2014 Interim Results and Corporate Update 15 August 2014

Transcription

1 2014 Interim Results and Corporate Update 15 August

2 Contents 1 A2 Company Overview Market Situation Up-date Performance in the 1st half of Review of Business Operation 7 5 Business Plan for the 2 nd half of Medium Term Strategy 10 7 Development Projects 11 Appendix Company Financial Statements 1

3 1. Company Overview NewOcean focuses on the energy market in Southern China (a region having 130 million flowing population and GDP of about US$1 trillion) and neighboring districts/countries including Hong Kong, Macau, Philippines, Vietnam Developed Business Expanding Business Developing Business Historic Business Business Segments Liquefied Petroleum Gas Oil Products Liquefied Natural Gas Electronics History of Development 14 years 27 months 15 months 20 years Remarks Largest supplier in Guangdong with abt. 30% market share; operating self-owned sea terminal, bottling plants and auto-gas refueling stations Started off in May 2012; Now within the top 5 marine bunkering providers in Hong Kong; Also expanding into the China bunkering market in Pearl River Delta Entered into JV agreements with bus companies, logistic companies, manufacturers that have massive need of transportation to secure the best locations for building auto LNG refueling stations and to secure captive demand from the end-users Business carried down from Kosonic Electronics (the predecessor of NewOcean) Trading of smart phones & electronic components with one single Thai customer In thousand tons 2

4 2. Market Situation Up-date Economic stagnation in Guangdong social instability (as caused by the spreading of terrorist attacks from Xinjiang to Beijing, Kunming and Guangzhou; tense military situation in East China Sea and South China Sea) slows down further investments in nearly all sectors; High Oil Price - in the first half of 2014, oil price always stayed at the level above US$100/barrel and that collaterally kept LPG prices at the high level of US$900/ton; The impact of natural gas comes earlier than we expect market hesitates to deploy more resources for further development of the traditional energy products; RMB devaluation market generally views that RMB value will sooner or later rebound. 3

5 3. Performance in the 1 st half of 2014 Revenue and Profit HK$ million HK$ million HK$ million 1H/2009 1H/2010 1H/2011 1H/2012 1H/2013 1H/2014 HK$ million 1H/2009 1H/2010 1H/2011 1H/2012 1H/2013 1H/2014 Revenue 3,147 3,796 5,467 5,978 6,857 10,153 Net Profit Growth 20.62% 44.02% 9.35% 14.70% 48.07% Net profit margin 1.29% 1.67% 3.04% 3.81% 5.52% 3.92% 4

6 3. Performance in the 1 st half of 2014 Gross Profit, Operating Profit and EBITDA Group Consolidation LPG Oil Products Electronics In HK$ million 1H/2013 1H/2014 1H/2013 1H/2014 1H/2013 1H/2014 1H/2013 1H/2014 Revenue 6,857 10, % 5,828 6, % 944 2, % 58 1, X Cost of Good sold (6,294) (9,467) +50% (5,283) (5,742) +8.7% (941) (2,636) +180% (56) (1,072) +18X Gross Profit % % X X GP Margin 8.21% 6.76% -1.45% 9.35% 7.76% -1.59% 0.32% 3.30% +3% 3.45% 8.06% +4.6% FX gain/(loss) 89 (68) -176% Net Interest income % Other income % Selling expenses (108) (126) +17% Administration cost (105) (105) +0% Operating Profit % EBITDA % Financing Cost (86) (60) -30% LPG Sales volume reduced because of (a) economic stagnation, and (b) market having much higher expectation on the potential of LNG; Revenue increased as a result of price surge; GP margin narrowed mainly because of subcontracting the auto-gas stations operations to the Joint Venture with Guangdong Sinopec. Oil Products Sales volume doubled as business significantly expanded in Hong Kong water, and the market in the China water of the Pearl River Delta was successfully opened up; Margin improved as a result of (a) substantial increase in MGO sales which can generate much higher margin, (b) reduction of purchase cost of #380 by direct procurement from Singapore, (c) locking in profit by applying fuel oil hedging instruments, and (d) exercising much better inventory control when processing the oil transmission. Electronics Business volume started to rebound in the 2 nd half of 2013; Business volume further increased in the 1 st half of 2014; gross margin reinstates back to normal level. FX loss About HK$33.5 million of FX loss came from the RMB pledged deposits. It was by large compensated by the 6 months net interest income of about HK$27.8 million produced by the same RMB deposits/usd borrowing arrangement; Should RMB exchange rate stays at the current level till the end of the year, the FX loss is not going to increase, but net interest income will be doubled and be more than enough to off-set the FX loss at the end of the year; Net interest income plus other income are sufficient to off-set all FX loss, no matter it is derived from the RMB pledged deposits or the RMB current assets. 5

7 3. Performance in the 1 st half of 2014 Maintain healthy financial position 1H/2013 1H/2014 Inventory Turnaround Time 21 days 18 days A/C receivables Turnaround Time 39 days 41 days Long Term Borrowings / Non-current Assets 1.44% 21.85% Net Debt / Equity 14.25% 42.26% Current Ratio 117% 122% NAV/ weighted average no. of ordinary share HK$2.69 HK$2.95 Basic earnings per share (half year) Basic earnings per share (annualized) Return on Equity (half year) Return on Equity (annualized) Weighted Average no. of ordinary shares for calculation of basic earnings per share HK$0.277 HK$ % 20.60% HK$0.268 HK$ % 18.22% 1,367,040,244 1,483,398,216 6

8 4. Review of Business Operation Liquefied Petroleum Gas LPG Sourcing Import Receiving Terminals Sales Points 17 auto-gas refueling stations in Guangzhou Retail Public Transport Customers Group Market: Guangzhou; Customers: Taxies and bus companies Origin: Gas fields in Middle East Supplier: KPC, Shell, Vitol & etc Class One deep draft LPG sea terminal in Zhuhai - Cargo discharge - Storage - Blending - Distribution 220 bottled LPG retail outlets 170 wagons as mobile outlets Sales (1H/2013) 114,600 tons (1H/2014) 111,500 tons -2.7% Retail Household and Commercial Consumers Market: Guangdong & Guangxi; Customer: numerous Sales (1H/2013) 141,600 tons (1H/2014) 129,200 tons -8.8% Wholesaling Industrial Customers (including auto-gas retailers) Market: Guangdong, Wuhan; Customer: Sinopec, Kingboard, GZ Honda, Sino-gas, SHV etc Sales (1H/2013) 381,000 tons (1H/2014) 368,000 tons -3.4% Local Procurement Wholesaling Overseas Customers Origin: Crude oil cracking Supplier: Sinopec refineries; Zhuhai Hengqin Gas Plant 16 bottle refilling plants in 11 cities in Guangdong & Guangxi - Cargo discharge - Storage - Blending - Bottle refilling - Distribution 11 loading bays for trucks 3 berths for distribution Market: Hong Kong, Macau, Vietnam, Philippines; Customer: Shell, Vitol, Sojitz Sales (1H/2013) 166,300 tons (1H/2014) 175,300 tons + 5.4% Wholesaling Other Terminals and/or Bottle Refilling Plants Market: Guangdong, Guangxi, Fujian; Customer: numerous Sales (1H/2013) 56,000 tons (1H/2014) 29,300 tons -47.7% 1H/2013 1H/2014 Total 859,700 tons 813,300 tons -5.4% 7

9 4. Review of Business Operation Oil Products Sourcing from Refineries in China Sourcing from oversea, say Singapore Sourcing from bonded warehouse in China Sourcing from Oil Companies in Hong Kong MGO Fuel Oil Fuel Oil Fuel Oil MGO & Fuel Oil A wholly owned subsidiary of NewOcean Group in Hong Kong A wholly owned subsidiary of NewOcean Group in China The Project Company Sales of Oil Products in China (tons) 1H/2013 1H/2014 Target Customers Sales of Oil Products in Hong Kong (tons) 1H/2013 1H/2014 Target Customers 0 ton 143,600 MGO: Fuel Oil: Diesel: Fishing boats, engineering ships, barges, cargo ships Coastal cargo ships Wholesaling to transport companies 203, ,800 MGO: Fuel Oil: Government ships, fishing boats, pilot ships, cruisers, HK-Macau Cotai Ferry, engineering ships, barges etc. Cargo ships, ocean-going container liners Ships deployed: (1)RunHaiYou 01 1,900 tons; (2)Zhuhai 3Shi tons; (3)ZhuhaiYou tons Ships deployed or to-bedeployed for oil transportation: (1)SuiHaiHui 388 5,000 tons; (2)NewOcean 5 4,500 tons; (3)NewOcean 6 4,500 tons Ships deployed : (1)NewOcean tons; (2)NewOcean tons; (3)NewOcean 3 1,700 tons; (4)Haifa 250 tons; (5)Jia Feng 200 tons (6)Sun Chun tons; (7)Sun Chun 300 tons; (8)Car Fai 1,200 tons; (9)Ever Crown 1,100 tons Floating oil stations to be placed in Zhaoqing, Guigang and Wuzhou Existing Floating oil stations in Zhuhai, Taishan and Nansha/Dongguan Existing Floating oil stations in Tuen Mun, Aberdeen, Yaumatei and South of Lamma Island Ships being built: (1)NewOcean 7 3,500 tons; (2)NewOcean 8 2,500 tons 8

10 5. Business Plan for the 2 nd half of Increase LPG refueling stations in Guangzhou accelerate the application for adding LPG refueling facilities into 5 existing Sinopec petro-stations. In March 2014, Guangzhou Government officially announced to increase 10,000 taxies in 3 years. From this, we are expecting Guangzhou to have additional demand of auto-lpg of about 140,000 tons per annum. 2. Identify suitable land resources for building new bottling plants work with Sinopec to re-activate idle land resources 3. Keep close dialogue with the new petrochemical factories well prepare for commencement of LPG (as feed stock) supply. 4. Eliminate obstacles existing in the Hong Kong bottled LPG market accelerate market expansion. 1. More term contracts for supply of MGO targeting at all kinds of ferry operating in Hong Kong & the Pearl River Delta; 2. Rely more on the supply of fuel oil by nearby bonded warehouse in China to save storage cost; 3. Apply to Hong Kong government for importing and storing MGO in our own 4,500 ton ship save the cost for leasing storage tanks (in Tsingyi Island) from the Hong Kong oil companies; 4. Open up the on-land diesel market by leasing a storage tank from one of the Hong Kong oil companies. Direct procurement of quality diesel (Sulphur content below 50 ppm) from neighboring countries; 5. Start the supply of bonded warehouse fuel oil to foreign ships anchored in China water an indirect cooperation with Sinopec 1. Start off the construction of additional LNG refueling stations accelerate the application for adding LNG refueling facilities into the 6 existing Sinopec petro-stations; 2. More Joint Venture Contracts with the end-users targeting at transportation company, bus company, logistic companies and manufacturers having massive transportation need. 9

11 6. Medium Term Strategy 1. Solidify existing markets; mitigate the impact by LNG; 2. Promote sales to industrial customers (high margin group) that use LPG as feedstock for petrochemical productions; 3. Continue to expand bottled LPG distribution in Hong Kong. Target to achieve 40% market share in 3 years. 1. To build an integrated supply chain in 2 years (reduce logistic costs; improve profit margin) including the establishment of fleet of bunker ships for efficient oil delivery; 2. Mainly focus on direct sales to end-users; supplemented by wholesaling through traders; 3. Mid-term target: to achieve 40% market share (from currently about 20%) for the supply of MGO to ships operating and servicing in Hong Kong water (not including ocean going liners); 4. Complete the construction of Zhuhai Oil Depot in 2014, and expand marine bunkering business into the China water of Zhuhai area. 1. Entering auto LNG business at the end-users market; Proactively cooperate or joint venture with bus companies, logistic companies and companies that have massive deployment of heavy duty trucks 2. Give an impetus to converting diesel trucks and coaches into LNG fuelled by providing financial support through our own leasing company in Hengqin 3. Secure land resources in the most optimum location for construction of receiving terminal and/or liquefaction plant in the future; build an integrated supply chain about 5 year later 4. Target to become one of the major LNG suppliers in Guangdong within 5 years 10

12 7. Development Projects LPG 1. Bottled LPG in Hong Kong Operation commenced in December 2013; Gradually expanding sales network by having more approved distributors; Processing on the application for cross-border tanker trucks. It enables us to supply LPG in bulk to residential complexes (equipped with LPG storage tanks) and the auto-gas refueling stations in Hong Kong. 2. The Joint Venture with Guangdong Sinopec Increase auto-lpg refueling stations tapping on the forthcoming increase of taxies in Guangzhou; Make use of idle land resources to build additional bottling plants; Make use of the Sinopec s petro-stations network to streamline bottled LPG distribution in Guangdong. 11

13 7. Development Projects Oil Products 1. Enlarging the fleet of bunker ships distribution capacity expansion The first 4,500 ton bunker ship arrived at Hong Kong in July; The second 4,500 ton bunker ship will arrive at Hong Kong in September; A barge of 3,500 ton and a bunker ship of 2,500 ton are being built in Guangdong and will be delivered for use in 2015; Shall charter 5 7 bunker ships (each about 500 tons) for placing at Zhaoqing, Guigang, Wuzhou and other points along Xijiang 2. The 70,000 ton Oil Storage Depot in Zhuhai Awaiting Operation Permit (handling oil transmission) for the berths; Applying bonded warehousing for 20,000 tons; The remaining 50,000 ton storage will be used to support oil distribution in the domestic market; Shall lease storage depots in Guangdong and other provinces for oil blending. 12

14 7. Development Projects LNG 1. Cooperation with Guangdong Sinopec One LNG refueling station was completed and commenced operation in May 2014; in 2 years, LNG refueling facilities will be added to 5 other petro-stations already identified by the JV partners; The JV partners are working on the schedule of adding LNG refueling facilities into another 16 existing petro-stations in Guangzhou. The JV will also build or acquire LNG refueling station in other cities of Guangdong 2. Entering into Joint Ventures with the End-users NewOcean is concluding Joint Venture Agreements with bus companies, transportation companies, cross border logistic companies and manufacturers having massive transportation needs, pursuant to which the partners will jointly build LNG refueling stations to serve their fleets of buses, trucks and lorries (all are captive customers) 3. Long Term Strategy NewOcean is studying on the feasibility of building (a) a LNG receiving terminal on a piece of land near its Zhuhai sea terminal, and (b) a LNG liquefaction plant in Shaoguan (both are intended cooperation with Sinopec) 13

15 Appendix Company Financial Statements 14

16 Company Financial Statements Consolidated statement of Profit and loss and other comprehensive income (For the half year ended 30 June 2014) Unit: HK$ 000 1H/2014 (unaudited) 1H/2013 (unaudited) Revenue 10,153,289 6,857,440 Cost of sales (9,467,090) (6,294,529) Gross profit 686, ,911 Net exchange (loss) gain (67,630) 89,307 Other income 120,766 83,459 Selling and distribution expenses (125,982) (107,812) Administrative expenses (105,362) (105,224) Changes in fair values of derivative financial instruments 9,403 (15,458) Finance costs (104,579) (123,995) Changes in fair values of convertible bonds 0 1,385 Share of profit of a joint venture Share of profits of associates 1,764 9,878 Profit before taxation 415, ,997 Taxation (17,014) (16,415) Profit for the period 398, ,582 Profit (loss) for the period attributable to: Owners of the Company 398, ,754 Non-controlling interests 306 (172) Other comprehensive (expense) income: Exchange differences arising on translation to presentation currency 398, ,582 (12,376) 35,472 Fair value loss on available for sale investment (14,937) (3,177) Total comprehensive income for the period 371, ,877 Total comprehensive income (expense) for the period attributable to: Owners of the Company 370, ,013 Non-controlling interests 259 (136) Earnings per share from continuing & discontinued operations 371, ,877 Basic HK$0.268 HK$0.277 Diluted HK$0.265 HK$0.272 Consolidated statement of cash flows (For the half year ended 30 June 2014) HK$ 000 1H/2014 (unaudited) 1H/2013 (unaudited) Net cash used in operating activities (408,808) (170,328) Net cash (used in) from investing activities Interest received 78,762 75,429 Purchase of property, plant and equipment (74,507) (133,734) Withdrawal of pledged bank deposits 3,638,236 3,412,792 Placement in pledged bank deposits (4,461,315) (2,585,690) Loan advance to an independent party (234,929) 0 Other investing cash flows (net) (31,836) (31,615) Net cash from (used in) financing activities (1,085,589) 737,182 Proceeds from issue of shares pursuant to placement 0 779,220 Proceeds from issue of shares pursuant to exercise of options 0 6,903 Expenses on issue of shares 0 (30,572) New Borrowings raised 7,287,069 5,954,974 Repayment of borrowings (6,344,094) (7,190,967) Dividend paid (84,554) (56,369) Other financing cash flows (net) (59,014) (123,995) 799,407 (660,806) Net increase in cash and cash equivalents (694,990) (93,952) Cash and cash equivalents at beginning of the year 1,747,612 1,196,143 Effect of foreign exchange difference (5,831) 10,830 Cash and cash equivalents at end of the year 1,046,791 1,113,021 Analysis of the balances of cash and cash equivalents Bank balances and cash 1,046,791 1,113,021 Source: Company financial reports 15

17 Company financial statements (Cont.) Consolidated statement of financial position (As at 30 June 2014) As at (Unaudited) As at (Audited) HK$ 000 Non-current assets Property, plant and equipment 1,574,834 1,507,951 Land use rights 240, ,759 Prepaid lease payments for coast 8,914 9,403 Goodwill 294, ,060 Other intangible assets 326, ,315 Interests in associates 307, ,327 Interest in a joint venture 12,748 11,893 Available for sale investment 121, ,534 Deposits paid 107, ,135 Deferred tax assets 1,358 1,358 2,996,110 2,970,735 Current assets Inventories 950, ,710 Properties under development for sales 207, ,218 Properties held for sale 192, ,541 Trade debtors and bills receivable 2,331,740 2,376,246 Amounts due from associates 975, ,965 Other debtors, deposits and prepayments 1,616, ,203 Derivative financial instruments 1,705 1,313 Land use rights 10,260 10,321 Prepaid lease payments for coast Pledged bank deposits 4,678,817 3,862,030 Bank balances and cash 1,046,791 1,747,612 12,012,478 10,321,031 Current liabilities Trade creditors and bills payable 2,564,304 2,173,145 Other creditors and accrued charges 268, ,276 Amount due to a joint venture Derivative financial instruments 14,294 20,302 Tax liabilities 42,545 40,770 Borrowings repayable within one year 6,923,052 6,082,659 9,812,793 8,478,661 Net current assets 2,199,685 1,842,370 Total assets less current liabilities 5,195,795 4,813,105 HK$ 000 Capital and reserves As at (Unaudited) As at (Audited ) Share capital 148, ,340 Share premium and other reserves 4,233,559 3,947,196 Equity attributable to owners of the Company 4,381,899 4,095,536 Non-controlling interests 21,520 21,261 Total equity 4,403,419 4,116,797 Non-current liabilities Deferred tax liabilities 137, ,031 Borrowings repayable over one year 654, , , ,308 5,195,795 4,813,105 Source: Company financial reports 16