2012 interim results corporate presentation2012 interim results corporate presentation august 2012 1...
TRANSCRIPT
2012 Interim Results
Corporate Presentation August 2012
1
Disclaimer
This presentation is prepared by China Lumena New Materials Corp. (the “Company”) and is solely for the
purpose of corporate communication and general reference only. The presentation is not intended as an offer
to sell, or to solicit an offer to buy or form any basis of investment decision for any class of securities of the
Company in any jurisdiction. All such information should not be used or relied on without professional advice.
The presentation is a brief summary in nature and do not purport to be a complete description of Company, its
business, its current or historical operating results or its future prospects.
This presentation is provided without any warranty or representation of any kind, either expressed or implied.
The Company specifically disclaims all responsibilities in respect of any use or reliance of any information,
whether financial or otherwise, contained in this presentation.
This presentation contains certain forward-looking statements with respect to the financial condition, results of
operations and business of the Company. These forward-looking statements represent the Company’s
expectations or beliefs concerning future events and involve known and unknown risks and uncertainty that
could cause actual results, performance or events to differ materially from those expressed or implied in such
statements. Certain statements, such as those that include the words “potential”, “estimated”, “expect”,
“anticipates”, “objective”, “intends”, “plans”, “believes”, “estimates”, and similar expressions or variations on
such expressions may be considered “forward-looking statements”.
Forward-looking statements involve inherent risks and uncertainties. Readers should be cautioned that a
number of factors could cause actual results to differ in some instances materially, from those anticipated or
implied in any forward-looking statement. Forward-looking statements speak only as of the date they are made,
and it should not be assumed that they have been reviewed or updated in the light of new information or future
events. Trends and factors that are expected to affect the Company’s results of operations are described in the
“Business Review and Financial Review”.
2
Agenda
1. Major Highlights
2. Financial Highlights
3. Business Review
4. Future Strategies
5. Q&A
1. Major Highlights
3
Signed a framework agreement with Dutch DSM in March 2012 to jointly develop
new products and explore overseas sales market
By the end of 2012, capacities of PPS resin and PPS fibre will reach 55,000 tpa and
20,000 tpa respectively
By 4Q 2012, the new production line of Yinpian natrii sulfas exsiccatus will carry out
trial production
Joint Development
with Dutch DSM
Significant Development
Expansion of Capacity
No interim dividend
Intend to maintain current dividend payout ratio of 25% of the net profit for the full
year of 2012.
Participation in
Formulation of
National Standards
Dividend
Key participant for drafting of “PPS National Standard Development” - formulating PPS
national standards and national textile industry standards of PPS staple fibre
Appointed by the government to participate in the revision of the national standards for
industrial anhydrous sodium sulfate and the development of the national standards for
cosmetic grade and food grade thenardite
Major Highlights
Continuous
Financial Growth
4
Net Profit: RMB820.1 million
Net Profit Margin: 37.2%
+ 5.9%
+ 1.7%
Actively implement product mix restructuring, switch the focus to develop high value-
added products
Continuous growth in PPS revenue and sales volume, which were +15.4% and +9.9%
respectively
Revenue from PPS and medical thenardite products increased to approximately
84.2% of the total revenue, revenue of medical thenardite products (56% of thenardite
revenue) overtook specialty thenardite products
2. Financial Highlights
5
6
Financial Highlights
(RMB mn)
2012 2011 Change
For the six months ended 30 June
Revenue 2,203.1 2,236.1 -1.5%
Gross Profit 1,307.0 1,455.3 -10.2%
Profit before Taxation 1,033.5 1,031.8 +0.2%
EBITDA 1,403.9 1,450.7 -3.2%
Profit for the Period Attributable to
Owners of the Company 820.1 774.5 +5.9%
Basic Earnings per Share (RMB cents) 14.66 15.04 -2.5%
Gross Profit Margin 59.3% 65.1% -5.8% pts
EBITDA Margin 63.7% 64.9% -1.2% pts
Net Profit Margin 37.2% 35.5% +1.7% pts
7
Financial Performance
Notes:
(RMB mn)
(RMB mn) (RMB mn)
(RMB mn) (%) (%)
Revenue EBITDA
Gross Profit & Gross Profit Margin Net Profit & Net Profit Margin
For the six months ended 30 June
* The decrease in the revenue was mainly due to lower pricing of specialty thenardite due to new competitor
* The decrease in gross profit margin was mainly attributable to the adjustment of product portfolio, especially the substantial increase in the
proportion of PPS revenue, and the pressure imposed by the new competitor on the prices of specialty thenardite
* The increase in net profit was attributable to the growth in PPS business and reduction in overall finance costs as well as selling and
distribution expenses
8
Revenue by Products
PPS & Thenardite Products Revenue Revenue Breakdown by Products
2012
Thenardite Products PPS Products
Powder thenardite
Medical thenardite
Speciality thenardite
PPS compounds
PPS fibre
PPS resin
For the six months ended 30 June For the six months ended 30 June
(55.1%)
(44.9%)
(64.5%)
(35.5%)
9
Cost Structure
Thenardite Products PPS Products
Coal and other power 11.8%
Packaging 10.4%
Other raw materials (thenardite)
2.2%
Depreciation (thenardite)
6.8%
Labour and others (thenardite)
1.4%
p-DCB (对二氯苯) 26.1%
Sodium sulfide (硫化钠) 4.1%
Other raw materials (PPS) 10.6%
Depreciation (PPS) 15.1%
Electricity 5.0%
Labour and others (PPS) 2.0%
Catalyst and other solvent 4.5%
10
Financial Position & Operational Management
As of 30 June 2012 As of 31 Dec 2011
Balance sheet
Total Assets 20,140 19,322
Net Assets 14,040 13,308
Onshore Borrowings 972 993
Offshore Borrowings 3,737 3,702
Borrowings 4,709 4,695
CAPEX Additions 1,031 2,572
Operational Management
Inventory Turnover Days 17 days 15 days
Trade Receivable Turnover Days 79 days 78 days
Trade Payable Turnover Days 39 days 33 days
(RMB mn)
11
Major Financial Indicators
As of 30 June 2012 As of 31 Dec 2011
Indebtedness
Net Debt/ EBITDA* (times) 0.74 0.79
Total Debt/ EBITDA* (times^) 1.83 1.79
EBITDA/ Interest (times**) 12.93 6.19
Net Gearing# (times) 0.13 0.16
(RMB mn)
Short Term Borrowings 1,881.4 1,737.5
Long Term Borrowings 2,827.7 2,957.0
Cash & Cash Equivalents 2,816.3 2,631.4
Net Debt 1,892.8 2,063.1
Notes: Interest recognized during 1H2012 was net of capitalized borrowing cost of approximately RMB141.5 million and the finance income of
approximately RMB64.1 million from loan commitment of CIC and CITIC USD120 million Convertible Bonds
* Calculated for the period from 1 July 2011 to 30 June 2012
# Net gearing = Net borrowings / Shareholders’ equity
^ S & P and Moody’s expected ratio is less than 3.
** S & P and Moody’s expected ratio is more than 5.
3. Business Review
12
13
Continuous Growth in PPS Revenue & Sales Volume
Total PPS revenue +15.4%
Total PPS sales volume +9.9%
Revenue of PPS Products Sales Volume of PPS Products (on neat resin basis )
Note: The interim figure of 2010 was not consolidated into the Group’s 1H 2010 figures as it relates to the financial period prior to the acquisition of Sino Polymer
For the six months ended 30 June
(RMB mn)
For the six months ended 30 June
14
Continuous Growth in PPS ASP & Gross Profit
ASP by Different PPS Products (Net of Tax) GP and GP Margin of PPS Products
(RMB mn) (RMB’000 / ton) (%)
For the six months ended 30 June For the six months ended 30 June
Notes:
8.4%
5.0%
6.0%
* The decrease of gross profit margin in PPS products for the 6 months ended 30 June 2012 was mainly due to 1) increase in cost of key raw material p-DCB
of approximately 16%, and 2) the additional depreciation of approximately RMB24 million resulting from the completion of technical improvement on existing
resin production line to increase capacity, as compared to the same period in last year
** Overall ASP of PPS products was RMB 73,400 / ton for six months ended 30 June 2012 (six months ended 30 June 2011: RMB 69,900/ton)
15
Thenardite Revenue & Sales Volume
Revenue by Different Thenardite Products Sales Volume of Different Thenardite Products
(RMB mn) (‘000 tons)
Note: 24,000 tons of powder thenardite was internally consumed as sodium sulfide for the production of PPS for the 6 months ended 30 June 2012
For the six months ended 30 June
1H 2012 Sales Volume: 838,500 tons
1H 2011 Sales Volume: 951,000 tons
For the six months ended 30 June
16
Thenardite ASP & Gross Profit & GP Margin
ASP of Different Thenardite Products (Net of Tax) GP and GP Margin of Thenardite Products
(RMB mn) (RMB / ton)
For the 6 months ended 30 June
(%)
Note: The decrease in ASP of specialty thenardite for the 6 months ended 30 June 2012 was mainly due to the pricing pressure imposed by a new competitor
7.4%
35.9%
9.4%
For the 6 months ended 30 June
4. Future Strategies
17
18
Future Strategies
Seize the opportunities
brought about by the
12th Five-Year Plan,
increasing PPS
capacity
Strengthen the R&D of
PPS new materials,
expanding PPS business
Adjust and improve
the structure of
medical thenardite products,
extending medical
thenardite’s
market segmentation
Tap the potential of
industry chain to improve
the Group’s profitability
19
Further Expanding PPS Production Capacity to Meet Strong Demand
2011 2013 2012
Tons per annum
PPS Resin
PPS Fibre
PPS Compounds
20
Seize Market Opportunities & Expand PPS Business
25% CAGR for the new materials industry during 2011-15 and RMB2
trillion market size by 2015 under the 12th Five-Year Plan
Named key product in the new materials industry in China under the 12th
Five-Year Plan, to be supported and developed by the government
New emission standard of air pollutants for coal fired power plants
effective on 1 January 2012, bringing strong demand for environmental
filter bags made of PPS fibre for the plants
PPS confirmed by industry sources as the most cost effective material
for filter bags; Lumena New Materials recommended by Filter Bag
Committee of China Association of Environmental Protection Industry
as the major PPS supplier to association members
Expand the Company’s overseas sales network and boost presence in
overseas market.
Explore the development in PPS/PA46 alloys and the new products and
applications of PPS.
R & D in PPS superfine fibre production technology
R & D in the technology of applying PPS materials in paper manufacturing
facilities
Promotion of the technology in the application of PPS materials in bridge
attachments
Cooperation with Dutch Royal DSM
Research and Development for PPS
PPS listed as one of the key new materials in the 12th Five-Year Plan
21
Restructure Product Mix & Prioritize the
Development of Medical Thenardite
Actively implement product mix restructuring, switch the focus to
develop high value-added products
Medical Grade
Pre-medical Grade(inc foodstuff
grade, cosmetic grade and health products grade)
Animal feed grade (inc veterinary
drugs grade )
Industrial grade (anhydrous sodium sulfate)
Enlarge medical thenardite’s market segmentation, adopt product
differentiation strategies to maintain higher profitability of
thenardite business
Develop downstream medical thenardite products. The new
production line of Yinpian natrii sulfas exsiccatus is expected to
carry out trial production in 4Q 2012
Develop new products and applications for medical thenardite.
Remarkable progress was made in the development of a colonic
cleansing agent made from thenardite, which is currently under joint
development by the Group and Huaxi Hospital in China
Value
22
(RMB’mn) 1H 2012 PPS Estimated
2012 PPS
PPS resin production facility 817 1,832
PPS fibre & PPS compounds production
facility 93 866
Repair & Maintenance of existing
production facilities - 200
Sub-total 910 2,898
(RMB’mn) 1H 2012 Thenardite Estimated
2012 Thenardite
Maintenance of mines, plant and
equipment 121 200
Downstream medical thenardite
production facility - 50
Sub-total 121 250
Total 1,031 3,148
CAPEX Plan
5. Open Forum
23
Appendix
24
25
Brief Introduction of PPS SRI Consulting published a detailed research report on the current and future PPS market
performance on 13 July 2011
Source: SRI Source:SRI
Properties Representative Uses
Industrial Applications
Excellent corrosion resistance Reduction of weight Resistance to heat and chemicals
Replacement of metals to make pumps, valves and pipes
Electrical and Electronic
Appliances
Good insulation Resistance to heat and chemicals
Electrical connectors and sockets Switch parts and other appliance parts
Automotive / Transportation Chemically resistant to automotive fluids Higher under-the-hood temperature resistance Resistance to fuels, oils, lubricants hydraulic fluids and coolants
Environmental Protection (Filter bag)
Excellent high-temperature resistance Excellent chemical resistance Reduction of maintenance cost
Reduction of dust, emission in coal-fired power plant
Aerospace Applications
Reduction of weight Replacement of metal parts
Coating
Corrosion protection of ferrous metals Application in slurry coating, electrostatic coating on cold or hot surfaces, powder flocking, or fluidized bed coating
Excellent high-temperature resistance
Exceptional chemical resistance
High strength-to-weight ratio
Electrical performance
Corrosion Resistance
Flame resistance
PPS: Pinnacle of the polymer “Performance Pyramid” Outstanding technical performance characteristics
Numerous applications where technical performance is the critical factor
26
The #1 PPS Producer Globally, and the Only
Producer in China
Others &
Imports
46.6%
Lumena
53.4%
2010A Total consumption = 41.2 kt
2010A China
PPS Resin
Consumption
By Market
Share (%)
Source: SRI Source: SRI
Source:SRI Source: SRI * New Products: Subway insulators
2011 PPS Resin Planned Capacity (Kt)
2010A China PPS Supply Market Share (%) PPS Resin Capacity (Kt) 169.1
102.6
Lumena is the largest, and only pure-play, PPS producer in the world Lumena is currently the only major PPS producer in China
Leading market share in all PPS market segments in China Expansion of capacity will further strengthen Lumena’s leadership
27
Filter Bags 36.2%
New Products* 3.1%
Industrial 7.4%
E&E 17.1%
Automotive
21.5%
Coating 6.3%
Aerospace 8.4%
Highly Attractive Industry Dynamics & Growth
Prospects
Source: SRI Source: SRI
Source: SRI Source: SRI
Global PPS Resin Demand (Kt)
China PPS Resin Demand CAGR ’11E-’15E By Application (%) China PPS Resin Demand ’11E-’15E By Application (%)
China PPS Resin Demand (Kt)
2011E Total = 50.7 kt 2015E Total = 103.9 kt
New products: subway insulators, high speed rail fasteners, PPS fire protection clothes, PPS film and PPS paper
Filter Bags 29.7%
New Products* 23.8%
Industrial
5.0%
E&E 11.3%
Automotive 16.5%
Coating 5.2%
Aerospace 8.5%
China’s PPS market has a number of particularly attractive segments with significant growth prospects
China is currently the world’s largest PPS market and is expected to gain further importance
Significant growth prospects, especially in new products
Demand for PPS is strong globally as it applies widely
28
Vertically Integrated PPS Business
Source: Company Information, SRI
Source:Company Information Source:Company Information
China Lumena New Materials Corp. is the largest PPS resin producer in terms of
production capacity in the world and the only Chinese PPS producer with large
scale industrialised production. Its production base is located in Sichuan Province
The Company began to build a new PPS resin production line with annual
production capacity of 25 Kt, and a PPS fibre production line with annual
production capacity of 15 Kt, which are expected to completion by the end of
2012. By that time, the Company’s PPS resin and PPS fibre annual production
capacity will increase to 55 Kt and 20 Kt respectively.
Lumena’s production capacity of PPS resin accounts for more than 99% of PPS
resin in China, and 29% in the world. It supplied 53% on a neat basis of the China
domestic market in 2010
With its leading R&D capabilities, the Company has been able to develop its
proprietary PPS production technology
Established in 2006
PPS resin capacity: 6 Ktpa
PPS compounds capacity: 30 Ktpa
Established in 2007
2 PPS resin production facilities: 24 Ktpa
PPS fibre production facility: 5 Ktpa
Deyang Chemical
Deyang New Materials
Average Selling Price (RMB)
PPS Production Capacity (Kt)
PPS: attractive business profile Moving towards high-value-added products
Significant PPS capacity expansion planned Production base located in Sichuan Province
291.7 807.7
3,064.1
0
1000
2000
3000
4000
60000
70000
PowderThenardite
SpecialtyThenardite
MedicalThenardite
PPSCompounds
73,000
3126.9
539.6 263.7