Investor Update. August 2014

Transcription

1 Investor Update August

2 Disclaimer This document has been prepared by Formosa Petrochemical Corporation ( FPCC or the Company ) solely for use in presentations by the Company at investor meetings and does not constitute a recommendation regarding the securities of the Company. The information contained in this document has not been independently verified. No representation or warranty express or implied is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of such information or opinions contained herein. Neither the Company nor any of its affiliates, advisers or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with this document. The information contained in this document may be subject to updating, completion, revision, verification and amendment and such information may change materially. This document is based on the economic, regulatory, market and other conditions as in effect on the date hereof. It should be understood that subsequent developments may affect the information contained in this document, which neither the Company nor any of its affiliates, advisers or representatives are under an obligation to update, revise or affirm. Many of the statements included in this document contain forward-looking statements and information relating to the Company. The Company has generally identified forward-looking statements by the use of terms such as may, might, will, expect, intend, plan, estimate, anticipate, believe or similar words or phrases. The Company bases these statements and financial information on its beliefs as well as its assumptions made using information currently available to it. Because these statements and financial information reflect the Company s current views concerning future events, these statements and financial information necessarily involve risks, uncertainties and assumptions. Actual future performance could differ materially from these forward-looking statements and financial information. The Company does not undertake to release the results of any revisions of forward-looking statements and financial information to reflect future events or circumstances. The Company cautions investors not to place undue reliance on these forward-looking statements. All written and oral forward-looking statements attributable to the Company or persons acting on the Company s behalf are qualified in their entirety by these cautionary statements. This document does not constitute an offer or invitation to purchase or subscribe for any securities in the Company and neither any part of it shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. Securities may not be offered or sold in the United States unless the securities have been registered under the U.S. Securities Act of 1933, as amended (the Securities Act ), or an exemption from registration is available. The securities of the Company have not been and will not be registered under the Securities Act. This document is being presented to you solely for your information and may not be reproduced, redistributed or transmitted to any person, in whole or in part. In particular, neither the information contained in this document nor any copy of this document may be, directly or indirectly, taken or transmitted into or distributed into the United States, Hong Kong or any other jurisdiction which prohibits the same except in compliance with applicable securities laws. Any failure to comply with this restriction may constitute a violation of the securities laws of the United States or other jurisdictions. No money, securities or other consideration is being solicited, and any such consideration, if sent in response to this document or the information contained in this document, will not be accepted. By reviewing this document, you are deemed to have represented that you are (1) a qualified institutional buyer within the meaning of Rule 144A under the Securities Act or (2) outside the United States (as defined in Regulation S under the Securities Act). 1

3 Agenda Company overview Key investment highlights Financial highlights Strategic initiatives 2

4 Overview of Formosa Petrochemical Corporation ( FPCC ) Shareholding overview Formosa Plastics Corporation ( FPC ) Formosa Chemicals and Fibre Corp ( FCFC ) Nan Ya Plastics Corporation ( NPC ) Other FPG companies Public float 28.8% 24.4% 23.3% 9.3% 14.2% Co-founded by Formosa Plastic Group ( FPG ) entities in 1992 The 5 th largest company listed in Taiwan in terms of market cap (current market cap is US$23.9 bn, as of August 25, 2014) Mainland China Taiwan Listed on Taiwan Stock Exchange since 2003 (ticker 6505.TT) Mailiao complex FPCC is 85.9% held by the group entities and is the key upstream supplier to the group 5 th largest company listed in Taiwan in terms of market capitalization with business located on single site in Mailiao complex 3

5 Overview of Formosa Petrochemical Corporation ( FPCC ) (cont d) Refining Petrochemical Utilities One of the only two licensed refining companies in Taiwan Large unit sizes contribute to low costs 540kbbl/d on single site Supplies to domestic market while also exports to high-growth markets, e.g. Southeast Asia The largest single-site ethylene complex globally with 2.935mmtpa ethylene capacity Flexibility to adjust feedstock and products Captive demands from integration with other FPG companies Owns the largest coal fired co-generation plant in Taiwan, with 16 generation sets with a total capacity of 2.82 GW which supplies Mailiao site s industrial usage Benefits from the group-operated Mailiao deep-water port Provides a reliable source of power and strong & stable cash flows Company operates under three business segments on single site, along with other downstream FPG entities, maximizing operational synergies 4

6 Overview of Mailiao Complex South Port Land Harbor District Harbor Admin Building Dock Dock FLARE Cooling Water Discharge Channel Ash Pond1 FPCC FPC NPC FCFC Common area Other affiliates Shared facilities Greenfields Ash Pond III CCP DCC Centralized Loading Station PP Greenfields FPC NB Plant AE-2/SAP PHENOL (III) ChangChun Plastics. Co. Ltd. FLARE AREA (B) SM3 Harbor Craft Basin PHENOL (II) FLARE AREA (A) PHENOL (I) Groove Region Land (E) Utility AROMA-2 Groove Region Land (D) OL-2(A) Olefin OL-2(B) Groove Region Land (C) Load dock AREA (D) Track 8 AREA (C) AREA (B) 5. Groove Region Land (B) AREA (A) Refinery Tank Area Sulphur Granulation Area (C) AREA (D) Power Generation Area FPC, Formosa Waste Water Treatment Plant (E) Utility (A) Formosa Ash Environmental Pond 2 AREA Solid Waste Landfill Field Solid Waste Landfill Field (A) AROMA & SM FLARE DMF/HAC SM2 FCFC PABS Waste Water Area AA/AE Incinerator Area SM1 PTA Fire Station Land Reserved for FPC Brown ARO-3 Project Phase II Dorm Land Reserved for FPC Brown Project OL-3(A) (E) Olefin INA 1.4BG Phase II 60~62M Greenfields EG4 Olefin BPA Phase IV EG3 Land Reserved for South Asia Brown Project (D) Land Reserved for South Asia Brown Project (E) AREA (E) Carbon Fiber Plant Elastic Fiber Plant Land Reserved for Komatsu s Brown Project (C) 100M Width Green Belt Komatsu s Silicon Wafer Factory Land Reserved for Komatsu Material and Equipment Warehouse Simosa AREA (A) Refinery &Tank Area AREA (B) AREA (C) Maintenance Center Greenfields (B) (C) (D) MMA AN C4 AREA & FLARE LLDPE EVA HDPE PVC(B) Water Treatment Area PVC (A) OL-1 AREA Olefin ECH OL-1 Utility Utility VCM/EDC FPC Maintenance CenterH2O2 EG1 ESO Admin Area 1.4BG Dorm Area Centralized Loading Station AROMA-1 FPCC Prefabrication Plant 2EH/DOP EPOXY EG1 DOP/PA Alkali Plant South Asia Waste (A) TDI Water Area Water Treatment Area Alkali Plant TDI-II Antioxidant (B) Alkali Plant (C) BPA PC Tailings Pond Formosa Heavy 5

7 Agenda Company overview Key investment highlights Financial highlights Strategic initiatives 6

8 Investment highlights 1 Unique exposure to strong Asian market fundamentals 2 Leading producer globally and in Asia 3 4 Competitive cost position benefiting from large-scale integrated operations and high degree of flexibility Diverse product mix with captive customer base 5 Strong commitment from Formosa Plastics Group Companies and experienced management team 6 Outstanding financial performance 7

9 Competitive cost position benefiting from large-scale integrated operations and high degree of flexibility Tightly integrated with downstream Formosa Plastic Group companies (FPC, NPC, FCFC, etc) on single site Mailiao Complex Self-owned distribution platform of over 525 gas stations across Taiwan Refined products Crude oil Gasoline Diesel Kerosene / Jet fuel Basic petrochemicals Ethylene Formosa Plastics Corporation ( FPC ) Downstream products FPCC Oil Refinery Fuel oil & other FPCC Naphtha Cracker Propylene LPG Naphtha Able to react quickly to market conditions through flexibility of feedstock use different mix of LPG vs. naphtha to maximize economics Butadiene Nan Ya Plastics Corporation ( NPC ) Energy Pyrolysis gasoline FCFC FPCC utilities Single-site, integrated operations provide significant synergies, flexibility and cost savings 8

10 Strong commitment from Formosa Plastics Group ( FPG ) Companies and experienced management team Full support from Formosa Plastics Group FPG controls 85.9% of FPCC s outstanding shares Tight integration and captive demand for end products Leveraging the greater Formosa platform Benefits from the group s strong fund-raising capability - FPG collectively raised over US$6.5bn 4-15 years bonds at % interest rate in YTD Able to leverage the Formosa brand and broad network of partnerships globally Same site operations and logistical advantages Benefits from the group-operated Mailiao deep-water port, enjoying reduced cost and risk of bottlenecking Reliable source of power and steam for all FPG companies Pipelines connecting facilities across single site, minimizes transportation cost and ensures security of supplies Shared supporting functions and operation costs Shared functions including finance, procurement, legal, HR, admin, export/import, safety, etc for better operational efficiency and lower overhead and administrative costs FPG controls 85.9% of FPCC s outstanding shares FPCC benefits from FPG s strong support, well integrated platform and maximized synergies 9

11 Strong commitment from Formosa Plastics Group ( FPG ) Companies and experienced management team (cont d) Board members Senior management team Bao Lang Chen Chairman Over 40 years experience in refining and petrochemical industry and previously the ex- President of CPC Member of FPG s FPG Executive Board Minh Tsao President Over 40 years experience in refining and petrochemical industry Previously served several senior positions in CPC William Wong Executive Director Chairman of FPG Executive Board since 2006 The eldest son of the co-founder YT Wang Keh Yen Lin Executive VP Over 26 years experience in petrochemical and refining industry and 16 years with FPCC Appointed Executive VP of President Office in April 2014 Susan Wang Executive Director Vice Chairman of FPG Executive Board since 2006 Daughter of the co-founder YC Wang Hang-Ting Chen Senior VP Previously served as Vice President of Formosa Mailiao Engineering Corp Appointed senior VP of President office sine 2003 Wilfred Wang Executive Director Member of FPG Executive Board and brother of William Wong Former Chairman of FPCC Jui-Shih Chen Senior VP Over 30 years experience in petrochemical industry Promoted to Senior VP of Olefins business in April 2013 Chang Pang Chang Independent Director Former Vice Minister of the Ministry of Economic Affairs, Chairman of Fuhwa FHC, Deputy Secretary-General of Executive Yuan, Administrative Deputy Minister of Ministry of Finance, etc K. M. Hung Senior VP Over 30 years with FPG and senior VP of FPCC since 2012 Former Senior VP of FCFC James Lo Independent Director Former Chairman of the Taiwan Bankers' Association, Chairman of Bank of Taiwan, Hwa Nan Bank and Taiwan Cooperative Bank, etc Tsai Shan Kao VP Former assistant VP of Formosa Mailiao Engineering Corp. VP of Maintenance Center since 2003 Yu Cheng Independent Director Former Deputy Minister of Fair Trade Commission, Chief Editor of Commercial Times, President of TTV, etc Yeong Fa Wang VP Over 15 years experience in refining industry VP of Oil Products Division since 2005 Together with 8 other directors 10

12 Agenda Company overview Key investment highlights Financial highlights Strategic initiatives 11

13 Delivering outstanding financial performance Strong track record of consistently delivering cash returns to shareholders ROAE evolution 10 year average ROAE comparison 18.6% 10.6% 13.9% 13.6% 19.7% 17.7% 15.0% 16.7% 1.1% 6.8% annualized H14 FPCC FPC NPC FCFC Cash dividend payout ratio FPCC 5-year cash dividend payout ratio Highest 5-year average cash dividend payout in the group 92.4% 90.8% 91.1% 88.7% 89.5% 71.6% 73.9% 72.6% 84.7% FPCC FPC NPC FCFC Source: Factset, Company Note: 1H14 annualized calculated by 1H x 2, solid portion indicates Q2 results and dashed portion indicates annualized figures; All numbers are pre-tax, except for ROAE calculations, which use pre-tax profits 12

14 FPCC key financials overview Revenue (NT$bn) Operating profit & margin (NT$bn; %) % Reported Normalized (0.1)% 2.5% 1.4% 2.9% H2013 1H (1) (1) H2013 1H2014 (4.0)% (14.0)% (24.0)% (34.0)% (44.0)% EBITDA & margin (NT$bn; %) Pre-tax profit & margin (NT$bn; %) Reported Normalized Reported Normalized 6.2% % 5.3% 5.5% 4.3% 4.6% 2.9% 3.3% 5% 2.6% 3.3% % 62 0% (5)% (10)% (15)% (20)% H2013 1H H2013 1H2014 Source: Company data Note: Light blue bars reflect the normalized profits; FPCC adopted ROC GAAP in and changed to IFRS in % 5% 0% (5)% (10)% (15)% (20)% 13

15 Agenda Company overview Key investment highlights Financial highlights Strategic initiatives 14

16 Vision and strategy 1 Strengthen Core Business Expand export market in petroleum products Switch between naphtha and LPG as cracker feedstock 2 Capitalize on Synergies from Vertical Integration Extract further synergies through economies of scale and shared services among Group companies Utilize quality feedstock from downstream plants 3 Explore Higher Value-Added Product Mix Optimize production yields through sophisticated production facilities Increase production system flexibility 4 Involve in High- Value Added Petrochemical Products Planned strategic expansion of downstream petrochemical (C4 and C5) Expand Ningbo synthetic rubber capacity 15