4q2018 & fy2018 results presentation · 220.2 195.2 221.7 341.3 641.3 0 100 200 300 400 500 600...
TRANSCRIPT
中国尚舜化工控股有限公司
CHINA SUNSINE CHEMICAL HOLDINGS LTD.
1
4Q2018 & FY2018RESULTS PRESENTATION
1 March 2018
PRESENTATION OUTLINE
Our Company
Financial Overview
Key Developments
Industry Info and Outlook
2
Our Company
3
About China Sunsine Chemical
✓ Specialty rubber chemicals producer
✓ World’s largest producer of Rubber Accelerators
✓ PRC’s biggest producer of Insoluble Sulphur
✓ Superior product-quality and economies of scale
✓ Accredited by a strong customer base of top tire makers
✓ Beneficiary of stringent environmental protection standards
4
Our Products - Rubber Chemicals5
Rubber AcceleratorsMBT MBTS CBS TBBS TMTD
DPG DCBS ….
Insoluble
Sulphur
Anti-OxidantsTMQ
6PPD
4010NA
Our Products: Rubber Chemicals
Rubber Chemicals are
Essential Additivesin the production of rubber products
6
Global Consumption of Rubber
Car Tyres61%
Tube/ Tape6%
Boots10%
Other Tire9%
Latex4%
Other Products10%
7
http://www.chemn.com
Accelerators1.7%
Vulcanizing agents 2%
Anti-oxidants2.2%
Rubber
Global rubber consumption in 2017:
28.27 million tons - By IRSG
• By weight, every 100 tons of rubber consumes
about 6 tons of rubber chemicals (100:6)
• By value, rubber chemical’s cost accounts for
about 3% of total tire cost (100:3)
8
Our Strong Customer Base
(2006)
(2006)
(2003)
(1997)
• Over 1,000
customers globally
• Serves more than
2/3 of the global
top 75 tire makers
• 1/3 output exported
Market Share: Rubber Accelerators9
PRC Market Share
Global Market Share19%
24% 24% 25%
28%29% 30% 30%
31%33%
7%
11% 12% 12%14% 16% 17% 17%
18%20%
0%
5%
10%
15%
20%
25%
30%
35%
40%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
MARKET SHARE
Our Market Leadership Position10
CompanyAnnual
Capacity 2018
China Sunsine中国尚舜
Tianjin Kemai
天津科迈
Yanggu Huatai
阳谷华泰
87,000 tons
51,000 tons
45,000 tons
GLOBAL TOP 3 ACCELERATOR PRODUCERS
Company Annual Capacity 2018
China Sunsine中国尚舜
Yanggu Huatai
阳谷华泰
30,000 tons
20,000 tons
15,000 tons
PRC TOP 3 INSOLUBLE SULPHUR PRODUCERS
Sennics
圣奥化学
Our Production Bases11
Five production bases in
three locations
Financial Overview
12
P&L Highlights13
* SGD to RMB exchange rate @5.0062
RMB ’mln 4th Quarter Ended Year Ended
31 Dec18 31 Dec17 Change 31 Dec 18 31 Dec 17 Change
Group Revenue 770.1 873.3 (12%) 3,283.3 2,738.4 20%
Gross Profit 249.4 291.2 (14%) 1,125.9 788.1 43%
Gross Profit Margin 32.4% 33.3% (0.9 pts) 34.3% 28.8% 5.5 pts
Profit Before Tax 142.3 195.6 (27%) 711.6 476.8 49%
Profit After Tax 108.6 132.0 (18%) 641.3 341.3 88%
EPS
(RMB cents/SGD Cents*)
22.11/4.42
26.85/
5.36
(18%) 130.45/26.06
70.83/
14.15
84%
Revenue Growth14
RMB ’mln
619.5797.9
718.4
991.41,175.1
1,417.3
1,695.9
2,077.3
1,859.1
2,036.9
2,738.4
3,283.30
0.0
500.0
1,000.0
1,500.0
2,000.0
2,500.0
3,000.0
3,500.0
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18
FY18 Revenue up 20% y-o-y boosted by higher average selling price (ASP) and sales volume
Revenue By Quarter15
RMB ’mln
4Q18 vs 4Q17 : -12%
4Q18 vs 3Q18 : - 1%432.1
497.3475.9
453.8445.1
491.1547.3 553.4
575656.2
634.4
873.3856.9 880.6
775.6770.1
0
100
200
300
400
500
600
700
800
900
1000
1Q 2Q 3Q 4Q
2015 2016 2017 2018
1Q20182Q2018
3Q20184Q2018
Sales Contribution (By Region)16
Rest of Asia
US
Europe
Others
PRC
62%
FY18 Sales Contribution (y-o-y)
27%
2%
8%
Region 4Q2018 FY2018 FY2017
China 64% 62% 64%
Rest of Asia 23% 25% 24%
US 2% 2% 5%
Europe 8% 9% 5%
Others 3% 2% 2%
Total 100% 100% 100%
Sales Volume17
Tons
31,036 30,787
45,42054,275
60,907
81,371
98,345
108,973114,572
135,791140,476
151,486
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18
FY18 Sales volume up 8% y-o-y due mainly to higher sales volume of Insoluble
Sulphur (IS) and Anti-oxidant products
Sales Volume by Products18
Tons
31,036 29,805
40,196
46,34350,148
64,252
72,71076,089 76,090
82,767 83,335 83,255
0464
3,468 4,413 7,873
10,724 11,94812,102
15,41720,031 22,283
25,759
0 185 1,361 2,971 2,0615,183
12,281
19,903 21,640
31,21434,858
42,472
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18
Accelerator Insoluble Sulphure Anti-oxidant and others
Sales Volume FY18 vs FY17 Utilization Rate
Accelerators + 0% Almost fully utilized
Insoluble Sulphur + 16% Fully utilized
Anti-oxidants & Others + 24% About 90%
Sales Volume By Quarter19
25,377
30,948
29,203 29,04530,051
34,483
36,797
34,46033,046
34,55834,098
38,77436,797 37,567 37,166
39,957
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
1Q 2Q 3Q 4Q
2015 2016 2017 2018
Tons1Q2018 2Q2018
4Q18 vs 4Q17 : +3%
4Q18 vs 3Q18: +8%
3Q2018
4Q2018
New record
Overall Average Selling Price (ASP)20
RMB/Ton
19.8K
25.9K
15.8K
18.3K19.3K
17.4K
17.2K
19.1K
16.2K
15.0K
19.4K21.5K
0
5,000
10,000
15,000
20,000
25,000
30,000
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18
ASP by Quarter21
RMB/Ton
17.0K16.0K 16.3K
15.6K14.8K 14.2K
14.8K16.0K
17.3K
18.9K 18.5K
22.4K23.2K 23.3K
20.7K19.1K
0
5,000
10,000
15,000
20,000
25,000
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18
• 4Q18 ASP dropped 15% y-o-y mainly due to the eased short supply situation and the decrease
in raw material prices
22
RMB/ Ton
Main Raw Materials Cost
2,000
6,000
10,000
14,000
18,000
22,000
Key Raw Materials Price Trend
Aniline
Tert-butylamine
Cyclohexylamine
Ketone
Dicyclohexylamine
Carbon Disulfide
Aniline
Gross Profit
FY18 Gross profit grew 43% y-o-y due to higher ASP and sales volume
23
125.2
226.8160.2
224.1293.4
243.9308.0
567.4492.0
547.1
788.1
1125.9
0.0
100.0
200.0
300.0
400.0
500.0
600.0
700.0
800.0
900.0
1000.0
1100.0
1200.0
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18
RMB ’mln
Net Profit24
RMB ’mln
76.1106.7
88.3115.3 99.4
3276.7
220.2195.2
221.7
341.3
641.3
0
100
200
300
400
500
600
700
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18
Net Profit
• Net Profit surge due to higher ASP and higher sales volume.
• Group’s main subsidiary-Shangdong Sunsine enjoys a concessionary tax rate of
15% throughout FY17, FY18 and FY19 due to its “High-tech Enterprise” status
Net Profit By Quarter25
47.4 47.155.3
45.533.6
49.0
72.866.3
57.2
74.5 77.6
132.0
149.5 191.7 143.4
108.6
0.0
50.0
100.0
150.0
200.0
250.0
1Q 2Q 3Q 4Q
2015 2016 2017 2018
4Q18 vs 4Q17: - 18%
4Q18 vs 3Q18: - 24%
1Q2018
RMB ’mln2Q2018
3Q2018
239.7
484Q2018
• A RMB48 million tax refund was credited in 2Q18
Margins Analysis26
20.2%
28.4%
22.3% 22.6%
25.0%
17.2%18.2%
27.3% 26.5% 26.9%28.8%
34.3%
12.3%13.3%
12.3% 11.6%
8.5%
2.3%4.5%
10.6% 10.5% 10.9%12.5%
19.5%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
Gross ProfitMargin (GPM)
Net Profit Margin(NPM)18.1%
--- Adjusted by taking out the one-time credit of tax expense of RMB 48 mln in FY17
Margins Analysis By Quarter27
31.7%
24.3%
26.8%
23.5%24.2%
27.3%28.2%27.2%
24.4%
28.5%26.8%
33.3%34.9%
36.7%
32.7% 32.4%
11.0%9.5%
11.6%10.0%
7.5%
10.0%
13.3%11.0%
10.0%11.4%12.2%
15.1%
17.4%
27.2%
18.5%
14.1%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
Gross ProfitMargin (GPM)
Net ProfitMargin (NPM)
21.8%
--- Adjusted by taking out the one-time credit of tax expense of RMB 48 mln in FY17
Balance Sheet Highlight
31/12/2018 31/12/2017 31/12/2016
Current Assets (RMB’mln) * 2,016.4 1,424.6 1,050.5
Current Liabilities (RMB’mln) 421.8 385.3 280.8
Current Ratio 4.78 3.70 3.74
Shareholders’ Equity (RMB’mln) 2,325.5 1,742.4 1,361.6
D/E ratio ** 0 0 0
NAV per share (RMB cents) (equivalent to SGD cents)
473.32/
94.6
354.37/
70.8
293.42/
58.6
Net Cash per share (RMB cents)(equivalent to SGD cents)
211.4
42.2
101.6/
20.3
56.1/
11.2
28
* Including Cash RMB 1,038.6 mln
** No bank borrowing
Key Developments
29
Ongoing Projects
Project Status CapEx
30,000-ton fully-automated, high-end
Accelerator TBBS at Shanxian:Whole project was approved in
Jan 2019
1. Phase I of 10,000-ton capacity Commercial production commenced RMB 100 mln
2. Phase II of 20,000-ton capacityProduction line to be installed in
2019RMB 60 mln
Insoluble Sulphur at Dingtao:10,000-ton production line
Obtained approval in Nov 2018
Commercial production commencedRMB 50 mln
Heating Plant:Add one boiler and one electric generator
Completed RMB 100 mln
30
The Group is currently negotiating with local government to acquire more land for further expansion
Annual Capacity
2007
(before IPO)FY17 FY18 FY9e
Rubber
Accelerators 32,000 87,000 87,000 117,000
Insoluble
Sulphur nil 20,000 30,000 30,000
Anti-oxidant
(TMQ & 6PPD) nil 45,000 45,000 45,000
Total 32,000 152,000 162,000 192,000
31
Industry Info and Outlook
32
China’s New Car Sales33
8.8 9.4
13.6
18.1 18.5 19.322
23.5 24.6
28 28.9 28.1
-10
0
10
20
30
40
50
0
5
10
15
20
25
30
35
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
sales
growth yoy
• 28.1 mln cars sold in China in 2018, down 2.8% y-o-y
• New car sales volume have seen the first time drop after 28 years of consecutive growth
in million units %
Global Vehicle Population34
240 250 260279
295310
327
0
50
100
150
200
250
300
350
400
2012 2013 2014 2015 2016 2017 2018
http://subscribers.wardsintelligence.com/analysis/world-vehicle-
population-rose-46-2016
PRC Motor Vehicle Population
Mln units
• Global vehicle population is growing, mainly driven by rising car ownership in developing countries
http://www.sohu.com/a/289093749_390500
Riding on Rising Tire Consumption35
• Replacement tire and new car tire sales account for 70% and 30% respectively
• As overseas factories of Chinese tyre makers produce for export to the US and the EU, tire
production in China expected to grow moderately
443 456 470529
562 565610
653
0
100
200
300
400
500
600
700
2010 2011 2012 2013 2014 2015 2016 2017
Source: http://www.tyrefh.org/
PRC Tire Production Volume
2840 2990 31403400
3660
0
1000
2000
3000
4000
5000
2014 2015 2016 2017 2018e
Projected worldwide tire market volumefrom 2014 to 2018
in million unitsin million units
www.statista.com
•
Competitive Strengths36
Market Leadership
Products & Economy of Scale
Strong Customer Base
Environmental Protection advantage
R&D Capability
Ready Resources for Future Expansion
- World largest accelerators and China’s biggest IS producer
- Capturing 20% of global and 33% of China’s accelerators markets
- Listed in the first batch of “National Champion Manufacturing Enterprise”
- “High-tech Enterprise” Status
- Academician R&D workstation in collaboration with Tsinghua and CAS
- R&D Centre partnered with Qingdao University of Science and Technology
- Early adopter of Environmental protection initiative
- 1/3 of capex invested in environmental protection and safety
- Transformation and upgrading towards “Green, Intelligent & Miniaturized”
- Strong cash position
- Built-up infrastructures
- Over 1,000 customers worldwide spanning over 40 countries
- Serving 2/3 of global top 75 tire manufacturers
- 1/3 output exported
- Superior quality and Full range of varieties
- Stable supply
- Largest capacity with economy of scale
Some Investors’ Concerns -1
Q : Are rubber chemical products commodities?
A : NO – They are products in the niche market.
Reasons:1. Rubber chemicals are not produced in a large scale
2. Renowned tire makers, which account for the bulk of the global tire production, require rubber chemicals to satisfy their special, onerous specifications. High technology and talents are required to make such rubber chemicals
3. China Sunsine has been profitable since 1998
37
Some Investors’ Concerns -2
Q : Are entry barriers high for the rubber chemical industry?
A : Yes.
Reasons:
1. Capital intensive -- land, environmental protection and safety infrastructure.
2. Know-how -- technology, talents and management skills also required to produce specialty chemicals.
3. Stringent supplier selection process by renowned tire makers, taking into account of production capabilities, capacity, quality of products & services and compliance with government’s regulations etc.
4. Rubber chemical industry currently undergoing consolidation.
5. Difficult to get approval for new capacities
38
Some Investors’ Concerns -3
Q : Will weakening car sales affect the rubber chemical industry?
A : There will be material impact only if the new car sales experience significant negative growth
Reasons:
1. New cars accounts for only 30% of tire consumption. Existing cars consume the remaining 70% as replacement for old tires. For passenger cars, every car needs to replace 1.5 piece of tires every year.
2. New car sales in developing countries expected to stay robust owing to low car ownership
39
Country US Australia Italy Japan Germany S. Korea China
Motor vehicles per
1,000 people
910 740 625 591 555 459 231
https://en.wikipedia.org/wiki/List_of_countries_by_vehicles_per_capita
Some Investors’ Concerns -4
Q : Will weakening ASP affect the Group’s performance?
A : The Group expects a downward pressure on ASP moving forward. For a long run, growing sales volume is what we are pursuiting for sustainable growth
Reasons:
1. ASP depends on the demand & supply situation and raw material prices. The Group is able to gain a reasonable margin due to its comprehensive competitive advantage.
2. Growing sales volume to further strengthen our market leadership position.
3. Robust financial position to support future capacity expansion
40
Trade war tension between US and China makes
the world economy uncertain and weakens
China’s tire export to US
Turning Challenges into Opportunities41
Challenges Opportunities
Short supply situation may ease as some
affected productions resuming gradually which
could lead to the decline of ASP
The policy affects smaller producers more
and will lead to industry consolidation,
benefiting bigger players
Sunsine's capacity growth will result in sales
volume growth and lower unit cost. Profit will
grow in long term even if ASP normalises
Group’s sales to US are small, about 2%.
Wherever they are located, tire factories all
over the world need rubber chemicals
Stringent environmental and safety enforcement
may affects all chemical companies in China
Listed On SGX Mainboard42
SHARE PERFORMANCE
• P/E 5 times & P/B 1.4 times
• Dividend yield 4.2%
Dividend Payment History43
Net Profit
(in RMB ’mln)Dividend
(in SGD cents)
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
5.5
6
0
100
200
300
400
500
600
700
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY8
Net Profit
Dividend
Chairman’s Message44
Mr. Xu Chengqiu
Executive Chairman
“I am pleased that the Group has achieved this phenomenal performance in
2018. The global economic and geopolitical conditions remain uncertain.
China’s economy is continuing to slow down. Auto sales have seen its first
decline in 2018 after 28 years of consecutive growth. On top of that, some
players which have placed more emphasis on their environmental protection
and safety measures had resumed their operations. The Group expects
downward pressure on prices moving forward.”
“In spite of many challenges ahead, as a leading rubber chemicals producer,
the Group continues to focus on production technology and innovation through
investment in R&D, to gain a competitive edge over other players We remain
cautious about the outlook of the Group and are confident of our profitability
in the next 12 months.”
45
Q & A
MEDIA/INVESTOR CONTACT
Tong Yiping, CFO, [email protected]
Jennie Liu, IR Manager, [email protected]
112 Robinson Road #11-01
Singapore 068902
(+65) 6220-9070
www.ChinaSunsine.com