Swancor (TSE: 3708)
Company Profile2017/10
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
Copyright © Swancor All Rights Reserved33
Anti-corrosion material
Wind Blade
material
Swancor
Renewable
Formosa I
(128MW)
Formosa II
(300-500MW)
Formosa III
(1,900MW)
Revenue
By Business20171H,%
6,000
8,000
10,000
12,000 NT$MN
Copyright © Swancor All Rights Reserved4
By Region20171H,%
* Revenue of 2017Q2 is fine chemical only. Revenue from off-shore wind power is not included in this chart..
-
2,000
4,000
2013 2014 2015 2016 2017H1
Anti-corrosion material Wind blade material
Other fine chemicals Offshore Wind Power
Fine Chemical – Anti-Corrosion Material
Copyright © Swancor All Rights Reserved5
2,000
2,500
3,000
Fine Chemical – Anti-Corrosion Material
• Major product is vinyl ester.
• Major applications are anti-corrosion tank and pipe for factories, desulfurization tank, and chimney for power plants.
• Broad customer base. Sales through direct channel or distribution. Produce by order.
• Major competitors are Ashland (US) and DSM (Holland).
• Market is oligopolistic with stable gross
RevenueNT$MN
Copyright © Swancor All Rights Reserved6
-
500
1,000
1,500
2013 2014 2015 2016 2017H1
• Market is oligopolistic with stable gross margin. Volume grows steadily every year.
• In 2016, Swancor sold 32 thousand tons. Main market was China.
• In 2016, considering vinyl ester only, Swancor sold 18 thousand tones in China. Total China market was 75 thousand tons. Swancor market shares in China was 24%
• International markets are South-East Asia, India and Middle-East.
Fine Chemical – Wind Blade Material
Copyright © Swancor All Rights Reserved7
5,000
6,000
7,000
8,000 • 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 services are high.
• Major competitors are Hexion (US), Olin Epoxy(US), and Huntsman(US).
RevenueNT$MN
Fine Chemical – Wind Blade Material
Copyright © Swancor All Rights Reserved8
-
1,000
2,000
3,000
4,000
2013 2014 2015 2016 2017H1
Epoxy(US), and Huntsman(US).
• Market is oligopolistic. Volume is highly relates to wind turbine market.
• In 2016, Swancor sold 23 thousand tons. Main market was China.
• In 2016, total quantity of China market was 115 thousand tons and global market was 250 thousand tons. Swancor market shares in China was 20%.
• International markets are India and northern America.
Carbon Fiber Composite
Global carbon fiber composite demand
Thousand tons
Global carbon fiber composite demandBy application, %, 2016
100
120
140
Copyright © Swancor All Rights Reserved9
• Swancor carbon fiber composite factory was completed in April 2016. Formosa Plastic (TSE: 1301) owns 18% of equity.
• Products are pre-peg, thermal plastic plate, and extrusion spar.
• Applications are automotive parts and wind blade spar.
• Thermal plastic plate has manufacturing flexibility and cost advantage over traditional pre-peg , and is recyclable.
0
20
40
60
80
2016 2017 2018 2019 2020 2021 2022
Source: JEC 2016
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
• Plan capacity is 128MW.
• Phase I 8MW has been installed and is commercially operating. Phase II 120MW will be built in 2019.
• Macquarie, DONG energy, and Swancor owns
Formosa I, II
Formosa III
Copyright © Swancor All Rights Reserved10
• Macquarie, DONG energy, and Swancor owns 50%, 35%, and 15% of the equity respectively.
• Formosa II
• Plan capacity is 300-500MW.
• Conducting environmental impact analysis (EIA) and will be built in 2020.
• Formosa III
• Plan capacity is 1,900MW.
• Conducting EIA and will be built in 2021.
Taiwan Offshore Wind Power Market &Swancor Business Model
Taiwan Government offshore wind power target
Accumulated, MW
• Major milestones to develop an offshore wind farm are permits, financing, construction, and
Permits Financing Construction COD
5-7 years 20 yearsdeveloping service O&M
Copyright © Swancor All Rights Reserved11
are permits, financing, construction, and commercial operating (COD).
• Swancor provides developing services to offshore wind farms. Normally, it takes 5-7 years to develop an offshore wind farm.
• After COD, Swancor provides operating and management services (O&M). O&M service usually lasts for 20 years.
• In addition to service fees, upon milestones been completed, depending on wind farm projected return, Swancor might get success fee.
Income Statement
Copyright © Swancor All Rights Reserved1212
•ROE is annualized.
•Sales volume includes anti-corrosion material and wind blade material only, does not include other products.
Balance Sheet and Financial Indexes
Copyright © Swancor All Rights Reserved1313
Cash Flow
Copyright © Swancor All Rights Reserved1414
Opportunities in green energy, environmental protection and safety territory: materials for anti-corrosion and wind blade, carbon fiber composite and offshore wind power.
Align with world leaders in the industry: with Goldwind in fine
Why Swancor
Copyright © Swancor All Rights Reserved15
Align with world leaders in the industry: with Goldwind in fine chemical, with Formosa Plastic in carbon fiber composite, with Macquarie Capital and Dong Energy in offshore wind power.
Corporate culture of integrity and persistence: Customer service is of utmost importance, Swancor strives for continuous growth, Protection of environment is our priority and Employees share the enthusiasm and prides in the company.
Thank you!
China Wind Power MarketChina Wind Power Curtailment Rate%
10%
15%
20%
25%
30%
China New Installed Wind Power Capacity
GW
25
30
35
Copyright © Swancor All Rights Reserved17
In 2016Q1, wind curtailment rate was as high as 26%. Main reasons are power consumption growth rate was low and inter-China power network was not sufficient.
As China invested RMB 218BN in inter-China power network, wind curtailment rate decreased.
0%
5%
2015Q22015Q32015Q42016Q12016Q22016Q32016Q42017Q12017Q2
-
5
10
15
20
2012 2013 2014 2015 2016 2017H1
Technical, procurement, safety, project management
Finance, procurement, project management
Formosa I founder
Swancor Ind.Macquarie
CapitalDong Energy
15% 50% 35%
100%
Holding company of Swancor group
Swancor Holding
Formosa I Business Model
Copyright © Swancor All Rights Reserved18
Offshore wind farm developer
Swancor Renewable Formosa Intl. Holding
Perm
it
Fin
ancin
g
Con
struction
O&
M
Developing service
Formosa I
100%
100%
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
Copyright © Swancor All Rights Reserved19
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.