COSCO SHIPPING Holdings Co., Ltd. 2018 Q3 Results STOCK CODE:601919.SH / 1919.HK 31 October 2018
To become a top-tier container transportation and port service provider 01 Highlights 02 Financial Review 03 Market & Business Review 04 Market Outlook 1
Highlights 2
Highlights RMB mn 2018 Q1 2018 Q2 2018 Q3 2018 Q1-Q3 2017 Q1-Q3 YoY Revenue 21,923 23,152 37,055 82,130 675.99 21.50% Gross profit 1,730 1,236 3,042 6,009 5,824 3.16% Gross profit margin 7.9% 5.3% 8.2% 7.3% 8.6% -1.3PPs Net profit attributable to equity holders of the Company 181-140 822 863 27.36-68.47% Net cash flows generated from operating activities -529 995 4,008 4,474 52.05-14.04% RMB mn 2018/3/31 2018/6/30 2018/9/30 2017/12/31 Equity attributable to equity holders of the Company 20,175 20,839 22,330 20,669 Total Asset 129,359 133,190 227,872 133,190 Long-term and short-term loans and total bonds payable 60,795 75,076 117,662 62,899 Net debt to total equity ratio 95% 104% 185% 86% 2018 Q1 2018 H1 2018 Q1-Q3 2017 Weighted average ROE (%) 0.90% 0.20% 2.64% 13.89% Basic EPS (RMB) 0.02 0.004 0.08 0.27 3
Transaction Completed, focusing on potential synergies On July 9, a voluntary general offer with preconditions was announced to all shareholders of OOIL On August 28, the filing of SASAC was completed Approved by the general meeting of shareholders on Oct 16 with approval rating of over 99.9% On October 23, the U.S. antitrust review was completed The EU's antitrust review was completed on Dec 5 On June 29, China's antitrust review was completed with all preconditions met The offer was announced as unconditional on July 13 On May 15, the NDRC filing was completed On July 6, NSA signed, and the LBCT entity for sale On July 24,CSH became indirect controlling shareholder of OOIL On July 27, when the offer was due to end, it was announced that some of OOCL's senior executives had stepped into the management of CSH The transaction was closed on August 7 2017 2018 Jul Aug Sep Oct Nov Dec May Jun Jul Aug Transaction Synergy 4
Structure of the Company CHINA COSCO SHIPPING CORPORATION LIMITED 45.47% COSCO SHIPPING HOLDINGS CO. LTD. (601919.SH/1919.HK) 100% 47.14% 75% COSCO SHIPPING Lines COSCO SHIPPING Ports (1199.HK) OOIL (316.HK) 5
Dual-Brand Strategy 6 Focus on releasing synergies Phase 1 Phase 2 Fleet and Network Equipment Management Maritime Operation Procurement IT Supply Chain Commercial Coordination Financing
A share placement Target Subscribers: no more than 10 specific subscribers (including China COSCO SHIPPING Corporation, the controlling shareholder of the Company) Proceeds: no more than RMB 12.9 billion, 50% of which already under the subscription pledge from China COSCO SHIPPING Corporation Use of Proceeds: payment of the consideration for existing ship orders (20 container vessels under construction) 13 th Dec 2017, announcement of approval from SASAC of the PRC 18 th Dec 2017, announcement of approval from the Shareholders at the EGM 26 th Jun 2018, announcement of approval from IEC of the CSRC 20 th Aug 2018, announcement that written approval from the CSRC received 7
Financial Review 8
Consolidated Income Statement RMB(mn) 2018 Q1-Q3 2017 Q1-Q3 YoY(%) Revenues 82,130 67,599 21.50 Cost of services 76,121 61,774 23.22 Gross profit 6,009 5,824 3.16 Gross profit margin (%) 7.3% 8.6% -1.3PPs Administration expenses 4,239 3,196 32.64 Finance costs 1,947 1,310 48.68 Investment income 1,621 3,394-52.24 Operating profit 1,565 4,567-65.74 Add: Non-operating income 1,087 937 15.99 Less: Non-operating expenses 18 106-83.43 Total profit 2,634 5,398-51.2 Less: Income tax expenses 505 832-39.34 Net profit 2,130 4,567-53.37 Net profit attributable to equity holders of the listed Company 863 2,736-68.47 Basic EPS (RMB) 0.08 0.27-70.37 9
Consolidated Balance Sheet RMB mn 2018-09-30 2017-12-31 YoY (%) Current assets 64,350 39,442 63.15 Non-current assets 163,522 93,748 74.43 Total assets 227,872 133,190 71.09 Current liabilities 95,823 43,492 120.32 Non-current liabilities 77,063 45,987 67.57 Total liabilities 172,886 89,479 93.21 Equity attributable to the equity holders of the Company 22,330 20,669 8.03 Total equity 54,986 43,711 25.80 Net debt to total equity ratio (%) 185% 86% +99PPs 10
Consolidated Cash Flow Statement RMB mn 2018 Q1-Q3 2017 Q1-Q3 Net cash (used in)/generated from operations 4,474 5,205 Net cash used in investing activities -33,705-10,683 Net cash generated from/(used in) Financing activities 36,848 5,670 Net cash inflows in the period 7,617 192 Net related exchange gain/(loss) 949-821 Net increase in cash and cash equivalents 8,566-629 Cash and cash equivalents as at 1 January 25,739 32,189 Cash and cash equivalents as at 30 September 34,304 31,559 11
Market & Business Review 12
Supply side pressure in 2018Q1-Q3 ( 000 TEU) 600 Concentrated delivery of new vessels in 2018 Q1-Q3 ( 000 TEU) Global idle capacity stayed at historical low level in 2018Q1-Q3 Idle Capacity (L) Idle to Existing Fleet Ratio (R) 400 200 230 320 410 235 420 410 280 220 2,000 1,500 1,000 1,4411,406 1,324 1,367 967 8% 7% 6% 5% 4% 3% 0 2017 Q1 Q2 Q3 Q4 2018 Q1 Q2 Q3 Q4 500 0 602 538 515 474 520 487 522 529 355 395 378 428 444 315 362 191 228 205 2% 1% 0% Source: Alphaliner Monthly, October 2018 13
Average CCFI* in 2018 Q1-Q3 decreased by 2.9% YoY In 2018 Q1-Q3,average CCFI: 810, -2.9% YoY; In 2018 Q3,average CCFI: 835, -1.2% YoY & +7.5% QoQ. 900 850 846 835 800 815 750 777 700 650 600 550 500 Jan-2017 Apr-2017 Jul-2017 Oct-2017 Jan-2018 Apr-2018 Jul-2018 Oct-2018 *CCFI: China Container Freight Index Source: Shanghai Shipping Exchange 14
Q3 is the peak season of major east-west routes Freight rates of Asia Europe routes (Westbound) SCFI* - Shanghai to Europe/Med. (USD/TEU) Freight rates of Transpacific routes (Eastbound) SCFI - Shanghai to USWC/USEC (USD/FEU) 1200 1000 UERO MED 4000 3500 3000 USWC USEC 800 2500 600 400 2000 1500 1000 200 500 0 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 0 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 *SCFI: Shanghai Container Freight Index Source: Shanghai Shipping Exchange 15
Freight rates of some north-south routes softened in 3Q2018 2018Q3 vs 2018Q2(SCFI) 2018Q3 vs 2017Q3(SCFI) -4.1% -14.2% -16.1% -18.3% -21.1% -26.1% 13.4% 11.0% 4.3% 0.6% 36.4% 56.5% USWC USEC EURO MED East/West Africa Japan Southeast Asia Korea Persian Gulf Austrlian/New Zealand South America South Africa -14.3% -31.8% -46.3% -53.6% 37.4% 33.8% 18.0% 13.6% 7.7% 4.1% 2.2% 0.4% USWC USEC Austrlian/New Zealand Korea MED Japan East/West Africa EURO Southeast Asia Persian Gulf South America South Africa Source: Shanghai Shipping Exchange 16
Higher bunker price 500 (USD/TON) 2017 Q1-Q3 2018 Q1-Q3 YoY SGP 380CST 314 422 +34.4% (USD/TON) 2017 Q3 2018 Q3 YoY QoQ SGP 380CST 316 462 +46.1% +8.3% 450 400 422 350 314 300 250 200 150 100 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 17
Ranking the third by fleet capacity Top liner companies (existing capacity) (million TEU) Top liner companies (existing capacity + order book) (million TEU) Maersk Line 4.04 Maersk Line 4.11 MSC 3.25 MSC 3.58 COSCO CSL+OOCL+ 3 3 2.80 COSCO CSL+OOCL+ 3.05 CMA CGM 2.64 CMA CGM 2.88 Hapag Lloyd 1.60 Hapag Lloyd 1.60 ONE 1.54 ONE 1.64 Evergreen 1.19 Evergreen 1.68 Yang Ming 0.63 Yang Ming 0.85 PIL 0.42 Zim 0.47 H.M.M 0.41 PIL 0.81 Zim 0.38 H.M.M 0.38 0.00 1.00 2.00 3.00 4.00 5.00 0.00 1.00 2.00 3.00 4.00 5.00 Source: Alphaliner, Company data 18
Fleet capacity of the Group: 2.8mn TEUs As at 30 September 2018, fleet capacity of the Group reached 498 vessels / 2,796,702 TEUs, representing a 52.2 % YoY growth, with average fleet age of 9.9 years and average fleet capacity of 5,616 TEUs. Existing capacity Order book Combined TEUs Owned Chartered-in Total Capacity (TEU) 307,283 94,910 402,193 164,850 567,043 15,000 vessels 15 5 20 8 28 Capacity (TEU) 433,726 292,604 726,330 69,000 795,330 10,000 15,000 vessels 34 24 58 5 63 Capacity (TEU) 205,257 355,931 561,188-561,188 8,000-10,000 vessels 24 40 64-64 Capacity (TEU) 0 20,550 20,550-20,550 6,000-8,000 vessels 0 3 3-3 Capacity (TEU) 314,404 487,179 801,583-801,583 4,000-6,000 vessels 66 103 169-169 Capacity (TEU) 2,992 106,574 109,566-109,566 2,000-4,000 vessels 1 40 41-41 Capacity (TEU) 14,240 161,052 175,292-175,292 <2,000 vessels 10 133 143-143 Total Capacity (TEU) 1,277,902 1,518,800 2,796,702 233,850 3,030,552 vessels 150 348 498 13 511 *Chartered-out capacity (6 vessels/54,816 TEUs) not included. Owned and Chartered breakdown (by TEU) Owned 46% 21% 34% Chartered from COSCO SHIPPING Development Chartered externally Orderbook delivery schedule Vessels TEUs 2018Q4 3 55,156 2019 10 178,694 19 Owned capacity change in 2018 Q1-Q3 Vessels TEU Scrapped 0 0 New Delivery 16 285,316
Container shipping - cargo volume 000 TEU 2018 Q1-Q3 2017 Q1-Q3 YoY Cargo Volume 16,022 13,089 +22.4% China Domestic; 30.6% Transpacific; 16.7% Asia-Europe (incl.med); 16.7% Other International Routes; 9.0% Intra-Asia; 26.9% 6,000 5,000 4,309 4,693 4,910 4,000 3,000 2,000 1,000 2,089 2,681 2,682 2,286 3,125 896 1,441 - Transpacific Asia-Europe (incl.med) Intra-Asia Other International Routes China Domestic 2017 Q1-Q3 2018 Q1-Q3 20
Container shipping revenue (USD mn) 2018 Q1-Q3 2017 Q1-Q3 YoY Revenue from routes 10,958 8,484 +29.2% Other International Routes; 13% China Domestic; 12% Transpacific; 30% 3,500 3,000 2,500 2,000 1,500 1,000 2,444 3,257 2,140 2,377 1,753 2,551 Intra-Asia; 23% 997 1,466 1,150 1,308 Asia-Europe (incl.med); 22% 500 - Transpacific Asia-Europe (incl.med) Intra-Asia Other International Routes China Domestic 2017 Q1-Q3 2018 Q1-Q3 *USD/RMB FX rate: 1) 2018 Q1-Q3: 6.53762; 2)2017 Q1-Q3: 6.80671; 21
Container shipping unit income 2018 Q1-Q3 2017 Q1-Q3 YoY Unit Income of international routes (USD/TEU) 868 874-0.6% Unit Income of China domestic routes (RMB/TEU) 1,741 1,667 +4.4% 1,400 1,200 1,000 1,170 1,215 936 886 1,113 1,017 800 600 400 200 561 592 0 Transpacific Asia-Europe (incl.med) Intra-Asia Other International Routes 2017 Q1-Q3 2018 Q1-Q3 *USD/RMB FX rate: 1) 2018 Q1-Q3: 6.53762; 2)2017 Q1-Q3: 6.80671; 22
Terminal Business - total throughput +20.6% YoY The total throughput in 2018 Q1-Q3 was 87.5 million TEUs with an increase of 20.6% YoY. S.W. Coast 1% Overseas 21% 2018 Q1- Q3 Bohai Rim 33% ( 000TEU) 35,000 30,000 28,864 +0.2% Pearl River Delta 23% Yangtze River Delta 17% 25,000 20,000 19,580 20,049 20,085 18,553 E.W. Coast & others 5% 2017 Q1- Q3 15,000 10,000 14,722 14,773 13,568 S.W. Coast 1% Overseas 19% 注 1 Bohai Rim 27% 5,000 3,679 4,259 977 985 Pearl River Delta 28% Yangtze River Delta 20% - Bohai Rim Yangtze River Delta E.W. Coast & others Pearl River Delta S.W. Coast Overseas 2017 1-3Q 2018 1-3Q E.W. Coast & others 5% 23
Market Outlook 24
Supply growth in 2019-2020 will slow down 2019-2020 Fleet Projections 2019 Newbuild Deliveries ( 000 TEU) 2017 2018E 2019E 2020E 600 ( 000 TEU) Newbuild deliveries 1,195 1,408 1,073 850 Scrapped 414 70 300 500 Capacity at year-end 21,100 22,347 23,222 23,741 Growth rate, net 3.7% 5.9% 3.9% 2.2% 400 420 410 280 300 340 270 来源 : Alphaliner Monthly, Oct 2018 5.9% 200 210 210 3.9% 2.2% 0 2018 Q1 Q2 Q3 Q4 2019 Q1 Q2 Q3 Q4 2018E 2019E 2020E 25
Demand and supply dynamics 20.0% 15.0% 13.8% 13.2% 14.2% 10.0% 5.0% 0.0% 12.6% 5.7% 5.5% 9.1% 8.3% 7.9% 6.0% 5.9% 6.3% 4.7% 3.8% 5.1% 1.4% 8.6% 2.7% 1.8% 6.7% 3.7% 5.9% 4.5% 4.3% 4.3% 3.9% 2.2% -5.0% -8.2% -10.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018E 2019E 2020E Capacity Growth(%) 13.8% 13.2% 5.5% 9.1% 7.9% 6.0% 5.9% 6.3% 8.6% 1.8% 3.7% 5.9% 3.9% 2.2% Throughput Growth(%) 12.6% 5.7% -8.2% 14.2% 8.3% 4.7% 3.8% 5.1% 1.4% 2.7% 6.7% 4.5% 4.3% 4.3% Source: Alphaliner, Drewry 26
Trade war s impact on container shipping remains to be seen Freight rates of Transpacific routes (Eastbound) (USD/FEU) USWC USEC 4000 3500 3000 2500 2000 2018/10/26 USD 3,294 2018/10/26 USD 2,587 1500 1000 500 0 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Source: Shanghai Shipping Exchange 27
To become a top-tier container transportation and port service provider Disclaimer This presentation contains certain forward-looking statements with respect to the financial condition, results of operations and business of COSCO SHIPPING Holdings and certain plans and prospects of the management of COSCO SHIPPING Holdings. Thanks! Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual result or performance of COSCO SHIPPING Holdings to be materially different from any future results or performance expressed or implied by such forward looking statements. Such forward- looking statements are based on numerous assumptions regarding COSCO SHIPPING Holdings present and future business strategies and the political and economic environment in which COSCO SHIPPING Holdings will operate in the future. 28 The representations, analysis and advice made by COSCO SHIPPING Holdings in this presentation shall not be construed as recommendations for buying or selling shares of COSCO SHIPPING Holdings. COSCO SHIPPING Holdings shall not be responsible for any action or non-action made according to the contents of this presentation.