MIRA INFORM REPORT

Report No. :	495680
Report Date :	08.03.2018

IDENTIFICATION DETAILS

Name :	LOYAL HAILIANG COPPER (THAILAND) CO.,LTD.
Formerly Known As :	LUVATA HEATING COOLING TECHNOLOGIES (THAILAND) LTD. LUVATA HITACHI CABLE (THAILAND) LTD OUTOKUMPU HITACHI COPPER TUBE (THAILAND) LTD
Registered Office :	102 Moo 3, Siri Sothorn Road, T. Saenphudas, A. Banpho, Chachoengsao 24140
Country :	Thailand
Financials (as on) :	31.12.2016
Date of Incorporation :	26.10.1999
Com. Reg. No.:	0245542000477
Legal Form :	Private Limited Company
Line of Business :	Subject is engaged in manufacturer, distributor andexporter of seamless copper tubes.
No. of Employees :	300

RATING & COMMENTS

(Mira Inform has adopted New Rating mechanism w.e.f. 23^rd January 2017)

MIRA’s Rating :

A

Credit Rating	Explanation	Rating Comments
A	Acceptable Risk	Business dealings permissible with moderate risk of default

Status :	Satisfactory
Payment Behaviour :	No Complaints
Litigation :	Clear

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List

Country Name	Previous Rating (30.09.2017)	Current Rating (31.12.2017)
Thailand	A2	A2

Risk Category	ECGC Classification
Insignificant	A1
Low Risk	A2
Moderately Low Risk	B1
Moderate Risk	B2
Moderately High Risk	C1
High Risk	C2
Very High Risk	D

THAILAND - ECONOMIC OVERVIEW

With a relatively well-developed infrastructure, a free-enterprise economy, and generally pro-investment policies, Thailand is highly dependent on international trade, with exports accounting for about two-thirds of GDP. Thailand’s exports include electronics, agricultural commodities, automobiles and parts, and processed foods. The industry and service sectors produce about 90% of GDP. The agricultural sector, comprised mostly of small-scale farms, contributes only 10% of GDP but employs about one-third of the labor force. Thailand has attracted an estimated 3.0-4.5 million migrant workers, mostly from neighboring countries.

Over the last few decades, Thailand has reduced poverty substantially. In 2013, the Thai Government implemented a nationwide 300 baht (roughly $10) per day minimum wage policy and deployed new tax reforms designed to lower rates on middle-income earners.

Thailand’s economy is recovering from slow growth during the years since the 2014 coup. Thailand’s economic fundamentals are sound, with low inflation, low unemployment, and reasonable public and external debt levels. Tourism and government spending - mostly on infrastructure and short-term stimulus measures – have helped to boost the economy, and The Bank of Thailand has been supportive, with several interest rate reductions.

Over the longer-term, household debt levels, political uncertainty, and an aging population pose risks to growth.

Source : CIA

Company name

LOYAL HAILIANG COPPER (THAILAND) CO., LTD.

[FORMER : LUVATA HEATING COOLING TECHNOLOGIES (THAILAND) LTD.]

SUMMARY

BUSINESS ADDRESS : 102 MOO 3, SIRI SOTHORN ROAD,

T. SAENPHUDAS, A. BANPHO,

CHACHOENGSAO 24140, THAILAND

TELEPHONE : [66] 38 577-068-71, 38 578-410

FAX : [66] 38 577-072

E-MAIL ADDRESS : sales.lhct@luvata.com

jouni.satola@luvata.com

REGISTRATION ADDRESS : SAME AS BUSINESS ADDRESS

ESTABLISHED : 1999

REGISTRATION NO. : 0245542000477

TAX ID NO. : 3211006823

CAPITAL REGISTERED : BHT. 500,000,000

CAPITAL PAID-UP : BHT. 500,000,000

SHAREHOLDER’S PROPORTION : HONG KONG : 100%

FISCAL YEAR CLOSING DATE : DECEMBER 31

LEGAL STATUS : PRIVATE LIMITED COMPANY

EXECUTIVE : MR. JOUNI KALEVI SATOLA, FINN

MANAGING DIRECTOR

NO. OF STAFF : 300

LINES OF BUSINESS : SEAMLESS COPPER TUBES

MANUFACTURER, DISTRIBUTOR AND EXPORTER

CORPORATE PROFILE

OPERATING TREND : STABLE

PRESENT SITUATION : OPERATING NORMALLY

REPUTATION : GOOD WITH NORMAL BUSINESS ENGAGEMENT

MANAGEMENT STANDARD : MANAGEMENT WITH GOOD PERFORMANCE

HISTORY

The subject was established on October 26, 1999 as a private limited company under the originally registered name “Outokumpu Hitachi Copper Tube (Thailand) Ltd.” by foreign groups. On May 3, 2006, its registered name was changed to “Luvata Hitachi Cable (Thailand) Ltd.”, and changed to “Luvata Heating Cooling Technologies (Thailand) Ltd.” on June 11, 2012.

On July 20, 2017, its name was finally changed to LOYAL HAILIANG COPPER (THAILAND) CO., LTD. Its business objective is to manufacture and distribute seamless copper tube for both domestic and overseas markets. The subject currently employs approximately 300 staff.

Presently, the subject is a member of The Hailiang Group, in Hong Kong. It achieved the international standard ISO 9001 : 2000 and ISO 14001 certification.

The subject’s registered address is 102 Moo 3, Siri Sothorn Road, T. Saenphudas,

A. Banpho, Chachoengsao 24140, and this is the subject’s current operation address.

THE BOARD OF DIRECTOR

Name	Nationality	Age
Mr. Jouni Kalevi Satola	Finn	57
Mr. Dong Chen	Chinese	49
Mr. Limin Jiang	Chinese	44

AUTHORIZED PERSON

Anyone of the above directors can sign on behalf of the subject with company’s affixed.

MANAGEMENT

Mr. Jouni Kalevi Satola is the Managing Director.

He is Finn nationality with the age of 57 years old.

Mr. Veerachon Sooksaengsee is the Factory Manager.

He is Thai nationality.

BUSINESS OPERATIONS

The subject is engaged in manufacturing and distributing seamless copper tubes for various industries such as air conditioners, refrigerators, heat transfers and machinery.

BRAND NAME

“LHCT”

PRODUCTION CAPACITY

20,000 tons per annum

PURCHASE

80% of raw materials mainly copper sheet is purchased from local suppliers, the remaining 20% is imported from Japan, India, Republic of China, Finland, Hong Kong and Germany.

MAJOR SUPPLIERS

Zhejiang Hailiang International Trade Co., Ltd. : Republic of China

Hong Kong Hailiang Metal Trading Ltd. : Hong Kong

SALES

80% of the products is sold locally by wholesale to manufacturers, the remaining 20% is exported to Japan, Republic of China, India, Malaysia, Indonesia, Korea, Singapore and Taiwan.

MAJOR CUSTOMERS

Hitachi Cable Co., Ltd. : Japan

Daikin Industries (Thailand) Ltd. : Thailand

Hitachi Compressor (Thailand) Ltd. : Thailand

Mitsubishi Electric Kang Yong Watana Co., Ltd. : Thailand

Toshiba Carrier (Thailand) Co., Ltd. : Thailand

SUBSIDIARY AND AFFILIATED COMPANY

The subject is not found to have any subsidiary or affiliated company here in Thailand.

LITIGATION

Bankruptcy and Receivership

There are no litigation on bankruptcy and receivership cases filed against the subject found at Legal Execution Department for the past five years.

Others

There are no legal suits filed against the subject according to the past two years.

CREDIT

Sales are by cash or on the credits term of 30-60 days.

Local bills are paid by cash or on the credits term of 30-60 days.

Imports are by T/T.

Exports are against T/T.

BANKING

Kasikornbank Public Company Limited

Bangkok Bank Public Company Limited

Mizuho Corporate Bank Ltd. (Bangkok Branch)

The Hongkong and Shanghai Banking Corporation Limited (Bangkok Branch)

EMPLOYMENT

The subject employs approximately 300 staff.

LOCATION DETAILS

The premise is owned for administrative office, factory and warehouse at the heading address. Premise is located in provincial, on the outskirts of Bangkok.

COMMENT

The company has been specifically formed to produce high-quality copper tubes for the air-conditioning, refrigeration and heat transfer industries. The products have been sold to both domestic and export market.

Despite of a decrease in sales or service income in 2016 comparing to the previous year, the cost of goods sold or service was also decreased significantly which accelerated high profit margin and ended the financial year with higher net profit. Nevertheless, its business remains solid and profitable.

FINANCIAL INFORMATION

The capital was registered at Bht. 100,000 divided into 1,000 shares of Bht. 100 each.

On April 7, 2000, the capital was increased to Bht. 500,000,000 divided into 5,000,000 shares of Bht. 100 each with fully paid.

THE SHAREHOLDERS LISTED WERE

[as at July 10, 2017]

NAME	HOLDING	%
Hong Kong Hailiang Metal Trading Ltd. Nationality: Hong Kong Address : 34^th Floor, AIA Tower, 183 Electric Road, North Point, Hong Kong	3,199,999	64.00
Hongkong Hailiang Metal Materials Co., Ltd. Nationality: Hong Kong Address : 16^th Floor, Citicorp CTR, 18 White Field Road, Causeway Bay, Hong Kong	1,800,000	36.00
Singapore Hailiang Metal Materials Pte. Ltd. Nationality: Singaporean Address : 9 Temasek Boulevard 9, Singapore	1	-

Total Shareholders : 3

Share Structure [as at July 10, 2017]

Nationality	Shareholders	No. of Share	% Shares
Thai	-	-	-
Foreign	3	5,000,000	100.00
Total	3	5,000,000	100.00

NAME OF AUDITOR & CERTIFIED PUBLIC ACCOUNTANT NO.

Mrs. Vilai Buranakittisophon No. 3920

COMPANY NAME

LOYAL HAILIANG COPPER (THAILAND) CO., LTD.

BALANCE SHEET [BAHT]

The latest financial figures published for December 31, 2016, 2015 and 2014 were:

ASSETS

Current Assets	2016	2015	2014
Cash and Cash Equivalents	377,120,923	608,844,224	680,181,471
Short-term Investment	30,149,367	29,880,994	29,409,956
Trade Accounts and Other Receivable	1,146,524,784	1,005,601,055	1,076,985,540
Inventories	538,802,839	538,507,616	770,364,201
Total Current Assets	2,092,597,913	2,182,833,889	2,556,941,168
Property, Plant and Equipment	636,435,522	658,531,102	668,881,911
Intangible Assets	5,217,739	5,792,771	5,587,674
Total Assets	2,734,251,174	2,847,157,762	3,231,410,953

LIABILITIES & SHAREHOLDERS' EQUITY [BAHT]

Current Liabilities	2016	2015	2014
Bank Overdraft and Short-term Loan From Financial Institutions	-	-	70,000,000
Trade Accounts and Other Payable	1,874,546,973	2,108,176,487	2,253,895,229
Current Portion of Long-term Liabilities	399,166	369,732	-
Total Current Liabilities	1,874,946,139	2,108,546,219	2,323,895,229
Employee Benefit Obligations	26,785,599	26,682,622	22,904,083
Other Non-current Liabilities	1,142,531	1,537,509	-
Total Liabilities	1,902,874,269	2,136,766,350	2,346,799,312
Shareholders’ Equity
Share capital : Baht 100 par value authorized, and issued share capital 5,000,000 shares	500,000,000	500,000,000	500,000,000
Capital Paid	500,000,000	500,000,000	500,000,000
Retained Earning : [Deficit] Appropriated statutory reserve	50,000,000	50,000,000	50,000,000
Unappropriated	281,376,905	160,391,412	334,611,641
Total Shareholders’ Equity	831,376,905	710,391,412	884,611,641
Total Liabilities and Shareholders’ Equity	2,734,251,174	2,847,157,762	3,231,410,953

PROFIT & LOSS ACCOUNT

Revenue	2016	2015	2014
Sales or Services Income	4,965,737,455	5,761,016,179	5,463,725,067
Other Income	12,425,237	6,870,368	19,408,145
Total Revenues	4,978,162,692	5,767,886,547	5,483,133,212
Expenses
Cost of Goods Sold or Services	4,683,620,239	5,730,481,998	5,373,114,061
Selling Expenses	21,003,731	18,279,432	20,002,614
Administrative Expenses	81,534,775	69,623,670	68,274,791
Other Expenses	17,227,682	64,362,353	-
Total Expenses	4,803,386,427	5,882747,453	5,461,391,466
Profit /[Loss] before Financial Cost and Income Tax	174,776,265	[114,860,906]	21,741,746
Financial Cost	[53,790,772]	[59,359,323]	[47,833,678]
Profit /[Loss] before Income Tax	120,985,493	[174,220,229]	[26,091,932]
Income Tax	-	-	-
Net Profit / [Loss]	120,985,493	[174,220,229]	[26,091,932]

COMPANY NAME

LOYAL HAILIANG COPPER (THAILAND) CO., LTD.

FINANCIAL ANALYSIS

ITEM	UNIT	2016	2015	2014
LIQUIDITY RATIO
CURRENT RATIO	TIMES	1.12	1.04	1.10
QUICK RATIO	TIMES	0.83	0.78	0.77
ACTIVITY RATIO
FIXED ASSETS TURNOVER	TIMES	7.80	8.75	8.17
TOTAL ASSETS TURNOVER	TIMES	1.82	2.02	1.69
INVENTORY CONVERSION PERIOD	DAYS	41.99	34.30	52.33
INVENTORY TURNOVER	TIMES	8.69	10.64	6.97
RECEIVABLES CONVERSION PERIOD	DAYS	84.27	63.71	71.95
RECEIVABLES TURNOVER	TIMES	4.33	5.73	5.07
PAYABLES CONVERSION PERIOD	DAYS	146.09	134.28	153.11
CASH CONVERSION CYCLE	DAYS	(19.82)	(36.27)	(28.83)
PROFITABILITY RATIO
COST OF GOODS SOLD	%	94.32	99.47	98.34
SELLING & ADMINISTRATION	%	2.06	1.53	1.62
INTEREST	%	1.08	1.03	0.88
GROSS PROFIT MARGIN	%	5.93	0.65	2.01
NET PROFIT MARGIN BEFORE EX. ITEM	%	3.52	(1.99)	0.40
NET PROFIT MARGIN	%	2.44	(3.02)	(0.48)
RETURN ON EQUITY	%	14.55	(24.52)	(2.95)
RETURN ON ASSET	%	4.42	(6.12)	(0.81)
EARNING PER SHARE	BAHT	24.20	(34.84)	(5.22)
LEVERAGE RATIO
DEBT RATIO	TIMES	0.70	0.75	0.73
DEBT TO EQUITY RATIO	TIMES	2.29	3.01	2.65
TIME INTEREST EARNED	TIMES	3.25	(1.94)	0.45
ANNUAL GROWTH
SALES GROWTH	%	(13.80)	5.44
OPERATING PROFIT	%	(252.16)	(628.30)
NET PROFIT	%	169.44	(567.72)
FIXED ASSETS	%	(3.36)	(1.55)
TOTAL ASSETS	%	(3.97)	(11.89)

ANNUAL GROWTH : RISKY

An annual sales growth is -13.8%. Turnover has decreased from THB 5,761,016,179.00 in 2015 to THB 4,965,737,455.00 in 2016. While net profit has increased from THB -174,220,229.00 in 2015 to THB 120,985,493.00 in 2016. And total assets has decreased from THB 2,847,157,762.00 in 2015 to THB 2,734,251,174.00 in 2016.

PROFITABILITY : IMPRESSIVE

PROFITABILITY RATIO

Gross Profit Margin	5.93	Impressive	Industrial Average	-
Net Profit Margin	2.44	Satisfactory	Industrial Average	3.97
Return on Assets	4.42	Satisfactory	Industrial Average	5.09
Return on Equity	14.55	Impressive	Industrial Average	9.80

Gross Profit Margin used to assess a firm's financial health by revealing the proportion of money left over from revenues after accounting for the cost of goods sold. Gross profit margin serves as the source for paying additional expenses and future savings. Gross Profit Margin is 5.93%. When compared with the industry average, the ratio of the company was higher, indicated that company was more profitable than the same industry.

Net Profit Margin is the indicator of the company's efficiency in that net profit takes into consideration all expenses of the company. A low profit margin indicates a low margin of safety, higher risk that a decline in sales will erase profits and result in a net loss. The company's figure is 2.44%. When compared with the industry average, the ratio of the company was lower.

Return on Assets measures how efficiently profits are being generated from the assets employed in the business when compared with the ratios of firms in a similar business. A low ratio in comparison with industry averages indicates an inefficient use of business assets. When compared with the industry average, it was lower, the company's figure is 4.42%.

Return on Equity indicates how profitable a company is by comparing its net income to its average shareholders' equity, ROE measures how much the shareholders earned for their investment in the company. Return on Equity ratio is 14.55%, higher figure when compared with those of its average competitors in the same industry, indicated that business was an efficient profit in a dominant position within its industry.

Trend of the average competitors in the same industry for last 5 years

Return on Assets Uptrend

Return on Equity Uptrend

LIQUIDITY : SATISFACTORY

LIQUIDITY RATIO

Current Ratio	1.12	Satisfactory	Industrial Average	1.75
Quick Ratio	0.83
Cash Conversion Cycle	(19.82)

The Current Ratio is to ascertain whether a company's short-term assets are readily available to pay off its short-term liabilities. The company's figure is 1.12 times in 2016, increase from 1.04 times, then it is generally considered to have good short-term financial strength. When compared with the industry average, the ratio of the company was lower.

The Quick Ratio is a liquidity indicator that further refines the current ratio by measuring the amount of the most liquid current assets there are to cover current liabilities. The company's figure is 0.83 times in 2016, increase from 0.78 times, by excluding inventory, the company may have problems meeting current liabilities.

The Cash Conversion Cycle measures the number of days a company's cash is tied up in the production and sales process of its operations and the benefit from payment terms from its creditors. It meant the company could survive when no cash inflow was received from sale for -20 days.

Trend of the average competitors in the same industry for last 5 years

Current Ratio Uptrend

LEVERAGE : ACCEPTABLE

LEVERAGE RATIO

Debt Ratio	0.70	Acceptable	Industrial Average	0.45
Debt to Equity Ratio	2.29	Risky	Industrial Average	0.83
Times Interest Earned	3.25	Impressive	Industrial Average	-

Debt to Equity Ratio a measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the shareholders have committed. A higher the percentage means that the company is using less equity and has stronger leverage position.

Times Interest Earned measuring a company's ability to meet its debt obligations. Ratio is 3.25 higher than 1, so the company can pay interest expenses on outstanding debt.

Debt Ratio shows the proportion of a company's assets which are financed through debt. The company's figure is 0.7 greater than 0.5, most of the company's assets are financed through debt.

Trend of the average competitors in the same industry for last 5 years

Debt Ratio Downtrend

Times Interest Earned Stable

ACTIVITY : EXCELLENT

ACTIVITY RATIO

Fixed Assets Turnover	7.80	Impressive	Industrial Average	-
Total Assets Turnover	1.82	Impressive	Industrial Average	1.28
Inventory Conversion Period	41.99
Inventory Turnover	8.69	Impressive	Industrial Average	7.82
Receivables Conversion Period	84.27
Receivables Turnover	4.33	Impressive	Industrial Average	3.63
Payables Conversion Period	146.09

The company's Account Receivable Ratio is calculated as 4.33 and 5.73 in 2016 and 2015 respectively. This ratio measures the efficiency of the company in managing its trade debtors to generate revenue. A lower ratio may indicate over extension and collection problems. Conversely, a higher ratio may indicate an overtly stringent policy. In this case, the company's A/R ratio in 2016 decreased from 2015. This would suggest the company had deteriorated in the management of its debt collections.

Inventory Turnover in Days Ratio indicates the liquidity of inventory. It estimates the number of days that it will take to sell the current inventory. Inventory is particularly sensitive to change in business activities. The inventory turnover in days has increased from 34 days at the end of 2015 to 42 days at the end of 2016. This represents a negative trend. And Inventory turnover has decreased from 10.64 times in year 2015 to 8.69 times in year 2016.

The company's Total Asset Turnover is calculated as 1.82 times and 2.02 times in 2016 and 2015 respectively. This ratio is determined by dividing total assets into total sales turnover. The ratio measures the activity of the assets and the ability of the firm to generate sales through the use of the assets.

Trend of the average competitors in the same industry for last 5 years

Fixed Assets Turnover Stable

Total Assets Turnover Downtrend

Inventory Turnover Uptrend

Receivables Turnover Downtrend

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	INR 64.96
UK Pound	1	INR 90.33
Euro	1	INR 80.74
THB	1	INR 2.08

Note : Above are approximate rates obtained from sources believed to be correct

INFORMATION DETAILS

Analysis Done by :	VAR
Report Prepared by :	DNS

RATING EXPLANATIONS

Credit Rating	Explanation	Rating Comments
A++	Minimum Risk	Business dealings permissible with minimum risk of default
A+	Low Risk	Business dealings permissible with low risk of default
A	Acceptable Risk	Business dealings permissible with moderate risk of default
B	Medium Risk	Business dealings permissible on a regular monitoring basis
C	Medium High Risk	Business dealings permissible preferably on secured basis
D	High Risk	Business dealing not recommended or on secured terms only
NB	New Business	No recommendation can be done due to business in infancy stage
NT	No Trace	No recommendation can be done as the business is not traceable

NB is stated where there is insufficient information to facilitate rating. However, it is not to be considered as unfavourable.

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors are as follows:

· Financial condition covering various ratios

· Company background and operations size

· Promoters / Management background

· Payment record

· Litigation against the subject

· Industry scenario / competitor analysis

· Supplier / Customer / Banker review (wherever available)

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This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.