Post on 30-Jun-2020
transcript
Part One Review of 2016
1. Economic Condition
1
In 2016, China’s GDP growth continued to slow down,
economic activities were still facing much downward
pressure.
Affected by factors such as slower economic growth, overcapacity
of production and the state’s regulatory measures, China’s raw
coal production continued to decline in 2016.
Affected by slower growth in import/export trade, growth in the
throughout of China’s above-scale ports slowed down in 2016.
GDP
流动港机 Domestic port throughput
Production of raw coal
7.70% 7.70% 7.30%
6.90% 6.70% 6.0%
7.0%
8.0%
2012年 2013年 2014年 2015年 2016年
China’s GDP growth rate
1.77 1.89
2.02 2.12 2.18
1.50
2.00
2.50
2012年 2013年 2014年 2015年 2016年
Container throughput of above-scale ports in China (Unit: ’00 million tonnes)
2.86 2.95 3.11 3.13 3.13
2.4
2.8
3.2
2012年 2013年 2014年 2015年 2016年
Container throughput of the world’s top 20 ports (Unit: ’00 million tonnes)
International port throughput
From 2012 to 2016, throughput of the world’s top 20 ports
increased year after year. In 2016, the growth rate continued
to decline.
2012 2013 2014 2015 2016
3.80% 0.80%
-2.50%
-3.30%
-9.40% -10.0%
0.0%
10.0%Growth rate of raw coal production in China
(Source: Website of State Statistical Bureau)
(Source: Website of State Statistical Bureau)
(Source: China Port Containers)
(Source: Official websites of various ports)
2012 2013 2014 2015 2016
2012 2013 2014 2015 2016
2012 2013 2014 2015 2016
2. Major operating indicators
2
RMB
No. Financial indicators 2016FY YoY Change
1 Revenue (million) 1,841.8 -16.3%
2 Gross profit margin (%, excluding
provision for inventory depreciation) 32.4% 2.9ppts
3 Net profit attributable to parent (million) -644.4 -3,667.2%
4 Earnings per share (RMB Yuan) -0.21
5 Net operating cash flows (million) 1,327.0 768.4%
No. Financial indicators 31 Dec 2016 YoY Change
6 Total assets (million) 10,139.1 -10.5%
7 Asset to liability ratio(%) 39.5% -0.6ppt
8 Net assets (million) 6,134.1 -9.6%
3
Unit: RMB million
Port machinery is the main source of profit of the Company, contributing net profit of RMB134.0 million in 2016.
Profitability of the energy equipment segment decreased, mainly due to the declining sales of coal machinery as
the coal industry continued its adjustment. Furthermore, for the sake of prudence, the Company made provision
for trade receivables in the amount of RMB429.0 million and provision for inventory depreciation in the amount of
RMB315.1 million and provision for doubtful other recivables in the amount of RMB59.1 million.
3. Business segments
Financial indicators Port machinery Energy equipment Total
Revenue 1,114.1 727.8 1,841.8
Total assets 4,252.1 5,887.0 10,139.1
Total liabilities 2,382.6 1,622.3 4,004.9
Net assets 1,869.5 4,264.7 6,134.1
Net profit 134.0 -792.3 -658.3
Sales margin 12.0% -108.9% -35.7%
Return on total assets 3.2% -13.5% -6.5%
Return on net assets 7.2% -18.6% -10.7%
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4. Sales for value
In 2016, the Company continued to follow the policy of sales for value and managed its clients by category. For more
creditworthy clients, better credit terms were offered while for the less creditworthy clients, stricter control on credit
terms was made. The Company also abandoned those clients with poor payment record so as to improve its sales
quality.
In 2016, sales of mobile port machinery grew rapidly and realized sales revenue of RMB888.1 million, up 21.4% as
compared with last year; roadheaders recorded substantial increase in sales with a 68.3% growth in sales revenue
to RMB 326.5 million. Of which, excavators recorded a 23.2% increase in sales revenue to RMB55.1 million.
Sales revenue from large port machinery dropped in 2016 as affected by the longer lead time for delivery. And
weaker international demand in 2016 led to lower sales revenue from mining vehicle.
Comparison of product sales revenue RMB million
888.1
326.5 254.7 226.0
114.6
19.3 12.7
731.3
194.0
359.8
464.5
223.2
11.8
217.1
-
250.0
500.0
750.0
1,000.0
小港机 掘进机 服务与配件 大港机 采煤机 天然气 矿用车辆
2016年 2015年
Mobile port
machinery
Roadheader
Services and
accessories
Large port
machinery
Shearer
Natural gas
equipment
Mining
vehicle
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5. Geographical structure of revenue
International sales constitute an important part of revenue. An analysis of clients which are
equipment end-users by region shows that in 2016, international clients accounted for 27.0% of
total sales revenue, representing a decrease of 3.5ppts mainly due to a decrease in international
sales of mining vehicle.
In 2016, international sales of mobile port machinery grew rapidly, generating revenue of RMB
382.1 million, which was 88.4% higher as compared with RMB202.9 million last year.
99.50%
69.50% 73.00%
0.50%
30.50% 27.00%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
2014年 2015年 2016年
国内销售占比 国际销售占比 Share of
domestic sales
Share of international
sales
Trend for geographical structure
of product sales revenue
2014 2015 2016
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In 2016, the Company started to control costs vigorously through measures such as business negotiation, R&D innovation,
improvement in technical process, etc. At the same time, it set profit target according to the scale of sales, bargained fees
with better deployment of resources and strived to raise productivity and strictly controlled expenses.
In 2016, the gross profit margin of mobile port machinery was 44.9%; up 6.3 percentage points as compared with 2015, and
that of roadheaders (excluding provision for inventory depreciation) was 37.1%; up 10.6percentage points and gross profit
margin of mining vehicle (excluding provision for inventory depreciation) was 55.4%, which was 16.0percentage points
higher than the previous year.
In 2016, the 3 items of costs totaled RMB635.2 million, a decrease of RMB12.6 million from the previous year. Sales
expenses amounted to RMB321.1 million, when was RMB45.0 million higher that the previous year, mainly due to an
increase in distribution for port machinery.
RMB million
6. Cost and expense control
Statistics of total costs of the 3 items Comparison of gross profit margin
44.9%
37.1%
55.4%
38.6%
26.5%
39.4%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
小港机 掘进机 矿用车辆
2016年 2015年
635.2
321.1
207.4
106.7
647.8
276.1 217.4
154.3
-
100.0
200.0
300.0
400.0
500.0
600.0
700.0
三项费用合计 销售费用 管理费用 研发费用
2016年 2015年
Mobile port
machinery
Roadheader
Mining
vehicle
2016 2015 2016 2015
Total costs of
3 items
Sales
expenses
Management
expenses
R&D
expenses
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7. Credit management
In 2016, the Company pursued the strategy of sales to valuable customers, strictly controlled the terms of sales and lowered
the amount of new receivables. It followed the policy of “one account one policy” and the “Five Principles” and launched a
massive account clearance campaign for the settlement of accounts and recovery of long, outstanding trade receivables. It
also started the non-recourse factoring business to reduce long-aged receivables.
At the end of 2016, the original value of receivables of the Company was RMB2,446.0 million, representing a decrease of
31.3% as compared to RMB3,559.2 million at the previous year end.
In 2016, the rate of sales repayment was 154.9%, representing an increase of 51.9 percentage points. Excluding factoring,
the Company’s sales repayment rate was 103.0%, the same as last year.
Comparison of sales repayment rate
RMB million
103.0%
154.9%
0.0%
30.0%
60.0%
90.0%
120.0%
150.0%
180.0%
2015年 2016年 2016 2015
Trend of receivables
3,545.4 3,559.2
2,446.0
-
1,000.0
2,000.0
3,000.0
4,000.0
2014 2015 2016
Part Two Longer Term Prospect
1.1.Projection on macro environment
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Establishing Yangtze River Economic Belt is one of the strategic
planning stated in the “Thirteenth Five-year Plan”. The primary objective
is to increase the shipping capacity of the golden waterway along
Yangtze River, which directly boosts the market demand for port
machinery.
Regional strategic planning of the
13th 5-year plan in China
One belt and one road: building the
“Silk Road Economic Belt”
“One Belt One Road” will create golden opportunity and platform for
China’s equipment manufacturing industry. The further implementation
of “Building Silk Road Economic Belt” will bring another golden age for
the internationalization progress of port machinery and coal mining
machinery.
Revitalizing of
Northeastern
economy
Yangtze River Economic Belt
The new round of “revitalizing the Northeastern
economy” plan
In August 2016, the Chinese government officially launched the “Three
year rolling plan for revitalization of the old industrial base in
Northeastern region” with an anticipated total investment of RMB1.6
trillion. This will certainly provide new opportunity for the Company’s
development.
One belt and one
road
1.2. Projection on macro environment
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Statistics indicate that coal price in China continued to rise in 2016.
Recovery of the coal industry is obvious and will stimulate demand
for coal mining machinery from the coal mining enterprises.
2016 Coal price index (month end)
35.3 36.1
35.1
39.6
41.0
32.0
34.0
36.0
38.0
40.0
42.0
2012年 2013年 2014年 2015年 2016年
Coal consumption in China (‘000 million tonnes)
2014 2012 2013 2014 2015 2016
Coal Consumption
Coal is the principle energy resource in China. Considering the
requirement for energy safety strategy of the country, the role of
coal as the main source of energy consumption will be quite
secured in the longer term, therefore, market demand for coal
mining machinery will be maintained withing a reasonable range.
Coal Price Index
622.9
681.7
753.5
860.7 853.9
600
700
800
900
8月底 9月底 10月底 11月底 12月底 August September October November December
(Source: Website of State Statistical Bureau)
(Source: 卓越资讯)
2. Market projection
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In 2017, the main theme of Chinese economy is “to promote investment and stabilize growth”. Given the
macroeconomic background, including deepening reform by PRC government and stable growth of GDP, the
throughput of China’s port will maintain a stable growth in 2017. Meanwhile, benefiting from “One Belt One Road” and
continuous exploration in international market, it is anticipated that the sales of transportable port machinery will
achieve a rapid growth.
In 2017, as the strategy of the 13th five-year plan is gradually implemented, a batch of major construction projects
including tunnels, subways and water conservancy construction will gradually begin, bringing favourable market
opportunities for excavator product. The excavator market is expected to grow rapidly in 2017.
Affected by the supply side reform, it is expected that raw coal output in China will keep its downward trend in 2017, but
total volume will remain large (forecast to be around 340 million tonnes) and market demand for coal mining machinery
will remain at a reasonable level. Leveraging on the advancement of the coal mining technology and equipment upgrade,
coupled with the fact that coal price has been significantly rising since the beginning of the year, it is anticipated that the
coal mining machinery market will experience a significant surge in 2017.
Excavators
Mobile Port Machinery
Coal Mining
Machinery
3.1. Expand sales for value – port machinery
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To launch the new S series of front loaders/container stacking machines onto the market, increase its competitive
advantage and reinforce its leading position in the domestic market; expand segmental market by diversified products
to improve profitability and satisfy clients’ demand for customization and differentiation; rapidly expand the international
market to gain a significantly larger market share through its dual branding, high price-performance ratio of products
and “one region one policy” strategy.
To concentrate on resources with competitive edge and focus on three major products
of quayside container crane, transtainer and portal crane, enhance its market
influence with timely delivery and tailor-made services; speed up the fostering of core
technology and capability of product delivery, strengthen strategic cooperation with
major clients and main ports for better brand building; put more efforts in the
development of Asia Pacific/Middle East markets by engaging benchmark agents
particularly in Saudi Arabia, Thailand, Malaysia and the Philippines to build up clients’
confidence so as to gain a strong foothold in those markets.
Large Port Machinery
Mobile Port Machinery
3.2 . Expand sales for value – coal mining machinery
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工程掘采
Lower production cost and hence increase the competitiveness of its products, and actively secure CCMM orders from major miners to expand its business volume. Put more marketing efforts on the more competitive coal mining machines with large inclination and thin layer coal mining machines in particular so as to capture the market.
Maintain the existing quality and quantity strengths of its main machinery while increasing the sales of those with high price-performance ratio. Speed up the R&D of integrated “excavation, bolting and retention” machines to satisfy the general expectations of clients on improving the supporting efficiency aiming to explore the blue ocean for its roadheader market.
Focus its marketing resources on core projects in the important southwestern region. Create benchmark projects and sample projects to extend market coverage and maximize the sales of excavation equipment.
Build up more extensive customer network to cover new clients in the industrial sector while fostering sales in key regions through visits to renowned open-pit mines to attract potential orders; on the international front, strengthen our work on selected regions, development of new agents and markets created with the “one belt and one road” initiatives so as to maintain its ongoing sales momentum.
Roadheaders
Excavators
Combined coal mining machines
Mining vehicles
4. Continue to enforce internal control
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Material
increase
Subtraction in
two fields
Reduction in
three fields
Addition in
one field
Marketing service platform
Manufacturing management platform
Reduce inventory Cut production
capacity
Reduce costs Reduce expenses Reduce receivables
Productivity of products
Competitiveness of products
In 2017, the Company will continue to enforce internal control and implement the operating strategy of “Addition
in one field, subtraction in two fields, reduction in three fields and growth in four fields to control costs and
expenses and enhance risk control.
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Through our marketing service platform for provision of product on-demand, to better manage
the marketing and services for our product market and after-sale market, and satisfy the
requirements of our business partners as well as clients.
Follow the production pattern of large and small port machineries,
and combining the internet + intelligent manufacturing technology +
Group resources to establish an intelligent port machinery
manufacturing management platform within one year and attain the
same scale in two years’ time.
4.1. Enforce internal control – “Addition in one
field”
Manufacturing management
platform
Marketing service platform
4.2 . Enforce internal control – “Subtraction in
two fields”
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Redesigning and optimizing production capacity to save costs and
expenses. Leasing out idle factories, research and development
facilities and staff dormitory; activating idle equipment through
internal allocation, transfer and other measures to reduce surplus
production capacity.
去产能
Through promotion and sales and adjust policies to reduce inventory of finished products; developing
sample product adhering to “one policy for one machine” strategy to reduce the inventory in R&D; adopting
“one policy for one material” to reduce to the inventory of raw materials.
Reduce inventory
Cut production
capacity
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4.3 . Enforce internal control – “Reduction
in three fields”
Reshape the pre-transaction, during transaction and post-transaction processes to
strictly control the terms of transaction, set up multi-layer receivables collection
mechanism to strengthen on debt enforcement team on debt recovery. Strictly
implement the plan of “one client one credit policy" to closely monitor recoverability;
set up specialized collection team and provide more incentive through the pledge of
warrants and the support of the “one case one policy” to speed up recovery of
receivables.
Set profit target based on sales volume, bargaining fees and charges and setting assessment indicators in each
level. Through consolidating resources and increasing efficiency across the organization to reduce administrative
costs and expenses. Through raising product standard and R&D quality and tighten the testing and verification to
reduce R&D costs. Through reasonably allocating marketing and service resources and cancelling ineffective
expense items to reduce operation cost.
Bargain fees to attain gross profit margin of not less than 30%, and through R&D and innovation, technological
upgrade, commercial negotiation, improving product quality and inventory control to realize reduction in
production costs.
Reduce trade receivables
Reduce costs
Reduce expenses
4.4. Enforce internal control – “Material
increase”
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Through cost controls to increase the gross profit margin; through strengthen internal management
to reduce cost and further improve profitability.
Through technological innovation to produce more
differentiated products; through improved technique and
production quality to enhance product quality; and through
advantage in service to broaden brand appeal and to further
strengthen product competitiveness.
Increase
profitability
Strengthen
competitiveness
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In 2016, despite all the difficulties encountered, we adhered to our mission when first
starting the business and boldly faced the challenges. Our perseverance is finally rewarded
with the arrival of the new phase of development of the heavy machinery manufacturing
industry. The most difficult time is now over and the whole industry is awaiting another
boom. Facing such favourable condition of business recovery, we firmly believe that under
the keen leadership of the Board and with concerted efforts of all staff, we will surely
capture the opportunities arising and ride on the prospering trend. We are also confident
that with our strong establishment and well positioning in the market, a blossoming future is
already ahead of us.
5. Ride on the trend and capture
opportunities ahead
QUALITY CHANGES THE WORLD
IR Hotline: 86-24-89318000 89318111
IR E-mail: tanglin@sany.com.cn
Website: www.sanyhe.com.cn
Address:No.25,16Kaifa Road, Shenyang Economic and Technological
Development Zone, Shenyang, Liaoning Province, PRC