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SCG Dinner Talk
Jan 15, 2015
Hosted by Bualuang Securities
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Agenda:
� Business Updates
� ASEAN Updates
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Cement and Building Materials:� Volume recovery and stable pricing.� Good visibility on government’s infrastructure plan.
Chemicals:� Margin recovery, in-line with the global economic recovery.� Enhanced naphtha cracker economics.
Paper:� Continued stable growth environment.
2015 highlights:
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Cement: Thailand supply and demand
Total Domestic Growth Rate (% y-o-y)
- 10% -45% 15% -8% -1% 23% 6% 11% 9% -2% -6% -6% 1% 10% 3% 12% 7% - -
0
10
20
30
40
50
60
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014e 2015e
MT Thai cement market – all players
+85-90% utilization
Capacity 56MT to 60MT(2015)
Domestic
Export
Avg. 7%
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Residential(50-52%)
CommercialRetail
(18-20%)
Gov’t(28-30%)
Total Marketby Volume
(100%)
FY2013 Q1/14 Q2/14 Q3/14 Q4/14e
7% 4% 0% -3% -
20% 14% 5% -4% -
3% 1% -2% -3% -
6% 1% -1% -2% -
% growth (y-o-y)
Cement: domestic market segments
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Cement: Thailand 2.4 trillion Baht infrastructure plan
Source: Ministry of Transport
Mass Transit (trains, bus, etc)
46%
Provincialhighways / roads
28%
Dual-track railways
16%
Others10%
Direct cement demand of <10 MT (8-10 years)
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Cement: Thailand mass transit
A) 2016 ground break (contractor finalized 2015)• orange line / 40 km• pink line / 36 km• yellow line / 30 km• airport link extension
B) 2015 ground break (contractor finalized 2015)• green line / 18 km
C) under construction• purple line 23 km (2017)• red line 26 km (2019)• blue line 27 km (2017)• light green 9 km (2017)
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Cement: other infrastructure projects
A) 1 meter track• 6 lines = 1,082 km, and 147,900 MB• ground break 2016 (contract signed 2015)• additional 6 lines being planned
B) 1.4 meter track� Chinese Government (planned)
3 lines = 1,060 km • Nakhon Ratchasima – Map Ta Phut (512 km)• Nakhon Ratchasima – Nong Khai (355 km)• Bangkok – Rayong (193 km)
� Japanese Government (planned)3 lines = 1,760 km• Mae Sot - Phitsanulok - Khon Kaen - Mukdahan (770 km)• Ban Phu Nam Ron – Bangkok - Mab Ta Phut (339 km)• Bangkok - Chiang Mai (653 km)
• North East – 3 projects (3,185 MB)• West – 1 project (1,400 MB)• East – 1 project (1,400 MB)• other numerous smaller projects• ground break 2015
(contract signed 2015)
Dual-track trains Provincial highways & roads
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Building Materials: domestic market demand
Residential(50-52%)
Gov’t(28-30%)
Products FY2013 9M/14
Housing Products Market -4% -8%
Ceramic Tiles Market -3% -6%
% growth (y-o-y)
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Cement: ASEAN presence
Indonesia 1.8 MT
Myanmar 1.8 MTThailand 23 MT
Laos 1.8 MT
Vietnam 0.2 MT
Cambodia 1.0 MT + 0.9 MT
NEW PLANTS: Start up
Cambodia 0.9 MT Q2/15
Indonesia 1.8 MT Q3/15
Myanmar 1.8 MT Q2/16
Laos 1.8 MT Q2/17
6.3 MT
EXISTING
Thailand 23 MT
Cambodia 1 MT
Vietnam 0.2 MT
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Chemicals: historical HDPE – naphtha margin
0
100
200
300
400
500
600
700
800
900
1,000
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
$/ton
Trough $300/ton
Trough$400/ton
Asian crisisUS crisis
EU crisis
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Note : Prices refer to SEA regional prices
Chemicals: current HDPE – naphtha margins
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Note : Prices refer to SEA regional prices
Chemicals: current PP – naphtha margins
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Note: Prices refer to FE regional prices
Chemicals: current PVC margins
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Chemicals: ethylene world supply growth
%
3%
8%
5%
1%
4%3% 3%
Incremental supply growth (MT):
“Flood of supply”
4% 4% 4% 4%3% 3%
4%5%
4%
2.8 4.4 4.6 4.7 4.7 3.5 10.5 6.9 2.0 5.0 4.5 5-6 5-7 6-8 7-9 6-8
Note: as of Sept/14
Potential capacity delay:� Permit delay� Execution risk� Feedstock security
0
1
2
3
4
5
6
7
8
9
10
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
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Paper: …is essentially a packaging business
Fibrous chain 23%
9M/14 EBITDA(7,510 MB)
Packaging chain 77%
13% EBITDA Margin
17% EBITDA Margin
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Paper:
� Regional / Geographical Growth (Targets: Vietnam an d Indonesia)
� Growing thru HVA Products / Services (such as High Performance Paper and Packaging)
Packaging Chain“Growing Packaging Business in ASEAN”
Primary Packaging
• Product protection• Marketing tools• Flexible packaging,
rigid, glass, or metal
Secondary Packaging
• Marketing tools• Information• Mainly paper-based
packaging; folding carton
Tertiary Packaging
• Logistics / transportation
• Handling / inventory management
• Corrugated container
Other Packaging
• Logistic support • Retail packaging
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Agenda
� Business Updates
� ASEAN Updates
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ASEAN updates: revenue in 9M/14
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ASEAN presence:
ASEAN assets = $2.4 billion (79,235 MB)
(17% of total assets)
International Staff = 15,252 persons
(30% of total staff)
Note: as of Sep/14
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Summary: Recent investment & new plant starts
Cement – Building Materials:� Global House Int’l: 50% JV with Siam Global House towards regional construction-related retail (200 MB) � Mortar: 2 MT capacity expansion (Lampang and Khon Kaen) (2,800 MB) – H1/16 start� Woodchip Cement Board : 55% stake M&A in Panel World, with cap of 2.4 Mill sqm. (550 MB)� Cement plants : (Laos, Myanmar, Indo, Cambodia) 6.3 MT (39,000 MB - $1,300 M) – Q2/15 - Q2/17 starts.� Ceramic (Italy) : 33% JV, 5 Mill sqm. (506 MB) - H1/15 start� Precast concrete : two precast plants totaling 2.4 Mill sqm (2,500 MB) – Q1/15 start� MG Stone Slabs : 400,000 sqm. green-field (1,500 MB) – Q2/15 start.
Chemicals:� Norner Group (Norwegian innovation and technology): 51% stake M&A (340MB)� Debottleneck of Chandra Asri (Indonesia) : Ethylene capacity gained up 43% - end of 2015 start� LDPE coating grade (HVA) of 60,000 tons, totaling 152,000 tons per year, by mid-2016 in Thailand.
Paper:Fibrous chain:� Glassine paper (HVA) : 1,825 MB , Upgrade paper machine for 60,000 tons/yr – Q2/16 start� Nippon paper’s 30% stake in SCG Paper’s Fibrous cha in.Packaging chain:� Flexible Packaging (HVA) : 22% stake M&A in Prepack of 14,000 tons (340MB)� Box plants
- Indonesia (Indoris) : 90% stake M&A, 8,000 tons (290 MB)� Packaging paper in Thailand : 400,000 tons brown-field (6,700 MB).- Q4/14 start
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ASEAN summary:
Indonesia:� Start up of the green-field cement plant in West-Java in Q3/15, which is Integrated in to SCG’s
existing assets.� Continued efforts in the chemicals and paper businesses.
Vietnam :� Utilize Prime Group (75 million sqm) as the ASEAN production hub (domestic and export sales).� Decision on the Long Song Petrochemicals Complex (flexible feedstock cracker and integrated
downstream operations).� Leverage Vina Kraft and box plants towards packaging solution.
Myanmar:� Increased sales levels of cement-building materials products, which will lead to the start-up of the
cement plant in Q2/16.
Cambodia:� Start up of the second cement plant in Q2/15.
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23232323
Q&A