Swancor (TSE: 3708) Company Profile 2017/06

Transcription

1 Swancor (TSE: 3708) Company Profile 2017/06

2 Business Units Swancor Holding Fine chemical Carbon fiber composite Offshore Wind Power Anti-corrosion material Swancor Renewable Formosa I (128MW) Wind turbine material Formosa II ( MW) Formosa III (1,900MW) 2

3 Revenue Revenue NT$ MN By product 2016,% 12,000 10,000 8,000 6,000 4,000 2,000 By Area 2016,% Q1 Anti-corrosion material Wind turbine blade material Others 3

4 Fine Chemical Anti-Corrosion Material 4

5 Fine Chemical Anti-Corrosion Material Revenue NT$ MN 3,000 2,500 2,000 1,500 1, Q1 Major product is vinyl ester. Major applications are anti-corrosion tank and pipe for factories, desulfurization tank and pipe, and chimney for power plants. Broad customer base. Sales through direct sales or distribution. Produce product by order. Major competitors are Ashland (US) and DSM (Holland), Market is oligopolistic with stable gross margin. Volume grows steadily every year. In 2016, Swancor sold 32 thousand tons. Main market was China. Regarding vinyl ester, Swancor sold 18 thousand tones in China. Total China market was 75 thousand tons. Swancor market shares in China was 24% International markets for Swancor are South- East Asia, India and Middle-East. 5

6 Wind Turbine Blade Material 6

7 Fine Chemical Wind Turbine Blade Material Revenue NT$ MN 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1, Q1 Products are epoxy resin and hardener. Major customers are China wind turbine blade makers, such as Sinoma (SZE: ), Zhongfu Composites and TPI Composites. Direct sales. Entry barriers in technical and customer services are high. Major competitors are Hexion (US), Olin Epoxy(US), and Huntsman(US). Market is oligopolistic with stable gross margin. Volume is highly relates to wind turbine market. In 2016, Swancor sold 23 thousand tons. Main market was China. Total quantity of China market was 115 thousand tons and global market was 250 thousand tons. Swancor market shares in China was 20%. International markets for Swancor are India, Middle-East, Turkey and Mexico. 7

8 China Wind Power Market China Wind Power New Installed Capacity GW China Wind Curtailment Rate % 30% 25% 20% 15% 15 10% Q1 In 2016, China wind power new installed capacity was 23GW, 49% of global 54.6GW. According to China government 13-5 plan, annual new installed capacity will be around 18GW-20GW from % 0% 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 In 2016Q1, wind curtailment rate was as high as 26%. Main reasons are power consumption growth rate was low and inter- China power network was not sufficient. As China invested RMB 218BN in inter- China power network, wind curtailment rate decreased. 8

9 Carbon Fiber Composite Global carbon fiber composite demand Thousand tons Global carbon fiber composite demand By application, %, Source: JEC 2016 Swancor carbon fiber composite factory was completed in April Formosa Plastic (TSE: 1301) owns 18% of equity. Products are pre-peg, thermal plastic plate, and extrusion spar. Applications are automotive parts and wind turbine blade spar. Thermal plastic plate has manufacturing flexibility and cost advantage over traditional pre-peg and is recyclable. The demand of carbon fiber spar is increased as wind turbine blades getting longer.

10 Offshore Wind Farms - Formosa I, II and III Formosa I, II Formosa III 10 Swancor renewable is developing Formosa I, II and III, three offshore wind farms. Formosa I, located northwest of Taiwan, will have 128MW capacity. Phase I 8MW has been installed and is commercial ly operating. Phase II 120MW will be built in Macquarie capital, DONG energy, and Swancor owns 50%, 35%, and 15% of the equity respectively. Formosa II, located in the west and south of Formosa I, will have MW capacity. We are conducting environmental impact analysis (EIA) and geological prospecting. Formosa III, located in the west of Taiwan, will have 1,900MW capacity. We are conducting EIA and geological prospecting. Swancor is partnering with Macquarie for this project.

11 Offshore Wind Power Developer Swancor Renewable Taiwan government offshore wind power target MW 11 Swancor Renewable Developer Development Management fee, Success fee Formosa I Off -shore wind farm Swancor renewable energy, a fully owned subsidiary of Swancor, is a pioneer offshore wind power developer in Taiwan. Revenues are management fee and success fee in wind farm developing stage and operating and management (O&M) fee when commercial operating. Normally, it will take 6-7 years to develop an offshore wind farm. Major milestones are permits, planning, fund raising, construction, and commercial operating. Success fees might be generated after milestones be completed Success fees are related to wind farm IRR. Key factors are wind condition, feed-in-tariff (FiT), and CAPEX.

12 Offshore Wind Power Business Model Swancor Holding Swancor Ind. Macquarie Capital Dong Energy Holding company of Swancor group Formosa I founder Finance, procurement, project management Technical, procurement, safety, project management 15% 50% 35% 100% Swancor Renewable Offshore wind farm developer Developing service Formosa Intl. Holding 100% Formosa I 12 Permit Financing Construction O&M

13 Income Statement * ROE is annualized. 13

14 Balance Sheet and Financial Indexes 14

15 Account Receivable and Bad Debt Reserve Account Receivable 2,500 2,000 2,023 1,825 1,717 1,500 1,301 1, Q2 2016Q3 2016Q4 2017Q1 Bad Debt Reserve NT$ Mullion Q2 2016Q3 2016Q4 2017Q

16 Cash Flow 16

17 CAPEX total CAPEX will be NT$ 4,800MN. Fine Chemical Carbon Fiber Offshore Wind Power Cash Cow Star Star The investments in fine chemical are Jiangsu and Malaysia new factories. Jiangsu factory is to meet China new environmental regulations and to expand manufacturing capacity. It has been completed in May Malaysia factory is to serve South-East Asia market and lower tariff. It will be started in 2017H2 and be completed in 2018H1. The investment in carbon fiber composite was the factory that completed in April The investments in offshore wind power were phase I and infrastructure of Formosa I. Swancor plans not to make capital investment for Formosa II and III and will be pure developer. 17

18 Why Swancor Anti-corrosion resin is in line with environment protection demand, has high entry barrier, is an oligopolistic market. Swancor has number 1 market share in China. Wind turbine blade resin meets green energy demand, has high entry barrier, is an oligopolistic market. Swancor is top 3 in China. Goldwind is the strategic partner. Carbon fiber composite is keeping with energy saving demand. Swancor strengths are fine chemical expertise and wind turbine customer base. Formosa plastic is the strategic partner. Offshore wind power meets green energy demand, has high entry barrier. Swancor is a pioneer in Taiwan and has future project pipeline. Macquarie Capital and DONG are strategic partners. 18

19 Thank you!

20 Disclaimer This document may be deemed to contain forward-looking statements. These forward-looking statements include, among other things, statements regarding future events and the future financial performance of Swancor that involve risks and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results. Any projections in the document are based on limited internal and external information currently available to Swancor, which is subject to change. Actual events or results could differ materially and no reader of this document should assume later that the information provided today is still valid. Such information speaks only as of the date of this document. Readers shall rely on self-judgment to makes any investment decision. Readers shall not interpret the information in this document to be investment recommendations. 20