1h 2006 results review - hyfluxinvestors.hyflux.com/pdf/...presentation_slides.pdf · * assuming...
TRANSCRIPT
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1H 2006 Results Review8th August 2006
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2
AgendaAgenda
1
2
Financial Review
Building Foundation for Global Growth
3 Outlook
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Financial ReviewFinancial Review
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4
Financial HighlightsFinancial Highlights
114%S$5.8mS$12.4mOperating Profit *
0.050.25Net Debt-to-Equity Ratio
(including PF loan)
(48%)4.67cents2.44centsEPS
(45%)S$23.0mS$12.6mPATMI
(62%)S$31.8mS$12.2mPAT
65%S$43.1mS$71.2mSales
+ / (-) %1H 20051H 2006
* Excludes one time and fair value gains
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5
Strong Performance Strong Performance -- Core BusinessCore Business
� Improved contributions from core business– Industrial sales increased by 128% to S$46.6m, driven by
pharmaceutical and biotechnology sectors
– Higher municipal sales from China and Singapore
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6
Revenue by Sector Revenue by Sector
22.422.422.422.4 23.023.023.023.0
20.520.520.520.5
46.646.646.646.6
1.61.61.61.6
1H051H051H051H05 1H061H061H061H06
Municipal Municipal Municipal Municipal Industrial Industrial Industrial Industrial Consumer Consumer Consumer Consumer
1H 20051H 20051H 20051H 2005
52%52%52%52%48%48%48%48%
1H 20061H 20061H 20061H 2006
2%2%2%2%
66%66%66%66%
32%32%32%32%65%
Industrial sales continues to grow
Municipal
Industrial
Industrial Municipal
S$’m
43.1
71.2
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Revenue by CountryRevenue by Country
1H 20061H 20061H 20061H 2006
China
70%
SG
16%
ME/OTH
14%
1H 20051H 20051H 20051H 2005
SG
3%
ME/OTH
51%
China
46%
China - key revenue driver
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8
Strong Performance - Core Business
� PATMI of S$12.6m, 45% lower than 1H2005
– 1H2005 boosted by S$17.2m one-time and fair value gains
– Higher investment in personnel and development costs for future earnings
� Improved contributions from core business– Industrial sales increased by 128% to S$46.6m, driven by
pharmaceutical and biotechnology sectors
– Higher municipal sales from China and Singapore
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9
Strong Core Operating ProfitsStrong Core Operating Profits
104%1.18cents2.41centsEPS (excluding one time and
fair value gains)
(S$17.2m)(S$0.2m)Less: One time and fair
value gains
114%S$5.8mS$12.4mOperating Profit
S$23.0mS$12.6mPATMI
+ / (-) %1H 20051H 2006
Core Operating Profits improved by 114%
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Growth in Core Operating ProfitsGrowth in Core Operating Profits
Operating Profit* (S$’m)
1.181.181.181.18
2.412.412.412.41
1H051H051H051H05 1H061H061H061H06
EPS* (Scts)
5.85.85.85.8
12.412.412.412.4
1H051H051H051H05 1H061H061H061H06
114% 114% 114% 114%
* Excludes one time and fair value gains
104% 104% 104% 104%
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11
9 11 1937 30
43
71
8 14
27
44 59
88
0
40
80
120
160
2000 2001 2002 2003 2004 2005 2006
1H 2H
Strong Revenue GrowthStrong Revenue Growth
CAGR 50%
S$’m
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3 3 49 9
23
132222 44448888
1111111119191919
23232323
0
20
40
2000 2001 2002 2003 2004 2005 1H 2006
1H 2H
Strong Profit GrowthStrong Profit Growth
CAGR 59%
S$’m
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13
Strong Cash PositionStrong Cash Position
Strong Cash Position of
S$61.1m
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14
Cash Flow AnalysisCash Flow Analysis
NM65.4(10.3)Net cash (used in) / generated
from financing activities
(21%)(36.5)(28.9)Net cash used in investing
activities
NM(19.8)6.9Net cash generated from / (used
in) operations
523%(0.1)(0.6)Payment of tax
NM(19.7)7.5Cash generated from / (used in)
operations
5%19.320.2
Profit before working capital changes adjusted for non cash item
Change1H 20051H 2006In S$’m
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Healthy Cash FlowHealthy Cash Flow
� Net cash generated from operations of S$6.9m– Positive working capital changes
– Progress payments received for contracts and related parties
� Net cash used in investing activities of S$28.9m
– Acquisitions of subsidiaries, technologies and investments in JVs for DBOO/DBOT projects in China
� Net cash used in financing activities of S$10.3m– Repayment of term loans and interest payments
– Dividends distribution to shareholders of S$6.9m
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0.25 0.05Net debt to equity ratio (including PF* Loan)
Healthy Debt to Equity RatioHealthy Debt to Equity RatioJun 06Jun 06 Dec 05Dec 05
79.1
ChangeChange
PF Loan
Long Term
Short Term
Total Borrowings
75.8 +3.3
Net Borrowings 51.9 10.7 +41.2
2.4 30.9 -28.5
31.5 0.4 +31.1
113.0 107.1 +5.9
Less : Cash & cash equivalents
(61.1) (96.4) -35.3
Net Cash Net CashNet debt to equity ratio (excluding PF* Loan)
Amts in S$’million
* PF – Non-recourse project financing
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Building FoundationBuilding Foundation
for Global Growthfor Global Growth
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18
Growth EnginesGrowth Engines
Technology
FOUNDATION
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Leverage on Proven TechnologiesLeverage on Proven Technologies
■ Largest membrane and materials research center in Asia outside Japan
■ About 115 R&D staff, 35% increase in researchers and engineers
■ Comprehensive range of membranes
� Polymeric, stainless steel and ceramic membranes
Process/ProductImprovements
■ Oil recycling, pharmaceuticals, biotechnology, chemicals and petrochemicals
■ Design
■ Membranes
■ Integration
New Applications
New Products
Invest in R&D
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Growth EnginesGrowth Engines
Operational Capability
Technology
FOUNDATION
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Building Operational ExcellenceBuilding Operational Excellence
InfrastructureDevelopment
■ Leverage on IT to support global operations■ Improve business processes■ Knowledge management
ProjectManagement
■ Proven track record for large scale projects
GlobalCompetencies
■ Beyond technical competencies
■ Relationship management, globalisationfactors, personal value, leadership dynamics, customer management
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Growth EnginesGrowth Engines
Financial Capability
Operational Capability
Technology
FOUNDATION
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Strong Financial CapabilityStrong Financial Capability
■ Investment by International Finance Corporation (IFC) (Mar 2006)
─ US$20M Equity Interest in SinoSpring
─ US$25M Facility Loan Agreement
■ US$138M Syndicated Facilities (May 2006)
─ 14 International banks including China, Taiwan, Malaysia, Europe, India and Major Local Banks
■ Pursuing funding through business trust structure
Optimize Capital Structure
Financial Structuring Expertise
■ EUROMONEY:
Water Deal of the Year 2003
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Growth EnginesGrowth Engines
Financial Capability
Operational Capability
TechnologyHu
man
C
ap
ital
FOUNDATION
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Align Human Capital with Business StrategyAlign Human Capital with Business Strategy
■ About 800 headcount, 111% increase in personnel expenses
■ >70% tertiary education■ 70% engineering background■ 13 PhDs
Headcount
Non Non Non Non EngineersEngineersEngineersEngineers
30%30%30%30%
EngineersEngineersEngineersEngineers70%70%70%70% DiplomaDiplomaDiplomaDiploma
22%22%22%22%
Below Below Below Below DiplomaDiplomaDiplomaDiploma
30%30%30%30%
PHDsPHDsPHDsPHDs2%2%2%2%
General General General General DegreeDegreeDegreeDegree
34%34%34%34%
Masters Masters Masters Masters DegreeDegreeDegreeDegree
12%12%12%12%
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Growth EnginesGrowth Engines
Wate
r U
tili
ties
(Mu
nic
ipal)
Financial Capability
Operational Capability
TechnologyHu
man
C
ap
ital
FOUNDATION
PILLARS OFGROWTH
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Water Utilities (Municipal)Water Utilities (Municipal)
■ Large order book of S$243M
■Estimated completion: 2006-2008
■ Focus on successful project execution
■When completed, substantial recurring income stream for next 20-30 years
■Pursuing projects in SEA, India, China and MENA region
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Water Utilities (Municipal)Water Utilities (Municipal) Liaoning Province1.Huludao, Desal2.Liaoyang
WWTP/WRP
Tianjin Desal
Henan Province, Lushan WTP
Jiangsu Province1.Yangkou WCP2.Yangzhou WWTP3.Wuxi WWTP4.Dafeng WCP5.Wujin WWTP6.Changshu WWTP7.Taizhou WWTP
Tiantai WWTP
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Water Utilities (Municipal)Water Utilities (Municipal)
400,000352.4Total
50,00080HoldLiaoning, Huludao Desal
40,00014.02008Jiangsu, Wujin
100,000154.02007/2008Tianjin Desal
20,00011.02007Jiangsu, Dafeng WCP
20,00014.02007Jiangsu, Yangzhou WWTP
30,00012.42007Henan, Lushan WTP
30,00010.02007Liaoning, Liaoyang WTP/WWRP
20,0009.02006Zhejiang, Tiantai WWTP
20,0009.42006Jiangsu, Taizhou WWTP
30,00016.82006Jiangsu, Changshu WWTP
20,0009.62006Jiangsu, Wuxi WWTP
20,00012.22006Jiangsu, Yangkou WCP
Capacity(m3/day)
Project Cost (S$M)
Year of CompletionProject
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Growth EnginesGrowth Engines
Wate
r U
tili
ties
(Mu
nic
ipal)
Ind
ustr
ial
Financial Capability
Operational Capability
TechnologyHu
man
C
ap
ital
FOUNDATION
PILLARS OFGROWTH
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Strong Industrial GrowthStrong Industrial Growth
20.8 21.523.5
34.5
52.356.6
46.6
0
10
20
30
40
50
60
2000 2001 2002 2003 2004 2005 1H 2006
Reven
ue
S$/M
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Growth EnginesGrowth Engines
Wate
r U
tili
ties
(Mu
nic
ipal)
Ind
ustr
ial
Oil
/ R
ecycli
ng
Financial Capability
Operational Capability
TechnologyHu
man
C
ap
ital
FOUNDATION
PILLARS OFGROWTH
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Oil Recycling BusinessOil Recycling Business
■ Asean, China, India, MENA
■ Volume: 3,506,000 ton/year
■ Value: US$2.1b
HugeMarket
Potential
■ Environmentally friendly
■ Low energy consumption
■ Cost competitive
■ High quality recycled oil
ProvenTechnology
■ Equity returns >20%AttractiveReturns
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Types of Used Oil and Their ApplicationsTypes of Used Oil and Their Applications
xxx
Cylinder/ crankshaft/
Sterntubeoil
xxx
x
Quench oil
xxMarine Industry
xxxxxxPower Plant
xxxIndustrial Plant
(Repair/Maintenance )
xxxxxAutomobile Mfg Plant/ vehicle service plant
x
x
x
x
x
Gear Oil
Machine Tool Plant
xxxAircraft component machine shop
xxxxxMills eg steel mills
xxxxPetrochemical Industry
xxxPlastic Injection moulding
Metal Working Fluid
Engine Oil
Turbine, /
transformer /
heat transfer/
circulating oil
Hydraulic / Slideway oilOil type
Application
xxx abundant supply
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Base Oil Price TrendBase Oil Price Trend
150SN Price History-- FOB SG v.s. Export v.s. XOM
200
300
400
500
600
700
800
900
Jan-
01M
ay-01
Sep-01
Jan-
02M
ay-02
Sep-02
Jan-
03M
ay-03
Sep-03
Jan-
04M
ay-04
Sep-04
Jan-
05M
ay-05
Sep-05
Jan-
06M
ay-06
Sep-06
U$
/to
nn
e
150N SG ICIS High Ave
150N Export ICIS High Ave
XOM-PreRebate
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Market PotentialMarket Potential
* Assuming 85% recovery rate and the recovered oil can be sold US $720 /ton (~80% of virgin base oil price @US$900/ton)
** Output of used oil for China is based on 60% of 2005 lube oil consumption; other regions are ref to 2003 data
214350,000India
1,5302,500,000China**
2,1463,506,000Total
184300,000MENA
218356,000Asean
Potential Market Value*
(US$ million/year)
Annual used oil output (ton/year)
Country
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Hyflux Proprietary Membrane System (HPMS)Hyflux Proprietary Membrane System (HPMS)
used oil
Collection Processing
HPMS
Sales
High value
Recycled base oil
Residue for disposal1. Environmentally Friendly
- no air pollution
- Chemical free
- less solid waste
2. Low Energy consumption
3. Robust and minimal maintenance
3. Cost Competitive
4. Ease of operation
5. High quality recycled oil
Concentrate
(sold as low grade fuel)
85%
10%
5%
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Proposed Business ModelProposed Business Model
Eflux Local Partner/s1. Provide
Technology
2. Investment
1. Collect used oil
2. Procure Licence
3. Investment
Joint Venture
1. Build the Plant
2. Operation and maintenance
3. Marketing of recycled oil
Hyflux
Sells/Lease
HPMS
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39
Growth EnginesGrowth Engines
Wate
r U
tili
ties
(Mu
nic
ipal)
Ind
ustr
ial
Oil
/ R
ecycli
ng
Financial Capability
Operational Capability
TechnologyHu
man
C
ap
ital
S’pore, SEA
FOUNDATION
MARKETS
PILLARS OFGROWTH
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40
Growth EnginesGrowth Engines
Wate
r U
tili
ties
(Mu
nic
ipal)
Ind
ustr
ial
Oil
/ R
ecycli
ng
Financial Capability
Operational Capability
TechnologyHu
man
C
ap
ital
S’pore, SEA
China
FOUNDATION
MARKETS
PILLARS OFGROWTH
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41
Growth EnginesGrowth Engines
Wate
r U
tili
ties
(Mu
nic
ipal)
Ind
ustr
ial
Oil
/ R
ecycli
ng
Financial Capability
Operational Capability
TechnologyHu
man
C
ap
ital
S’pore, SEA
China
India, MENA
FOUNDATION
MARKETS
PILLARS OFGROWTH
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42
Breaks Into Indian MarketBreaks Into Indian Market
■ Obtained approval from Karnataka Udyog Mitra to invest in a 15,000m3/day high grade industrial plant at Hebbal, Bangalore
■ Project cost estimated to be S$17.1M
■ Estimated completion in 2007
■ Contribution to future recurring income stream
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Opportunities in Key Growth MarketsOpportunities in Key Growth Markets
CHINA
INDIA
MENA
SEA
Physical Water Scarcity
Economic Water Scarcity
Little or No Water Scarcity
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44
Building Foundation for Global GrowthBuilding Foundation for Global Growth
30% CAGR (2003-2008)
Wate
r U
tili
ties
(Mu
nic
ipal)
Ind
ustr
ial
Oil
/ R
ecycli
ng
Financial Capability
Operational Capability
TechnologyHu
man
C
ap
ital
S’pore, SEA
China
India, MENA
FOUNDATION
MARKETS
PILLARS OFGROWTH
SUSTAINABLEGROWTH
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OutlookOutlook
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46
Growth in Order BookGrowth in Order Book
336336336336
465465465465382382382382
0000
100100100100
200200200200
300300300300
400400400400
1H 20051H 20051H 20051H 2005 FY 2005FY 2005FY 2005FY 2005 1H 20061H 20061H 20061H 2006
Order Book of S$382m includes :
� Municipal = S$243 mil (Outstanding project cost : S$270 mil)
� Industrial = S$139 mil
� Recurring income = S$23 mil – S$34 mil
Growth in order book mainly contributed by :
� Industrial sector in China with strong demand in the pharmaceutical and bio-technology sectors
� Our pioneer project in India
S$S$S$S$’’’’mmmm
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47
OutlookOutlook
On track to deliver CAGR growth of 30% over 5 year period from
2003 - 2008
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Thank YouThank You
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Q&AQ&A
SessionSession
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50
EPS GrowthEPS GrowthScts
2.9 2.78
1.18
2.41
3.49
0.03
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
1H 2003 1H 2004 1H 2005 1H 2006
0
100000
200000
300000
400000
500000
600000
EPS EPS One time Nbr of shares