2015 Annual Results and Corporate Update 18 March 2016

Transcription

1 2015 Annual Results and Corporate Update 18 March

2 Contents 1 Company Overview Market Situation Up-dateA 3 3 Performance in the year of 2015 Revenue and Net Profit 4 Performance in the year of 2015 Gross Profit, Operating Profit and EDITDA 5 Performance in the year of 2015 Main healthy financial position 6 4 Review of Business Operation LPG 7 Review of Business Operation Oil Products 8 5 Business Outlook LPG 9 Business Outlook Oil Products 10 Business Outlook LNG 11 Appendix Company Financial Statements 1

3 1. Company Overview OBJECTIVE: STRATEGY: NICHE: To become regional oil major supplying a wide range of petroleum products in Southern China and neighboring districts/countries Persistently taking end-users driven approach for the Group s expansion and development High logistic efficiency Developed Business Expanding Business Developing Business Historic Business Business Segments Liquefied Petroleum Gas Oil Products Natural Gas Electronics History of Development 16 years About 4 years About 3 years More than 20 years Remarks The cornerstone business: Already developed integrated infrastructures (sea terminal, LPG storage) and extensive sales network (bottling plants and refueling stations) for LPG distribution in Guangdong, Hong Kong and Macau; Preparing to expand to overseas Achieved a sales revenue of about HK$8,488,519,000 (US$1.09bn.), and a gross profit of about HK$1,476,097,000 (US$190mn.) in 2015; Contributing about 55% of the Group s turnover, and about 80% of the total gross profit in The rapidly expanding business: With integrated infrastructures (sea terminal, oil depots, bunker ships) to provide mainly bunkering services in Hong Kong and along the rivers and coastal lines of the Pearl River Delta; Now in the process of building a gasoline station network in Guangdong and have started to trade oil and chemical products Achieved a sales revenue of about HK$6,331,336,000 (US$814mn.), and a gross profit of about HK$316,950,000 (US$40.7mn.) in 2015; Contributing about 41% of Group s turnover, and 17% of the total gross profit in Business for the future: Not yet making any contribution to the Group s revenue and profit; Now in the process of establishing C-LNG refueling stations (end-users sales network for cars); Taking the strategy of cooperating with the end-users (such as transport company, large scaled manufacturers) to develop C-LNG refueling stations Started to study on the construction of a LNG receiving terminal in Guangdong. Business brought about by NewOcean s predecessor: Trading integrated circuits and electronic components related to general mobile phones and smartphones; Achieved a sales revenue of about HK$659,404,000 (US$84.8mn.), and a gross profit of about HK$28,503,000 (US$3.7mn.) in 2015; Contributing about 4% of Group s turnover, and 1.6% of the total gross profit in 2015; To scale down gradually. 2

4 2. Market Situation Up-date Slow down of China Economy Excessive production capacity is the biggest problem that China Economy is now facing. Oversupply is basically stifling all industries in all areas. Investment expansion substantially decelerated; domestic demand weakened; exportation remained lifeless even after repeated RMB depreciation. In such situation, it is hard to expect that China economy will be able to achieve substantiated growth in recent years, and deflation seems inevitable. The impact of the plunge in Oil Price While it is a general expectation that international crude oil price will stay on the low level for a rather long period of time, we believe the following scenarios will likely emerge in the energy market of Southern China: Operators in the end-users market will benefit the most; Natural Gas Development will continue to slow down A pessimistic outlook for new energies RMB devaluation Import of energy products into China in 2015 was also subject to the additional risk of RMB depreciation. RMB has depreciated for more than 5% in the latter half of the year. Such scale of depreciation in fact means a substantial raise of the cost of imports, and as trading of commodities and energy products can only generate very thin margin, a 5% increase in cost would easily erode the profit or might have brought about a loss to the importer. Importation is highly discouraged and it will be conducted in a way that an off-taker is secured in advance. 3

5 3. Performance in the year of 2015 Revenue and Net Profit HK$ million HK$ million HK$ million Revenue 10,117 12,458 14,432 19,633 15,515 Growth % % % % % HK$ million Net Profit Net profit margin 2.99% 3.44% 5.43% 4.59% 4.88% The decrease of Group Revenue in year 2015 was mainly attributable to the decline of global price of energy products. Sales Volume of the Energy Products The decrease of Net Profit in year 2015 was mainly due to the incurrence of huge net foreign exchange loss. It is unrelated to the Group s earning capability. In 000 tons 4

6 3. Performance in 2015 Gross Profit, Operating Profit and EBITDA Group Consolidation LPG Oil Products Electronics In HK$ million Revenue 19,633 15, % 12,665 8, % 5,214 6, % 1, % Cost of Good sold (18,256) (13,675) -25.1% (11,592) (7,013) -39.5% (5,038) (6,013) +19.4% (1,600) (631) -60.6% Gross Profit 1,377 1, % 1,073 1, % % % GP Margin 7.01% 11.86% 8.47% 17.39% 3.38% 5.01% 5.83% 4.25% Net FX gain/(loss) (23) (292) +11.7X Net Interest income % Other income/(expenses) 103 (11) -111% Selling expenses (252) (352) +39.7% Admin. expenses (229) (282) +23.1% Operating Profit 1, % EBITDA 1,170 1, % Financing Cost (128) (143) +11.7% LPG Sales volume reached 1,893,000 tons (2014: 1,743,000 tons) as demand resumed in response to price reduction. Revenue however reduced by 33% also because of the general decline of the LPG price; GP margin substantially improved as (a) retail margin widened because of cost reduction; and (b) bigger profit margin coupled with substantially low selling price contributing to the great improvement in GP margin. Oil Products Completion of the Zhuhai oil storage helped a lot in the improvement of logistic efficiency. Sales volume in China therefore increased by more than 2X. Coupled with the sales growth of about 27% in Hong Kong, total Sales volume reached 1,993,000 tons (2014: 1,086,000 tons) Margin improved slightly only as oil products sales was still in majority wholesaling, not the retailing that would benefit the most when oil price dropped. We also started the trading of oil/chemical products both in Hong Kong and China Electronics Only carried out trading business of electronics products to customers in Thailand. Turnover substantially reduced to the normal level of about HK$659 million (2014: HK$1.7 billion), GP margin also reduced to 4.25% (2014: 5.83%). Expecting the electronics business to scale down gradually. Net FX loss Because of continuous slump in the RMB exchange rate, the net exchange loss in 2015 amounted to HK$292 million. Net exchange loss from import trading amounted to HK$109 million; net loss from the Group s intra-group C/A and RMB current assets amount to HK$56 million; and net exchange loss from RMB/USD structural matching arrangement amounted to HK$123 million. The balance of USD borrowing and RMB deposits matching arrangements had reduced to a very low level at the end of RMB fluctuation will no longer cause significant unexpected impact to the Group s operating performance. Net Interest Income In 2015, the Group recorded a net interest income of HK$36 million (2014: HK$70 million). Such income was reduced by 50% in line with the decrease of the balance of the USD borrowing/rmb deposits matching arrangements. Selling expenses and Administration Cost Selling and administration expenses increased by about HK$150 million in 2015 sd all expenses of the Oil Products Project Company were consolidated and Lianxin s 2 months expenses were consolidated after the subcontracting arrangement with Sinopec terminated in October Financing Cost The financing cost (in relation to bank borrowings for working capital) increased by about 11.7% because of (a) slight increase in total long term borrowing, (b) increase in RMB borrowing; and (c) increase in bank handling charges. 5

7 3. Performance in 2015 Maintain healthy financial position FY2014 FY2015 Inventory Turnaround Time 8.89 days 6.94 days A/C receivables Turnaround Time days days Free operating cashflow (Note 1) (HK$823,618,000) HK$689,250,000 Long Term Borrowings / Non-current Assets (Note 2) 35.80% 57.49% Net Debt / Shareholders Equity 44.35% 42.45% Current Ratio (Note 3) 136% 203% NAV/ weighted average no. of ordinary share (Note 4) HK$3.29 HK$3.61 Basic earnings per share HK$0.61 HK$0.51 Return on Equity 18.54% 14.13% Weighted Average no. of ordinary shares for calculation of basic earnings per share 1,482,576,298 1,480,398,216 Remarks: 1.We are pleased to see that a free operating cashflow of HK$689 million was achieved in 2015; 2.In 2015, the Group has shifted a part of its short term borrowing to Long term borrowing; 3.The Group has a highly liquid financial position; 4.NAV represents the Net Asset Value. It equals to the amount of equity attributable to owners of the Company. The ratio of NAV per share increased by HK$0.32/share in the year of

8 4. Review of Business Operation Liquefied Petroleum Gas TOTAL PURCHASE Inc./dec. LPG sourced from overseas ( Imported Gas ) LPG sourced inside China ( Domestic Gas ) 1,067,000 1,042, % 676, , % Total (in tons): 1,743,000 1,893, % TOTAL SALES Inc./dec. Overseas Customers 400, ,000-49,000 Industrial Customers 755, , ,000 Other terminals and bottling plants 73, , ,000 Bottled LPG Sales 271, ,000 +8,000 Auto-gas Sales 244, ,000-32,000 Total (in tons): 1,743,000 1,893, ,000 Remarks: 1.Out of the sales of 351,000 tons to Overseas Customers in 2015, 222,700 tons were delivered in the overseas. The remaining 128,300 tons were re-exported through our Zhuhai Sea Terminal. 2.Sales to Industrial Customer increased by about 42,000 tons because LPG price has dropped significantly, therefore lowered the cost of production of customers that apply LPG as production fuel or feedstock for producing chemical products. 3.Auto-gas sales showed more than 13% reduction as some buses in Guangzhou have migrated to use LNG as the fuel and the business of taxies were highly affected by unregulated passenger lifting services. PAYMENT TERMS FOR IMPORTED GAS PURCHASE 2015 By LCs issued by 8 international banks 980, % By TT 62, % Total (in tons): 1,042, % IMPORTED GAS BY SUPPLIERS 2015 Supplied by Shell 713, % Supplied by 1 national oil companies 222, % Supplied by 2 LPG traders & 2 national oil companies 106, % Supplied by United Gas for Africa sales % Total (in tons): 1,042, % IMPORTED GAS BY ORIGIN 2015 Middle East 983, % Mainly from Africa 58, % Total (in tons): 1,042, % DOMESTIC GAS PURCHASE 2015 Mainly sourced from refineries, gas plants and Natural gas processing plants of CNPC, Sinopec and CNOOC in Guangdong or neighboring provinces (such as Hunan and Hubei). Most of the domestic gas was transported by tanker trucks within Guangdong Province or Cross-provinces, while others were transported by pressurized ships from the north 850,600 tons (+25.83%) 7

9 4. Review of Business Operation Oil Products Product Purchase Sales Inc./dec. Marine Fuel Oil (FO380, FO180) Bunkering in HK Marine Fuel Oil (FO380, FO180) Ex-Wharf in HK from bonded warehouse in Pearl River Delta under term contract from bonded warehouse in Pearl River Delta under term contract to Shipping co. & bunker traders mainly for ocean going liners to other bunker operators in Hong Kong Water 351,900 tons 425,400 tons % 341,400 tons 190,400 tons % Marine Gas Oil (MGO) Bunkering in HK from oil majors having storages in the Tsing Yi Island to small to medium size ships operating in Hong Kong Water 202,400 tons 174,700 tons 15.86% Marine Gas Oil (MGO) Ex- Wharf in HK from oil majors having storages in the Tsing Yi Island to other bunker operators in Hong Kong Water 13,600 tons 0 ton n.a. Oil products/chemical products for trading in HK from commodity trader in Singapore to importer in the PRC 95,700 tons 0 ton n.a. Marine Fuel/Gas Oil Bunkering in China Diesel for automobile Wholesaling in China Oil products/chemical products for trading in China from CNPC, Sinopec, Sinochem, CNOOC, local refineries and privately owned oil products storage companies to ships operating along rivers and coastal line of Pearl River Delta to gasoline stations located in the Pearl River Delta to other oil/chemical products or commodities trader in China 399,000 tons 181,000 tons % 130,500 tons 114,500 tons % 458,500 tons 0 tons n.a. Total 1,993,000 tons 1,086,000 tons % For the sales of oil products in Hong Kong, we have adjusted the sales strategy (significant increase in oil supply to other bunkering operators; reduction of direct bunkering to ships) in order to avoid malicious competition in the bunker market; The oil storage in Zhuhai has been completed and is now serving as not only storage, but distribution centre for the oil products. It effectively helps to speed up the expansion of oil business in China; Leveraging on our market reputation and funding capability, we have started to trade oil/chemical products both in Hong Kong and in China. 8

10 5. Business Outlook LPG Continue to expand into new markets that can generate attractive investment return Expand the scope of business of the RGSC license in Hong Kong Identify opportunities outside China In Southern China 1.To build or acquire two to three bottle filling plants and commence retailing of bottled LPG in certain second to third tier cities in Guangdong where the Group does not have any business presence yet; 2.To reinforce the cooperation with non-gasoline/diesel manufacturers striving for more long-term supply contracts to increase the sales to industrial customers; 3.Assist the stakeholders of the taxi industry in Guangzhou to eliminate the unfair competition caused by the operation of unregulated passenger vehicles. We aim to help the taxies in regaining its business volume and in turn stimulating the demand for LPG by taxi. In Hong Kong 1.Continue to invest more human resources into expanding the distributor network; 2.Participate more actively in tender processes for long term contracts of supplying bottled LPG to government and public entities; 3.Applying for using cross-border tanker trucks to import LPG. 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. In Overseas 1.Preparing to build LPG receiving terminals and retail network in one or two countries in Asia and/or Africa 9

11 5. Business Outlook Oil Products Adopt the end-users driven approach for the development Enhance supply chain integration enabling the Group to supply a wide range of oil and chemical products; Improve profitability by enhancing logistic efficiency Not only pointing at ships; focus also on the distribution of oil products on land In Hong Kong 1.Strive to become the major retailer of marine fuel oil and gas oil to ships operating in the Hong Kong Water. Further improve the retail margin by reducing cost of purchase through direct importation (instead of procuring from Tsing Yi storage of the oil majors in Hong Kong); 2.Continue to enhance our competitiveness in supplying marine fuel oil to other bunker operators in Hong Kong mainly by further reduction of the cost of purchase; 3.Ride on the advantages of Hong Kong being an international trading and financial hub to carry out the trading of oil and chemical products for the China market in the South, the East and the North. In China 1.Building a sizable network of petrol stations in Southern China. In the cooperation with Conch, we are to build petrol stations first, then followed by C-LNG refueling station. 2.Continue to expand marine bunkering business along rivers and coastal line of Southern China. We may merge with or acquire some existing operators in order to expedite the development. We shall cooperate with Conch Group to establish marine bunker stations along Pearl River, Xijiang and Beijiang 3.Expand our oil wholesaling business into the north of China. Targeting to take two medium sized oil storage depot in Qingdao into the Group s warehousing and distribution network 4.Make use of 70,000 tons oil depot to handle more importation and trading of oil and chemical products 10

12 5. Business Outlook LNG Take auto-lng as the entry point; Enter auto-lng business at the end-users market; Cooperate or joint venture with bus companies; logistic companies and those that have massive needs on truck transportation; As a long term strategy, shall identify land resources for building LNG receiving terminal and/or liquefaction plant, therefore constructing an integrated LNG supply chain in order to reduce logistic costs and improve profit margin 1. Started to identify suitable partners and desirable locations in neighboring area of Guangzhou for the construction of a LNG receiving terminal of about 200,000 cubic meters; 2. 8 C-LNG autogas refueling stations are being processed: In Shima Road, Guangzhou with land area of about 2,800 sq.m.. Anticipating to start construction at the end of March 2016; In Huadu, Guangzhou with land area of about 11,000 sq.m.. Now under construction and anticipating to commence operation in May 2016; In Shabu, Guangzhou with land area of about 4,000 sq.m.. Now under construction and anticipating to commence operation in May 2016; In Junan, Shunde with land area of about 3,000 sq.m.. Now under construction and anticipating to commence operation in May 2016; In Xintang, Guangzhou with land area of about 47,000 sq.m.. Expecting to start construction by the end of June and commence operation by the end of the year 2016; In Zhaoqing main road, Zhaoqing with land area of about 6,800 sq.m.. Expecting to start construction by the end of March, and commence operation by the end of November 2016; 3. Currently negotiating to acquire one project company which owns 10 C-LNG autogas refueling stations projects in Guangdong that are currently applying for start of construction. New Projects will continue to emerge, approval for the start of construction will be granted as scheduled and more autogas refueling stations will commence operation. 11

13 Appendix Company Financial Statements 12

14 Company Financial Statements Consolidated statement of Profit and loss and other comprehensive income (For the year ended 31 December 2015) Unit: HK$ (audited) 2014 (audited) Revenue 15,514,990 19,633,037 Cost of sales (13,675,086) (18,255,810) Gross profit 1,839,904 1,377,227 Other gains and losses (343,596) 15,677 Other income 113, ,534 Selling and distribution expenses (352,071) (251,656) Administrative expenses (282,310) (228,938) Finance costs (194,953) (226,210) Share of profit of joint ventures 2,631 1,713 Share of profits (losses) of associates 13,009 (14,129) Profit before taxation 795, ,218 Taxation (36,783) (21,312) Profit for the year 758, ,906 Profit (loss) for the period attributable to: Owners of the Company 756, ,270 Non-controlling interests 2, Other comprehensive (expense) income: Exchange differences arising on translation to presentation currency 758, ,906 (210,056) 4,810 Fair value loss on available for sale investment 8,932 (37,503) Reclassified to profit or loss upon the disposal of certain amount of available for sale investment 17,898 7,588 Total comprehensive income for the year 575, ,801 Total comprehensive income for the period attributable to: Owners of the Company 573, ,168 Non-controlling interests 2, Earnings per share 575, ,801 Basic HK$0.51 HK$0.61 Diluted HK$0.51 HK$0.60 Consolidated statement of cash flows (Summary) (For the year ended 31 December 2015) HK$ (audited) 2014 (audited) Net cash from (used in) operating activities 689,250 (823,618) Net cash from investing activities 1,876, ,466 Net cash (used in) from financing activities (2,713,969) 507,481 Net increase in cash and cash equivalents (148,580) (24,671) Cash and cash equivalents at beginning of the year 1,738,621 1,747,612 Effect of foreign exchange difference (20,104) 15,680 Cash and cash equivalents at end of the year 1,569,937 1,738,621 Analysis of the balances of cash and cash equivalents Bank balances and cash 1,569,937 1,738,621 Source: Company financial reports 13

15 Company financial statements (Cont.) Consolidated statement of financial position (As at 31 December 2015) As at (audited) As at (audited) HK$ 000 Non-current assets Property, plant and equipment 1,506,653 1,642,891 Land use rights 266, ,426 Prepaid lease payments for coast 7,214 8,527 Goodwill 658, ,139 Other intangible assets 357, ,720 Interests in associates 15,960 71,766 Interest in joint ventures 21,332 19,969 Available for sale investment 37,770 81,958 Deposits paid 663, ,472 Deferred tax assets 3,197 7,312 3,537,700 3,307,180 Current assets Inventories 260, ,082 Properties under development for sales 211, ,936 Properties held for sales 157, ,035 Trade debtors and bills receivable 2,518,348 3,053,093 Amounts due from associates 124, ,586 Amounts due from a joint venture 1,078 0 Other debtors, deposits and prepayments 1,890,558 1,414,734 Derivative financial instruments 12,378 1,222 Land use rights 11,701 11,313 Prepaid lease payments for coast Pledged bank deposits 1,108,142 3,522,442 Bank balances and cash 1,569,937 1,738,621 7,867,265 10,938,936 Current liabilities Trade creditors and bills payable 641,816 1,378,694 Other creditors and accrued charges 214, ,592 Amount due to an associate 8,706 0 Amount due to a joint venture Derivative financial instruments 25,785 3,600 Tax liabilities 60,031 49,369 Borrowings repayable within one year 2,914,813 6,239,536 3,866,582 8,025,300 Net current assets 4,000,683 2,913,636 Total assets less current liabilities 7,538,383 6,220,816 HK$ 000 Capital and reserves As at (audited) As at (audited ) Share capital 148, ,040 Share premium and other reserves 5,202,383 4,726,560 Equity attributable to owners of the Company 5,350,423 4,874,600 Non-controlling interests 38,193 31,184 Total equity 5,388,616 4,905,784 Non-current liabilities Deferred tax liabilities 116, ,147 Borrowings repayable over one year 2,033,755 1,183,885 2,149,767 1,315,032 7,538,383 6,220,816 Source: Company financial reports 14