COAL INDUSTRY REPORT Q1/2019 1
Content Abbreviation 3 Executive Summary 4 1. Business Environment 5 1.1 Macroeconomic Situation 6 1.2 Legal barriers 9 2.2.8 Price movement 54 2.3 Development plan of coal industry 57 3. Enterprise Analysis 60 3.1 Enterprise Introduction 60 3.2 Financial analysis 63 15 2.1 Global Market 15 2.1.1 Exploitation- Consumption 15 2.2 Vietnamese Market 23 2.2.1 History of Vietnam s Coal Industry 23 2.2.2 Definition and classification 25 2.2.3 Value chain 29 2.2.4 Industry exploitation - production reality 31 2.2.5 Consumption 36 2.2.6 Import 43 2.2.7 Export 50 2
Abbreviation MONRE Ministry of Natural Resources and Environment Prof Profit Me Mechanization ATP After-tax profit CNCA China National Coal Association SBV The State bank of Vietnam G&A General and administrative expenses PVN Vietnam Oil and gas group CS Cost of sales BR Basic Regulation CPI Consumer price index GDVC General Department of Vietnam Customs Co., Ltd JSC Limited liability company Joint Stock Company IR Industry Regulation GSO General Statistics Office of Vietnam NR Net revenue VNTR Vietnam s National Technical Regulation TI Trade investment VINACOMIN Vietnam National Coal-Mineral Industry Group EIA Energy Information Administration PC People s Committee EVN Vietnam Electricity VICEM Vietnam Cement Corporation GDP Gross Domestic Product VIRAC Vietnam Industry Research And Consultant IEA International Energy Agency 3
Executive Summary In 2018 coal industry output reached xxx million tons increased by xxx% compared to the same period in 2017. Of which, VINACOMIN output reached xxx million tons, up xxx% over the previous year and accounted for xxx% of the coal industry. In 2018. the amount of exported coal reached xxx million tons, the value of xxx billion USD increased xxx% in production and xxx% in value compared to the same period in 2017. 4
Content 1. Business environment 1.1 Macroeconomic Situation 1.2 Legal barriers 5
1. Business environment 1.1 Macroeconomic Situation Gross domestic product (GDP) for the whole year 2018 reached xxx% - the highest increase since 2008 onwards % GDP growth rate by quarter, 2015 2018 Q1 Q2 Q3 Q4 With impressive economic growth results in 2018 along with new growth drivers will continue to be a driving force for economic growth in 2019 2015 2016 2017 2018 Source: VIRAC, GSO 6
1. Business environment 1.1 Macroeconomic Situation The proportion of mineral mining industry in GDP, 2013 2018 The contribution structure of the Mining Industry to GDP reached xxx% in 2018 2013 2014 2015 2016 2017 2018 Source: VIRAC, GSO Exchange rate CNY/VND, 2013 2018 Source: VIRAC, SBV 7
1. Business environment 1.1 Macroeconomic Situation Vietnam's energy demand has increased rapidly over the past 15 years since 2001 (average increase of xxx% per year) and is expected to continue to rise quite high in the next 15 years. kwh/capita Electric consumption per capita, 2000 2017e Source: VIRAC, World bank VND/ kwh Electric average price, 7/2007-9/2018 Source: VIRAC, Ministry of Industry & Trade 8
Content 1. Business environment 1.1 Macroeconomic Situation 1.2 Legal barriers 9
1. Business environment 1.2 Legal barriers The Prime Minister issued Directive no 2006/QD-TTg dated 12/12/2017, approving the Project of restructure Vietnam Coal and Minerals Industry Group, 2017-2020. 10
1. Business environment 1.2 Legal barriers Industrial revolution 4.0 (industry 4.0) during the inception phase and will affect all areas of socio-economy, at the same time completely change the current production and management system. Industry 4.0 offers huge opportunities if you take advantage and at the same time be a lagging and eliminating challenge. For coal mining and processing industry, minerals, industry 4.0 is based on a digital platform that is applied most widely as application software to automation and connection lines in management, operating. 11
1. Business environment 1.2 Legal barriers 12
1. Business environment 1.2 Legal barriers 13
1. Business environment 1.2 Legal barriers 14
Content 2 Industry overview 2.1 Global market 2.1.1 Exploitation- Consumption 15
2.1 Global market 2.1.1 Exploitation - Consumption World s coal output from 2011 2017 Coal production in major coal producing countries in the world has increased again in 2017. 8,400 Million tons 4% 8,200 2% 8,000 0% 7,800-2% 7,600 7,400-4% 7,200 Content is deleted for 7,000 demo purpose 2011 2012 2013 2014 2015 2016 2017-6% -8% Source: VIRAC, BP Statistical Review In 2017, global coal production tends to increase sharply compared to 2016. Coal production in the three countries in 2017 increased at least xxx million tons (equivalent to xxx% over the same period). 16
2.1 Global market 2.1.1 Exploitation - Consumption World coal reserves World's coal reserves, 2017 Billion tons Source: VIRAC, BP statistical review Thermal coal reserves, 2017 Billion tons Source: VIRAC, Influence Map 17
2.1 Global market 2.1.1 Exploitation - Consumption Million tons Coal exploitation by region, 2011-2017 2011 2012 2013 2014 2015 2016 2017 Source: VIRAC, BP Statistical Review In 2017, top 10 countries produce coal in the world still did not change their rankings. XXX continues to lead the world in coal production with xxx million tons. 18
2.1 Global market 2.1.1 Exploitation - Consumption The structure of coal production by type in 2017 did not change much compared to 2016. Coal production by type, 2014 2017e Million tons 2014 2015 2016 2017e Source: VIRAC, IEA Structure of coal production by type, 2017e Source: VIRAC, IEA 19
2.1 Global market 2.1.1 Exploitation - Consumption Million tons 8,100 8,000 7,900 7,800 Global coal consumption, 2011 2017 3.0% 2.0% 1.0% Coal demand by region, 2010-2017 7,700 7,600 7,500 7,400 0.0% -1.0% -2.0% 7,300-3.0% 2011 2012 2013 2014 2015 2016 2017 Source: VIRAC, Enerdata Source: VIRAC, Enerdata In 2017, global coal consumption increased again after 3 years of consecutive decline, reaching xxx million tons with an increase of xxx%. Contributing the most to the increase in global coal consumption is XXX and XXX. 20
2.1 Global market 2.1.1 Exploitation - Consumption Compared to 2016, the top 3 largest coal consuming countries in the world remain unchanged, namely XXX, XXX and XXX. Million tons Coal consumption in some countries, 2017 Source: VIRAC, Enerdata Coal consumption by sectors, 2012 2040f Electricity production accounts for xxx% of global coal consumption in 2012, industry accounts for xxx%. 2012 2020F 2040F Source: VIRAC, EIA 21
2.1 Global market 2.1.1 Exploitation - Consumption In 2017, IEA estimates that xxx% of global coal consumption is steam coal, xxx% is coking coal and xxx% is lignite coal consumption. Coal consumption by types, 2017 Source: VIRAC, IEA 22
Content 2.2 Vietnamese Market 2.2.1 History of Vietnam s Coal Industry 2.2.5 Consumption 2.2.2 Definition and classification 2.2.6 Import 2.2.3 Value chain 2.2.7 Export 2.2.4 Industry exploitation - production reality 2.2.8 Price movement 23
2.2 Vietnamese Market 2.2.1 History of Vietnam s Coal Industry Vietnam's coal industry has been born and undergone development for more than 120 years. 24
Content 2.2 Vietnamese Market 2.2.1 History of Vietnam s Coal Industry 2.2.5 Consumption 2.2.2 Definition and classification 2.2.6 Import 2.2.3 Value chain 2.2.7 Export 2.2.4 Industry exploitation - production reality 2.2.8 Price movement 25
2.2 Vietnamese Market 2.2.2 Definition and classification Depending on the ability of heat generation, carbon content and ash, coal is divided into many types such as stone coal, lignite coal, anthracite coal, thin coal (half anthracite)... 26
2.2 Vietnamese Market 2.2.2 Definition and classification Anthracite coal Fat coal Peat 27
2.2 Vietnamese Market 2.2.2 Definition and classification Long-flame coal Lignite coal 28
Content 2.2 Vietnamese Market 2.2.1 History of Vietnam s Coal Industry 2.2.5 Consumption 2.2.2 Definition and classification 2.2.6 Import 2.2.3 Value chain 2.2.7 Export 2.2.4 Industry exploitation - production reality 2.2.8 Price movement 29
2.2 Vietnamese Market 2.2.3 Value chain The value chain of coal mining 30
Content 2.2 Vietnamese Market 2.2.1 History of Vietnam s Coal Industry 2.2.5 Consumption 2.2.2 Definition and classification 2.2.6 Import 2.2.3 Value chain 2.2.7 Export 2.2.4 Industry exploitation - production reality 2.2.8 Price movement 31
2.2 Vietnamese Market 2.2.4 Industry exploitation - production reality According to the report, the total reserves and coal resources estimated by December 31, 2016 are about xxx billion tons. Coal reserves by category, 2016 Thousand tons Source: VIRAC, BCT 32
2.2 Vietnamese Market 2.2.4 Industry exploitation - production reality Output of coal mining, 2010 2018 Million tons 50 45 40 35 30 25 15% 10% 5% 0% In 2018, coal output reached xxx million tons of coal, increased by xxx% compared to the same period in 2017. Of which, VINACOMIN 0 output reached xxx million tons, up by xxx% over the previous year and accounted for xxx% of the coal industry. 20-5% 15 10-10% 5-15% 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: VIRAC, BCT, GSO 33
2.2 Vietnamese Market 2.2.4 Industry exploitation - production reality The coal mining price increases remarkably in recent years, the main reasons are: Thousand dongs/ton Coal production price, 2001 2030F 2001 2005 2010 2014 2015 2016-2030F Source: VIRAC, TKV 34
2.2 Vietnamese Market 2.2.4 Industry exploitation - production reality The number and the level of tax policy, fees for minerals are significantly increasing. 35
Content 2.2 Vietnamese Market 2.2.1 History of Vietnam s Coal Industry 2.2.5 Consumption 2.2.2 Definition and classification 2.2.6 Import 2.2.3 Value chain 2.2.7 Export 2.2.4 Industry exploitation - production reality 2.2.8 Price movement 36
2.2 Vietnamese Market 2.2.5 Consumption National coal consumption, 2018 Coal consumption continued to increase from 2012 to 2017 due to many coal-fired power plants already in operation. Million tons 60 50 40 30 20 10-10 0 2012 2013 2014 2015 2016 2017 2018 Source: VIRAC, GSO Coal consumption structure, 2017 Source: VIRAC, BCT, TKV 37
2.2 Vietnamese Market 2.2.5 Consumption VINACOMIN business results, 2013-2017 Billion dongs 120,000 200% VINACOMIN s revenue is estimated at VND xxx trillion, equal to xxx% of the plan, up100,000 xxx% compared to the same period of 2016. VINACOMIN's profit in 2017 is VND xxx billion, up nearly VND xxx billion, corresponding to xxx% increase compared to the 80,000 same period in 2016. 60,000 150% 100% 50% 40,000 0% 20,000-50% - 2013 2014 2015 2016 2017-100% Source: VIRAC, TKV 38
2.2 Vietnamese Market 2.2.5 Consumption Electricity Industry s coal consumption Electricity planning VII of coal provision in the near future Total capacity (MW) Year 2020 2025 2030 Coal Consumption (million tons) Source: VIRAC 39
2.2 Vietnamese Market 2.2.5 Consumption Cement Industry s coal consumption Coal provision for some cement factories, 2015 Tons In 2017, coal consumption for cement reached xxx million tons, down by xxx% compared to the same period in 2016. 2015 2014 Source: VIRAC, VICEM 40
2.2 Vietnamese Market 2.2.5 Consumption Steel industry s coal consumption 41
2.2 Vietnamese Market 2.2.5 Consumption Fertilizers industry s coal consumption 42
Content 2.2 Vietnamese Market 2.2.1 History of Vietnam s Coal Industry 2.2.5 Consumption 2.2.2 Definition and classification 2.2.6 Import 2.2.3 Value chain 2.2.7 Export 2.2.4 Industry exploitation - production reality 2.2.8 Price movement 43
2.2 Vietnamese Market 2.2.6 Import Thousand tons Import output and turnover, 2013 2018 Million USD In 2018, imported coal output increased sharply to xxx thousand tons, the value of xxx million USD increased respectively xxx% and xxx%. 2013 2014 2015 2016 2017 2018 Source: VIRAC, GDVC 44
2.2 Vietnamese Market 2.2.6 Import Stone coal import structure by volume, 2018 Stone coal import structure by turnover, 2018 Source: VIRAC, GDVC Source: VIRAC, GDVC Nguồn: VIRAC, GDVC 45
2.2 Vietnamese Market 2.2.6 Import The purpose of using imported coal Sources Share of imported coal by type of use% in 2017 Source: VIRAC, Vietnam Energy Association 46
2.2 Vietnamese Market 2.2.6 Import Price of imported coal, 2018 The price of imported coal from the markets has a big difference due to many factors such as coal quality, coal type, transport distance... USD/ton Source: VIRAC, GDVC 47
2.2 Vietnamese Market 2.2.6 Import Structure of imported coal types by volume, 9M/2018 Source: VIRAC, GDVC 48
2.2 Vietnamese Market 2.2.6 Import Top 10 largest import companies by volume, 9M/2018e Top 10 largest export companies by volume, 9M/2018e Content Source: is VIRAC, deleted TCHQ for demo purpose Source: VIRAC, TCHQ The two largest importers in May 9, 2018 are XXX accounting for xxx% and XXX Corporation accounts for xxx%. 49
Content 2.2 Vietnamese Market 2.2.1 History of Vietnam s Coal Industry 2.2.5 Consumption 2.2.2 Definition and classification 2.2.6 Import 2.2.3 Value chain 2.2.7 Export 2.2.4 Industry exploitation - production reality 2.2.8 Price movement 50
2.2 Vietnamese Market 2.2.7 Export 51
2.2 Vietnamese Market 2.2.7 Export Vietnam s stone coal export output and turnover, 2011-2018 Million tons 20.00 Billion USD 2.00 In 2018, the volume of exported coal reached xxx million tons, the value of USD xxx billion increased by xxx% in volume and xxx% in value over the same period in 2017. 16.00 12.00 1.60 1.20 8.00 0.80 4.00 0.40 0.00 2011 2012 2013 2014 2015 2016 2017 2018 Source: VIRAC, GDVC 0.00 Nguồn: VIRAC, TCHQ 52
2.2 Vietnamese Market 2.2.7 Export Export market structure by output of Vietnam, 2018 Structure of export export market by turnover of Vietnam, 2018 Source: VIRAC, GDVC Source: VIRAC, GDVC From the beginning of 2017, coal export volume to China is very low, instead, it is markets such as Laos, Taiwan, and Thailand due to the impacts of the nation's application of regulations on quality barriers to imported coal. 53
Content 2.2 Vietnamese Market 2.2.1 History of Vietnam s Coal Industry 2.2.5 Consumption 2.2.2 Definition and classification 2.2.6 Import 2.2.3 Value chain 2.2.7 Export 2.2.4 Industry exploitation - production reality 2.2.8 Price movement 54
2.2 Vietnamese Market 2.2.8 Price movement Adjustment of coal price selling for electricity industry The increase in coal selling prices is due in part to high taxes and fees, in particular: high tax fees, accounting for about 16%. Source: VIRAC, TKV, EVN Coal price selling for electricity generation (Hon Gai-Cam Pha s coal by 01/10/018) Source: VIRAC, TKV, EVN 55
2.2 Vietnamese Market 2.2.8 Price movement Coal price selling for individual household Coal price selling for cement, fertilizer and paper Type Current export price (USD/ton) Current export price (VND 1000/ton) Current price (VND 1000/ton) Expected price (VND 1000/ton) Type Current export price (USD/ton) Current export price (VND 1000/ton) Current price (VND 1000/ton) Expected price (VND 1000/ton) Source: VIRAC, VINAMICO Source: VIRAC, VINAMICO 56
Content 2 Industry overview 2.3 Development plan of coal industry 57
2.3 Development plan of coal industry 58
2.3 Development plan of coal industry Forecasting demand for coal No. Coal demand 2016 2020 2025 Total 59
Content 3 Enterprise Analysis 3.1 Enterprise Introduction 3.2 Financial analysis 60
3. Enterprise Analysis 3.1 Enterprise Introduction Companies name Logo Total asset (billion VND) Revenue (billion VND) General information 61
3. Enterprise Analysis 3.1 Enterprise Introduction Companies name Logo Total asset (billion VND) Revenue (billion VND) General information 62
Content 3 Enterprise Analysis 3.1 Enterprise Introduction 3.2 Financial analysis 63
3. Enterprise Analysis 3.2. Financial analysis Billion dongs Revenue and revenue growth, 2016-2017 TBN=5.2% Source: VIRAC 64
3. Enterprise Analysis 3.2. Financial analysis 65
3. Enterprise Analysis 3.2. Financial analysis Gross profit margin, 2016-2017 Source: VIRAC, Companies FR 66
3. Enterprise Analysis 3.2. Financial analysis Selling expenses and Selling expenses/revenue, 2016-2017 Source: VIRAC, Companies FR 67
3. Enterprise Analysis 3.2. Financial analysis G&A expenses and G&A expenses/revenue, 2016-2017 Source: VIRAC, Companies FR 68
3. Enterprise Analysis 3.2. Financial analysis Financial expenses / net revenue of coal industry enterprises 2016-2017 Source: VIRAC, Companies FR 69
3. Enterprise Analysis 3.2. Financial analysis Asset structure and turnover of total assets of coal companies, 2017 Billion dongs Source: VIRAC, Companies FR 70
3. Enterprise Analysis 3.2. Financial analysis Debt structure of coal industry enterprises, 2017 Billion dongs Source: VIRAC, Companies' FR 71
3. Enterprise Analysis 3.2. Financial analysis The inventory Turnover, 2016-2017 The receivables turnover, 2016-2017 Days Days Source: VIRAC, Companies' FR 72
3. Enterprise Analysis 3.2. Financial analysis Solvency coefficient, 2017 Source: VIRAC, Companies' FR 73
3. Enterprise Analysis 3.2. Financial analysis Profit after taxes and Profit/Net Revenue, 2017 Source: VIRAC, Companies' FR 74
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