4Q2017 & FY2017 RESULTS BRIEFING

Transcription

1 4Q2017 & FY2017 RESULTS BRIEFING 28 February 2018 CHINA SUNSINE CHEMICAL HOLDINGS LTD. 中国尚舜化工控股有限公司 1

2 2 PRESENTATION OUTLINE Our Company Financial Overview Key Developments Outlook

3 About China Sunsine Chemical 3 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 China Sunsine listed in the first batch of the National Champion Manufacturing Enterprises by Ministry of Industry and Information Technology of the PRC, in 2017 Accredited by a strong customer base of top tire makers Beneficiary of stringent environmental protection standards

4 Our Products: Rubber Chemicals 4 Rubber Accelerators MBT MBTS CBS TBBS TMTD DPG DCBS. Insoluble Sulphur Anti-Oxidants TMQ 6PPD 4010NA

5 Our Products: Rubber Chemicals 5 Rubber Chemicals are essential additives in the production of rubber products

6 Global Consumption of Rubber 6 Other Tire 9% Other Products Latex 10% 4% Car tyres consume 2/3 of Global Rubber Output Boots 10% Tube/ Tape 6% Car Tyres 61%

7 Global Consumption of Rubber Chemicals 7 Anti-oxidants 2.2% Vulcanizing agents 2% 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 tyre cost (100:3) Accelerators 1.7% Rubber Global rubber consumption in 2017 estimated : million tons - By IRSG

8 Our Strong Customer Base 8 (2006) (1997) (2003) (2006) Over 1,000 customers globally Serves more than 2/3 of the Global Top 75 tyre makers 1/3 output exported

9 Market Share: Rubber Accelerators 9 40% 35% 30% 25% 20% 15% 19% MARKET SHARE 28% 29% 30% 30% 24% 24% 25% 14% 16% 17% 17% 11% 12% 12% 31% 33% 18% 20% PRC Market Share Global Market Share 10% 7% 5% 0%

10 Our Market Leadership Position 10 GLOBAL TOP 3 ACCELERATOR PRODUCERS PRC TOP 3 INSOLUBLE SULPHUR PRODUCERS Company Annual Capacity 2017 Company Annual Capacity 2017 China Sunsine 中国尚舜 87,000 tons China Sunsine 中国尚舜 20,000 tons Tianjin Kemai 天津科迈 51,000 tons Yanggu Huatai 阳谷华泰 10,000 tons Yanggu Huatai 阳谷华泰 30,000 tons Wuxi Huasheng 无锡华盛 10,000 tons

11 Our Production Bases 11 Five production bases in three locations

12 Financial Overview 12

13 Financial Highlights 13 RMB mln 4th Quarter Ended Year Ended 31 Dec17 31 Dec16 Change 31 Dec Dec 16 Change Group Revenue % 2, , % Gross Profit % % Gross Profit Margin 33.3% 26.0% 7.3 pts 28.8% 26.5% 2.3 pts Profit Before Tax % % Profit After Tax % % EPS (RMB cents/sgd Cents*) 26.85/ / % 70.82/ / % NAV per share (RMB cents/sgd Cents*) / / * SGD to RMB exchange

14 RMB mln Revenue Growth 14 3, , , , , , , , , , , , FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17

15 Revenue By Quarter 15 RMB mln 4Q Q2017 3Q2017 1Q Q 2Q 3Q 4Q Q17 vs 4Q16 : +58% 4Q17 vs 3Q17: +38%

16 Sales Volume 16 Tons 160, , , , , ,000 80,000 60,000 40,000 31,036 30,787 45,420 54,275 60,907 81,371 98, , ,572 20,000 0 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Priority in growing sales volumes and market share through the following methods: Expanding capacities to meet the growing market demand Continual emphasis on environmental protection measures over the years

17 Tons 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10, ,036 29,805 0 Sales Volume by Products 40,196 46,343 50,148 3,468 4,413 7, ,361 2,971 2,061 64,252 72,710 76,089 76,090 19,903 21,640 10,724 11,948 15,417 12,102 12,281 5,183 Anti-oxidant TMQ & 6PPD newly introduced in 2008 and 2012 respectively Insoluble Sulphur introduced in ,767 83,335 31,214 20,031 34,858 22,283 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Accelerator Insoluble Sulphure Anti-oxidant and others 17

18 Sales Volume By Quarter 18 Tons 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5, ,051 25,377 23,899 33,046 1Q2017 2Q2017 3Q ,483 30,948 29,470 34,558 36,797 34,098 29,203 28,905 29,045 26,699 1Q 2Q 3Q 4Q ,460 38,774 4Q2017 4Q17 Sales volume increased due to continued short supply situation in China More orders shifted to us, as the productions of some rubber chemical producers which failed to meet the requirements of environmental protection laws and regulations were being affected. 4Q17 vs 4Q16: +13% 4Q17 vs 3Q17: +14%

19 Sales Contribution (By Region) 19 FY2017 Sales Contribution (y-o-y) PRC EXPORT Sales: RMB 1,753.3 mln +38% Rest of Asia Sales: RMB mln +27% Volume: 95,560 tons +4% 24% Volume: 44,916 tons +2% PRC sales increased due mainly to the increase in overall ASP as the result of short supply situation in China which led by the rigorous environmental inspection conducted by central government of China PRC 64% 5% 5% America Europe Others 4% International sales increase due to higher ASP

20 Overall Average Selling Price (ASP) 20 RMB/Ton 30,000 25, K 20,000 15, K 15.8K 18.3K 19.3K 17.4K 17.2K 19.1K 16.2K 15.0K 19.4K 10,000 5,000 0 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17

21 ASP by Quarter 21 RMB/Ton 25, K 20,000 15, K 20.1K 19.6K 17.9K 17.0K 16.0K 16.3K 15.6K 14.8K 14.2K 14.8K 16.0K 17.3K 18.9K 18.5K 10,000 5, Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 4Q17 ASP up 40% y-o-y due mainly to short supply of rubber chemicals products in China

22 Main Raw Materials Cost 22 RMB/ Ton Key Raw Materials Price Trend 22,000 18,000 14,000 10,000 6,000 Aniline Aniline Tert-butylamine Cyclohexylamine Ketone Dicyclohexylamine Carbon Disulfide 2,000 1Q142Q143Q144Q141Q152Q153Q154Q151Q162Q163Q164Q161Q172Q173Q174Q17 Raw material accounts for about 80% of total cost

23 Gross Profit 23 RMB mln FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Since 2014, the Chinese government started to enforce stringent environmental protection measures. Some of our competitors had to cease their operations due to failures to meet the new environmental requirements

24 Net Profit 24 RMB mln FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Adopted flexible pricing strategy since FY09 to gain more market share FY12: One-off R&D cost for 6PPD abt RMB60 mln Since 2014, began to be benefited from stringent environmental laws and regulations implemented in China

25 Net Profit By Quarter 25 RMB mln Q Q2017 3Q Q Q17 vs 4Q16: +99% 4Q17 vs 3Q17: +70% Q 2Q 3Q 4Q

26 Margins Analysis % 30.0% 25.0% 20.0% 20.2% 28.4% 22.3% 22.6% 25.0% 17.2% 18.2% 27.3% 26.5% 26.9% 28.8% Gross Profit Margin (GPM) 15.0% 10.0% 12.3% 13.3% 12.3% 11.6% 8.5% 10.6% 10.5% 10.9% 12.5% Net Profit Margin (NPM) 5.0% 0.0% 2.3% 4.5%

27 Margins Analysis By Quarter % 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 19.2% 25.3% 31.1% 31.9% 31.7% 27.3% 28.2% 27.2% 28.5% 26.8% 24.3% 26.8%23.5% 24.2% 24.4% 33.3% 14.3% 15.1% 13.3% 11.0% 10.0% 11.0% 11.6% 11.0% 11.4% 12.2% 9.5% 10.0% 10.0% 10.0% 7.5% 5.3% Gross Profit Margin (GPM) Net Profit Margin (NPM) 0.0%

28 Balance Sheet Highlight 28 31/12/ /12/ /12/2015 Current assets (RMB mln) * 1, , Current liabilities (RMB mln) Current Ratio Shareholders equity (RMB mln) 1, , ,175.3 D/E ratio ** NAV per share (RMB cents) (equivalent to SGD cents) / / * Including Cash RMB mln + Notes RMB mln ** Bank borrowings fully repaid in FY2016

29 Key Developments 29

30 Ongoing Projects 30 Project Scheduled Completion Date Status CapEx 30,000-ton Accelerator TBBS: Phase I of 10,000-ton capacity at Shanxian Plant Phase I construction and installation completed at the end of 2016 Waiting for trial run approval RMB 100 mln Insoluble Sulphur: 10,000-ton production line at Dingtao plant Construction to be completed by end of 2017 Waiting for trial run approval RMB 50 mln Heating Plant: Add one boiler and one electric generator By end of 2017 Construction completed, undergoing the machinery testing. To start trial run by 2Q2018 RMB 100 mln

31 Annual Capacity (before IPO) FY17 FY18e Note Rubber Accelerators Insoluble Sulphur Anti-oxidant (TMQ & 6PPD) 32,000 87,000 97,000 nil 20,000 30,000 nil 45,000 45,000 Shanxian: 71,000-ton Weifang: 26,000-ton Shanxian: 10,000-ton Dingtao: 20,000-ton Shanxian: 10,000-ton TMQ 30,000-ton 6PPD 5,000-ton 4010 Total 32, , ,000

32 Outlook 32

33 Rising Tire Consumption 33 Piece mln PRC Tire Sales Volume Source: Goodyear Annual report 2016 Replacement tires and new car tire sales account for 70% and 30% respectively For passenger cars, every car needs to replace 1.5 piece of tires every year (source: Linglong Tyre s IPO prospectus)

34 Units mln 35 Riding on Rapid Growth of Car Market PRC Car Sales PRC car sales totaling mln units, up 3% y-o-y, ranked no. 1 in the world for 9 consecutive years PRC car sales remains robust due to the improvement of people s disposable income and higher living standards

35 General Concerns and Opportunities Ahead General Concerns Opportunities 35 Environmental protection and safety inspection in China have become commonplace and prevalent Shortage of supply will be relieved as some affected productions will be resumed gradually Fluctuation of raw material prices Automobile industry in China is still poised for further growth Industry consolidation may benefit bigger players Large competitive advantage due to our stringent standards in environmental protection, which will enable us to benefit from short supply situation Stay competitive through our ability to provide high quality and comprehensive range of products, stable supply supported by economies of scales, and continued investment in R&D and innovation

36 Net Profit (in RMB mln) Dividend Payment History Net Profit Dividend Dividend (in SGD cents) FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY Proposed final SGD 2.5 cents Interim Paid SGD 0.5 cents IPO price : SGD 39 cents Total dividend paid : SGD 14.5 cents (for 11 consecutive years) FY2017 : SGD 3 cents (interim SGD 0.5 cents + proposed final SGD 2.5 cents) Dividend Policy : Payout not less than 20% of net profit for FY17 & FY18

37 Listed On SGX Mainboard SHARE PERFORMANCE 37 IPO SGD0.39 On 05/07/2007 No rights issue or new share placement since IPO Total share buyback 5.5% or 27,653,200 shares of issued shares Placed out all treasury shares in May 2017 to institutional investors to expand investor base and increase liquidity

38 Investment Merits 38 Leverage on the increasing demand of tire and car markets Market leadership position and largest market share in rubber accelerators Strong customer base Organic growth supported by ready resources (such as cash, land, the build-up of infrastructures, etc.) Strong operating cashflows, RMB500 million cash on hand with no bank loan 10-year track record & annual dividend payment (min 20% payout for FY17 & FY18) P/E at about 9+ times (based on EPS SGD0.145 in FY17)

39 Chairman s Message 39 Due to the greater importance placed on environmental protection and safety production in China, the inspection regime in these areas have become commonplace and prevalent. Our competitors are likely to make greater investments in environmental protection and safety production measures, to maximise their utilisation rate, and to improve their capacity through innovations. These will lead to a gradual normalisation of prices eventually. The Group has always been investing heavily in environmental protection and safety production measures, which benefited us greatly. In the coming years, the Group will focus on production technology and innovation, and will continue to invest in R&D. With our high quality and comprehensive range of products, scale of production, environmental protection advantages, and market leadership position, I am very confident of our profitability and outlook in the next 12 months. Mr. Xu Chengqiu Executive Chairman

40 40 Q & A MEDIA/INVESTOR CONTACT Tong Yiping, CFO, tongyiping@chinasunsine.com Jennie Liu, IR Manager, jennie@chinasunsine.com 112 Robinson Road #11-01 Singapore (+65)