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中国尚舜化工控股有限公司
CHINA SUNSINE CHEMICAL HOLDINGS LTD.
1
2Q & 1H 2018RESULTS BRIEFING
8 August 2018
PRESENTATION OUTLINE
Financial Overview
Key Developments
Outlook
2
Financial Overview
3
Financial Highlights4
* SGD to RMB exchange rate @4.8386
RMB ’mln 2nd Quarter Ended 6 Months Ended
30 Jun 18 30 Jun 17 Change 30 Jun 18 30 Jun 17 Change
Group Revenue 880.6 656.2 34% 1,737.5 1,230.7 41%
Gross Profit 323.6 187.1 73% 622.4 327.1 90%
Gross Profit Margin 36.7% 28.5% 8.2 pts 35.8% 26.6% 9.2 pts
Profit Before Tax 214.8 92.9 131% 396.4 177.6 123%
Profit After Tax 239.7 74.5 222% 389.2 131.7 196%
EPS
(RMB cents/SGD
Cents*)
48.75/
10.08
15.53/
3.21
214% 79.15/
16.36
27.90/
5.77
184%
NAV per share
(RMB cents/SGD
Cents*)
421.14/
87.04
314.30/
64.96
Revenue Growth5
RMB ’mln
619.5
797.9718.4
991.4
1,175.1
1,417.3
1,695.9
2,077.3
1,859.1
2,036.9
2,738.4
1,230.7
1,737.50
0.0
500.0
1,000.0
1,500.0
2,000.0
2,500.0
3,000.0
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 1H17 1H18
1H18 Revenue up 41% y-o-y mainly boosted by higher ASP
Revenue By Quarter6
RMB ’mln
2Q18 vs 2Q17 : +34%
2Q18 vs 1Q18: +2.8%
432.1
497.3475.9
453.8445.1
491.1547.3 553.4
575656.2
634.4
873.3856.9 880.6
0
100
200
300
400
500
600
700
800
900
1000
1Q 2Q 3Q 4Q
2015 2016 2017 2018
1Q20182Q2018
Sales Volume7
Tons
31,03630,787
45,42054,275
60,907
81,371
98,345
108,973114,572
135,791140,476
67,60474,364
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 1H17 1H18
1H2018 Sales volume up 10% y-o-y due mainly to more orders received as tire makers
recognize the Group’s ability to provide stable supply
Sales Volume by Products8
Tons
31,036 29,805
40,196
46,34350,148
64,252
72,71076,089 76,090
82,767 83,335
41,692 41,469
0464
3,468 4,413 7,873
10,724 11,94812,102
15,41720,031 22,283
10,02412,884
0 185 1,361 2,971 2,0615,183
12,281
19,903 21,640
31,21434,858
15,07420,011
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 1H17 1H18
Accelerator Insoluble Sulphure Anti-oxidant and others
Sales Volume 1H18 vs 1H17
Accelerators - 0.5%
Insoluble Sulphur + 29%
Anti-oxidants + 28%
Sales Volume By Quarter9
25,377
30,948
29,203 29,04530,051
34,483
36,797
34,46033,046
34,55834,098
38,77436,797 37,567
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
1Q 2Q 3Q 4Q
2015 2016 2017 2018
Tons
1Q2018 2Q2018
2Q18 vs 2Q17 : +9%
2Q18 vs 1Q18: +2%
Sales Contribution (By Region)10
Rest of Asia
America
Europe
Others
PRC
62%
PRC
Sales: RMB 1,072.8 mln +37%
Volume: 49,941 tons +9%
PRC sales increase due mainly
to the rise in overall ASP and
volume fueled by the continued
short supply situation
EXPORT
Sales: RMB 656.2 mln +49%
Volume: 24,423 tons +13%
International sales increase
due to higher ASP and higher
sales volume to South East Asia
and Europe.
(Direct sales to US accounted
2% of total revenue)
1H18 Sales Contribution (y-o-y)
1%
27%
2%
8%
Overall Average Selling Price (ASP)11
RMB/Ton
19.8K
25.9K
15.8K
18.3K19.3K
17.4K
17.2K
19.1K
16.2K
15.0K
19.4K
23.3K
0
5,000
10,000
15,000
20,000
25,000
30,000
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 1H18
ASP by Quarter12
RMB/Ton
17.0K16.0K 16.3K
15.6K14.8K 14.2K
14.8K16.0K
17.3K
18.9K 18.5K
22.4K23.2K 23.3K
0
5,000
10,000
15,000
20,000
25,000
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18
• 2Q18 ASP up 23% y-o-y due mainly to continued short supply situation in China since 2017
13
RMB/ Ton
Main Raw Materials Cost
2,000
6,000
10,000
14,000
18,000
22,000
Key Raw Materials Price Trend
Aniline
Tert-butylamine
Cyclohexylamine
Ketone
Dicyclohexylamine
Carbon Disulfide
Aniline
Gross Profit
1H18 Gross profit grew 90% y-o-y due to higher ASP and sales volume
14
125.2
226.8
160.2
224.1
293.4243.9
308.0
567.4
492.0
547.1
788.1
327.1
622.4
0.0
100.0
200.0
300.0
400.0
500.0
600.0
700.0
800.0
900.0
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 1H17 1H18
RMB ’mln
Net Profit15
RMB ’mln
76.1
106.788.3
115.399.4
32
76.7
220.2195.2
221.7
341.3
131.7
389.2
0
50
100
150
200
250
300
350
400
450
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 1H17 1H18
Group’s main subsidiary, Shandong Sunsine, obtained “High-tech Enterprise” status
which allows the company to enjoy a concessionary tax rate of 15% for 3 years with
effect from 1 Jan 2017
Net Profit By Quarter16
47.4 47.1 55.345.5
33.649.0
72.8 66.357.2
74.5 77.6
132.0149.5
239.7
0.0
50.0
100.0
150.0
200.0
250.0
300.0
1Q 2Q 3Q 4Q
2015 2016 2017 2018
2Q18 vs 2Q17: +222%
2Q18 vs 1Q18: + 60%
1Q2018
RMB ’mln
• 2Q18 Net profit surged 222% y-o-y due mainly to higher ASP with expanded profit margin
• As the “High-tech Enterprise” status was approved at end of FY2017, approximately RMB 48 mln
tax expensed was credited back in 2Q2018
2Q2018
Margins Analysis17
20.2%
28.4%
22.3% 22.6%
25.0%
17.2%18.2%
27.3% 26.5% 26.9%28.8%
35.8%
12.3%13.3%
12.3% 11.6%
8.5%
2.3%4.5%
10.6% 10.5% 10.9%12.5%
22.4%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
Gross Profit Margin(GPM)
Net Profit Margin(NPM)
19.6%
Adjusted by taking out the one-time credit of tax expense of RMB 48 mln in FY17
Margins Analysis By Quarter18
31.7%
24.3%
26.8%
23.5% 24.2%
27.3% 28.2%27.2%
24.4%
28.5%26.8%
33.3%34.9%
36.7%
11.0%9.5%
11.6%10.0%
7.5%
10.0%
13.3%11.0%
10.0%11.4% 12.2%
15.1%17.4%
27.2%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
Gross ProfitMargin (GPM)
Net Profit Margin(NPM)
21.8%
Adjusted by taking out the one-time credit of tax expense of RMB 48 mln in FY17
Balance Sheet Highlight
30/06/2018 31/12/2017 31/12/2016
Current assets (RMB’mln) * 1,738.8 1,424.6 1,050.5
Current liabilities (RMB’mln) 390.8 385.3 280.8
Current Ratio 4.45 3.70 3.74
Shareholders’ equity (RMB’mln) 2,070.7 1,742.4 1,361.6
D/E ratio ** 0 0 0
NAV per share (RMB cents) (equivalent to SGD cents)
421.14/
87.04
354.37/
73.23
293.42/
60.64
19
* Including Cash RMB 566.4 mln + Notes RMB 357.9 mln
** No bank borrowing since end of FY2016
Key Developments
20
Ongoing Projects
ProjectScheduled
Completion DateStatus CapEx
30,000-ton Accelerator TBBS:
Phase I of 10,000-ton
capacity at Shanxian P lant
Phase I construction and
installation completed
at the end of 2016
Pending trial run approval RMB 100 mln
Insoluble Sulphur:
10,000-ton production line at
Dingtao plant
Construction completed
by end of 2017Pending trial run approval RMB 50 mln
Heating Plant:
Add one boiler and one
electric generator
Construction completed
by end of 2017
Undergoing grid
integration RMB 100 mln
21
Annual Capacity
2007
(before IPO)FY17 FY18e Note
Rubber
Accelerators 32,000 87,000 97,000
Shanxian:
71,000-ton
Weifang:
26,000-ton
Insoluble
Sulphur nil 20,000 30,000
Shanxian:
10,000-ton
Dingtao:
20,000-ton
Anti-oxidant
(TMQ & 6PPD) nil 45,000 45,000
Shanxian:
10,000-ton TMQ
30,000-ton 6PPD
5,000-ton 4010
Total 32,000 152,000 172,000
22
Outlook
23
Rising Tire Consumption24
• Replacement tires and new car tire sales account for 70% and 30% respectively
• For passenger cars, every car needs to replace 1.5 piece of tires every year
(source: Linglong Tyre’s IPO prospectus)
Pcs ‘ mln
285337 355
385
443 456 470
529562 565
610653
0
100
200
300
400
500
600
700
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
PRC Tire Production Volume
Source: http://www.tyrefh.org/
Riding on Rapid Growth of Car Market25
• 1H2018 PRC car sales totaling 14.1 mln units, up 0.83% y-o-y
• After a robust growth in the past decade, China’s new car sales forecasted to grow moderately
• China’s motor parc as of 1H2018 reached 319 million makes the demand for tire strong and sustainable
Units ‘mln
19.3
2223.5
24.6
28 28.9
14.1
0
5
10
15
20
25
30
35
2012 2013 2014 2015 2016 2017 1H2018
PRC Car Sales
www.caam.org.cn
PRC Car Parc Forecast
Competitive Strengths26
Market Leadership
Products
Strong Customer Base
Environmental Protection advantage
R&D Capability
Ready Resources for Future Expansion
- World largest accelerators and China’s biggest IS producer
- Capturing 20% of global and 33% of China’s accelerators markets
- Listed in the first batch of “National Champion Manufacturing Enterprise”
- “High-tech Enterprise” Status
- Academician R&D workstation in collaboration with Tsinghua and CAS
- R&D Centre partnered with Qingdao University of Science and Technology
- Early adopter of Environmental protection initiative
- 1/3 of capex invested in environmental protection and safety
- Transformation and upgrading towards “Green, Intelligent & Miniaturized”
- Strong cash position
- Land spaces available in our production facilities
- Built-up infrastructures
- Over 1,000 customers worldwide spanning over 40 countries
- Serving 2/3 of global top 75 tire manufacturers
- 1/3 output exported
- High quality
- Stable supply
- Full range of varieties
Declining tire demand may result in lower
utilization rate of tire manufacturing
Trade war tension between US and China makes
the world economy uncertain and weakens
China’s tire export to US
Challenges and Opportunities Ahead27
Challenges Opportunities
The 3-year “Battle for a Blue Sky” initiative
affects all chemical companies in China
Short supply situation may ease as some
affected productions resuming gradually which
could lead to the normalisation of ASP
Environmental rectification causing industry
consolidation which may benefit bigger players
Group’s sustainable growth driven by organic
expansion of capacity for a long-term
Group’s sales to US account for about 2-3%.
The impact on our exports is minimal, indirect
and manageable
China is the world largest tire and auto market.
It provides a stable consumption based on a
strong replacement tire market
Fluctuation of raw material prices, a perennial
concern
Group is able to maintain a reasonable margin
and pass on the increased material price onto
customers
Listed On SGX Mainboard28
SHARE PERFORMANCE(China Sunsine vs STI)
▪ P/E below 6 times (Rolling EPS SGD0.25 for last four quarters)
▪ P/B ratio about 1.6
Chairman’s Message29
Mr. Xu Chengqiu
Executive Chairman
I am proud that the Group has achieved such outstanding performance in the first
half of 2018. As China’s economy is facing a slowdown in its growth amidst trade
war tensions, China’s tire capacity utilisation rate is falling. We expect the selling
price of rubber chemicals to continue to normalise. In addition, as the Chinese
government continues to enforce stringent environmental protection regulations
and conduct frequent inspections under “The Battle for a Blue Sky”, this may
materially affect all chemical companies in China. We remain positive of our
performance in the next 12 months.
30
Q & A
MEDIA/INVESTOR CONTACT
Tong Yiping, CFO, tongyiping@ChinaSunsine.com
Jennie Liu, IR Manager, jennie@ChinaSunsine.com
112 Robinson Road #11-01
Singapore 068902
(+65) 6220-9070
www.ChinaSunsine.com