20190326 Japfa Ltd Corporate Presentation 2019.Pdf

JAPFA LTD Corporate Presentation 2019 26 March 2019 Agenda 1 Group Overview 2 Growth Prospects 3 Our Business Segments 4 Looking Ahead 5 Appendix 1 Group Overview . Established in 1975 Feeding Emerging Asia . 5 animal protein businesses in 5 countries . Japfa Ltd’s market capitalisation: approx US$1.0 billion1 . FY2018 revenue: US$3.5 billion 2 1 As at 31 December 2018 1 As at 30 Jan 2018 Leading Pan-Asian Industrialised Agri-Food Company WHAT WE DO WHERE WE ARE WHY WE DO IT We produce quality We employ over 3 billion people living protein staples, dairy, 38,000 people across in our target markets and packaged food that Singapore, Indonesia, More than 40% of the nourish millions of Vietnam, Myanmar, world’s total people India and China population A leading pan-Asian, industrialised agri-food company dedicated to feeding emerging Asia with essential proteins 3 Over 40 Years of Growth The Group has grown from a single poultry feedmill in Indonesia to a leading pan-Asian agri-food company operating in 5 countries. Its diversification strategy into new geographies and proteins positions the Group to be a long-term industry player. Track record by PT Japfa Tbk1 and the Santosa family Indonesia: Indonesia: India: Indonesia: Indonesia: Vietnam: Established our first poultry Established aquaculture Established poultry Established dairy Established beef Established swine feedmill in Surabaya operations feed operations farming operations operations operations 1975 1982 1986 1989 1995 1996 1997 2000 2008 2009 2012 Indonesia: Indonesia: Vietnam: Indonesia: China: Established PT Japfa Tbk listed on Established feed and Launched Greenfields and Established dairy poultry breeding Jakarta Stock Exchange poultry operations other consumer food brands farming operations Businesses above are now held under Japfa Ltd 2014 2015 2016 2018 Japfa Ltd: Indonesia: Japfa Ltd: Japfa Ltd: Listed on Singapore KKR acquired a 10.4% Revenue surpassed US$3 billion Acquired remaining interest in Stock Exchange stake in PT Japfa Tbk Dairy (AustAsia) Myanmar: China: Established poultry Completed farms 6 and 7 operations 1 PT Japfa Comfeed Indonesia Tbk 4 Vertically Integrated Business Across Entire Value Chain Five Proteins | Five Countries ANIMAL PROTEIN – PT JAPFA TBK ANIMAL PROTEIN – OTHER DAIRY Indonesia Vietnam | Myanmar | India China | Indonesia UPSTREAM ANIMAL FEED PRODUCTION PoultryFeed Cattle Feed AquacultureFeed PoultryFeed Swine Feed CattleFeed BREEDING FARMS Poultry Breeding Beef Cattle Breeding Aquaculture Breeding Poultry Breeding Swine Breeding Dairy CattleBreeding MIDSTREAM MILKING & FATTENING Poultry Commercial Beef Feedlots Aquaculture Commercial Poultry Commercial Swine Dairy Milking FARMS Farming Farming Farming Fattening DOWNSTREAM CONSUMER FOOD Indonesia Vertically Integrated BusinessModel Vertically PROCESSING & DISTRIBUTION Branded Consumer Foods Branded Dairy Products Notes: • Five Proteins refer to Poultry, Beef, Aquaculture, Swine and Dairy. • Five Countries refer to Indonesia, Vietnam, Myanmar, India and China. 5 Japfa’s Core Competencies Industrialised approach to farming and food production CORE COMPETENCIES FEED UPSTREAM Enjoys economies LARGE SCALE ANIMAL FEED of scale and an • Ability to manage mega-scale farming operations; over PRODUCTION 38,000 employees across five countries established network • Scale of the Group’s animal feed business provides stability to group revenue and profitability TECHNOLOGY BREEDING • JVs with leading genetics companies (Aviagen and Hypor) LIVESTOCK FARMS for superior breeds and genetics FARMING • Advanced feed technology Strong livestock • Combined with best farm management practices MIDSTREAM farming experience MILKING & and expertise ANIMAL HEALTH FATTENING • Best in class bio-security using stringent operating FARMS procedures • In-house vaccine production firm PT Vaksindo STANDARDISATION AND REPLICATION BRANDED Vertically Integrated BusinessModel Vertically DOWNSTREAM • Replication of best practices and infrastructure design across CONSUMER FOODS five protein groups and five countries PROCESSING & Future growth • Replication of farm design model in dairy farms, DOC DISTRIBUTION driver breeding farms, feedmills, etc 6 GROWTH PROSPECTS PT Japfa TbkAnimal Protein Other Dairy Consumer Food Japfa’s Emerging Asia: Market Growth GDP US$ trillion 25 Europe 1.3% North America & Japfa Emerging Asia US$22.0t Canada 7.0% 20 2.2% US$14.1t US$19.2t 15 Rest of Asia 2.7% South America & US$14.0t Carribean 10 -0.4% Japfa operates in the major US$5.4t high growth markets of Emerging Asia (Indonesia, China, 5 Vietnam, India & Myanmar) Africa Oceania 3.5% High potential for protein 2.7% US$2.4t consumption growth US$1.6t 0 -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% GDP CAGR 2011 – 2017 Circle size is a diagrammatic reflection of 2017 population *All percentages (%) above refers to 2011- 2017 GDP CAGR *”Rest of Asia” refers to Asian countries excluding Japfa’s *GDP US$ trillion in each circle shows the 2017 GDP Emerging Asia countries 8 constant US$ value *Source: World Bank Data The Right Business in the Right Markets Poultry Swine Poultry Meat Consumption per capita in Asia Per capita consumption (kg per capita - 2015) (kg per capita - 2015) Malaysia 47.5 41.3 Philippines 11.7 22.2 Indonesia 10.1 Vietnam 9.9 China 9.3 Vietnam China Source: Frost & Sullivan Estimates, 2017 Source: Ipsos, Vietnam Meat Market, 20161 Rising consumption in emerging Asian markets . Ample room for sustained growth in business locations with some Positive correlation between GDP per capita and Poultry Meat Consumption (2015) of the lowest meat protein consumption per capita in Asia 60 . “Meat-of-choice” given poultry’s relative affordability, religious United States neutrality, consumer preference, increasing penetration and 50 Malaysia popularity of quick service restaurants Saudi Arabia 40 Brazil Argentina . Vietnam is one of the world’s top pork consumption countries and Canada 2 30 South Africa Singapore stands second in Asia, only after China Mexico . Strong projected growth in GDP per capita to underpin growing 20 Philippines protein consumption Consumption Capita/ (Kg) 10 Vietnam Indonesia . Potential upside as diets evolve to include more meat-based 0 India protein from the currently carbohydrate-heavy diets 0 10,000 20,000 30,000 40,000 50,000 60,000 GDP / Capita (USD) Source: OECD, UN, Frost & Sullivan Estimates, 2017 1 https://www.ipsos.com/sites/default/files/2016-08/meat-market-in-vietnam.pdf 2 USDA Foreign Agricultural Service, Vietnam, Grain and Feed Annual, 2017 9 Japfa’s Business Segments: Revenue growth Revenue: PT Japfa Tbk, Dairy and APO-Vietnam US$ million 3,500 3,000 FY2018 Sales Revenue APO-India US$98.4 million 2,500 APO-Myanmar US$81.2 million 2,000 1,500 1,000 500 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 PT Japfa Tbk Dairy APO-Vietnam Note: Sales figures in foreign currencies translated to USD at each annual prevailing exchange rate 10 Japfa’s Business Segments: Assets Growth Total Assets: PT Japfa Tbk, Dairy and APO-Vietnam US$ million 3,000 Total Assets increased by US$2 billion from FY1998 to FY2018 2,500 2,000 1,500 1,000 500 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 PT Japfa Tbk Dairy APO-Vietnam 11 Japfa’s Business Segments: Feed Volume Growth Rates ‘000 tons Total feed volume increased by 5,000 2.5 million tons from FY2008 to FY2018 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 PT Japfa Tbk Poultry Feed APO Poultry Feed APO-Vietnam Swine Feed 12 Market Share Shift to Industrialised Producers China Dairy Cattle Population Vietnam PS Sow Population 20141 20161 20142 20182 15.0m heads4 14.3m heads4 3.8m heads4 3.2m heads4 15.0% 20.2% 35.0% 28.2% 20.0% 15.0% 47.7% 25.0% 54.8% 24.1% 50.0% 65.0% 1-100 heads 100-1000 heads 1000+ heads Backyard Hybrid3 Industrialised In China, industrialised dairy producers (1000+ Similarly in Vietnam, industrialised swine producers heads) achieve better productivity (higher milk achieve better productivity (breed more piglets) and yields) and better milk quality (commanding higher better quality piglets, with a lower production cost. selling prices). The shift to industrialised producers was accelerated in 2017 due to the extraordinary As a result, the raw milk supply market share is reduction in demand after China closed its borders shifting towards industrialised producers (1000+ to the import of pigs from Vietnam. heads). It is estimated that the Parent Stock (PS) sow population shrunk 16% from 2014 to 2018. 1 Source: China Dairy Statistical Summary 2018, Rabobank 2 Source: Market shares above based on the Company’s own estimates 3 Industrialised breeders use strict breeding methodology and systems, in comparison to Hybrid breeders that allow uncontrolled crossbreeding 13 4 The number of heads represents total population in each respective country Responsible Growth US$ million Japfa Group Capex relative to EBITDA US$ million PT Japfa Tbk Capex relative to EBITDA 500 500.0 450 450.0 400 400.0 350 350.0 300 300.0 250 250.0 200 200.0 150 150.0 100 100.0 50 50.0 0 - 2011 2012 2013 2014 2015 2016 2017 2018 2011 2012 2013 2014 2015 2016 2017 2018 EBITDA Capex EBITDA Capex US$ million Japfa Group Capex US$ million APO Capex relative to EBITDA 500.0 490.0 450.0 440.0 400.0 390.0 350.0 340.0 300.0 290.0 250.0 240.0 200.0 190.0 150.0 140.0 100.0 90.0 50.0 40.0 - (10.0)

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