Alumex Limited

Strictly for Private Circulation Only
Alumex Limited
Initial Public Offering
Financial Advisors and Managers to the Offering
Financial Advisors and Managers to the Offering
February 20,
24, 2014
Disclaimer
2
This presentation has been prepared by NDB Investment Bank Limited (“NDBIB”) on behalf of Alumex Limited (the “Company” or
“Alumex”) solely for the purpose of investor presentations and unless otherwise expressly authorised by NDBIB, shall not be used
by any third party. This report is for the use of the intended recipient only. Access, disclosure, copying, distribution or reliance on
any of it by anyone else is prohibited and may be a criminal offence. The presentation does not constitute or form of any offer for
sale or invitation, or solicitation of an offer, to subscribe for or purchase any securities and neither this presentation nor anything
contained herein shall form the basis of or be relied on in connection with any contract or commitment whatsoever.
This presentation has been prepared and issued on the basis of publicly available information, internally developed data and other
sources, believed to be reliable. NDBIB however does not warrant its completeness or accuracy. Opinions, estimates and forecasts
given constitute a judgment as of the date of the material and are subject to change without notice. This presentation may
contain forward-looking statements regarding, amongst other things, the Company's outlook, business and strategy which are
current as of the date they are made. These forward-looking statements are based largely on the current assumptions,
expectations and projections of the directors and management of the Company about the business, and the industry in which the
Company operates in. These statements are not guarantees of the Company’s future performance and are subject to a number of
risks and uncertainties, some of which are beyond the Company's control and are difficult to predict. Future developments and
actual results could differ materially from those expressed in the forward-looking statements. In light of these risks and
uncertainties, there can be no assurance that the forward-looking information will prove to be accurate. Certain data in this
presentation has been obtained from various external data sources and NDBIB have not verified such data with independent
sources.
The recipients of this presentation must make their own independent decision regarding any securities, investments or financial
instruments mentioned herein. NDBIB, there directors, officers, consultants, employees, associates or business partners, will not
be responsible, for any claims damages, compensation, suits, damages, loss, costs, charges, expenses, outgoing or payments
including attorney’s fees which recipients of this presentation suffers or incurs directly or indirectly arising out actions taken as a
result of this presentation.
Financial Advisors and
Managers to the Offering
Offer Summary
Number of Ordinary Voting Shares
to be Offered
Offer Price
Amount to be Raised
Objectives of the Offering
Allocation
Issue Opening Date
Issue Closing Date
Listing
Estimated Market Capitalisation at the
IPO Price
Resultant Public Float
3
59,860,600
LKR 14/LKR 838mn (Offer for Subscription of LKR 250mn and Offer for Sale of LKR 588mn)
I. To finance the capital requirement to setup a powder coating plant
II. To be eligible for the tax benefit offered by GoSL for entities obtaining a listing on
the CSE
III. To facilitate Alumex to obtain a listing on the CSE and broad-base the public
ownership
Retail Individual Investor Category
Unit Trust Investor Category
Non-Retail Investor Category
40%
10%
50%
March 06, 2014
March 25, 2014
Or the day on which the Issue becomes oversubscribed, whichever is earlier
To be listed on the Diri Savi Board of the CSE
LKR 4,190mn
20%
Financial Advisors and
Managers to the Offering
Shareholding Structure
Shareholder
Hayleys PLC
Rosewood (Private) Limited
Akbar Brothers (Private) Limited
Star Pack Investments (Private) Limited
Mr. D. W. P. N. Dediwela
Mr. T. H. D. I. U. Thirimanne
Mr. J. M. Iqbal
Roshan Trading Company (Private) Limited
New Shares
Shares Offered to Public
Total
4
Pre IPO
Number of
Shares Shareholding
(millions)
171.33
60.88%
38.50
13.68%
38.50
13.68%
21.00
7.46%
10.67
3.79%
1.11
0.39%
0.22
0.08%
0.11
0.04%
IPO
Post IPO
Number of Number of
Shares
Shares Shareholding
(millions) (millions)
18.69
152.64
51.00%
9.16
29.34
9.80%
9.16
29.34
9.80%
5.00
16.00
5.35%
10.67
3.56%
1.11
0.37%
0.22
0.07%
0.11
0.04%
17.86
281.45
100.00%
59.86
59.86
20.00%
299.30
100.00%
• In order to be eligible for the tax benefit of 50% for 3 years starting from FY 2013/14 the Company
has to offer 20% to the public through the IPO
• LKR 250mn required for the capital expenditure converts only to a 6% of the Shares in issue post IPO
• As a result, the existing shareholders are required to offer the balance 14% to fulfil the 20% public
holding
Financial Advisors and
Managers to the Offering
Locked in Shares
Shareholder
Hayleys PLC
Rosewood (Private) Limited
Akbar Brothers (Private) Limited
Star Pack Investments (Private) Limited
Mr. D. W. P. N. Dediwela
Mr. T. H. D. I. U. Thirimanne
5
Number of
Shares Shareholding
(millions)
152.64
29.34
29.34
16.00
10.67
1.11
51.00%
9.80%
9.80%
5.35%
3.56%
0.37%
Locked- in period
Up to 6 months from the date of listing
6 months from the date of listing
6 months from the date of listing
6 months from the date of listing
6 months from the date of listing
6 months from the date of listing
The existing major shareholders will be locked in for a minimum of 6 months, as such
these shares will would not be available for secondary market trading on the CSE
for the said period
Almost the entirety of the unlocked shares post IPO would be the shares offered to
the public through the IPO at LKR 14/-
Financial Advisors and
Managers to the Offering
Strictly Confidential
ALUMEX LIMITED
Financial Advisors and
Managers to the Offering
6
Alumex - Ultimate in Aluminium Profiles
• Over 25 years experience in profile manufacturing since 1988
• State-of-the-art extrusion, anodizing, powder coating, wood effect and die
manufacturing facility in Makola
• Market share exceeding 50% over a decade
• Modern testing equipment for quality control
• Over 400 staff with extensive experience
Alumex is the only Sri Lankan company capable of,
Designing and
manufacturing
extrusion dies
(uses CNC machinery with
CAD/CAM technology)
Manufacturing
220 mm CCD
(width) aluminium
extrusions
Manufacturing of
high performance
aluminium
proprietary
systems
Ensuring the
quality of recycled
aluminium using
spectrometer
• Part of the diversified conglomerate, Hayleys PLC
Financial Advisors and
Managers to the Offering
7
Alumex Group
8
Alumex Limited
Manufacturing of aluminium logs, dies (molds),
extruding and surface coating profiles for industrial
and architectural sectors
100%
100%
Avro Enterprises (Private) Limited
Alco Industries (Private) Limited
• Incorporated in 2008
• Imports and distributes a range of aluminium
accessories and related products (Interlock,
Alpolic, Giesse, Dupont, Elumatec)
• BOI company, incorporated in 2010
• Enjoys concessionary tax rates
• Produces components required by various
industries and specific components such as
clamps and connectors for CEB
Financial Advisors and
Managers to the Offering
Board of Directors
9
Name
Designation
Mr. Mohan Pandithage
Chairman/Chief Executive
Mr. Rohan Peris
Managing Director
Mr. Pramuk Dediwela
Executive Director
Mr. Sarath Ganegoda
Non-Executive Director
Mr. Ranil Pathirana
Non-Executive Director
Mr. Ali Asghar Akbarally
Non-Executive Director
Mr. Huzaifa Abdulhusein
Non-Executive Director
Dr. Harsha Cabral, PC
Independent Non-Executive Director
Mr. Somasiri Munaweera
Independent Non-Executive Director
Mr. Aroon Janak Hirdaramani
(Alternate to Mr. R. P. Pathirana)
Non-Executive Director
Mr. Tyeabally Akbarally
(Alternate to Mr. A. A. Akbarally)
Non-Executive Director
Financial Advisors and
Managers to the Offering
Experienced and Qualified Management Team
Name
Designation
Profile
Managing Director
• Over 28 years of experience in manufacturing at Haycarb PLC
• B.Sc Honours Degree in Industrial Engineering from Hatfield
Polytechnic, UK
Mr. Pramuk Dediwela
Executive Director
• Over 25 years of experience in the aluminium industry as part of the
Alumex Group
• Chartered Marketer/Financial Economist, Master of Arts in Financial
Economics from the University of Colombo, Master of Business
Administration from the University of Southern Queensland,
Postgraduate Diploma in Marketing (CIM-UK)
Dr. Chandika
Wickramatillake
Deputy General
Manager
(Production)
• Studied and worked overseas for 18 years in countries such as the
UK, Netherlands, Australia and the USA
• PhD in Material Science, from the University of Hertfordshire, UK
Mr. Nilruk Jeevaratne
Deputy General
Manager
(Marketing)
• Over 26 years of experience in the aluminium industry
• Extensive experience with international aluminium suppliers while
working for SGI Architectural, Australia and PD Keells Limited/Kelsey
Aluminium Limited
Chief Financial
Officer
• Over 14 years of experience in varied industries of audit,
telecommunication and manufacturing
• Bachelor of Business Administration Degree from the University of
Colombo, Associate Member of Institute of Chartered Accountants,
Sri Lanka
Mr. Rohan Peris
Mr. Prageeth
Rajapaksha
Financial Advisors and
Managers to the Offering
10
Fully Integrated Aluminium Profiles Manufacturer
Located close to the Sapugaskanda Industrial Zone utilizing a freehold land with an extent of 7 acres
Imported
Aluminium Billets
Aluminium Scrap
Imported Ingots
Extrusion
Die Design
(40% utilised)
12,000MT/year
(40% utilised)
2,400MT/year
Recycling
(45% utilised)
4,800MT/year
Anodizing
Powder Coating
(40% utilised)
5,400MT/year
(100% utilised)
1,800MT/year
Wood Coating
(50% utilised)
360MT/year
Packing and
Dispatch
With the acquisition of the new powder coating plant, Alumex Group will double its
capacity (3,600MT/year) to meet the future demand
Financial Advisors and
Managers to the Offering
11
Strong Relationship with Suppliers
12
Alumex sources a majority of its requirement of
aluminium billet logs and ingots through Dubai
Aluminium (Dubal) and Emirates Aluminium (Emal)
• Dubal and Emal, both subsidiaries of Emirates Global Aluminium
(EGA), are two of the world's largest single-site aluminium smelters
with a production capacity of over 2 million MT/year
• EGA is the Industrial flagship of the UAE and among the
largest non-oil contributors to its economy
• EGA is ranked among the five largest aluminium
producers in the world
Alumex Group has been sourcing aluminium
from Dubal for 22 years and has built a
good relationship with the supplier
Financial Advisors and
Managers to the Offering
Strong Network with Forward Integration
13
Islandwide distribution network of 57 dealers
5 Alumex distribution centres
Makola
Kotte
Jaffna
Anuradhapura
Ratnapura
Alumex Group is the only aluminium extruder to
provide training for fabricators
• Over 10,000 fabricators/technocrats trained since
1998
• Exclusive signup with Vocational Training
Authority to conduct the NVQ Level 3 Fabricator
Training Programme in five centers in Northern
Peninsuila, Galle, Ratnapura, Kurunegala and Ratmalana
Distribution Centers
Dealer s
Head Office and Facility
Financial Advisors and
Managers to the Offering
Unique International Affiliations
14
Only manufacturer of internationally reputed high performance aluminium window
and door proprietary systems under license in Sri Lanka
• A leader in design and manufacture of premium
aluminium proprietary building systems
• Based in Italy with product extrusion facilities in
China, Italy and Sri Lanka
• Develops and manufactures premium aluminium
proprietary building systems and extrusions for an
extensive range of industries
• Based in New Zealand with product extrusion
facilities in New Zealand, Thailand and Sri Lanka
National distributors for globally renowned aluminium profiles in Sri Lanka
Avro Enterprises (Private) Limited is the national distributors of Alpolic composite materials, DuPont
Corian Composite panels, Elumatec Aluminium and UPVC processing machines, and Assa
Abloy/Interlock Aluminium in Sri Lanka
Financial Advisors and
Managers to the Offering
Few Local Projects
15
Sports Ministry
Hambantota Port
Building
Colombo Port
Building
Supun Arcade
Chartered Institute
of Sri Lanka
Airport Garden
Hotel
CPC Building
Dematagoda
People’s Bank
Building
Pership Building
SLINTEC (Nano
Park) Homagama
Kingsbury Hotel
Sethsiripaya
Financial Advisors and
Managers to the Offering
Some International Projects
16
Raufathuge Project
Green Building
Maldives
Maldives
Joondalup
Residential Building
Australia
Australia
Financial Advisors and
Managers to the Offering
Few of the Projects in the Pipeline for Alumex
• Dialog Head Office Building – Colombo 02
• Mercedes Benz Show Room – Colombo 14
• UDA Housing Complex – Colombo 15
• Access Towers 2 – Colombo 02
• Southern Provincial Council Building – Galle
• Rajarata University Building – Mihintale
• DSI Office/Factory Complex – Maharagama
• CDB Office Complex – Colombo 10
• Tata Show Room – Jaffna
• Census and Statistics Department Office Complex – Battaramulla
• Free Lanka Head Office – Colombo 07
• CEB Head Office – Jaffna
• Dental Hospital – Colombo 07
• General Hospital – Hambantota
• General Hospital – Ragama
• Cancer Hospital – Maharagama
Financial Advisors and
Managers to the Offering
17
Leader in Aluminium Extrusions
LKR Millions
Revenue of Major Aluminium Extruders
in Sri Lanka
18
Capacity of Aluminium Extruders
in Sri Lanka
4,500
Hemnette
10%
4,000
3,500
3,000
Swisstek
17%
2,500
2,000
1,500
1,000
Alumex
56%
500
0
2011/12
2012/13
2013/14 6M
Source: Annual/Quarterly Reports
PBT Margins of Major Aluminium Extruders
in Sri Lanka
Alumex
Lanka Aluminium
Swisstek
18.63%
3.96%
1.12%
Lanka Aluminium
17%
Source: Alumex Limited
Competitors mainly focus on the aluminium extrusions for the commercial segment,
whilst Alumex concentrates mainly on the architectural proprietary systems which
requires superior quality and provides higher margins
Financial Advisors and
Managers to the Offering
Strategic Direction
19
Shift in Focus to Value Added Products
Steady
increase in
demand for
value added
products
3,145 MT
Heavy dependence on
anodized products
Alumex Group
expects the
product mix to
shift in favour
of value added
segments in
future
4,173 MT
Significant portion of
income from value added
products (powder coated
and wood coated)
7,205 MT
Over 50% revenue from
value added products with
the expected construction
boom in Sri Lanka
Financial Advisors and
Managers to the Offering
Strategic Direction
20
Advanced Design Centres
Establish 10 advanced design centres to serve the customer requirements on
drawings, details of fabrications, BOQs and recommend fabricators
Nawala
Kandy
Matara
Nittambuwa
Galle
Jaffna
Ratnapura
Batticaloa
Negombo
Kurunegala
Venturing into New Markets
Expand its operations in regional markets including India,
Maldives, Bangladesh and Myanmar (in March 2014)
Quality wood coated and powder coated products
compared to regional manufacturers
India
Bangladesh
Myanmar
Maldives
Head Quarters
Leveraging on Alumex’s international partners
Financial Advisors and
Managers to the Offering
Strictly Confidential
PROMISING
PROMISINGINDUSTRY
INDUSTRY
OUTLOOK
OUTLOOK
Financial Advisors and
Managers to the Offering
Construction Sector Growth
8.50%
8.00%
20.0%
7.50%
15.0%
7.00%
10.0%
6.50%
6.00%
5.0%
5.50%
0.0%
5.00%
2009
2010
2011
Construction sector recorded a
remarkable growth of 21.6% in
2012 compared to 14.2% in 2011
Construction industry’s share of
GDP increased to 8.0% in year
2012 from 7.1% in 2011
2012*
Construction Sector Growth (at constant 2002 prices)
Construction as a Share of GDP
*Provisional data
Share of GDP
Construction Sector Growth
25.0%
22
Aluminium applications are widely
used in modern infrastructure
projects
Source: Central Bank of Sri Lanka
Competitive advantages of Alumex Group in winning new projects
•
•
•
•
Existing relationship with developers/fabricators
Renowned for quality aluminium products including globally licensed profiles
Leading fabricators’ recommendation
Exclusive designs based on customer requirement
Financial Advisors and
Managers to the Offering
Dramatic Change in Colombo’s Skyline
A significant demand for Aluminium would be created through these projects
during the next 2 to 4 years
Financial Advisors and
Managers to the Offering
23
Stable Global Aluminium Prices
24
3000
USD/Metric Tonnes
2500
2000
1500
1000
500
0
2009
2010
2011
2012
2013
2014E
2015E
2016E
2017E
2018E
2019E
Source: World Bank, Commodity Outlook
•
Aluminium prices have continuously reduced since 2011
•
Aluminium price forecast of World Bank indicate a stable price behavior of around
USD 1,800 - USD 2,300 per metric ton over the next 12 years
Stable outlook in global aluminium prices will facilitate smooth operational
performance for Alumex
Financial Advisors and
Managers to the Offering
Environment Friendly Green Metal
25
Price Indices for Timber (1990=100)
1200
• Deforestation - a serious environmental issue
1000
• Declining supply of timber from natural forests
800
Price of timber continues to increase
600
Aluminium profiles have low maintenance cost
and higher durability compared to timber
400
200
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
A shift in demand, from timber to aluminium
profiles can be seen in the construction industry
Source: Central Bank of Sri Lanka
It is expected that wood effect and powder coated aluminium profiles will
substitute wood and penetrate the local construction and interior designing to
a great extent
Alumex, the pioneer in wood effect profiles, is positioned to reap the benefits of
the shift in demand towards wood coated products
Financial Advisors and
Managers to the Offering
Government’s Support for Local Manufacturers
• Increased import CESS for processed and semi processed aluminium products
India
All countries except India
Import tax rate
0%
25%
CESS rate
10%
5%
Alumex is positioned with a competitive edge in manufacturing international
quality aluminium products.
The import tariffs would further enhance the competitiveness of Alumex.
Financial Advisors and
Managers to the Offering
26
Strictly Confidential
STRONG
FINANCIAL
STRONG
FINANCIAL
PERFORMANCE
PERFORMANCE
Financial Advisors and
Managers to the Offering
Improving Profitability
28
Consolidated Income Statements
Year ended March 31,
Revenue
2009
2010
All figures in LKR millions
2011
2012
2013
1,859.3 1,593.2 2,279.5 2,189.7 2,430.0
Gross Profit
Profit from Operations
Profit before Taxation
374.6
275.5
224.0
263.5
106.8
64.6
355.6
90.7*
58.7
390.8
177.8
110.7
669.6
415.8
377.8
Net Profit for the Year
171.0
31.6
37.2
114.5
306.3
50.0
100.0
16.0
16.1
100.5
Gross Margin
20.1%
16.5%
15.6%
17.8%
27.6%
Operating Margin
14.8%
6.7%
4.0%
8.1%
17.1%
9.2%
2.0%
1.6%
5.2%
12.6%
Return on Equity
10.3%
14.2%
18.8%
43.2%
Return on Assets
3.1%
3.9%
7.1%
19.5%
Dividends Paid
Net Margin
Earnings Per Share (LKR)
0.61
0.11
0.13
0.41
1.09
Dividends Per Share (LKR)
0.18
0.36
0.06
0.06
0.36
Improved margins
– Shift in product mix in
favour of value added
segments
(powder
coated and wood coated
products)
– Improved
operational
efficiencies
including
working
capital
management
High Dividend Payout
– Overall dividend payout
of over 40% during the
last five years
*After writing off Goodwill created through acquisition of United Ceylon Insurance Company
Limited amounting to LKR 83mn
Financial Advisors and
Managers to the Offering
Strong Balance Sheet
29
Consolidated Statements of Financial Position
As at March 31,
2009
2010
All figures in LKR millions
2011
2012
2013
Non-current Assets
385.7
396.3
857.6
882.9
969.4
Current Assets
633.0
557.4
752.7
686.8
730.6
1,018.7
953.7
1,610.3
1,569.7
1,700.0
Equity
306.8
262.4
609.8
708.4
984.1
Non-current Liabilities
104.5
124.4
248.3
204.9
186.2
Current Liabilities
607.4
566.9
752.1
656.3
529.6
1,018.7
953.7
1,610.3
1,569.7
1,700.0
20.6%
28.3%
22.5%
19.0%
9.4%
Current Ratio
1.04
0.98
1.00
1.05
1.38
Net Asset Value per Share (LKR)
1.10
0.94
2.18
2.52
3.50
Total Assets
Total Equity and Liabilities
Gearing [D/(D+E)]
Financial Advisors and
Managers to the Offering
Recent Performance
30
Income Statements
Statements of Financial Position
All figures in LKR millions
For the ten months ended
January 31,
All figures in LKR millions
March 31, January 31,
2013
2014
2013
2014
1,972.2
2,251.1
Gross Profit
530.5
622.5
Non-current Assets
969.4
937.9
Profit from Operations
327.0
408.2
Current Assets
730.6
956.7
Profit before Taxation
290.2
398.2
Total Assets
1,700.0
1,894.6
Net Profit for the Year
237.2
326.0
Equity
984.1
1,152.9
Non-current Liabilities
186.2
154.1
529.6
587.6
1,700.0
1,894.6
3.50
4.10
Revenue
Dividends
148.8
As at
Gross Margin
26.9%
27.7%
Current Liabilities
Operating Margin
16.6%
18.1%
Total Equity and Liabilities
Net Margin
12.0%
14.5%
0.84
1.16
Earnings Per Share (LKR)
Net Asset Value per Share (LKR)
Financial Advisors and
Managers to the Offering
Forecast Income Statements
31
All figures in LKR millions
2017F
2018F
2019F
2014E
2015F
2016F
2,784.8
3,442.6
4,145.0
4,903.0
5,644.1
6,338.2
Gross Profit
756.8
898.9
1,041.9
1,200.6
1,333.1
1,459.4
Profit from Operations
475.0
590.5
702.3
827.2
923.0
1,010.9
Profit before Taxation
456.1
576.6
692.6
819.0
914.5
1,002.1
Net Profit for the Year
417.5
527.8
614.4
650.2
700.5
758.3
38.3
47.9
57.2
Net Profit (excluding IPO tax benefit)
379.2
479.9
557.2
Revenue Growth
14.6%
23.6%
20.4%
18.3%
15.1%
12.3%
Gross Margin
27.2%
26.1%
25.1%
24.5%
23.6%
23.0%
Operating Margin
17.1%
17.2%
16.9%
16.9%
16.4%
15.9%
Net Margin
15.0%
15.3%
14.8%
13.3%
12.4%
12.0%
Net Margin (excluding IPO tax benefit)
13.6%
13.9%
13.4%
Return on Equity (excluding cash)
45.4%
44.1%
54.0%
61.3%
68.3%
76.9%
Return on Assets (excluding cash)
25.5%
27.3%
30.3%
30.4%
30.9%
31.7%
1.48
1.76
2.05
2.17
2.34
2.53
Year ending March 31,
Revenue
Tax Saving due to IPO
Earnings per Share (LKR)
Financial Advisors and
Managers to the Offering
Forecast Financial Statements
32
Statements of Financial Position
As at March 31,
Non-current Assets
Current Assets (excluding Cash)
Cash and Cash Equivalents
Total Assets
2014E
1,151.2
780.6
277.9
2,209.7
2015F
1,063.1
965.7
600.8
2,629.6
2016F
976.5
1,165.3
985.5
3,127.3
All figures in LKR millions
2017F
2018F
2019F
887.5
796.3
703.9
1,379.7
1,594.3
1,794.8
1,345.4
1,735.2
2,163.1
3,612.6
4,125.9
4,661.7
Equity
Non-current Liabilities
Current Liabilities
Total Equity and Liabilities
1,474.6
162.4
572.7
2,209.7
1,738.5
157.2
733.9
2,629.6
2,045.7
165.0
916.5
3,127.3
2,370.8
176.2
1,065.5
3,612.6
2,721.1
188.6
1,216.2
4,125.9
3,100.2
202.4
1,359.1
4,661.7
4.93
5.81
6.84
7.92
9.09
10.36
Net Asset Value per Share (LKR)
Statement of Cash Flows
Year Ending March 31,
Net Cash From Operating Activities
Net Cash From Investing Activities
Net Cash From Financing Activities
Net Increase/(Decrease) in Cash Flows
Free Cash Flow to Equity Holders
2014E
447.6
(254.0)
20.4
214.0
2015F
632.5
(25.0)
(284.6)
322.9
2016F
743.2
(25.0)
(333.4)
384.7
364.3
560.4
661.2
All figures in LKR millions
2017F
2018F
2019F
702.6
758.6
823.2
(20.0)
(20.0)
(20.0)
(322.7)
(348.7)
(375.4)
359.8
389.8
427.9
652.4
705.1
Financial Advisors and
Managers to the Offering
769.1
Attractive Valuation
33
Post IPO Value of Alumex Group
based on discounted cash flow method* (in LKR million)
5,721.7
Number of Shares After IPO
299,302,840
Value per Share (in LKR)
19.12
IPO Discount
27%
Proposed IPO Price (in LKR)
14.00
Post IPO Value of Alumex Group at IPO Price (in LKR million)
4,190.2
*Assuming Cost of Equity of 17% and terminal growth rate of 5%
Equity IRR of 22% is projected at the IPO Price of LKR 14/-
Financial Advisors and
Managers to the Offering
Attractive Multiples
34
• Price multiples of Alumex Group
Earnings per Share (LKR)
Price to Earnings Ratio
Net Asset Value per Share (LKR)
Price to Book Value*
2013/14
1.48
9.4
2014/15
1.76
7.9
2015/16
2.05
6.8
4.93
2.8
5.81
2.4
6.84
2.0
* The Price to Book Value ratio is high as a result of substantial dividends amounting to
LKR 430 million being paid out by the company over the last 6 years period out of a profit
of approximately LKR 1,078 million. If not for the payment of substantial dividends, the
Price to Book Value ratio would be lower.
• Manufacturing Sector Multiples
– PER: 14.1
– P/BV: 1.9
• Market Multiples
– PER: 16.7
– P/BV: 2.1
The Sector and Market Multiples were based on CSE as at January 28, 2014
Financial Advisors and
Managers to the Offering
Competitor Analysis
35
All figures in LKR millions
Aluminium Extrusion Revenue
2012/13
2013/14 6 Months
Total Revenue
2012/13
2013/14 6 Months
Net Profit
2012/13
2013/14 6 Months
889.8
610.2
965.6
522.2
2,430.0
1,300.5
1,929.9 a
1,321.1 a
1,189.2 b
761.0 b
2,430.0
1,300.5
(6.1) a
21.7 a
(17.1) b
13.2 b
-0.32%
1.64%
-1.44%
1.73%
12.61%
15.05%
Market Capitalisation
420.7 c
624.1 c
4,190.2 d
PBV
N/A
9.70x e
0.73x
N/A
23.70x e
1.04x
Business segments;
- Aluminium extrusion
- Aluminium fabrication
- Tea Exports
b
Business segments;
- Aluminium extrusion
- Tile related products
- Wooden flooring and
installation
c
As at January 31, 2014
d
Based on IPO price
e
Annualised 6 months
306.3
195.8
Net Margin
2012/13
2013/14 6 Months
PER (based on 2012/13 earnings)
PER (based on 2013/14 earnings)
a
12.86x
9.44x
2.84x
Source: Annual/Quarterly Reports
Financial Advisors and
Managers to the Offering
“ALUMEX”– Uniquely Positioned IPO
36
Only Fully Integrated Manufacturer of Aluminium Profiles in Sri Lanka
Only company capable of designing and manufacturing extrusion dies (molds)
Only manufacturer of high performance aluminium proprietary systems
Only company with the capability to manufacture 220mm CDD (width) aluminium extrusions
Only company to have a 1850MT press to use 7” billets
Market Leader in Aluminium
Extrusions
Strong Network with Forward
Integration
Over 50% market share over the past decade
Over 70% market share in the architectural
industry
Network of 57 distributors
Trained over 10,000 fabricators
Positive Industry Outlook
Extensive Range of Superior
Quality Products
Growth in the construction sector
Trend towards wood coated products
Government support for local manufacturers
Diversified product categories
Exclusive designs
Superior quality powder coated and
wood coated products
Strong Financial Performance
Attractive Valuation
Unique International Affiliations
Improving profitability
Strong Balance Sheet
Attractive forward PER < 8
27% discount to the DCF valuation
Only company in Sri Lanka with
international affiliations
Financial Advisors and
Managers to the Offering
37
Aluminium Extruders
in Sri Lanka
For more information please contact :
Navodana
Dhileeban
+94 71 482 1264
+94 77 764 1469
navodana@ndbib.com
dhileeban@ndbib.com
Financial Advisors and
Managers to the Offering