A.J.

Plast Public Company Limited

March 2017
A.J. Plast Public Company Limited

March 2017
Disclaimer

The information contained in this presentation is intended solely for your personal reference only. If you
are not an intended recipient, you must not read, disclose, copy, circulate, retain, distribute or take any
action in reliance upon this material.

The information contained in this presentation does not constitute or form any part of any offer or
invitation to purchase any securities and neither the issue of the information nor anything contained
herein shall form the basis of, or be relied upon in connection with, any contract or commitment on the
part of any person to proceed with any transaction.

This presentation is not intended to substitute your own analysis and investigation, and should not be
considered a recommendation to any recipient of this presentation. Some information contains
projections and forward-looking statements that reflect the company’s current views with respect to
future events and financial performance. These views are based on current assumptions which are
subject to various risks and which may change over time. No assurance can be given that future events
will occur, that projections will be achieved, or that the company’s assumptions are correct. Actual
results may differ materially from those projected.

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 AJ snapshot: One-stop BO (biaxially-oriented) film manufacturer

Business description Value chain

• AJ is a BO (biaxially-oriented) film manufacturer, offering one-stop service for BO film

used primarily in flexible packaging
Resin
• Expanded into CPP film and off-line chemical coating film to enhance product Product
producer
portfolio and add value to existing products Upstream manuf.
e.g. IVL, BO film Converter
petrochem. e.g. food Consumer
• AJ is capable of producing full range of flexible packaging films which are: PTTCH, producer / Printer
industry processor
Product BOPP BOPET BOPA CPP UBE,
(CPF, TUF)
TPC
Capacity (MT/yr) 132,000 62,000 18,000 16,000
(as of 1Q2017)

• AJ is founded in 1987 and listed on the SET in 1990 Plastic Plastic Packaging Finished
• SET Ticker - AJ resin film goods
• Bloomberg Code - AJ:TB

Production Capacity Financial highlight Top 10 Shareholders

140000 Unit: MB 2016 2015 2014 2013 2012 นาย กิตติภตั สุ ทธิ สมั พัทน์ 24.31%
120000 Revenue 7,032 6,259 6,545 5,452 5,287
นาย ภูมิพนั ฉัตร สุ ทธิ สมั พัทน์ 11.62%
นาย ณรงค์ สุ ทธิ สมั พัทน์ 7.48%
100000 Net profit 121 4 -248 -98 190
80000
น.ส. อจลา สุ ทธิ สมั พัทน์ 6.54%
Total น.ส. วรัญญา ฉัตรพิริยะพันธ์
8,495 8,244 8,243 7,542 6,108 2.81%
60000 assets
40000
บริ ษทั ไทยเอ็นวีดีอาร์ จากัด 2.29%
D/E ratio 1 .62 1.6 1.62 1.22 0.72
20000
นาย กิตติภตั สุ ทธิ สมั พัทน์ 2.16%
P/E 47.11 - - 54.69 36.65 น.ส. ดารณี ฉัตรพิริยะพันธ์ 1.78%
0
Market น.ส. โสพิศ ภูสนาคม 1.58%
5,386 2,397 3,535 3,695 6,000
cap. นาง นงนิภา สุ ทธิ สมั พัทน์ 1.4%

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Schematic of BO Film Industry

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AJ snapshot: An overview of BO film production process

main
extruder co- ex 1 co- ex 2
Evalene
Evalene
Evalene
Evalene
Evalene
Evalene
BOPP PROCESS
FLOW DIAGRAM
Evalene Evalene
Evalene Evalene
Ev alene Evalene Evalene
Evalene Evalene

Raw Material Feeding

Extrusion
(Extruder)

Transversal Stretching
(Transverse Direction Orienter)
Winding
(Winding Section)

Casting Longitudinal Stretching Flame/Corona T reating

(Casting Section) (M achine Direction Orienter) (Pull Roll Section)

Secondary Slitting
(Secondary Slitter Machine) Slitting AGEING
(M ain Slitter M achine) (Age ing Rack)

Weighing / Packing Storage Loading Delivery

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Equipped with engine to achieve growth: Leader in Southeast Asia

Well-planned capacity expansion Additional capacity towards leadership

VALUE (Unit: MT)

Year BOPP BOPET BOPA CPP 16,000 CPP
ADDED LINE 18,000 BOPA (Nylon)
62,000
1987 • 1st BOPP BOPET
18,000

31,000
1995 • 2nd BOPP • 1st BOPET 8,000 18,000 18,000

31,000 31,000 31,000 146,000

New Machine

106,000
BOPP
2001 • 1st Metallizer
66,000 66,000 66,000

2003 • 3rd BOPP • 2nd BOPET • 2nd Metallizer

2010 2011 2012 2013 2014-Present
2014

2006 • 1st BOPA 105,000 115,000 115,000 155,000 242,000 Total capacity

2008 • 4th BOPP

2010 • 3rd Metallizer SEA’s largest BO film producer in all

segments since 2014
2011 • 3rd BOPET • 2nd BOPA

2013 • 5th BOPP • 4th BOPET

2014 • 6th BOPP • 1st CPP • 4th & 5th

Metallizer

2015 • 6th Metallizer

2016 • 1st Coater

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Recent structural changes of packaging industry: Catalyst for BO film demand

Flexibility and functionality at competitive cost for producer and affordable price for consumer is key driver of
flexible packaging trend at present

The market is overwhelmed by

What is the BEST one? Flexible packaging has gradually
various packaging alternatives
replaced conventional ones
U.S. packaging industry (2009) Key requirements for packaging

Basics Conventional
Others
Corrugated • Contain, Inform, Protect, Transport &
17% 22% Display
Glass 3%

?
Economy
Metal cans 11% • Easy to manufacture & cost efficient
18% Flexible
Logistics
Paperboard 12%
• Easy to handle, store & transport
17%
Environment
Misc rigid plastics
& bottles • Minimum use of resources Flexible
• Easy to empty / recycle
Source: U.S. Census Bureau data & Flexible
Packaging Association estimates Health
• Protect the product from chemical /
biological exposure

Usability
• Easy to open, hold & close Flexible packaging provides many
• Inform consumers about the product consumer conveniences including
extended shelf life, easy storage,
microwaveability & resealability

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Flexible packaging: Significant value and benefits to the market

Flexible packaging (FP) sustainability initiatives Advantages of FP over alternative packaging

1 2 3 4
Beverage packaging Glass bottle Plastic PET Aluminum Stand-up
example & metal cap bottle & cap can flexible pouch
FP waste can be FP reduces Product weight (g) 236 236 236 199
reproduced into waste, energy Packaging weight (g) 198.4 22.7 11.3 5.7
Resource Sustainability
new FP consumption &
Recovery Advantages Product-to-
greenhouse gas
Packaging Ratio
1:1 10:1 21:1  35:1
FP waste may FLEXIBLE emission
be used as
PACKAGING (FP) Packaging weight
83.9 9.6 4.7  2.8
feedstock to per 100 g product (g)
produce
MSW/1 landfill
gaseous & liquid per 100 g product (g)
54.5 6.0  2.4 2.8
Light
fuel
Weighting Energy consumption
(MJ/8 oz)
3.36 3.00 0.99  0.45

Emissions
(Kg Co2e/8 oz)
0.29 0.18 0.08  0.02

The lightweight package produces “less waste at the first place”

• The flexible beverage pouch consumes ½
Examples of light weighting between 2005 -2011:
the amount of energy compared to the
• Barrier enhancement: resulted in 50% less material for the same barrier closet alternative

• Material toughness: layers reduced up to 50% • The flexible beverage pouch generates ¾
less emission than the closet alternative
• Coextrusion technologies: enable weight reduction of up to 33%
• The flexible beverage pouch uses less space
• Equipment innovation: allows some film thickness to be reduced to 50%
in shipping than other alternatives, reducing
transportation emission while saving costs

Remark: /1 MSW stands for municipal solid waste

Source: FPA (Flexible Packaging Association) Case Studies

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AJ Plast: Strategies

No.1 in Southeast Asia The lowest cost producer Sustainable growth

Capacity expansion Right investment One-stop service

• Continuous Expansion from 2010-2018 • Invest in the state-of-the-art machinery • Offer comprehensive range of film products
• Achieve the largest capacity in all BO film - Increase productivity • Diversify business risk and mitigate volatile
- Reduce energy consumption profit
How to Achieve the Goals

segments in 2014
Portfolio enlargement
• Cautiously expand product portfolio to be
the industry leader:
BOPP since 1987, BOPET since 1995, Metallizer
since 2001, BOPA since 2006, CPP since 2016,
and Chemical Coated Film since 2017
- Reduce plastic waste
- Able to produce higher grade films
• Invest at the right timing
• Gain promotional privileges (esp. tax
incentives) from the Board of Investment
Premium market penetration
• High value-added product
• Target Japanese market
- Massive demand of 280k MT/yr
- Premium price opportunity
- High level of quality requirement
- Technical know-how improvement

Quality excellence Efficiency improvement Flexible packaging trend

• Fully dedicate to quality excellence at all • Realize greater level of economy of scale as • Global shift from traditional to flexible
levels of production the company grows packaging

• Deepen sourcing skills to obtain advantage • Flexible packaging mainly correlates with
of material cost minimization food and consumer product sectors, thereby
indicating sustainable & resilient demand

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AJ Plast: Unique Positioning
Complete Product Line
• AJ Plast offers customers with complete product lines for
flexible packaging including BOPP, BOPET, BOPA, CPP and
metallized film.
• Product ranges from high volume commodify products to high
value-added specialized products such as transparent barrier
films
Benefits
• One-stop supply for local and export customers
• Lower sales and administration costs per sales value
• Smoother business cycles with less volatility
• Enjoys more frequent product cycles compared with relying
on only one product cycles
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Latest Production Fleet
• AJ Plast replaced old machines with smaller capacity, less
efficiency, higher production cost with new ones with larger
capacity, higher efficiency, and lower production cost at
appropriate periods.
• Currently, 70% of production capacity is coming our from
Production line with ages less than 6 years
Benefits
• Becomes a lowest cost producer with better efficiency in both
raw material, energy consumption, and manpower
• Enhance competitiveness in local and global market
• Better quality - a ticket to enter and stay in premium market
• More flexibility to produce high value-added products
• Better spare part management – less cost and high machine
reliability
Diversified customer base: To decrease reliance on any particular economy

AJ sales quantity (MT) AJ sales mix by proportion (%)

140,000

121,263
120,000

98,689
100,000

81,520
80,000

60,000

38,405
40,000

20,000

0
2005 2010 2015 2016

Export Local

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Diversified customer base: To decrease reliance on any particular economy

AJ Customer Base

England

Germany
Switzerland Japan
China
Italy
U.S.A. Hong Kong Taiwan

Thailand Vietnam
Mexico
Philippines
Malaysia
Nigeria Indonesia
Singapore

Australia

Individual country (except TH & JP) is targeted to contribute

no greater than 5% of AJ’s total sales

Reduce dependency and minimize particular country risk

Avoid anti-dumping measure enforcement
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BOPP film industry: Opportunity from sustained growth with recent limited expansion

The history confirms the unremitting expansion in world film demand

•Demand for BOPP production was growing stronger than expected (CAGR (1998-2014) of 8.6%
globally, 15% in China)

•Huge Market at more than 8 million MT per year

•Relatively limited capacity expansion expected in 2017-2018, leaving vulnerability in supply shortage
in the next couple years

BOPP film consumption by Region

1,600,000 2

1,400,000 1.8
1.6
1,200,000
Population in thous.

1.4
1,000,000

kg / year
1.2
800,000 1

600,000 0.8
0.6
400,000
0.4
200,000 0.2
- 0
Japan USA- Western China Near/Far South Eastern Africa
Canada East America
Population in thous. Consump./year
Source: Industrial Source
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 BOPP film industry: Sustained growth with recent limited expansion

BOPP WORLD Demand / Production

18,000,000

16,000,000

14,000,000

12,000,000
Tons per Year (tpa)

10,000,000

8,000,000

6,000,000

4,000,000

2,000,000

-
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Demand Production Demand Production

Source: Industrial Source

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BOPET film industry: The worst has passed, but still need time to fully recover

•CAGR (1998 – 2014) of 7.5% for BOPET

•BOPET production capacity was increased drastically during 2011-2014,

especially in China and India causing serious global oversupply of BOPET film

•While investment in new machines was slow down since 2015, there will be at
least a couple years until the increasing demand can gradually absorb all the
production capacity

•Spread between BOPET film and PET resin will remain at low level, but will
eventually get better gradually in couple years

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BOPET film industry: The worst has passed, but still need time to fully recover

BOPET WORLD Demand / Production

6,000,000

5,000,000

4,000,000
Tons

3,000,000

2,000,000

1,000,000

-
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Demand Production Demand Production

Source: Industrial Source

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BOPA film industry: The Dawn of the New cycle

•In 2016, the demand of BOPA film in China was increased 15% while BOPA
production capacity expansion was not enough to serve the gradually increasing
demand

•At the same time, price of PA resin was down due to over-capacity situation of
Caprolactam which, in turn, widening the spread between BOPA film and PA
resin

•Moving to end of 2016, BOPA film was under shortage especially in China,
bumping the price up 25% in fourth quarter with lead time for delivery of 2.5-3
months.

•Lead time for new machinery including installation and commissioning is more
than 2 years with limited number of machines to be supplied by a single machine
supplier causing slow capacity expansion

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- 18 -
Why BOPA Film price in China are going up?
BOPA film is one of the main three package materials (another two are BOPP & BOPET). The resin PA6 comes from ring opening polymerization of CPL. Through
melt extruded and bio-oriented stretched it will become BOPA film. BOPA film is named as “queen of film” as its high strength, good toughness, wide range of
application temperature, good resistance to acid & alkali and excellent barrier to gas & order. It’s widely used in food package, cosmetic package, electron package
& field of construction chemicals.
The second half year of 2015 to 2016, the price of BOPA has gone up for several times, the deliver term of orders become longer and longer, while BOPA film is
getting shorter and shorter.

Why all these happened?

The direct reason is price of up steam resin going up.

The price of CPL has gone up all the way in 2016. Some analysis pointed out that it’s because of over sales of PA6, it became more and more serious to end of
2016. For example, the price of PA6 has increased 6,000-8,000 RMB/T during Nov. to Dec. 2016, price rise up to 40%.
Although the price of resin going up a lot, it doesn’t affect the demand of BOPA. The price of CPL is high and short of demand, so as PA6, price of BOPA also follow
to go up.

Increase demand of BOPA down steam is the important reason of BOPA price going up.

The value of gross output of the global packaging market is $ 839 billion by 2015, and is currently growing at average annual rate of nearly 5% . It is estimated that
the global packaging industry will reach $ 998 billion by 2020. Global demand for plastic film is also growing at an average annual rate of 5%. Throughout the
global BOPA film market, the world's largest supplier are concentrated in the Asia Pacific region, while China's annual production of BOPA has accounted for more
than 30% of global production, has become the world's largest BOPA supply and demand.
Demand of domestic BOPA market increased by 15% in 2016 than in 2015, growth rate is doubled compared to the previous year. The growth of BOPA
demand is rapid in 2016, will continue to become main engine of global growth for BOPA film market in the future.

Japan's Unitika shuted down the factory and Foshan Plastic Group stopped the line for long term in 2015 reduced the supply of domestic BOPA in a certain extent;
the world's population is increasing and it is expected to increase by 1 billion and city population by 1.1 billion in the next 10 years; living is more green, more
environmentally friendly, packaging is more diversified. Independent packing is more and more popular. Except the application of traditional food packing and
chemical packing, the application of lithium battery film and special nylon film will cause the increase demand of BOPA film. The increasing speed of output
BOPA is slowing down, the increasing population, improve of living life and more application field are important reasons of short of BOPA.

Source: PFCHINA.COM.CN (http://www.pfchina.com.cn/00/0012/001201/2017/5379890460010.asp)

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 BOPA film industry: The Dawn of the New cycle

BOPA WORLD Demand / Production

450,000

400,000

350,000

300,000

250,000
Tons

200,000

150,000

100,000

50,000

-
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Demand Production Demand Production

Source: Industrial Source - 20 -

BOPA and BOPET Cycles: The Differences
BOPET
•There are many BOPET manufacturers
around the world which could make
investment immediately once market
indicates the start of product cycles
•BOPET does not require high expertise and
knowhow to run which attracts new comers
to enter the business
•There were two BOPET production line
manufacturers (Brueckner and Dornier)
competing head-to-head so that each aims
to take as much order as they can
•Some applications could be switched
between BOPP and BOPET (although taking
some time) if price is too high
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BOPA
•There are fewer BOPA manufacturers
compared with BOPET/BOPP
•BOPA requires expertise and knowhow to run
efficiently with high productivity and low
waste. New comers are aware that they
may not be able to compete with existing
players
•There is only single BOPA production line
manufacturer now (Brueckner). Capacity
expansion is slow and limited. Lead time for
machine delivery is long (more than two
years from contract date to start production)
•BOPA film applications requires special
properties that are not available in BOPET or
BOPP
Market Update: Spreads Insight 2015-2017

Source: Chinese Industrial Source

BOPP BOPET
• BOPP has been maintaining its spread in the last 2 years with • BOPET still remains in difficulties as spread is still considered to be
recent small surge in the beginning of 2017 due to market lower than other films due to huge surge in production capacity
demand/supply condition. during/after the last BOPET cycle.

• In medium term, there is a positive trend in the spread as • Market still needs more time to absorb the additional capacity
there had been only some capacity expansion in 2015-2016 which will take at least another couple years. Before that,
and still no known expansion plan in 2017 while global spread for BOPET film will still be under high pressure.
demand keep increasing at 8.6% of 8 million metric tons per
year or approximately 680k MT (equivalent to 20 latest
generation BOPP machines)

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Market Update: Spreads Insight 2015-2017

Spread BOPA
3500

3000

2500

2000

1500

1000

500

Source: Chinese Industrial Source

BOPA

•BOPA is a clear winner since 2H2015 – Present with continuously increasing spread trend
from USD940/mt in June 2015 to USD2750/mt in Jan 2017.

•The trend is continue to increase/maintain as there is no new capacity planned to be

coming out soon.

•There will be small capacity coming in second half of 2018 but will not be enough to serve
increasing demand in China.
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