raffles infrastructure holdings limited

CORPORATE PRESENTATION

RAFFLES INFRASTRUCTURE HOLDINGS LIMITED

1 Executive Summary & Strategy

02

04

05

03

Executive Summary & Strategy

Projects & Pipeline

Financial Highlights

Management

Investment Merits

Building World Connections

01

About Us

• Mainboard-Listed in Singapore Exchange (SGX) – (Stock code: LUY)

• Principally engaged in infrastructure investment in Asia

• Successfully secured large-scale roadway and railway projects and established close working relationships with numerous SOEs and government bodies

1.1

Better Infrastructure Greater Life

Improving standards of living with engineering

and technology innovation

3

Strategy1.2

Project participation by state-owned enterprises, public-listed companies or high-tech companiesProject is in line with local national policy directivesPotential for long term sustainable development Working with local authorities

Congregation of financial, HR and technology resourcesAs a Singapore-listed company, RI is being enabled for more intensive fund raising, regional development experience and reputable international branding.

KEY INVESTMENT CRITERIA WORK WITH REPUTABLE PARTNERS (SOE & GOVERNMENT)

4

Target Business Segments1.3

To strengthen the city infrastructure, industrial technology transformation and the development of tertiary industry

ConstructionIncluding:

hospitals, public housing, office

buildings, hotels, schools,

industrial parks, etc.

EnergyIncluding:

electricity, gas, natural gas, new

energy, etc.

Environmental Water

ConservancyIncluding: reservoirs,

dams, sewage treatment, air

purification, etc.

Transport Infrastructure

Including: aviation, railway,

shipping, highways; bridges, tunnels,

subways, light rail elevated, public transportation,

parking lots, etc.

Mail & Telecommunications

Including: telecommunications,

communications, information networks,

etc.

5

The Public-Private Partnership (PPP) Model

Public-Private Partnership (“PPP”)• Cooperative agreement between the public and

private sectors• A common business model to fund infrastructure

projects• As of September 2018, 3,812 projects have been signed

in China. with an investment of 6.1 trillion RMB(Source : Xinhuanet)

Public PrivateCommon Interest

" The Belt and Road Initiative" emphasizes

“Communicating, Building and Sharing“

and building a community with

integration of interests.

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1.4

Working Together as One1.4.1

PPPIdentify

Infrastructure need

Propose Solution

LocalGovernment

Capital Investment & Fund Raising

Construction

Operation

Resource Congregation

Established Construction Companies

Local Government/Experienced

Operators

7

ResourceCongregation

PPP Earns both Construction and Investment Profit1.4.2

Public-Private Partnerships (PPP)

Construction Profit Investment Profit

Total Return

Infrastructure Projects

Investor

Construction Profit

Infrastructure Projects

Investment Profit

Contractor

Getting both the Construction and Investment Profit

8

Partnership - Transport Infrastructure

China Railway 23rd. Bureau Group Co., Ltd.

China Railway International Group

Tianfu Railtech Valley

Strategic Alliance

Affiliated to China Railway Construction Co., Ltd. Technological and innovative enterprises, mainly focusing on the core technology of the rail transit industry.

It brings together the world's top scientists and consultants, and has strong independent R&D capabilities.

1.5

9

Tripartite Agreement to Form Consortium

o China Railway 23rd. Bureau Group Co., Ltd. (中国铁建-23局)

o Tianfu Railtech Valley (天府轨谷)

Consortium with:

Congregation of financial resources, operational,

design and construction expertise to increase global

competitiveness

Objective:

o BASHAN RAILWAY (巴山大峡谷) – Contract Value S$56m

o MEISHAN RAILWAY (眉山) – Contract Value S$120m

Planning to bid two tourist railway projects namely:

• Ranked 58th in 2017 Fortune Global 500 • Ranked 14th in 2017 China 500 • 3rd in 2015 ENR’s Top 250 Global

Contractors• Largest engineering contractor in China

• Technology company incorporated inChengdu

• Principal business activities includeR&D on new technologies to reducetourist-related transportation pollution

1.5.1

*Converted by 1 SGD = 5 RMB

10

Potential Partnership- Water Conservancy

BEIJING CAPITAL GROUP CO., LTD.

Beijing Capital Group Co., Ltd. is a large state-owned enterprise directly under the supervision of the State-Owned Assets Supervision and Administration Commission of People’s Government of Beijing Municipality (Beijing SASAC)

Beijing Capital Group has established its core business in the four fields:o Environmental protection; o Infrastructure; o Real estate; and o Financial services

With core competitive edges in capital operation, industry collaboration, innovation and R&D.

1.5.2

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02

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Projects & Pipeline


Management

Investment Merits


01

2 Projects & Pipeline

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Project: Xingwen County Roadway2.1.1

Chengdu

Chongqing

Xingwen County

About Reconstruction of provincial, county, township andother roads, with a total length of about 220 km

Construction Period Project is expected to continue to contribute to the Group’s profitability in FY2020

Customer Xingwen County government

Project Value SGD 110m* (Est Construction Cost)

Raffles Infrastructure’s Stake

90.91%

Financing Structure Equity (est 30%) and Debt Financing (est 70%)

Project Est Return Cost of construction + 8.8% return/year onconstruction cost amortised over 10 years(Recognised Upon Delivery Of Land Parcels)

Status Construction Progress 60-70%

5 out of 26 parcels delivered (Est 23% of revenue has been recognised so far)

Payment Terms Xingwen County government will make progressive payment within the next 10 years upon completion of each road parcel(The Group has already started receiving payment from the Xingwen County government)

*Converted by 1 SGD = 5 RMB 13

Contributed to FY2019’s strong earnings turnaround

90.91%

Bo Dao Road Construction Co., Ltd

Construction

To provide construction capabilities

• Share capital of RMB 500m• Highest and second

highest level of construction qualification for national road construction and engineering construction respectively

3.18%

State-owned wholly owned construction company

Yibin Highway & Bridge

Construction Co., Ltd

Local Government

related companies

5.91%

2.1.2 Project: Xingwen County Roadway

Cost of construction + 8.8% return/year on construction cost

amortised over 10 years

Xingwen County Government

Bo Dao Road Construction Co., Ltd

Guaranteed Profit*Cost of construction and return is underwritten by Xingwen County Government, the local authority

In the event of a construction cost overrun (above the budgeted

S$110m), it shall be borne by YibinHighway & Bridge Construction Co.

• Interest costs• Sub-contractor

costs

Costs

Revenue Recognition

2.1.3 Project: Xingwen County Roadway

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Project: Dengfeng City Railway

Insufficient investment in tourism infrastructure

Underdeveloped and outdated transportation system

Traffic congestion and breakdown of transport system

Reduced accessibility to tourist attractions

Inability to cater to surge in visitors demand during holidays and weekends

2.2

16

Description

70 km tourist railway network to be completed in 4 phases connecting famous historic attractions like ZhongyueTemple, Songshan Study Courtyard and Shaolin Temple

Value SGD 1.2 billion*

Construction Expected completion end of 2026

StatusWorking with govt on project route design(We have already found investors for the project)

Client Tourist board of the People’s Government of Dengfeng


2.2.1 Project: Dengfeng City Railway

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Estimated distance: 15 km

Estimated contract value: SGD 260 million*

PHASE 1: (2018 – 2020)

To complete the building of tourist railway

between SongshanTourist Centre (嵩山游客集散中心) to Shaolin Temple

Tourist Area (少林景区)

PHASE 2: (2020 to 2022)

To complete the building of tourist railway between Songshan Tourist Centre (嵩山游客集散中心) to

Songshan Study Courtyard (嵩山书院) and

Zhongyue Temple (中岳庙)



PHASE 3: (2022 - 2024)

To complete the building of tourist railway between

Zhongyue Temple (中岳庙) to Luya

Waterfall (卢崖瀑布) and Safari Zoological

Park (野生动物园)



PHASE 4:(2024 - 2026)

To complete the building of tourist

railway between Safari Zoological Park (野生动

物园) and Chaoyanggou Opera

Town (朝阳沟戏曲小镇)




2.2.2 Project: Dengfeng City Railway

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Railway: Pipeline- China(Subject to approval/bidding)

Bashan

Total Mileage : 100kmRailway network & rolling stock project in 3 phases Currently in agreement with partners and operators

Dengfeng

Total mileage : 150kmSigned agreement with the Henan Dengfeng City Municipal Government

Meishan

(E-Mei Mountain – WawuMoutain – Gongga Mountain)3 connecting mountainsTotal mileage : 200kmCurrently in agreement with partners and operators

2.3

19

Railway: Bashan

Bashan Valley

ChengduChongqing

Description100km railway network & rolling stock project in 3 phases (Phase 1 5.5km section with 7 stations)

PurposeBashan Valley to be opened up for tourist attraction venue

Construction Oct 18 – Jul 20

Status Final Stage Contract Negotiation

Value SGD 56 million*

Financing Structure

Equity and Debt Financing

StructureConsortium Public–private partnership with Xuanhan County Government

Participation method

Financing and providing management consultancy


2.3.1

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Railway: Bashan

China Railway 23rd. Bureau Group Co., Ltd. 【 Rail 】

Leasing Company

XinzhuCorporation【Trains】

DazhouState Owned Operator

Bank of China【 Bank 】【 Equity 】

Manufacturing

Sales

Manufacturing

Financing

Project Establishment

o Sichuan Rongteng New Material Technology Development Co. Ltd.【Resources】

Consortium

o Raffles Infrastructure (Special Purpose Vehicle) 【 Financing 】

o China Railway 23rd. Bureau Group Co., Ltd 【 Rail 】

o Chengdu Tianfu Railtech Valley 【Technology】

2.3.2

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Railway: Pipeline - Asia(Subject to approval/bidding)

Development City Monorail in Songkhla, Thailand

Joint Consortium with China Railway International Group

Development of Light Rapid Transit System Project in

BangladeshJoint Consortium with China Railway International Group

SGD 146 million*(Bidding)

SGD 696 million*(Bidding)

Bengal, Yangganji CityThailand, Songkhla City

*Converted by 1 SGD = 23 BAHT *Converted by 1 SGD = 0.73 USD

2.3.3

22

Monorail: Songkhla City

Description

ThailandSongkhla City MonorailHat Yai City, Shan State Station - Van StationEst length: 12.54 km

Structure PPP-BOT


Consortium Partner China Railway International Group

Local Government Partner

Songkhla State Administration


2.3.4

23

Monorail: Yangganji City

DescriptionBengal, Yangganji CityUrban Light Rail Rapid Rail Transit System Est length: 16.5 km

Structure PPP-BOT


Consortium Partner China Railway International Group

Local Government Partner

Yangganji City Management Department


2.3.5

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Projects & Pipeline


Management

Investment Merits


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3 Financial Highlights

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FY2019 net profit to owners of S$4.1 m translates to a PE of only 7.2x

Deconsolidated Fabrics operations since 3QFY19

Strong turnaround in profitability with contributions from infrastructure segment –Xingwen County Project

3.1

• 5 out of 26 parcels delivered • Est 23% of revenue has been recognised

from the project so far• The Group is expected to recognise the

rest of the revenue from the XingwenCounty project in FY20, setting up for a potentially very strong FY20

Infrastructure segment started to contribute only from 4QFY19


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-1

45

38

-10

0

10

20

30

40

FY2018 FY2019

S$ m

Net profit to owners Sales

3.2

*Adjusted for other expenses and extraordinary gainConverted by 1 SGD = 5 RMB


Key Highlights (S$ m) FY2019Revenue 37.8Net profit 5.0Net Profit to owners 4.1 P/E 7.2 P/B 0.8 Return on equity 13.5%Net D/E -56.8%Est Dividend yield N/A

As at 2 Sep 19Price S$0.435Market cap (SGD m) 29.6YE 6/201952 wk high/low (S$) 0.550/0.190YTD % change +35.9%Free Float % 16.1%

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Projects & Pipeline


Management

Investment Merits


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4 Management

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Management Team

MR CHOO HAN KIAT, ERICExecutive Director & Chief Executive Officer

o Since 2007, Eric has been involved in themanagement of many cross-industry andmulti-disciplinary financial management,mergers and acquisitions and corporateinvestment and financing projects in Asia.

o More then two decades of experience in thefinance field with previous positions for globalMNCs like Hewlett Packard and Apple Inc.

o Successfully provided billions worth offinancial services for central and state-owned enterprises as well as governmentrelated agencies, setting the groundwork forfuture strategic partnerships.

Management experience in international MNCs and strategic relationships with government agencies

Conduce in overseeing and securing of new projects

4.1

29

MR YANG ZHIHead Of Operations

Bachelors degree awarded by the Faculty of Electronic Engineering from Changsha Railway College, specialising in auto control.

o Asian-Pacific Region Deputy General Manager at China Railway Construction Corporation International Ltd

o General Manager role of CRCCI (Bangladesh) Ltd., from 2015 to 2018

o Head of Overseas Department of the China Railway 23th Bureau Co., Ltd. from 2001 to 2014

o Head of Technology Department of the Zhuzhou Bridge Factory from 1988 to 2000.

Experience and strategic relationships with major construction companies –

Help in overseeing construction and forming of strategic key partnerships

4.2 Management Team

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MR ALLAN POH-CHYE TANSpecial Advisor

o Principal Lawyer, Allan Tan Law Practice, and practices in the field of corporate finance, regulatory and compliance laws.

o Admitted to the Singapore Bar in 1994.

o Lead independent director of Nico Steel Holdings Limited which is listed on the Mainboard of the SGX-ST, independent director of CNMC Goldmine Holdings Limited, listed on Catalist of the SGX-ST.

o Bachelor of Laws (Honors) degree from the University of Buckingham (United Kingdom) and a Master’s degree in Comparative Business Laws from the London-Guild University.

o Called to the English Bar as a Barrister-at-law by the Honorable Society of Gray’s Inn

4.3 Management Team

Legal Experience – Help in legal advisory of project deals

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Projects & Pipeline


Management

Investment Merits


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5 Investment Merits

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Investment Merits

Based on FY19 adjusted net profit• Xingwen County project which

formed nearly 100% of FY19 net profit, only started to contribute from 4QFY19.

• Currently, only 23% of sales from the project was recognized, with the remaining sales expected to be recognized in FY20.

Trading at attractive PE of only 4.5x

5.1

In Sep 18, Raffles Infrastructure successfully raised about S$30m from a share placement at S$0.60/share, including strategic major shareholder, state owned enterprise, China Capital GroupCurrent investors will be investing at a steep discount to strategic investor

Current market cap≈ money raised in recent share placement

Positioning

Strong Pipeline of Projects

Current projects• Xingwen County Roadway• Dengfeng City Railway

Currently Bidding for• Bashan Railway• Meishan Railway Project• Monorail in Songkhla, • Light Rapid Transit System

Project in Bangladesh

Valuation

Stable cashflow contribution for the next 10 years

From progressive payment by Xingwen county government

Xingwen County Project

“Guaranteed” Profit

• In the event of a construction cost overrun, it shall be borne by Yibin Highway & Bridge Construction Co.

• Providing strong earnings visibility for FY20.

Low customer credit risk

For Xingwen county project-project payment is underwritten by Xingwen County Government, the local authority

Establishing Track Record

RI’s involvement in reputable mega projects such as Dengfeng City railway is expected to raise the profile of the Group, strengthening its track record for future projects bidding.

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For investor relations enquiries:

[email protected]

Chan Hui Si

[email protected]

Raffles Infrastructure

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6 Appendix—Industry Research

Shortage of quality Infrastructure in Asian Developing Countries

Source: Asian Development Bank

According to the Asian Development Bank (ADB)report, infrastructure needs in developing countries in Asia will exceed US$22.6 trillion through 2030, or US$1.5 trillion per year, if the region is to maintain growth momentum, according to a new flagship.

Infrastructure in developing countries in Asia remains far from adequate. More than 400 million Asians still lack electricity; roughly 300 million have no access to safe drinking water and 1.5 billion lack basic sanitation. In many countries, power outages constrain economic growth.

Between 2016 and 2030, the region needs to invest US$14.7 trillion for power, US$8.4 trillion for transport, US$2.3 trillion for telecommunications, and US$800 billion for water and sanitation improvements. In the transport sector, shifts from more carbon-intensive modes of travel (private cars) to less carbon-intensive modes (public transit and railways) will require investments.

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Belt and Road 一带一路6.1

一带一路

ONE BELT ONE ROAD

What is Belt and Road Initiative (B&R)?Introduced in 2013, a global development strategy spearheaded by China to improve trade and economic integration across Asia, Europe, and Africa

How it will be implemented? • Uses free-trade agreements and infrastructure

projects – including roads, ports and railways – to create a modern Silk Road spanning some 65 countries

• Expected to link more than 60 countries, accounting for over 30% of global GDP, 62% of population and 75% of known energy reserves

Source: worldbank, enterprisesg.gov.sg

At maturity, investment in the Belt and Road Initiative is expected to reach US$4 trillion.

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Belt and Road 一带一路

一带一路

ONE BELT ONE ROAD

How will it be financed?• China established the US$40b Silk Road Fund in early

2014 to fund the scheme’s infrastructure projects• Chinese financial institutions and multilaterals such

as Asian Infrastructure Investment Bank (AIIB), the China-backed global bank and the New Development Bank (NDB), a Shanghai-based bank for the BRICS (Brazil, Russia, India, China, South Africa) countries

• Public-Private Partnership (“PPP”) – funding from private companies, with suitable incentives and safeguards

China has invested US$90b in projects while banks have provided upwards of US$300b in loans, according to Reuters citing Chinese officials

Source: worldbank, enterprisesg.gov.sg

6.1

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Singapore’s Criteria Role in Belt and Road6.1

Singapore is China’s largest foreign investor since 2013, and one of China’s top trading partners in ASEAN

• Accounts for 83% of inbound investments to China from Belt and Road Countries, and

• 25% of China’s outbound investments to these partner countries

In Sep 2017, China’s President Xi and Singapore’s PM Lee reaffirmed the three platforms of collaboration under the B&R

• Infrastructural connectivity• Financial connectivity and • Third-country collaboration, such as joint training for officials

from B&R countries.

In Apr 2019, Singapore and China signed the Implementation Framework for enhancing Singapore-China Third-Party Market Cooperation, the highlighted sectors for collaboration under the B&R:

• Logistics• e-commerce• infrastructure • professional services such as financial and legal services

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6.2 Singapore’s Role in Bangladesh Infrastructure

International Enterprise Singapore signed a pact with Bangladesh's Public Private Partnership Authority to help Singapore companies participate directly in PPP infrastructure projects in Bangladesh.

In March 2019, PM Sheikh Hasina visited Singapore.

Demand for Bangladesh infrastructure solutions has surged, especially in:

• Power• Energy• Transport • Logistics• Ports

Source: The Straits Times

During the visit, a slew of agreements were signed, forging more business opportunities between Singapore and Bangladesh.

Bangladesh government announced a 38% increase in the 2019 budget for transport and 44% increase for power.

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6.3 Cooperation between Singapore and Vietnam

Singapore established Strategic Partnership with Vietnam in 2013.

Vietnam-Singapore Cooperation Centre plans to widen the type of aid Singapore offers to Asean neighbours, such as

• Vietnam• Cambodia• Laos• Myanmar

They also agreed to step up cooperation in• Technology and innovation• Food and agriculture trade• Air and maritime connectivity• Facilitation of trade and investment

Source: 联合早报

In March 2019, DPM Teo Chee Heanvisited Vietnam and opened

Vietnam-Singapore Cooperation Centre in Hanoi.

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raffles infrastructure holdings limited

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