Nan Ya Plastics
Operations & Prospects
March
2011
Agenda
Page
• Overview ‥‥‥‥‥‥‥‥‥‥‥‥‥‥
• Strategy & Competitive Advantages‥‥‥
• Operating Performance ‥‥‥‥‥‥‥‥
• Investment Income ‥‥‥‥‥‥‥‥‥‥
• Capital Expenditure ‥‥‥‥‥‥‥‥‥
• Capacity & Expansion ‥‥‥‥‥‥‥‥
• Financial Ratio ‥‥‥‥‥‥‥‥‥‥‥
• Comparison of Top 5 Competitors‥‥‥‥
2∼6
7∼8
9∼10
11
12
13∼19
20
21∼24
1
Overview
Highlights
 Member of the Formosa Plastics Group (FPG)
 The 6th largest private company in Taiwan in terms of market capitalization
 Annual revenue of US$ 7 billion with 4 major businesses: sales breakdown 15% in plastics, 19% in electronic materials, 16% in fibers, and 47% in
Chemicals
 Market capitalization of US$ 23 billion
51 manufacturing plants in Taiwan, 23 manufacturing plants in China, 4 and 3
manufacturing plants in USA and Vietnam respectively.
 Leading market positions

World’s #1 manufacturer of secondary plastics

World’s #1 manufacturer of copper clad laminates

World’s #3 producer of polyester fibers
2
Overview
History
Polyester
staple
PU
leather
1969
1974
1958
1971
PP Glass fiber yarn,
film cloth and POY
1981
1976
Incorporation Textured PVC
Rigid
First PVC sheet yarn
film
production
China
Investment
(Plastics)
1985
1984
Vietnam
6th Naphtha
Investment
Cracker Project
(Polyester)
1994
1989
Nanya
PCB Nan Ya America
established
Technology
& CCL
established
Expanding scale of
CCL in China
2007
2009
2003
1998
1995
BPA-4 & EG-4
startup
2000
China
Investment
(Electronics)
2004
2008
China
Glass fiber-3 &
Investment Glass fiber cloth-3
(Polyester)
in China startup
2010
China
Investment
(Chemicals)
 1950’s - 1960’s : Production of PVC secondary plastics in Taiwan
 1970’s : Began manufacturing polyester fiber, expanding scale and varieties of plastics
processing products
 1980’s : Entered electronics business, growth in polyester and plastics
 1990’s : Plastics and polyester facilities in the US commissioned, manufacturing of plastics
initiated in China, construction of specialty chemicals in No. 6 Naphtha Cracker
Project completed, and subsidiary for DRAM manufacturing stated production
 2000’s : Production facilities for electronic materials in China commissioned
 2007’s : BPA-4 and EG-4 plant of the phase-four expansion project in Mailiao complex
started operation
 2008’s : Glass fiber & glass fiber cloth of phase-three expansion in China started operation
 2009’s : Expanding scale of CCL in China and started mass production in Hui Zhou
 2010’s : Chemical products including BPA & DEHP investment in China
3
Overview
Corporate Structure
Plastics
III
Plastics
I
Plastics
II


PVC Sheeting
Rigid PVC
Film
 PP Paper
 PU Leather



Chemicals
II
Chemicals
I



Plastics
Chemicals
III
BPA
 1.4 BG
 PVC Stablizers




PA
2EH
DEHP
DINP
 DIDP

Engineering
Polyester
Fibers






PVC Pipes
BOPP Film
Engineering
Plastics
SMC Doors
Vinyl Windows
Door Frames
Electronic
Materials
CCL
Epoxy Resin
Glass Fiber Cloth
Copper Foil
STN LCD
EG







Chemicals
Electronics

Switching Gears

Rollers

Molding
Equipment

Factory
Equipment
Filament
Staple
Chips
Film
Dyeing
Finishing
Dry Film
Polyester
Others
4
Overview
Subsidiaries
Nan Ya Plastics Corp.
33.54%
100.00%
23.84%
50.00%
24.94%
67.30%
Nan Ya
Plastics Corp.,
U.S.A.
Nan Ya
Plastics Corp.,
America
Nanya
Technology
Corp.
Nan Ya
Plastics (Hong
Kong) Co.
Formosa
Petrochemical
Corp.
PFG Fiber
Glass Corp.
Mai Liao
Power Corp.
Nan Ya Printed
Circuit Board
Corp.
PFG Fiber
Glass
(Kunshan) Co.
Printed Circuit
Board (Hong
Kong) Co.
PieceMakers
Technology,
Inc.
Printed Circuit
Board Corp.,
USA
Meiya
Technology
Corp.
Inotera
Memories, Inc.
Pei Jen Co.,
Ltd.
Nanya
Technology
(Hong Kong)Co.
Nanya
Technology
Japan
Nanya
Technology
Corp. Delaware
Nanya
Technology
Corp., USA
100.00%
0.19%
100.00% 100.00%
100.00%
71.43%
100.00% 100.00%
50.00%
99.99% 100.00% 29.67%
100.00% 100.00% 100.00%
PFG Fiber
Glass (Hong
Kong) Co.
100.00%
50.00%
100.00%
Nan Ya Printed
Circuit Board
(Kunshan)Co.,
LTD.
Nanya
Technology
(Shanghai) Co.,
Ltd.
Nanya
Technology
Europe, GmbH
5
Overview
Subsidiaries (Hong Kong)
Nan Ya Plastics
(Hong Kong) Co.
50%
100%
85%
Plastics (Zhengzhou)
Kyowa Plastics (Nantong)
Plastics (Ningbo)
Plastics Construction (Anshan)
Draw-Textured Yarn (Kunshan)
Co-Generation (Kunshan)
Epoxy Resin (Kunshan)
Glass Fabrics (Kunshan)
Copper Foil (Kunshan)
Electronic Materials (Kunshan)
Trading (Huizhou)
Electronic Materials (Huizhou)
Plastics Film (Huizhou)
Plastics (Huizhou)
Rigid Film (Guangzhou)
Construction Materials (Guangzhou)
Co-Generation (Nantong)
Electric (Nantong)
Plastics Film (Nantong)
Construction Materials (Nantong)
Nantong Huafu Plastics
China Nantong Huafeng
Synthetic Leather (Nantong)
Nan Ya Plastics (Nantong)
Nan Ya Plastics(Xiamen)
Plastics (Guang Zhou)
6
Strategy
Backward Integration
Product Diversification
•
•
•
6th Naphtha Cracker
Polyester products (e.g. EG)
Electronic products
Secure stable and low cost
raw materials
•
•
High margin products
High value-added chemical &
polyester fiber
Electronic products
Increase profitability and
market share
•
Transform into Chemical
and Electronic Products
Establish Production
Base in China and Vietnam
•
•
•
•
•
•
Strengthen R&D Capability
•
Enhancing investment of chemical
and electronic productions (e.g. MA,
CCL (Kunshan) and Nan Ya PCB)
Rising weight of chemical
and electronic products to
maintain profitability
PVC sheeting, leather, pipes,
fittings & PU leather
Electronic products
Polyester fiber
Support relocation of
downstream customers and
profit from rapid growth in
China and Vietnam
Optical PET film for backlight module,
anti glare PET film for LCD
Speciality chemicals (Nonyl Phenol free
and 3P free Ba/Zn Stabilizer, IC
Encapsulation Epoxy)
PCB material (A glass fiber desizing can
improve the efficiency of the components
of sizing, high thermal-conductive resin
composition for PCB)
As a main product base,
Taiwan mother company
also formed as a R&D
center, supporting
required technology to
overseas investee
companies
7
Competitive Advantages
 Economies of Scale


World’s #1 manufacturer of secondary plastics and CCLs
World’s #3 producer of polyester fiber
 Customer Oriented
 Expansion in line with the needs of our customer and market
 Backward Integration




Purchase PVC resin and PTA from FPC and FCFC
Self-production of EG, copper foil, glass fiber cloth, epoxy resin and DEHP
Purchase glass fiber from PFG
Completely backward integration from PCB to glass fiber in the world
 Self-Sufficient in Power

Reduce manufacturing costs and secure power supply
 Using Financial Strength

Lower cost and provide readily available financing
 Internal Construction and Engineering Departments

Lower capital expenditures while integrating research with manufacturing to improve production
efficiency and predictive maintenance
 Focused Management
 Long-term strategy with a flexible approach (TQC,TPM,ISO)
8
Operating Performance
Unit：NT$ millions
After Tax Income Pre-Tax Income Operating Income Sales Revenue
Items
Plastics
Amount
Electronics
%
Amount
%
Polyester
Amount
%
Chemicals
Others
Amount % Amount %
Total
Amount
Growth
%
Rate%
Year 2010
32,501 (15.3) 41,086 (19.4) 34,031 (16.0) 98,887 (46.6)
5,743
(2.7) 212,249 (100.0)
31.9
Year 2009
27,836 (17.3) 28,195 (17.5) 25,254 (15.7) 70,018 (43.5)
9,662
(6.0) 160,964 (100.0)
－
Year 2010
Year 2009
1,702
2,034
5.2
5,710 13.9
3,723 10.9
15,791 16.0
(6.4)
(21.6)
(14.1)
(59.6)
7.3
1,951
(23.4)
6.9
-317
(22.4)
-1.3
3,751
-(3.6)
Year 2010
1,779
5.5
5,712
13.9
3,883
Year 2009
2,096
7.5
1,972
7.0
34
5.4
-435
26,491
-(1.6)
1,291
(43.1)
11.4 15,579
-7.6
13.4
12.5
204.1
(100.0)
8,710
(14.8)
5.4
－
(100.0)
15.8 19,376
46,329
21.8
182.7
8,638
16,386
10.2
－
Year 2010
40,831
19.2
148.9
Year 2009
16,404
10.2
－
0.1
3,646
5.2
※1.（）representing contribution
2. 2010y numbers are unaudited.
9
Operating Performance
Y2010 Result (Unaudited)
•
Y2010 operating profit was NT$ 26,491 million, up NT$17,781 million from NT$8,710m in Y2009 (+204.1% YoY);
operating performances of major products:
•
Plastics: Y2010 operating margin 5.2%, slightly down YoY from 7.3% in Y2009.
•
Electronic Materials:
•
•
•
Y2010 operating margin 13.9%, up 7.0% YoY from 6.9% in Y2009
•
Benefiting from recovery in the electronics industry and raw materials price rise, prices of all electronic materials
rose significantly
•
Strong demand helped to increase utilization rate and reduce unit fixed cost
Polyester:
•
Y2010 operating margin 10.9%, up 12.2% YoY from -1.3% in Y2009
•
Demand increase from cotton shortage, consumption power increase in China, in addition to product mix improved
and portion of high value-added products expanded, for example, sales of polyester film which are applied to LCDs
and solar panel increased significantly
•
Set up a performance improvement team to establish standard production lines by implementing strict problem
solving with productions to increase efficiency and performance as well as to reduce cost.
Chemical Products:
•
Y2010 operating margin 16.0%, up 10.6% YoY from 5.4% in Y2009
•
With soaring ethylene price, plenty of maintenance in the industry, and strong demand from downstream polyester
buyers, EG price rose significantly and operating margin could reach 30%+ in Y2010.
•
Profits from DEHP and BPA increased due to product price increase more than raw materials cost raised and better
operating rate on the back of improving demand
10
Investment Income
Unit：NT$ millions
Investee
Nan Ya Plastics Corp.,U.S.A
Nan Ya Plastics Corp.,America
Nan Ya Plastics(H.K.) Corp.,Ltd
FPG Fiber Glass(H.K.)Corp.,Ltd
Nan Ya Printed Circuit Board
Nanya Technology Corp.,
Formosa Petrochemical Corp.
FPG Fiber Glass Corp.
Nan Chung Petrochemical Corp.
Mai Liao Power Corp.
Formosa Industries Corp.
Others
Equity income
Dividend income
Others income
TOTAL
＊2010y numbers are unaudited.
Stake
100.00%
100.00%
99.99%
50.00%
67.30%
33.53%
23.84%
50.00%
50.00%
24.94%
42.50%
2010
16
2,989
5,602
473
1,448
-5,207
9,833
406
45
1,801
866
576
18,848
2,018
2
20,868
2009
80
837
773
-185
1,403
-7,804
9,340
81
-165
2,209
176
409
7,155
951
92
8,198
Difference
-64
2,152
4,829
658
46
2,597
492
324
210
-408
691
167
11,693
1,067
-90
12,669
11
Capital Expenditure
2011 (budget)
Area
Product
MA
Unit：NT$ millions
Amount
1,919
Industrial yarn
793
Taiwan
Others
1,763
Sub-total
4,475
Copper Clad Laminates
541
Epoxy Resin
506
Copper Foil
2,576
Glass Fabrics
1,930
China
Others
Sub-total
Total
318
5,871
10,346
12
Capacity/Expansion – Plastics
Unit: US$1,000
Main Products
Capacity
(p.a.)
Expansion
Investment Completion
for Expansion
Date
Capacity
Increase
(%)
PVC Sheeting (Taiwan)
103,200 MT
-
-
-
-
PVC Sheeting (U.S.A.)
46,800 MT
-
-
-
-
PVC Rigid Film
43,200 MT
-
-
-
-
PU Leather
10,800 KYD
PVC Rigid Pipe
175,000 MT
-
-
-
-
BOPP Film
72,600 MT
-
-
-
-
Window & Door Frames
27,200 MT
-
-
-
-
Engineering Plastics
24,000 MT
-
-
-
13
Capacity/Expansion - Plastics (China Investment Part I)
Main Products
PVC Sheeting
Guang Zhou
Nan Tong
Kyowa(Nan Tong)
PVC Leather
Guang Zhou
Nan Tong
PU Leather
Nan Tong
Hui Zhou
PVC Rigid Pipes
Xiamen
Wu Hu
Dung Ying
Guang Zhou
Zheng Zhou
Anshang
Capacity
(p.a.)
Unit: US$1,000
Total
Investment
NYC
Stake
Expansion
(p.a.)
Completion
Date
86,400 MT
42,000 MT
19,200 KYD
52,797
53,669
7,324
85%
100%
50%
-
-
21,600 KYD
32,400 KYD
26,938
37,400
85%
100%
-
-
19,200 KYD
16,800 KYD
61,413
49,980
100%
100%
-
-
37,800 MT
37,900 MT
54,000 MT
19,200 MT
24,200 MT
33,800 MT
44,617
20,103
28,990
16,443
12,825
11,830
85%
15%
15%
100%
50%
100%
-
14
Capacity/Expansion - Plastics (China Investment Part II)
Main Products
Capacity
(p.a.)
Fittings
Xiamen
12,000 MT
PVC Rigid Film
Guang Zhou
67,200 MT
Nan Tong
67,200 MT
PVC Film
Nan Tong
15,000 MT
PVC Chips
Guang Zhou
24,000 MT
Casting PVC Leather
Hui Zhou
12,000 KYD
UP Resin
Hui Zhou
36,000 MT
Engineering Plastics
Hui Zhou
14,400 MT
Bopp Film
Nan Tong
30,000 MT
Hui Zhou
30,000 MT
Total
Unit: US$1,000
Total
Investment
NYC
Stake
Expansion
(p.a.)
Completion
Date
22,151
85%
-
-
45,689
38,574
100%
100%
-
-
23,738
100%
-
-
2,530
100%
-
-
10,522
100%
-
-
8,750
100%
-
-
16,678
100%
-
-
58,418
64,394
712,533
100%
100%
-
-
15
Capacity/Expansion – Polyester
Main Products
Stable Fiber
Taiwan
U.S.A.
Vietnam
Chips
Taiwan
U.S.A.
Vietnam
Filament
Taiwan
U.S.A.
China
Vietnam
Film
Capacity
(MT/p.a.)
Unit: US$1,000
Expansion
(MT/p.a.)
Investment Completion Capacity
for Expansion
Date
Increase
(%)
135,000
216,000
108,000
-
-
-
-
168,000
486,000
122,000
-
-
-
-
339,000
162,000
66,000
40,000
72,000
36,000
228,000
05/2013
50%
16
Capacity/Expansion – Electronic Materials
Main Products
Capacity
(Annual)
Unit: NT$1,000
Expansion
Investment Completion
for Expansion
Date
PCB
PCB Co. (Subsidiary) 8,580,000 SQFT
-
-
-
36,000,000 SH
-
-
-
220,000 MT
-
-
-
288,000,000 M
-
-
-
Copper Foil
32,400 MT
-
-
-
LCD
120,000 SH
-
-
-
Copper Clad Laminates
Epoxy Resin
Glass Fiber Cloth
17
Capacity/Expansion – Electronic Materials (China)
Main Products
Unit: US$1,000
Capacity
(p.a.)
Total
Investment
NYC
Stake
Expasion
(p.a.)
Completion
Date
21,000,000 SQFT
431,637
-
Kun Shan
39,600,000 SH
283,783
100%
-
-
Hui Zhou
13,200,000 SH
106,868
100%
-
-
Epoxy Resin
250,000 MT
196,344
100%
-
-
276,000,000 M
281,425
100%
10,200,000 M
08/2011
36,000 MT
397,323
100%
19,200 MT
06/2012
105,600 MT
409,374
50%
37,800 MT
07/2012
PCB
PCB Co. (Subsidiary)
5,400,000 SQFT
12/2011
Copper Clad Laminates
Glass Fiber Cloth
Copper Foil
Glass Fiber Yarn
18
Capacity/Expansion – Speciality Chemicals (Taiwan)
Main Products
EG
Taiwan
U.S.A.
BPA
Taiwan
China
ESO
H2 O2
1.4BG
DEHP
Taiwan
China
PA
2EH
Capacity
(MT/p.a.)
Unit: US$1,000
Expansion
Investment
for Expansion
Completion
Date
Capacity
Increase
(%)
-
-
-
-
-
-
-
-
-
-
-
-
150,000
130,812
06/2013
-
20,000
34,000
-
-
-
-
-
-
-
-
120,000
-
-
-
-
-
-
-
-
150,000
48,017
03/2013
-
-
-
-
-
-
-
-
-
1,470,000
300,000
455,000
-
350,000
-
228,000
200,000
19
Financial Ratio
Unit：%
YEAR
2007
2008
2009
2010
Interest Coverage (EBITDA)
25.51
4.48
10.63
15.76
GEARING
27.69
41.60
34.37
28.20
Debt Ratio
30.97
35.46
32.73
30.47
Long Term Funds To Fixed Assets
435.58
375.39
430.22
524.86
Current Ratio
216.23
227.21
283.67
429.00
Quick Ratio
166.55
170.56
223.31
342.53
Return On Total Assets
15.36
2.97
4.89
11.03
Return On Stockholders' Equity
22.01
3.65
6.90
15.16
Net Income To Net Sales
25.82
4.50
10.19
19.24
EPS ( NT$ )
7.75
1.23
2.09
5.20
20
Comparison of Top 5 Competitors
Business：Plastics
PVC
Sheeting
PVC
Leather
PVC
Rigid Film
PU
Leather
BOPP
Film
thousand tons
thousand yards
thousand tons
thousand yards
thousand tons
Company
Nan Ya
Nan Ya
Nan Ya
Anhui Anli
Exxon Mobil
Capacity
311
87,600
238
72,000
265
9%
10%
5%
Klockner
San Fang
Treofan
190
67,000
245
7%
9%
4%
Hun Xian
JiaCing HoCing
Nan Ya
149
62,000
193
5%
9%
4%
Rockman
Nan Ya
Shenda
96
58,800
164
3%
8%
3%
Qinghua
Daewoo
Vibac
36
43,200
163
1%
6%
3%
Main Products
Unit
Item
No.1
Market Share
Company
No.2
Capacity
Market Share
Company
No.3
Capacity
Market Share
Company
No.4
Capacity
Market Share
Company
No.5
Capacity
Market Share
7%
Renolit
Sinweixing
162
57,600
4%
4%
Lucky
Jhongchen
120
38,400
3%
3%
China General
Baderly
78
33,600
2%
3%
CGT
RASINDO
48
26,400
1%
2%
8%
21
Comparison of Top 5 Competitors
Business：Electronic Materials
Copper Clad
Laminates
Glass Fiber Cloth
Epoxy Resin
Copper Foil
thousand sheets
thousand meters
thousand tons
thousand tons
Company
Capacity
Market Share
Company
Capacity
Market Share
Nan Ya
88,800
18%
King Board
52,800
11%
Momentive
380
15%
DOW
366
15%
Nan Ya
68.4
14%
CCP
60.0
12%
Company
Shen Yi
Nan Ya
King Board
Capacity
Market Share
Company
Capacity
Market Share
Company
Capacity
Market Share
36,000
7%
ITEQ
28,800
6%
Isola
27,000
5%
Nan Ya
564,000
25%
Taiwan Glass
336,000
15%
Hong Kong
Glass Fiber
252,000
11%
GRACE
156,000
7%
GLOTECT
144,000
6%
337
14%
KUKDO
228
9%
Huntsman
180
7%
60.0
12%
Mitsui
51.0
11%
JE
32.4
7%
Main Products
Unit
Item
No.1
No.2
No.3
No.4
No.5
22
Comparison of Top 5 Competitors
Business：Polyester
Main Products
Polymer
Filament
Staple
thousand tons
thousand tons
thousand tons
Company
Sinopec
Zhejian Tongkung
Sinopec
Capacity
Market Share
3,190
5%
1,500
7%
1,180
7%
Company
Indorama
Jiangsu Hengli
Jiangsu Sanfanxiang
Capacity
Market Share
2,232
3%
Nan Ya
2,040
3%
800
4%
Sinopec
760
4%
900
6%
Reliance
575
5%
Company
M&G
Reliance
Huvis
Capacity
Market Share
1,717
3%
Jiangsu Sanfanxiang
1,650
3%
Reliance
1,605
3%
730
3%
Zhejian Rongheng
650
3%
Nan Ya
610
3%
550
3%
Zhejian Jinagnan
550
6%
Jiangsu Yizheng
497
3%
Company
Far Eastern
Jiangsu Shenghong
Nan Ya
Capacity
1,551
3%
600
3%
460
3%
Unit
No.1
No.2
Market Share
No.3
No.4
Company
Capacity
Market Share
No.5
Company
Capacity
Market Share
No.6
No.7
Company
Capacity
Market Share
23
Comparison of Top 5 Competitors
Business：Chemicals
Main Products
DEHP
Unit
No.1
Company
Capacity
Market Share
No.2
Company
Capacity
Market Share
No.3
Company
Capacity
Market Share
No.4
Company
Capacity
Market Share
No.5
Company
Capacity
Market Share
PA
INA
BPA
EG
thousand tons thousand tons thousand tons thousand tons thousand tons
Exxon Mobil
UPC
Exxon Mobil
Bayer
SABIC
915
300
565
1,223
3,795
10%
5%
44%
22%
16%
UPC
BASF
Evonik
GE
ME Global
745
275
340
978
2,315
8%
5%
26%
17%
10%
BASF
Nan Ya
BASF
Nan Ya
SINOPEC
660
228
185
455
2,253
7%
4%
14%
8%
9%
Aekyung
Exxon Mobil
Nan Ya
Mitsui
Shell
500
211
115
410
1,820
5%
4%
9%
7%
8%
Nan Ya
Aekyung
Kyowahakko
Hexion
Nan Ya
350
180
80
390
1,770
4%
3%
6%
7%
7%
* Nan Ya’s EG capacity of 1,770 thousands tons per year is theoretical capacity. Actual EG capacity can reach 2,080
thousand tons per year。
24