SAN SHING FASTECH
TW 5007
1
SAN SHING FASTECH
TW 5007
Shun-Sheng Wu
Vice chairman
2011.01.11 2
Brief Profile
Founded： on July 2, 1965
GTSM ：on Jan. 17, 1998
Capital ：NT$ 2.2 billion
Employees ：1,164 ( 2010.11.30)
Area of Plant and Buildings ：
Land －148,302.19M2，
Buildings －81,468.05M2
The net cost of land in book value is NT$1.325
billion.
3
Board of Directors
Li Family Professional
firm May. 2000
managers
All graduated from
college or above and
professional managers
They hold 38.50%
Board of Directors ： of issued shares in
7 directors and 3 supervisors total.( Nov. 2010 )
Operations of board of directors ：
•At least once a quarter
•The chief CPA is required to be present.
4
Management Team
Chairman of board
Mr. Chi-Yuan Ko
Professional managers
Vice chairman
Mr. Shun-Sheng Wu
Accounting background
President
Mr. Wen-Chieh Lin
Sales background
5
Distribution of Stock Right
Distribution of Numbers of Holding Rate of
Stock Right Shareholders Issued Capital Stock
0 ~ 10 4,826 2.91%
11 ~ 50 344 3.53%
51~ 100 62 2.06%
101 ~ 400 79 6.76%
401 ~ 1,000 27 7.65%
Above 1,000 18 77.09%
Total 5,356 100 %
Source：San Shing, Apr. 2010
6
Holding List by Main Group
Holding Rate of
Rank Relationship Group
Issued Capital Stock
1 Director Taifas Corporation 46.15%
2 Director Shun-Sheng Wu 20.03%
Subsidiary
3 Corporations
Subsidiary Corporations 6.84%
Connection Investment
4 Director
Limited
6.75%
5 Supervisor Cheng-Dar Tsai 3.56%
Total 83.33 %
Source：San Shing, Nov. 2010
7
Introduction of Products
Net Sales Gross Profit
Net Sales Weight Gross Profit Weight
Products Weight Jan ~ Nov,2010
Weight Jan ~ Nov,2010
in 2009 in 2009
Nuts 81.27% 73.24% 76.72% 76.87%
Bolts 7.29% 9.39% 1.60% 7.85%
Machine & Parts 1.21% 1.36% 0.75% 0.88%
Tooling 4.29% 5.46% 15.27% 10.67%
Wire Rod for Trading 5.27% 10.21% 5.23% 2.06%
Other 0.67% 0.34% 0.43% 1.67%
Total 100.00% 100.00% 100.00% 100.00%
Total revenue and
2,695 4,122 188 729
Gross Profit (NT$ m)
8
Position of Nut Products
San Shing is the largest nuts
manufacturer in the world.
More than 95% of our products are
exported.
San Shing’s export to USA is about
4.6% of USA nut import volume.
9
Strategy of Product
Trend of Nut Products
Jan ~ Nov
5007 S.S. Unit 2006 2007 2008 2009
2010
Weighting Standard Nuts (%) 18% 19% 16% 16% 12%
Custom Nuts (%) 82% 81% 84% 84% 88%
Standard Nuts (NT$/KG) 40.90 44.91 53.56 58.64 56.89
ASP Custom Nuts (NT$/KG) 56.29 60.25 66.48 70.31 68.55
Average (NT$/KG) 53.48 57.38 64.06 68.09 66.87
Shipment All Ton 74,592 70,824 64,237 32,242 45,160
10
Nuts Trend of Unit Price in Shipment
90 St andar d
83. 41
80 Cust om
70 69. 44
60
54.71
Unit price (NT/KG)
50
41.6
40
30
20
10
0
2006/1 2006/7 2007/1 2007/7 2008/1 2008/7 2009/1 2009/7 2010/1 2010/7
YYYY/MM
11
20
10.00%
15.00%
20.00%
25.00%
0.00%
5.00%
06
Q
20 1
06
Q
2
20
06
Q
20 3
06
15.79%
Q
20 4
07
Q
25. 03%
20 1
07
Q
2
20
07
Q
20 3
07
Q
20 4
08
Q
20 1
08
Q
2
20
08
Q
20 3
08
Q
r
20 4
23.63%
09
Q
20 1
09
Q
2
20
09
Q
20 3
09
-0.76%
Q
20 4
G oss Pr of i t
10
Q
20 1
10
Q
2
Nuts Trend of Gross Profit Margin
ar
20
1
20 0Q
10 3
.1
0~
M gi n
11
21. 73%
12
Distribution of Clients
2008 2009 Jan ~ Nov 2010
Unit： % Gr oss Gr oss Gr oss
Sales Pr of i t
Sales Pr of i t
Sales Pr of i t
Top 10 63 63 64 25 66 63
Top 20 77 77 80 70 81 79
Top 60 95 95 96 95 97 96
Top 100 99 100 99 100 99 99
Al l Cl i ents 100 100 100 100 100 100
13
Nuts Sales Breakdown of Main Countries by Amount
2010.01~2010.11
14
Unit Price of Nuts Breakdown by Main Countries
(NT/KG)
80.00
76.97
U. S. A
75.00 73.37 72.97
Ger many
70.70
70.00
Canada
67.58
65.00 64.76 64.33
Hol l and
60.00 60.25
56.49 Japan
55.00
Ot her s
50.00 49.91
2006 2007 2008 2009 2010.01~11
15
Nut Sales Breakdown by Industrial Category
Unit：% 2005 2006 2007 2008 2009
Automobile Industry 75% 82% 82% 83% 83%
General Industry 18% 13% 15% 14% 14%
Construction & Heavy
7% 5% 3% 3% 3%
Industry
Total 100% 100% 100% 100% 100%
16
Cost Structure of Nuts
2005 2006 2007 2008 2009 Jan ~ Nov
Unit：%
2010
Gross Margin 19.8% 23.0% 22.1% 21.4% 6.3% 18.8%
Material 54% 50% 51% 52% 49% 54%
COGS Labor 11% 13% 13% 12% 13% 12%
Overhead 35% 37% 36% 36% 38% 34%
17
Operation Result
─Statements of Income
Unit：NT$m 2005 2006 2007 2008 2009 2010
Net Sales 6,640 5,637 5,439 5,780 2,695 4,565
Gross Profit 923 994 1,023 984 188 808
Operating Income 519 634 649 637 -36 489
Investment Income 64 93 75 71 25 78
Interest Expenses -51 -36 -37 -35 -25 -14
Pretax Income 597 720 716 669 7 591
Net Income 481 551 551 540 -8
EPS 2.55 2.81 2.81 2.68 -0.04
※Unaudited data in the fourth quarter of 2010.
18
Net Sales
5, 000, 000
4, 565, 121
4, 500, 000
4, 000, 000
3, 500, 000
3, 000, 000 2, 695, 134
2009
2, 500, 000
2010
2, 000, 000
1, 500, 000 1, 260, 156 1, 262, 739
1, 094, 672
947, 554
1, 000, 000 826, 140
718, 236 639, 327
511, 431
500, 000
0
1Q 2Q 3Q 4Q Tot al
Net Sales 1Q 2Q 3Q 4Q Total
2009 718, 236 511, 431 639, 327 826, 140 2, 695, 134
2010 947, 554 1, 094, 672 1, 260, 156 1, 262, 739 4, 565, 121
19
Gross Profit
900, 000 單位: 新台幣仟
808, 176
800, 000 元
700, 000
600, 000
500, 000
2009
400, 000
2010
300, 000 261, 129
235, 793
179, 373 188, 036
200, 000
131, 881
101, 363
100, 000 57, 767
單位: 新台幣仟
41, 335
0
元 ( 12, 429)
( 100, 000) 1Q 2Q 3Q 4Q Tot al
Gr oss pr of i t 1Q 2Q 3Q 4Q Total
2009 41, 335 ( 12, 429) 57, 767 101, 363 188, 036
2010 131, 881 179, 373 261, 129 235, 793 808, 176
20
Operating Income
600, 000
489, 030
500, 000
400, 000
300, 000
2009
2010
200, 000 172, 705
150, 639
103, 651
100, 000 62, 035
35, 867
5, 268
0
( 15, 698)
1Q 2Q 3Q 4Q Tot
( 35, 558) al
( 100, 000) ( 60, 996)
per
O at i ng
i ncome 1Q 2Q 3Q 4Q Tot al
2009 ( 15, 698) ( 60, 996) 5, 268 35, 867 ( 35, 558)
2010 62, 035 103, 651 172, 705 150, 639 489, 030
21
Pretax Income
700, 000
591, 349
600, 000
500, 000
400, 000
2009
300, 000
2010
204, 425
200, 000 180, 360
129, 975
100, 000 76, 590
54, 249
6, 495 11, 240 6, 764
0
1Q 2Q 3Q 4Q Tot al
( 100, 000) ( 65, 220)
Pretax income 1Q 2Q 3Q 4Q Tot al
2009 6, 495 ( 65, 220) 11, 240 54, 249 6, 764
2010 76, 590 129, 975 204, 425 180, 360 591, 349
22
Operation Result
─Statements of Cash Flow
Unit: NT$ m 2005 2006 2007 2008 2009 2010.09.30
Net Income 481 551 551 540 -8 350
Cash Flow － Operating 868 1,157 715 342 804 333
Cash Flow － Investing -223 -93 -212 -2 -42 -47
Cash Flow － Financing -487 -947 -704 -117 -889 -365
Cash & Cash Equivalent 306 424 223 446 319 241
Capital Expenses -221 -218 -239 -302 -56 -65
R & D Expenses -21 -22 -21 -24 -29 -25
23
Balance Sheets and Financial Ratio
Unit: NT$ m 2008 2009 2010
Current Assets 2,668 1,824 2,264
2,669 2,536 2,465
Balance Sheets
Fixed Assets
Total Assets 5,959 4,908 5,315
Current Liabilities 1,723 890 1,119
Total Liabilities 2,658 1,870 1,943
Capital 2,200 2,200 2,200
Stockholders' Equity 3,301 3,038 3,372
Liability Ratio 44.60 ↘ 38.10 ↘ 36.56
Financial
ROA 10.07 ↘ 0.20 ↗ 10.07
Ratio
ROE 17.43 ↘ -0.25 ↗ 16.56
Times Interest Earned 20.30 ↘ 1.27 ↗ 44.55
※Unaudited data in the fourth quarter of 2010.
24
Sales Growth by Products
Nut s Bol t s
Uni t : NT$ m i
W r e Rod Tool i ng
5,000
4,500 4,035 3,973 4,053 4,104
4,000
3,500 3,019
3,000
2,500 2,190
2,000
1,500
1,000
500
0
2005 2006 2007 2008 2009 Jan.~Nov.
2010
25
Gross Profit Growth by Products
Nut s Bol t s
Uni t : NT$ m i
W r e Rod Tool i ng
1,000
868
859 846
800 757
561
600
400
200 144
0
2005 2006 2007 2008 2009 Jan.~Nov.
2010
26
Gross Profit Margin Growth by Products
Nut s Bol t s
Unit:% i
W r e Rod Tool i ng
40 41
39
34 35
30
28
25
22 21 21
20 19 19
17
15
10 11
7
4 5 4 4
3 2
0 0 0
2005 2006 2007 2008 2009 Jan.~Nov.
2010
27
COMPETITIVE EDGE
Comparatively Sufficient Supply of Material
We have a long-term contract with China Steel Corp. for
the purchase of wire rods to prevent the risk of rising
price and insufficient supply.
San Shing is the largest customer of China Steel Corp.
in the wire rod. In 2010, 70% of the raw materials are
procured from China Steel Corp.
The current inventory of wire rods can meet the order of
nuts over 2 months.
28
COMPETITIVE EDGE
High Integration
Vertical Integration in Process
The continuous manufacturing system allows San Shing to
retain its competitive ability and position as the
benchmark of the fastener industry. San Shing integrates
R&D department, technical department, machine and tooling
plant, quality test lab and boasts a self-contained
production process from wire pickling, wire spheroid-zing
and annealing, wire drawing, forming, to the finish
treatment and heat treatment.
29
COMPETITIVE EDGE
Develop and Produce Tooling by
Ourselves
The quality of forming tooling is the
most important key technology of nut
production process. If we can develop
and produce excellent tooling, that will
reduce the production cost and enhance
the efficiency of nut process.
30
COMPETITIVE EDGE
Quality Reputation Makes High Entry Barrier
In 1992, San Shing earned as ISO 9002.
In 1993, our Testing Lab. was certified by CNLA as an accredited Lab.
In 1996, we obtained the QS-9000 certification, required by USA Top Three Car
makers.
In June 1997, our Testing Lab. was certified by NVLAP as an accredited lab for FQA.
In December 1997, our Environmental Management System obtained ISO 14001.
In 1999, we obtained AS-9000 certification of aerospace graded standard.
In 2002, we obtained OHSAS-18001 certification.
In 2004, we obtained TS16949 certification, required by auto companies of Europe
and America market.
In 2006, we obtained QMI AS 9100B certification.
In 2006, we obtained ISO 9001：2000 certification of bolts.
In 2007, we obtained ISO/TS 16949 certification of nuts and bolts from TUV
Rheinland, Taiwan Branch, authorized by its headquarter in Germany.
31
FUTURE OUTLOOK
Focusing on Developing Core Business and
Controlling Outsourcing
San Shing’s monthly maximum capacity can reach
6,000 tons now on custom nuts and bolts. Recently San
Shing has actively and discreetly worked with
subcontractors who can meet our requirements in
production and quality so that we are fully capable of
winning more orders and upgrading our service for
customers’ satisfaction. Such a strategy extends San
Shing’s capacity and increases our revenue and gross
profit.
32
FUTURE OUTLOOK
Promoting Business of Bolts to Lead the
Market of Fasteners
Fasteners include three categories： 70%
bolts, 20% nuts and 10% washers.
San Shing has following existing advantages
to enter the bolts domain ：
New plant is close to the existing factory and can
be supported by existing organizational resources.
Having the abilities and equipments to produce
tooling for bolts. 。
Having the abilities and equipments for pre- and
post- treatments of bolts.
With the same market channel as bolts and nuts.
33
FUTURE OUTLOOK
Selling Treasury Stocks to Reduce
Liability Ratio
From 1998 to January 1999, two subsidiary corporations, hundred-percent owned
by San Shing, bought San Shing’s stocks as long-term investment and never sold
those stocks. These two subsidiary corporations hold 9,265 thousand stocks and
5,781 thousand stocks, respectively, total stock number is 15,046 thousand
stocks, total cost is NT$ 543,073 thousand , average cost of stock is NT$36.09.
In first quarter of 2002, those stocks holding by subsidiary corporations are
regarded as treasury stocks in accordance with Taiwan Statement of Financial
Accounting Standards No.30 Accounting for Treasury Stock. San Shing valued
each treasury stock at $8.45 based on the average price on December,2001 and
hasn’t changed the valuation ever since. These treasury stocks’ average price
of stock becomes $7.29 after 4 times of ex-rights.
If San Shing sells treasury stocks, we will have almost NT$543 million of cash
to pay back long-term liabilities, to reduce the liability ratio below 26% and
to increase shareholder’s right per share above $17.5.
34
FUTURE OUTLOOK
Dividend Policy
San Shing’s EPS was average NT$2 a year between 1994
and 1998, so that we paid NT$2 per share as dividends
for four years including NT$6.8 stock dividends and
NT$1.2 cash dividends. Share of San Shing firstly
traded at NT$35, and P/E ratio 17.5 as the profits
and dividends were stable. After first trading in the
GTSM, San Shing’s P/E ratio had ever reached up to 20
~ 30.
In 2010, San Shing paid NT$0.96 of cash dividends per
share. We expect to pay at least NT$2 dividends per
share every year from 2011.
Board of directors prefers to distribute cash
dividends rather than stock dividends in the future.
35
Q&A
36