CTCI Corporation
The 1st Investor
Conference, 2017
2017.03.29
1
Agenda
• Operation Review – 2016
• Business Outlook and Operation
Strategies
• Financial Highlights – 2016
2
Operation Review – 2016
3
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New Contracts and Breakdown
4
60.2
66.9
77.9
64.5
85.6
0
10
20
30
40
50
60
70
80
90
2012 2013 2014 2015 2016
Unit: NT$, Billion
Taiwan 73%
South East Asia 17%
China 3%
India 2%
Middle East 4%
Others 1%
Hydrocarbon 10%
Environmental 60%
Transportation 2%
Power 22%
Industrial 4%
Other 2%
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Backlog and Breakdown
5
153.2 163.5
187.1 190.5
203.2
0
50
100
150
200
250
2012 2013 2014 2015 2016
Unit: NT$, Billion
Taiwan 55%
South East Asia 21%
China 1%
India 1%
Middle East 21%
Other 1%
Hydrocarbon 39%
Environmental 34%
Transportation 5%
Power 18%
Industrial 4%
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Accomplishments Review
Project Execution Honors
• SAMAC MMA/PMMA Project awarded SABIC Green Flag for Best EHSS Performance
Three Times
• CPC Talin No. 11 DHDS Project and Taichung LNG Terminal Expansion Project honored
with MOEA Public Construction Quality Award
• Thai Oil TOP SPP Project awarded appreciation and recognition for achievements in COD
completion and 10 Million Man-hours without LTI
• Petronas RFCC project awarded Best Performance for continuously leading EPC progress
among all EPC contractors
6
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Accomplishments Review
Company Honors
• Won the highest honor of "The 16th Public Construction Golden Quality Award“ in design
and construction excellence awards under the facilities category
• Honored with Green Sustainability Practice Award by British Standards Institution
• Recognized with five Achievements in 2016 Taiwan Corporate Sustainability Awards
Sustainable Corporate Award
gold medal of service industry for “Taiwan Top 50
Corporate Sustainability Report Award”
Growth through Innovation Award
Transparency and Integrity Award
Group Chairman John T. Yu was honored as the “Outstanding Corporate Sustainability
Professional”
• Listed by Dow Jones Sustainability Indices (DJSI) in its Emerging Markets index
• Evaluated as Top 5% in “Corporate Governance Evaluation System”
• John T. Yu was honored as the “2016 Top 50 CEO” by Harvard Business Review”
7
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Accomplishments Review
The CommonWealth Magazine Top 2,000 Enterprises Survey
ENR Magazine Rankings
Sector 2015 2016
International Contractors 122 100
Global Contractors 148 139
International Design Firms 103 92
Global Design Firms 136 147
8
Sector Company 2015 2016
Contractor CTCI Corp. 1 1
Contractor CTCI SEC 33 30
Contractor CTCI MAC 43 41
Contractor CTCI REI 54 51
Investment Holding
Company KD Holding 5 8
Environmental Services SESC 2 2
IT Equipment Sales and
Services CTCI ASI 35 33
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CSR Fulfillment
9
Records and benefits of indicative green engineering resulted in 2013-2016
• Electricity consumption saved 4,304,030Mwh equivalent to 14.7days of thermal power plant of Taiwan Power Co.
• Cumulative CO2 reduction 58.99 million metric tons equivalent to151,640 times the annual carbon absorption of Daan Forest Park in Taipei City
• Cumulative water saved 135.98 million cubic meters equivalent to 152 days of water use by Taipei City
Records and benefits of O&M for incineration plants in 2016
• The largest O&M institution of incineration plants for city garbage in Taiwan Electricity generated can supply up to 286 thousand households
Records and benefits of O&M by GDDC for photovoltaic power plants in 2016
• Current power generated: 28,960 thousand kWh
Power generated by the end of 2017:41,510 thousand kWh
Water resources management
• Chungli Sewerage System BOT Project: a capacity of 156,800 CMD
• Fengshan Shi Wastewater Reclamation Plant BTO Project:
a capacity of 45,000 CMD
CTCI Education Foundation established in 2016
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Significant Projects Awarded ─ Taiwan
Client Taoyuan City Government
Project Chung Li Sewerage System Project, BOT
Contractor Consortium of CTCI & HEC
Scale 156,800 CMD per day
Scope Investment, Design, Procurement, Construction and O&M (BOT)
Location Taiwan
10
Taoyuan
• CTCI and the partner jointly implement all phases of this project within 35 years of
concession period, serving 200,000 households and improving the life quality in southern
Taoyuan
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Significant Projects Awarded ─ Taiwan
Client Kaohsiung City Government
Project Feng Shan Shi Wastewater Reclamation Project, BTO
Contractor Consortium of HEC & CTCI
Scale 45,000 CMD per day
Scope Investment, Design, Procurement, Construction and O&M (BTO)
Location Taiwan
11
Kaohsiung
• CTCI and the partner jointly implement all phases of project with 17 years concession
period, producing reclaimed water to Linhai industrial park
• This project is the first municipal wastewater reclamation BTO project in Taiwan
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Significant Projects Awarded ─ Taiwan
• To release the risk of power shortage, Ministry of Economic Affairs and Taiwan Power
Company bought two Simple Cycle Generators with capacity of 600MW from GE
company by public bid. CTCI is in charge of the EPC project (except for the generators
and HV equipment)
Client Taiwan Power Company
Project Dah-Tam Gas-Fired Simple Cycle Generators Emergency Project
Contractor GE company
Sub-Contractor CTCI
Capacity 2 x 300MW
Scope Design, Procurement, Construction, and Commissioning
( Except for the generators and HV equipment)
Location Taiwan
12
Taoyuan
Copyright © 2016 CTCI All Rights Reserved.
• The first EPC project awarded by FPC USA, utilizing modularization solution to achieve
higher cost effectiveness and efficiency
13
Significant Projects Awarded ─ USA
Client Formosa Plastics Corporation USA
Project Offsite Pipe Rack Modularization & Erection Project, EPC
Contractor CTCI
Module No. 28 modules
Scope Design, Procurement and Construction
Location USA
Taxes
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• Awarded cogeneration power plant project by FPC USA for basic engineering design work,
extending the power business to the USA
Significant Projects Awarded ─ USA
Client Formosa Plastics Corporation USA
Project FPC USA Utility-3 Power Plant Basic Design Project
Contractor CTCI
Capacity 230MW
Scope Basic Engineering Design
Location USA
Taxes
14
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Significant Projects Awarded ─ Middle East
Client Saudi Kayan
Project Ethylene Cracking Furnace and Ethylene Plant Expansion Project,
EPC
Contractor CTCI
Capacity 200 thousand tons per year
Scope Design, Procurement and Construction
Location KSA
15
• Awarded the Ethylene Cracking Furnace Project which comprises the installation of a
new additional furnace, increasing the capacity of ethylene by 200 thousand tons
• Saudi Kayan is a subsidiary of SABIC, which is among the Top 3 petrochemical
companies in the world
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Significant Projects Awarded ─ India
Client Petronet LNG Limited
Project Dahej LNG Terminal the 3rd phases Expansion
Regasification Facilities Project, EPC
Contractor Consortium of CTCI, CINDA
Capacity 2.5 million tons per year
Scope Design, Procurement, Construction, and Commissioning
Location India
16
• Awarded Dahej LNG Terminal Expansion EPC Project by Petronet
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• This is the first project for CTCI to enter the CIS market, successfully developing the new
market given CTCI’s abundant experiences of PTA plants
Significant Projects Awarded ─ CIS
Client SafPet LLC
Project SafPet LLC PTA/ PET Basic Engineering Design
Contractor CTCI
Capacity PTA 210 KTA / PET 250 KTA
Scope Basic Engineering Design
Location Russia
17
Business Outlook and Operation
Strategies
18
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Business Outlook and Operation Strategies─Taiwan
• The new government proposed the “Forward-looking Infrastructure Construction Project” which includes green energy, waterworks, digital development, rail transportation, and urban and rural developments
Market Review
• Energy Policy • The nuclear free policy and the decrease of Percent Operating Reserve may
bring more opportunities for power plant expansion projects in the next few years
• CPC investment plan amounted NT$ 200 billion includes the Taoyuan Refinery Revamping Project, The Third LNG Terminal Project, CPC Talin Tank Farm Project and related projects for high-value petrochemical product
• Wastewater Reclamation Policy:
• The six Wastewater Reclamation projects in Taiwan have been planned by CPAMI since last year, and will be continuously open for bidding in the future
• Transportation Policy:
• MRT Projects such as Keelung Light Rail Transit, Taoyuan Green Line, Wanda Line and Xinyi Eastern Extension and Xinzhuang Depot E&M System Project
• Railway Projects such as railway double-track electrification, underground and elevated railway, etc.
• Continuously look for the domestic investments plan for high-value petrochemical product
Business Outlook
• Continuously maintain close cooperation with major equipment suppliers such as GE, Mitsubishi Heavy Industries, and Siemens, etc. to stabilize the domestic power plant market
Operation Strategies
19
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• The cheap shale gas significantly reduces the downstream petrochemical material cost, and creates more opportunities for the new investment on petrochemical
• More incentive for international petroleum companies to invest in petrochemical industry in US
Market Review
• Awarded some Engineering and EPC projects, and is bidding for several mega projects such as:
• Formosa Texas LDPE and EG plants
• Formosa Group Louisiana petrochemical complex (US$ 10 billion dollars)
• ExxonMobil and SABIC petrochemical investment (US$ 10 billion dollars)
• The energy policy under Trump’s government will benefit CTCI to enter downstream petrochemical market in US
Business Outlook
• Hire local management team and build-up the comprehensive EPC capability
• Seek for the best strategic alliance to enter to the LNG terminal fields
• Considering the high labor cost in USA, CTCI will leverage the modularization to minimize the site manpower
Operation Strategies
Business Outlook and Operation Strategies─USA
20
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Business Outlook and Operation Strategies─ Middle East
and Africa
• The members of Gulf Cooperation Council prefer to invest in downstream industry and high-value products following the drop of oil price in 2014
Market Review
• Major potential opportunities are downstream petrochemical plants based on strategic plan for country economy development and private investment, such as :
• Duqm refinery project in Oman
• Aramco oil and gas Industry project in KSA
• Qatar Petroleum Corporation petrochemical expansion project in Qatar
• Borouge ethylene expansion project in Abu Dhabi
• Sonatrach new refinery projects in Algeria, Africa
Business Outlook
• To cultivate the relationship with clients such as SABIC, and Qatar Petroleum, etc.
• Develop the new market such as Kuwait, UAE, Iran and Africa
Operation Strategies
21
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Business Outlook and Operation Strategies─Southeast
Asia and India
• The Southeast Asia and India have better fundamentals due to the less effect by Europe and America, the government policy impulse and the increasing investments by KSA, which are beneficial for infrastructures and petrochemical investments
• The RAPID petrochemical EPC projects in Malaysia, the refinery project in Indonesia, and the hydrocarbon and LNG projects in India
• The increasing demand for power brings in various business opportunities for IPP power plant projects; there are also infrastructures like transportation and waste to energy plants
Market Review
• Continuously strive for Petronas RAPID projects • Several projects over US$10 billion dollars such as Thai Oil CFP, and
Pertamina Balikpapan Refinery, etc.
• Coal-fired power plants in Vietnam, gas-fired power plants in Malaysia and Thailand, waste to energy plants in Philippines and MRT projects in Singapore, which are all potential opportunities in the future
Business Outlook
• Actively enter the petrochemical maintenance fields and chemical markets in Malaysia • Prudently choose partners to jointly develop the petrochemical market in Indonesia
Operation Strategies
22
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Business Outlook and Operation Strategies ─CIS
• The abundant petroleum and LNG resources in Russia and Kazakhstan provide many opportunities in petrochemical industry. Nevertheless, the project financing is required given the tight budget for the owners
Market Review
• Awarded the first PTA/PET basic design project in Russia in 2016 and now aggressively seek for the following detail design work • Kazakhstan is planning to build PTA/PET plant, and CTCI/CTCI Beijing will cooperate to strive for the FEED project and provide the project financing for the owner
Business Outlook
• CTCI and CTCI Beijing will acquire the ECA for the owner to easily receive the project financing support by cooperating with China Export & Credit Insurance Corporation (Sinosure), which is beneficial for CTCI to win the project
Operation Strategies
23
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Taiwan
Hydrocarbon:23bn
Infrastructure, Environment, and Power:29.9bn
South East Asia
Hydrocarbon:90bn
Infrastructure, Environment, and Power:67.5bn
India
Hydrocarbon:44.0bn
Total Amount
Hydrocarbon:563.7bn
Infrastructure, Environment and Power:101.1bn
China
Hydrocarbon:10bn
Infrastructure, Environment, and Power:2.6bn
CIS and Others:
Hydrocarbon:1.5bn
Infrastructure, Environment and Power:0.6bn
2017~2018Q2 Potential Opportunities
24
Unit:NT$
USA
Hydrocarbon:92.9bn
Middle East
Hydrocarbon:302.3bn
Infrastructure, Environment, and Power:0.5bn
Financial Highlights – 2016
25
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Consolidated Sales Revenues and Breakdown
26
52.2
57.7
67.1 70.5
0
10
20
30
40
50
60
70
80
2013 2014 2015 2016
Unit: NT$/Billion
Taiwan 50%
South East Asia 18%
China 3%
Middle East 26%
Other 3%
Hydrocarbon 50%
Environmental 7%
Transportation 2% Power 27%
Industrial 11%
Other 3%
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2016 Consolidated Income Statement
Unit: NT$, Thousand
2016/12/31 2015/12/31 YOY
Sales Revenues 70,509,675 100% 67,057,640 100% 5.1%
Operating costs (64,323,846) -91.2% (61,621,562) -91.9% 4.4%
Gross Profit 6,185,829 8.8% 5,436,078 8.1% 13.8%
Operating expenses 2,023,306 2.9% 2,434,166 3.6% -16.9%
Operating income 4,162,523 5.9% 3,001,912 4.5% 38.7%
Total non-operating income
and expenses (184,055) -0.3% 318,740 0.5% -157.7%
Profit before income tax 3,978,468 5.6% 3,320,652 5.0% 19.8%
Income tax expense (964,753) -1.4% (750,509) -1.1% 28.5%
Profit for the period 3,013,715 4.3% 2,570,143 3.8% 17.3%
Profit attributable to
Owners of the parent 2,222,888 2.6% 2,040,610 2.5% 8.9%
Total basic earnings per
share 2.92 2.69
27
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2016 Consolidated Balance Sheet Unit: NT$, Thousand
2016/12/31 2015/12/31 2016/12/31 2015/12/31
Current assets* 51,394,621 45,298,807 Current liabilities 40,297,705 34,389,605
Financial assets 1,479,172 1,479,308 Non-current liabilities 5,737,135 6,112,898
Non-current assets 14,830,268 14,931,779 Long-term borrowings 2,265,150 2,611,950
Property, plant and
equipment 6,876,224 7,001,676
Other non-current
liabilities 3,471,985 3,500,948
Intangible assets 127,686 121,469 Total Liabilities 46,034,840 40,502,503
Other non-current
assets 7,826,358 7,808,634 Total equity 20,190,049 19,728,083
Total assets 66,224,889 60,230,586 Total liabilities and
equity 66,224,889 60,230,586
*Cash and cash equivalents:NT$13.8bn
28
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Dividend Payout
29
Unit: NT$
2.13
2.41 2.65
2.91
3.22 3.32
2.22
2.51 2.69
2.91
1.74 1.92
2.37 2.42
2.76 2.84
1.99 2.23
2.40 2.60
87%
80%
89%
83% 86% 85%
90% 89% 89% 89%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
EPS Cash DPS Cash Dividend Payout Ratio(%)
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