteel in advantageous position

Corporate Profile Project Brief Financials Investment Merits …

11

Industry Highlights – Supply Side

Recent environmental catastrophe causing tight supply of iron ore,

compounding the already-high prices of iron ore

Global crude steel production surged 15% in 2010 to 1.414 billion MT and is expected to have same growth momentum in 2011 (Source: World Steel).

High price of iron ore may last another 2-5 years, No substantial new capacity coming on (according to BHP & Rio Tinto

chiefs)

Recent flooding in Australia and Brazil affected the supply of iron ore and coking coal

Australia exports over 140m MT of coking coal in 2010; due to loss of production estimated to be 20-30m MT during the flood

In Brazil, iron ore production might see a 30% reduction in February, 2011


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Industry Highlights – Demand Side

But worldwide demand for steel products is ever increasing…

Continued economic recovery in developed markets in 2011, giving the steel market a strong case in terms of demand and prices

Furthermore, with China’s implementation of central plan for next five years, the country is likely to be front-end loaded with infrastructure investments that need large amount of steel. China has 626m MT of steel output in 2010, and exports about 6m

MT of long products (constituting less than 1% of China total production capacity); therefore any economic slow down in China is not likely to see China dumping large quantity of steel bars to Malaysia


13

Raw Material Price Trend

The expected increase in iron ore & coking coal prices have minimum

impact on Masteel’s steel production costs…

Period Scrap %

Change

Iron

Ore

%

Change

Coking

Coal

%

Change

December, 2010 USD420 USD172 USD225

January, 2011 USD470 12% USD185 7.5% USD290 29%

February, 2011 USD460 -2% USD198 7% USD321 11%

85% of steel producers in the world use Blast Furnace while remaining 15% use Electric Arc Furnace (EAF).

Most local mills use iron ore, gas and coking coal as major feedstock

Masteel uses scrap which are mainly sourced locally


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Steel Prices

Growth Strategies

Expanding capacity for local and overseas demand

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Investment MeritsCorporate Profile Project Brief Financials

Continued investment in CAPEX to increase production capacity &

revenue base…aiming to be the 2nd largest bar producer in Malaysia

Installed

Capacity/

(Utilization

Rate)

2009 (A) 2010 (A) 2011 (F) 2012 (F)

Billet Plant 450,000 (60%) 500,000 (70%) 550,000 650,000

Rolling Mill 350,000 (65%) 350,000 (75%) 350,000 500,000

Expansion Plan

CAPEX of RM50 million in FY10 for Billet Plant expansion

Further CAPEX of RM180 million to increase capacity of both billet plant and rolling mill over FY11 & FY12

Rolling mill to be the 2nd largest in Malaysia by 2012 (currently 3rd)

Investment Merits

Strong Core Business with Future Catalyst

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Investment MeritsCorporate Profile Project Brief Financials

Upside potential from re-rating on core earnings from steel business

and growth catalyst from rail transit project…

Investment Merits

Core business of steel milling to continue to provide Group’s

baseline growth

New business of Rail Transit to add new dimension to Group’s revenue model with recurring

income

Local steel industry to be spurred by huge fiscal projects

by the Government

Currently trading at single digit 5.1x FY11 earnings (excluding construction profits from Rail

Project)

Dividend paying since listing in 2005; to continue to pay in

respect of FY10

Strong competitive edge of Group’s mill due to more

stable inputs of scrap metal and energy (vs peers’ mills that uses iron ore, gas and

coking coal)

Thank Youhttp://www.masteel.com.my

IR Contacts:

Tommy Sim E: [email protected] T: +603 - 7781 1611

Terence Loo E: [email protected] T: +6012 – 6295 618

http://www.masteel.com.my/

mailto:[email protected]

mailto:[email protected]

Corporate Profile

Pivotal Role in 40 years of Nation’s Growth


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Corporate Information

Listed since 2005…

Malaysia Steel Works (KL) Bhd (MASTEEL)

Listed Bursa Malaysia Main Board (on 7 Feb 2005)

Sector Industrial Products

Stock Codes 5098 (Bursa); MSWK.KL (Reuters); MSW:MK (Bloomberg)

Share Capital RM105.4 mil (210.8 mil shares of RM0.50 par)

Market Capitalization RM265.6 mil (RM1.26 as at 23 Feb 2011)

MASTEEL Warrants 2010/2015

Warrant Codes MASTEEL-WA

No. of Warrants 105.4mil at 23 Feb 2011

Terms of Warrants Expires 26 October 2015; Exercise price of RM0.67 each

Market Capitalization RM66.9 mil (RM0.635 as at 23 Feb 2011)


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Corporate Profile

Established in 1971, Masteel began operations inPetaling Jaya producing commercial mild steel roundbars

Petaling Jaya rolling mill is a fully-continuous millwith reheating furnace; capacity of 350K MT/pa

Group expanded upstream in 1998 with Bukit Rajameltshop, which houses Malaysia’s first electricarc furnace billet plant; capacity of 500K MT/pa

Today, Masteel is one of the top 5 integrated steelmills in Malaysia

Masteel’s finished products adhere to SIRIM(MS 146), ISO 9001 and Australia CertificationAuthority for Reinforcing Steels Ltd (ACRS) standards

Masteel distributes its products locally (via a widenetwork of >60 dealers nationwide) and direct exports

Group exports 20%-30% of its products, including to Australia, Singapore, New Zealand, Fiji, Vietnam, Philippines, Thailand and Bangladesh

40-year track record in steel milling…

Steel billets Steel bars


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Operations

Integrated operations…

MELTSHOP AT BUKIT RAJA ROLLING MILL AT PETALING JAYA

SCRAP

METAL

ELETRIC

ARC

FURNACE

CONTINUOUS

CASTING

MACHINE

BILLETSREHEAT

FURNACEROLLING BAR

DELIVERYDELIVERY

Capacity: 500,000MT pa Capacity: 350,000MT pa


Core Competencies

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Leading player with entrenched capabilities, certifications and

reputation…

•Integrated business model allows for better control of input raw material for milling operations and therefore margin containment; improving production efficiency as a result of increased capacity utilization

Integrated operations

•Compliance to stringent quality standards opens up markets for Masteel locally and abroad

Ability to produce high-quality products

•40-year track record in supplying high-quality products enables Masteel to retain and expand customer base

Established track record

•>60 dealers nationwide provide gateway to local construction market; established relationships with overseas dealers to facilitate export sales

Wide dealership network

•Experienced and prudent management team equipped with industry know-how

Hands-on management

fy2010 results briefing - investormasteel.investor.net.my/wp-content/uploads/2011/03/... ·...

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