Posit. Outlook Good Performance to Continue Interim Results Announcement 16 August 2011

Transcription

1 Posit itive Outlook Good Performance to Continue 2011 Interim Results Announcement 16 August 2011 Singamas Container Holdings Limited (incorporated in HK with limited liability) Website: Stock Code: 716

2 Disclaimer The information contained in this presentation is for information purposes only and does not constitute an offer or invitation to sell or the solicitation of an offer or invitation to purchase or subscribe for any ordinary shares ( Shares ) or rights to purchase Shares in Singamas Container Holdings Limited ( Singamas or the Company ); nor does the information contained in this presentation constitute or form part of (and should not be construed as constituting or forming part of) an inducement to enter into any investment activity involving Singamas in any jurisdiction. This presentation should not, nor should anything contained in it, form the basis of or be relied upon in any connection with any contract, investment decision or commitment whatsoever; nor does it constitute a recommendation regarding the securities of Singamas. This presentation may contain forward-looking statements that involve risks and uncertainties. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements as a result of a number of risks, uncertainties and assumptions. Although Singamas believes that such forward-looking statements are based on reasonable assumptions, it can give no assurance that such expectations will be met. You are cautioned not to place undue reliance on these forward-looking statements, which are based on current views of the management regarding future events. In addition, certain information in this presentation, including but not limited to information concerning strategic decisions, corporate principles and information relating to the Company's competitors in the shipping container industry, is not based on published statistical data or information obtained from independent third parties. Such information and statements reflect the Singamas directors' belief and best estimates based upon internal Company information and information obtained from trade and business organizations and associations and other contacts within the industry in which it competes, as well as information published by its competitors. This presentation has been prepared by Singamas. The information in this presentation has not been independently verified. The provision of the information in this presentation should not be treated as giving investment advice. No representation, warranty, express or implied, is made as to, and no reliance should be placed for any purpose whatsoever on, the fairness, accuracy, completeness or correctness of the information and opinions in this presentation. The information and opinions contained in this presentation are provided only as at the date of this presentation and are subject to change without notice. None of Singamas or its agents or advisers, or any of their respective affiliates, advisers or representatives, undertakes to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, and none of them shall have any liability (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with this presentation. This presentation is given to you solely for your own use and information, and no part of this presentation may be copied or reproduced, or redistributed or passed on, directly or indirectly, to any other person in any manner or published, in whole or in part, for any purpose. 2

3 Company Business Profile 3

4 Corporate profile Singamas Container Holdings Limited ( Singamas or the Company ) is the world s second largest container manufacturer and a major operator of container depots and terminals in the Asian-Pacific region The Company has been listed on the Hong Kong Stock Exchange since 1993 Manufacturing business Logistics business Singamas manufactures a wide range of products including dry freight containers and specialised containers Currently have 11 factories 1 all in the PRC, with a total capacity of 850,000 TEUs 2 in 2011 Its logistics business includes container depots/terminals, midstream and logistics company 11 container depots/terminals, 8 at the major ports in the PRC, 2 in Hong Kong and 1 in Thailand 1 mid-stream company in Hong Kong and 1 logistics company in Xiamen Notes: 1. Two new factories located in Qidong, Nantong City, Jiangsu Province are currently under construction and are expected to commence operations by TEU stands for Twenty-foot equivalent unit, a standard unit of measurement used for container transportation 4

5 Shareholding Structure Mr. Chang Yun Chung & Family 89.61% Pacific International Lines (Private) Limited % Singamas Container Holdings Limited Pacific International Lines Limited Singamas ultimate and immediate holding company is Pacific International Lines (Private) Limited ( PIL ), one of the largest shipowners and leading container operators in Asia. Mr. Chang Yun Chung is the founder and Executive Chairman of PIL PIL is incorporated in Singapore in 1967 and it is currently ranked 19th amongst the top containership operators in the World Source: Company Reports 5

6 Comprehensive Container Factory and Depot Network FACTORIES Currently have 11 factories with 17 production lines Annual production capacity of 850,000 TEUs in 2011 Manufacture of dry freight containers, refrigerated containers, tank containers and other specialised containers Two new factories to be located at Qidong in Jiangsu Province are currently under construction and expected to commence operations by mid and end of 2012 respectively DEPOTS/TERMINALS Total yard size of 1,439,360 m 2 Total storage capacity of 156,200 TEUs Container storage and handling services, dry & reefer container maintenance and repair, CFS, cargo stuffing and unstuffing and other container related services MID-STREAM Hong Kong LOGISTICS Xiamen 6

7 Manufacturing Location Factories (effective equity stake) Location Date of of Commercial Operations No. of of Production Lines Annual Production Capacity TEUs (note 2) 2) Products The PRC Tianjin Pacific (97%) Tianjin ,000 80,000 Dry freight and specialised containers Qingdao Pacific (100%) Qingdao , ,000 Dry freight and US domestic containers Singamas Container Industry (75%) Yixing ,000 30,000 Flatracks, bitutainers, pallet-wide containers, log carriers, other specialised containers and container components Shanghai Pacific (60%) (Note 1) Shanghai Baoshan (74%) Shanghai Reeferco (90.91%) Shanghai ,000 10,000 Tank containers Shanghai , ,000 Dry freight, trash and other specialised containers Shanghai ,000 35,000 Refrigerated and live seafood containers Xiamen Pacific (41.69%) Xiamen ,000 70,000 Dry freight containers Shun An Da Pacific (100%) Shunde Singamas Tank (100%) Shunde , ,000 Dry freight, CKD container houses and other specialised containers Shunde ,000 10,000 Tank containers Hui Zhou Pacific (91%) Hui Zhou , ,000 Dry freight and other specialised containers Ningbo Pacific (100%) Ningbo ,000 80,000 Dry freight containers Total Container Manufacturing (Note 2) , ,000 Notes: (1) After relocating to the new site in December 2010, Shanghai Pacific, formerly a dry freight container factory prior to 2011, has become the Group s second tank container factory with effect from January 2011 (2) Two new factories to be located at Qidong in Jiangsu Province are currently under construction and are expected to commence operations by mid-2012 and end of 2012 respectively 7

8 Manufacturing Specialised Containers Key products are well on track Platform Container Open-top Container Log Carriers Generator Container Bitutainer Gas Pack Container Singatech (Flatrack) Container Bulk Container Live Seafood Container Half-height Container Japanese JR Container Trash Container 8

9 Container Depots / Terminals Location (effective equity stake) Date of of Commencement Yard size Storage Capacity** Services provided The PRC Dalian (36.84%) ,000 sq. m 14,000 TEUs Container storage, handling, haulage, dry & reefer container maintenance and repair, cleaning and fumigation, C.F.S., etc. Tianjin (100%) ,000 sq. m 10,000 TEUs Container storage, handling, haulage, dry & reefer container maintenance and repair, hanger equipment installation, C.F.S., etc. Qingdao (60%) ,260 sq. m 12,000 TEUs Container storage, handling, haulage, dry & reefer container maintenance and repair, hanger equipment installation, C.F.S., forwarder, etc. Shanghai (25%) ,500 sq. m 33,500 TEUs Container storage, handling, haulage, dry & reefer container maintenance and repair, hanger equipment installation, C.F.S., etc. Ningbo (40%) ,000 sq. m 23,000 TEUs Container storage, handling, haulage, dry & reefer container maintenance and repair, hanger equipment installation, C.F.S., etc. Xiamen (28%) ,000 sq. m 27,000 TEUs Container storage, handling, haulage, dry & reefer container maintenance and repair, hanger equipment installation, C.F.S., etc. Fuzhou (40%) ,500 sq. m 7,700 TEUs Container storage, handling, haulage, dry & reefer container maintenance and repair, hanger equipment installation, C.F.S., bonded warehousing & trading within bonded zone, etc. Shunde (59%) ,600 sq. m 15,500 TEUs Container storage and handling, has an on-site customs clearing company, an X-Ray Scan for container inspections, a large container freight station, a bonded warehouse and bonded processing zone Hong Kong Thailand - DY Terminal (100%) - Eng Kong (73.3%) Laem- Chabang (25%) ,500 sq. m 58,000 sq. m 1,575 TEUs 8,925 TEUs Container storage and repair, CFS, container haulage, reefer point & repair, hanger box decoration, stevedore and barge services, etc ,000 sq. m 3,000 TEUs Container storage and repair, cargo storage & distribution, cargo stuffing & unstuffing, cargo packaging/repackaging, etc. Total 1,439,360 sq. m 156,200 TEUs ** Container (for both loaded and empty containers) storage only, excluding bulk cargo and other warehousing space. 9

10 Industry Overview 10

11 Global Container Industry From Fragmentation to Oligopoly Y1994 Global Market Share Y2008 Global Market Share Est. Y2010 Global Market Share Others 57% CIMC 8% Taiwan Suppliers KSCF 3% 8% Jindo 8% Hyundai 7% Singamas 6% TYC 3% Jindo 2% Others MCI 2% 3% CXIC 11% Dong Fang 10% Hyundai 3% Singamas 18% Civet 3% CIMC 48% Dong Fang 7% MCI 5% CXIC 10% Singamas 23% Others 5% CIMC 50% Market Characteristics In 1994: Oversupply with many suppliers Price wars Margin erosion South Korea / Taiwan largest suppliers PRC 43% of world output in 1994 At Present: Oligopoly More rational pricing and capacity expansion PRC approx. 98% of world output in 2010 Other Characteristics of the Industry Containers were 57% owned by shipping lines and 43% owned by container leasing companies in 2010 (vs. 59% / 41% owned by shipping lines and container leasing companies in 2009) More orders are placed by container leasing companies since 2010 Note: Market share based on production output of dry freight containers Source: WorldCargo News November 2010 Issue Alphaliner Weekly Newsletter 1 March to 7 March 2011 Issue 11

12 Dry Freight Container Industry Dynamics Dry Freight Container demand driven by trade / export volumes, not freight rates Traditionally, demand is seasonal in line with the trade pattern - Q2 - Q3 are peak seasons but now, demand seasonality reduced substantially with orders distributed more evenly in the year Materials cost is the major determinant of container price use cost-plus pricing model to set selling price Corten steel, a high-grade hot rolled steel product, accounts for 55% of total dry freight container production costs in 1H2011 Size of current container fleet worldwide as at 31 December 2010 is estimated to be 29 million TEUs with an average age of over 8 years A dry freight container is built for use for up to 15 years but major refurbishment is required in year 9 or 10, which costs over US$1,000 for a 20-ft container The replacement rate is normally about 5% to 7% p.a. of the total container fleet, depending on market conditions Current replacement rates are exceptionally low due to container shortage 12

13 Specialised Container Industry Dynamics Specialised container has higher entry barrier and is less competitive Demand for higher value-added specialised containers is less seasonal and cyclical than dry freight container demand Specialised containers include tank, refrigerated, 53 US Domestic, open top and other higher profit margin non-dry freight containers Refrigerated Container Tank Container 53 US Domestic Container Open-side Container 13

14 Container Prices vs. Steel Prices 1H2011 ASP of 20ft dry freight container increased to US$2,760, 28.1% and 14.9% higher than 1H2010 s US$2,155 full year 2010 s US$2,403 Higher ASP due to good demand for new containers and increased raw material (especially Corten steel) and labour costs ASP US$ 3,000 2,500 2,000 1, ft. Dry Freight Container 1 Price (ASP 2 ) vs. Average Steel Cost Per Ton Steel Cost/ Ton US$ , Year H H H ASP Avg. Steel Cost Note: 1. one 20 container normally requires 1.8 tons (including wastage) of steel 2. ASP stands for average selling price of Singamas 14

15 Container Shipping Fleet Projections In normal circumstances, the box to TEU slot ratio is 2x That is, for every one new shipping slot, approximately two TEU of new containers would be required Shipping capacity estimates to grow steadily from million TEUs as at 31 December 2010 to million TEUs by end of 2014 (representing a compound annual growth rate of 9.1% from ) Shipping Capacity (in mil of TEU) New Shipping Slots (in mil of TEU) Rise p.a. 9.2% 8.5% 8.7% 10.2% 3.3% Cellular Fleet as at 31 December New Shipping Slots Note: Based on order book as at 1 August 2011 and assuming no ships are deleted after that date (other than those planned). Forecast figures take into account delivery deferrals and slippage. Expected fleet size after provision for future scrappings and delivery slippage is based on the following assumptions: i) Slippage: 6 ships for 15,000 TEUs planned for delivery in 2011 are assumed to be delayed to ; and ii) Scrappings and de-ceilings are estimated to reach 85,000 TEUs in 2011 and 100,000 TEUs per year in Source: AXS-Alphaliner (published at www1.axsmarine.com) is a worldwide reference in liner shipping intelligence. 15

16 Favourable industry fundamentals Benefits to the box manufacturers Annual production capacity better managed by the container manufacturers and less competition have resulted in: Higher ASP Better pricing power by the container manufacturers pushing up overall selling prices, especially for dry freight containers Increasing operating margins Due to the better pricing power, Singamas operating margins further increased from 3-5% historically and 8.9% in 2010 to 14.4% in 1H2011 Higher capacity utilisation rate 93% capacity utilisation for 1H2011 vs. average of 57% from 2003 to 2009 and 85% in 2010 Improving demand and higher pricing power would render higher ASP P as well as higher margin for Singamas 16

17 World's second largest container manufacturer Singamas is now the world s second-largest container manufacturer, with a market share of 23% in 2010 Singamas and CIMC combined accounts for nearly 3/4 of the global market The market is expected to remain as an oligopoly as Singamas has the competitive strengths to preserve a number of entry barriers Entry barrier Singamas competitive positioning 1 Production network and services Production network across the coastal regions Proximity to ports 11 factories across the coastal region in PRC with multi location delivery capabilities 2 A restricted business in PRC Extremely difficult for obtaining new licenses Incumbent with well established facilities, strong marketing network and customer relationship 3 Higher land prices in coastal regions Cost has risen two- or threefold in the last decade Difficult to find large area in coastal areas Most of its production facilities were established or acquired in the 1990s and early 2000s and are now under continuous improvement and upgrading 17

18 Diversifying product mix to protect income stability To further diversify its businesses as well as providing a buffer against the volatile market for dry freight containers, which is trade driven, Singamas is exploring higher-margin specialised containers with more stable demand Singamas is targeting sales of specialised containers to account for 40% to 50% of its total revenue over the next three to five years after the market returns to normal in around 2013 It is expected that dry freight container would be the main growth driver up to 2012 Revenue breakdown for dry freight and specialised containers in the period under review was 72% and 28% respectively Total revenue % breakdown Manufacturing volume % breakdown Manufacturing revenue % breakdown (%) (%) (%) H2010 1H H2010 1H H2010 1H2011 Containers manufacturing Logistics Dry Freight Specialised Containers Dry Freight Specialised Containers 18

19 Sustainable business along the industry cycle Singamas has weathered various ups and downs along the industry cycle yet still maintained its leading position In the recent down-cycle from mid-2008 to end of 2009, Singamas quickly returned to profitability in 2010 Further improvements in both selling prices and margins in 1H2011 Singamas has a healthy financial position to support future business growth Production output and sales volume TEUs ( 000) H2010 1H2011 Production Sales EBITDA and margin % % % % % % (40) (33) H2010 1H2011 (90) EBITDA (US$ m) EBITDA Margin (%) 20% 15% 10% 5% 0% -5% -10% -15% -20% -25% -30% 19

20 Industry Outlook Recovery of global export trading activities especially from the PRC Container shipping capacity to increase by approximately 34% over the next few years Significant reduction in order seasonality Expects replacement rate to resume to at least normal level of 5-7% in the coming year Continuing Good Demand for New Containers Raw materials and labour costs to be stable 20

21 2011 Interim Results 21

22 Agenda Financial Highlights Business Review - Business Segment Analysis - RMB Notes Issue - Qidong Project Future Plans Appendix - Consolidated Income Statements 22

23 Financial Highlights: Revenue US$ M 1,750 1,500 1, % 1, , For the six months ended 30 June Consolidated revenue amounted to US$1,023,991,000, a significant rise of 109.7% over the revenue of US$488,406,000 in the last corresponding period Driven by a good demand for new containers, higher average selling prices, effective cost controls and further improved production efficiency 23

24 Financial Highlights: Consolidated Net Profit (Loss) Attributable to Owners of the Company US$ M % (20) (40) (27.4) (60) For the six months ended 30 June Consolidated net profit attributable to owners of the Company increased significantly by 899.8% to US$101,900,000 compared to US$10,192,000 recorded in the last corresponding period New container demand has been rising which has lifted both selling prices and margins 24

25 Financial Highlights: Basic Earnings (Loss) per Share & Dividend per Share 6 Basic Earnings (loss) per Share US cents HK cents 10 Dividend per Share % For the six months ended 30 June For the six months ended 30 June Basic earnings per share increased to US4.22 cents, 904.8% higher than US0.42 cent recorded in 1H2010 Declared an interim dividend of HK9 cents per ordinary share (1H2010: nil), representing a dividend payout of 27.4% 25

26 Financial Highlights: Net Assets Value per Share US cents % As at 30 June As at 31 December 26

27 Business Review: Business Segment Analysis US$ M 1,250 Revenue 1,000 1, % % Manufacturing Logistic Services % of Revenue 98 / 97 2 / 3 For the six months ended 30 June 27

28 Business Review: Business Segment Analysis US$ M Profit Before Taxation % 6.3% Manufacturing Logistic Services For the six months ended 30 June 28

29 Business Review: Logistics Services Container Depots, Terminals and Mid-stream: Handling, Repair and Storage Volumes 1H2011 1H2010 Total Handling TEUs Total Repair TEUs Daily Storage TEUs Total Handling TEUs % / Total Repair TEUs % / Daily Storage TEUs % / PRC 1,609, ,557 96,049 1,556, % 169, % 97, % Hong Kong 245,953 44,951 7, , % 45, % 9, % Thailand 30,913 13,127 1,124 37, % 15, % 1, % TOTAL 1,886, , ,597 1,854, % 229, % 108, % Less idle containers resulted in lower storage revenue but at the same time, due to more container movements, more handling revenue year-on-year Total revenue from the segment was US$17,010,000 (1H2010: US$16,975,000) Profit before taxation and non-controlling interests increased to US$3,167,000 US$2,980,000) (1H2010: 29

30 RMB Notes Issue Issued the RMB Notes on 14 April 2011 Proceeds: RMB1.38 billion Coupon: 4.75% per annum Interests will be paid every half year from 14 Oct 2011 Mature on 14 April 2014 Tradable on the Singapore Exchange Entered into par forward contracts to fix the exchange rate at RMB6.15 to US$1 for all coupon and final principal payments in order to hedge against any fluctuation of RMB in relation to the Notes Benefits & Use of Proceeds Provides stable funding for the Group s working capital and general corporate expenses in the PRC Further strengthened the Group s financial position 30

31 Well on Track - Construction of New Facilities at Qidong Building two adjacent highly efficient, environmentally friendly and energy saving container factories on the site at Qidong Increase the Group s production capacity to meet the rising container demand in the Shanghai area and at the same time, in response to the shifting of the industrial centers to the inland of the PRC Improved logistics / shipping arrangement for materials and finished products transportation / distribution Yangtze River Taking advantage of the Yangtze River to satisfy the container demand in the Central and Western PRC, maintaining the Group s competitiveness in the region Chongqi Bridge Located near to the Chongqi Bridge (to be completed by end of 2011), prime riverfront land in close proximity to Shanghai 31

32 Well on Track - Construction of New Facilities at Qidong Total land area: 820 Mu (approx. 546,670 M 2 ) Riverfront: 900 metres long with designated terminal Phase I: Dry freight and specialised containers factory expected to commence operation in June/July 2012 Phase II: Refrigerated container factory that could meet the international requirements, with planned completion by end of 2012 Benefit from many synergies, such as streamlined management, improved logistics, lower overheads, valuable economies of scale and shared facilities 32

33 Future Plans Future Plans Expect good achievements to continue into 2H 9. Global reputation 1. Fully capture the rising new container demand 2. Strengthened cash position for robust growth 8. Maintain high product quality 7. Enhanced production capacity and efficiency from Qidong new plants 3. More efficient deployment of labour due to less seasonality fluctuation in demand 4. Maintain high operational efficiency at current plants 6. Influx of working capital from its Notes issuance 5. Marketing network 33

34 Appendix 34

35 Consolidated Income Statement I (Classification Of Expenses By Nature) Revenue Other income Changes in inventories of finished goods and work in progress Raw materials and consumables used Staff costs Depreciation and amortisation expense Exchange (loss) gain Other expenses Finance costs Investment income Changes in fair value of derivative financial instruments classified as held for trading Share of results of associates Share of results of jointly controlled entities Profit before taxation Income tax expense Profit for the period Attributable to: Owners of the Company Non-controlling interests Earnings per share Basic Diluted For the six months ended 30 June US$'000 US$'000 1,023, ,406 1, (1,844) (736,342) (386,928) (57,618) (29,498) (9,081) (8,859) (3,018) 407 (72,602) (42,867) (9,722) (4,806) 1, (1,683) , ,852 14,442 (33,026) (1,469) 111,826 12, ,900 10,192 9,926 2, ,826 12,973 US4.22 cents US0.42 cent US4.21 cents US0.42 cent 35

36 Consolidated Income Statement II (Classification Of Expenses By Function) Revenue Cost of sales Gross Profit Other income (expense) Selling and distribution expenses General and administrative expenses Exchange (loss) gain Profit from operations Finance costs Investment income Changes in fair value of derivative financial instruments as held for trading Share of results of associates Share of results of jointly controlled entities Profit before taxation Income tax expense Profit for the period Attributable to: Owners of the Company Non-controlling interests Earnings per share Basic Diluted For the six months ended 30 June US$'000 US$'000 1,023, , , , ,617 40,930 1,813 (720) (19,614) (8,318) (28,504) (12,814) (3,018) ,294 19,485 (9,722) (4,806) 1, (1,683) , ,852 (33,026) 14,442 (1,469) 111,826 12, ,900 10,192 9,926 2, ,826 12,973 US4.22 cents US0.42 cent US4.21 cents US0.42 cent 36