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Swancor Company Profile (TWSE: 3708) 2018/5
SwancorCompany Profile
(TWSE: 3708)
2018/5
1992
Established
in Taiwan
2006
Tianjin, China
2015
Carbon Fiber Composite
2017
Jiangsu, China
Milestones
Copyright © Swancor All Rights Reserved2
2000
Shanghai, China
2013
Offshore wind
power in Taiwan
2016
Taiwan First offshore wind
turbines
Swancor Holding
Fine chemicalCarbon fiber composite
Offshore
Wind Power
Business Units
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Anti-corrosion material
Wind Blade
material
Swancor
Renewable
Formosa I
(128MW)
Formosa II
(378MW)
Formosa III
(1,900MW)
Revenue
By Business (2017,%)
50%
35%
10%4%
Anti-corrosion material
Wind blade material
Other fine chemicals
Offshore Wind Power
RevenueNT$ MN
8,000
10,000
12,000
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By Region (2017, %)
Power
17%
72%
11%
Taiwan
China
International-
2,000
4,000
6,000
2014 2015 2016 2017 2018Q1
Anti-corrosion material Wind blade material
Other fine chemicals Offshore Wind Power
Fine Chemical – Anti-Corrosion Material
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Fine Chemical – Anti-Corrosion Material
• Major product is vinyl ester.
• Major applications are anti-corrosion tank and pipe for factories, desulfurization tank, and chimney for power plants.
• Broad customer base. Sales through direct channel or distribution. Produce by order.
• Main market is China. Major competitors are Ashland (US) and DSM (Holland).
RevenueNT$ MN
2,000
2,500
3,000
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Ashland (US) and DSM (Holland).
• Market is oligopolistic with stable gross margin. Volume grows steadily every year.
• In 2017, Swancor sold 18.4 thousand tones of vinyl ester in China. Total China market was 70 thousand tons. Swancor’s market shares in China was 23%
• International markets are South-East Asia, India and Middle-East.
-
500
1,000
1,500
2014 2015 2016 2017 2018Q1
Fine Chemical – Wind Blade Material
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• Products are epoxy resin and hardener.
• Major customers are China wind blade makers (e.g. Sinoma, SZE: 002080) and international wind blade makers (e.g. TPI Composites).
• Direct sales. Entry barriers in technical support and customer service are high.
• Main market is China. Major competitors are Hexion (US), Olin Epoxy(US), and
Fine Chemical – Wind Blade Material
RevenueNT$ MN
5,000
6,000
7,000
8,000
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Hexion (US), Olin Epoxy(US), and Huntsman(US).
• Market is oligopolistic. Volume is highly relates to wind turbine market.
• In 2017, total quantity of China market was 95 thousand tons and global market was 240 thousand tons. Swancor sold 14 thousand tons. Market shares in China and world market were 15% and 6% respectively.
• International markets for Swancor are India and northern America. -
1,000
2,000
3,000
4,000
5,000
2014 2015 2016 2017 2018Q1
2017 Major Wind Turbine Makers
5.2 5.8
China Market
Goldwind
Envisiom
Uninted Power
Mingyang
Shanghai Electric
CSIC Haizhuang
9.4
7.8
3.1
15.1
Global Market
Vestas
Siemens Gamesa
Goldwind
GE
Enercon
Envision
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Source of wind turbines: Bloomberg.
We estimated the usage of blade resin for wind turbine per MW is roughly 4.7 ton.
The ASPs of blade resin over the years were between NT$90,000-110,000 per ton.
Unit: GW
2.7
1.3 1.1
1.1
0.9 CSIC Haizhuang
Others
Unit: GW
5.7
4.7 3.1
3.1
3.1 Nordex
Others
Taiwan Offshore Wind Power Market
Taiwan Government offshore wind power target plan
Accumulated capacity, MW
3000
4000
3000
3500
4000
4500
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8
520
0
500
1000
1500
2000
2500
3000
2016 2020 2025 2030
Swancor Offshore Wind Farms - Formosa I, II and III
• Swancor is developing Formosa I, II and III, three offshore wind farms in Taiwan.
• Formosa I
• Capacity is 128MW. Phase 1 8MW has been installed and is commercially operating. Phase 2 120MW will be built in 2019.
• Macquarie, Orsted, and Swancor owns 50%, 35%, and 15% of the equity respectively.
• Formosa II
Formosa I, II
Formosa III
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• Formosa II
• Capacity is 378MW.
• Had pass Taiwan offshore wind power grid allocation process and will be built in 2020.
• Formosa III
• Capacity is 1,900MW.
• Will participate in Taiwan price autcion in 2018 and will be built from 2021 to 2025.
• Shareholders are Swancor, Macquarie and EnBW.
Swancor Offshore Wind Power Business Model
• Major milestones of offshore wind farm
PermitsPlanning and
FinancingConstruction COD
Developing takes 5-7 years Commercial operating period is 20 years
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• Swancor provides offshore wind farms developing services in the developing stage, and provides operating and management (O&M) service after wind farms being commercial operating (COD).
• In developing stages, major milestones are permits, planning, financing, construction, and COD. Usually, it will take 5 to 7 years.
• After wind farms being COD, Swancor provides O&M services. In most cases, offshore wind farms will operate for over 20 years.
• In addition to monthly service fees, upon milestones been completed, depending on wind farm ‘s return, Swancor might get success fee as bonus.
Operating and Management (O&M) ofOffshore Wind Power
50%
10%
15%
15%
Offshore wind power O&M
Turbine inspection and maintenance
Management
Non-turbine inspection and maintenance
Insurance
20%
30%
40%
50%
60%
70%
80%
O&M plan for the first wind farm
Aggressive plan
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According to Taiwan Energy bureau's estimation, O&M expense of offshore wind per MW per year is NT$5.73MN.
Swancor is in charge of O&M management now, and plans to take 50% of turbine inspection and maintenance of from 6th year (after COD) and 100% by 9th year. Swancor also plans to take 50% of non-turbine inspection and maintenance from 4th year and 100% by 6th year.
As Swancor is the pioneer of offshore wind power O&M in Taiwan, other non-Swancor wind farms in Taiwan are target customers as well.
10%
10%Environmental monitoring and other 3rd party services
0%
10%
20%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
2018Q1 Income Statement
Consolidated Income Statement
(NT$ million except rates)2018Q1 2017Q4 2017Q1 QoQ YoY
Net Revenue 1,149 1,442 937 -20% 23%
Gross Margin Rate 12.6% 16.5% 18.6% -4% -6%
Operating Expense (184) (129) (182) 43% 1%
Operating Income Rate -3.4% 7.5% -0.9% -11.0% -2.5%
Non-Operating Income (11) 0 24 -5586% -147%
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•ROE is annualized. •Sales volume included anti-corrosion material and wind blade material. Other products are not included
Non-Operating Income (11) 0 24 -5586% -147%
Tax Rate 7% 33% 67% -27% -61%
Net Income (42) 64 1 -165% -3549%
Net Income Rate -3.7% 4.5% 0.1% -8.1% -3.8%
EPS (NT$) (0.47) 0.73 0.01 (1.20) (0.48)
ROE Rate -3.8% 5.8% 0.1% -10% -4%
Sales Volume (Ton) 10,164 13,718 9,021 -26% 13%
Balance Sheet and Financial Indexes
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2018Q1 Cash Flow
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Thank you!
Disclaimer
This document may be deemed to contain forward-looking statements. These forward-looking statements include, among other things, statements regarding future events and the future financial performance of Swancor that involve risks and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results.
Any projections in the document are based on limited internal and external
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Any projections in the document are based on limited internal and external information currently available to Swancor, which is subject to change. Actual events or results could differ materially and no reader of this document should assume later that the information provided today is still valid. Such information speaks only as of the date of this document.
Readers shall rely on self-judgment to makes any investment decision. Readers shall not interpret the information in this document to be investment recommendations.
