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Ho Tung Chemical Corp.
Investor ConferenceTime: 2:30PM, November 16th , 2017
Address: GFORTUNE
(7F., No.5, Sec. 1, Zhongxiao W. Rd.)
Keynote Speaker: Hsu Jung-Huei
Disclaimer
This material has been prepared by Ho Tung Chemical Corp., (“HoTung”).
Any opinions expressed in this material are subject to change without notice as a result of using
different assumptions. HoTung is under no obligation to update or keep current the information
contained herein. The information contained in this presentation is HoTung’s confidential
information.
Any disclosure, copying, distribution or any action taken or omitted to be taken in reliance on it is
prohibited and may be unlawful.
No representation or warranty, express or implied, is or will be made in or in relation to, and no
responsibility or liability is or will be accepted by the Company as to, the accuracy or
completeness of this material and any liability therefore is hereby expressly disclaimed.
Statements made in this material include forward-looking statements, which include, without
limitation, statements about the issues, plans and expectations of Ho Tung. Without limiting the
foregoing, statements including the words “believes”, “anticipates”, “plans”, “expects” and similar
expressions are also forward-looking statements. Forward-looking statements reflect, among
other things, management’s plans and objectives for future operations, current views with respect
to future events and future economic performances and projections of various financial items.
These forward looking statements involve known and unknown risks, uncertainties and other
factors which may cause actual results to differ materially from those implied by such forward-
looking statements.
Outline
Company Profile
Financial Report
Q&A
Brief Introduction
Company Name: Ho Tung Chemical Corp. (Stock
Exchange Code:1714)
Date Established: August 1st, 1980
Chairman: Yang Yu-Chieh
General Manager:
Hsu Jung-Huei (Commercial & Operation),
Tsai Yi-Tung (Administration & Management)
Listed in The Taiwan Stock Exchange: August 30th, 1991
Capital: NTD 10,215,928,080
Consolidated Revenue: NTD 30,642,870,000 (Year 2016)
Individual Revenue: NTD 5,184,627,000 (Year 2016)
Group History
‘80 ‘90 ‘06 ‘10‘95 ‘00
•’80 Ho Tung Chemical Corp. was established.
•’87 Normal Paraffin Plant started commissioning in Kaoshiung.•’91 Ho Tung Chemical became listed in Taiwan Stock Exchange.
•‘98 License for West Terminal
at Taichung Port was approved
• ‘93 Jintung Petrochemical Corp. Ltd. was founded in Nanjing, China by Joint Venture with Sinopec Jinling. (LAB)
• ‘96 First LAB unit was completed and started commissioning in Nanjing, China.• ‘03 Jiangsu Jintung began plant construction
Base in Taiwan
Developin China
Grow inInternational
• China : Resource Integration
(Procurement/Sales), Gulei
Investment Project
• S.E.A: Establishing Logistic Center,
Downstream Distribution
• America/ Africa: Developing New
customers, Downstream Distribution,
Establishing Logistics
‘17
NTD 12.5 Million
Paid-up Capital
Company Established in 1980
NTD 560 Million Capital
Listed in The Taiwan Stock Exchange in 1991
Over NTD 10 Billion Capital
Current (Year 2017)
Group Structure
Ho Tung Group
Oil Chemical Cement
Taiwan: Normal Paraffin
China: Petrochemical(Linear Alkylbenzene Series)Oleochemical
(Fatty Alcohol Ethoxylates Series)
Distribution/Blending
Ho Tung CementCement、Slag
Powder
Chemical, 76.68%
Oil, 20.79%
Cement,2.53%
2016 Business Ratio
Income Ratio
Unit: NTD One Thousand
2016 Q3 2017 Q3
Amount % Amount %
Chemical 16,864,564 77.96 17,249,922 73.16
Oil 4,199,786 19.42 5,693,423 24.15
Cement 566,205 2.62 634,008 2.69
Total 21,630,555 100 23,577,353 100
Key Markets
Area 2016 Sales %
Taiwan 4,215,861 13.76
China 19,085,684 62.28
S.E.A 2,739,699 8.94
Other 4,601,626 15.02
Total: 30,642,870 100.00
Taiwan14%
China62%
South East Asia
9%
Other15%
Production Capacities
Taiwan: Kaohsiung
Normal Paraffin: 90,000MTDe-Aromatic Solvent: 22,000MT
ChinaLinear 1st Unit. 120,000 MTAlkylbenzene: 2nd Unit. 130,000 MT
3rd Unit. 100,000 MTFatty Alcohol: 100,000MTEthoxylation: 200,000MTSulfonation & Sulfation: More than 600,000MT
Taiwan: Taichung Port
26 Tanks:130,000cbm
Products: Gas Oil
China: Tianjin Port
10 Tanks: 60,000cbm
Products: Fuel Oil
Chemical Oil
Supply Chain
Products made by Ho Tung Chemical
Home Care:
Detergent
Personal Care:
Shampoo
Body wash
Conditioner
Antiseptic
清潔劑
DETERGENT
煤油
KERO
正烷屬烴
NP直鏈烷基苯
LAB烷基苯磺酸LAS
航空燃油
FO
氯化腊
CP
高碳數醇
HC ALCOHOL
工業用溶劑
SOLVENT
脂肪醇硫酸鹽
AS
醇醚
AEO醇醚磺酸鹽
AES
工業用界面活性劑
Surfactant
乙醇胺,碳酸乙酯,
及其他衍生物
EA,EC,EOD
電子用化學品
Chemical for
Electron
潤滑油
BO
其他油品
OTHERS
環氧乙烷
EO
羥乙基磺酸鹽
SI
脂肪醇(天然/合成)
Fatty Alcohol
(N/S)
椰子油
Coconut Oil
棕櫚仁油
PKO
乙稀
Ethylene
Operation Location
Tianjin
LAS/AES
Taiwan
NPChengdu
LAS/AES
Guangzhou
LAS/AES
Anhui
LAS/AES
Nanjing
LAB/LAS
Shanghai
LAS
Xiamen
LAS
Huizhou
AEO/AES
Philippines
LAB/LAS
2017 LAB Global Capacities
LAB Suppliers QTY(KT/Y) %
NO 1 CEPSA 560 14.42
NO 2 Ho Tung 350 9.01
NO 3 SASOL 345 8.88
TOP 3 Capacities 1,255 32.31
Global Capacities 4,034 100
LAB: Top market share in Asia since 2010
+ +
CEPSA, 14.42%
Ho Tung, 9.01%
SASOL, 8.88%
Others, 67.69%
2017 Sulphonation Capacities in China
AES: Top market share in Asia since 2012
LAS: Top market share in the World since 2013
Ho Tung, 46.48%
Zanyu, 27.47%
Resun, 12.94%
Others, 13.11%
LAS/AES Suppliers QTY(KT/Y) %
NO 1 Ho Tung 812 46.48
NO 2 Zanyu 480 27.47
NO 3 Resun 226 12.94
TOP 3 Capacities 1518 86.89
China Capacities 1,747 100.00
Strategic Partners
Review and Improvement of Factors
Influencing Profit in the Past Years
1.74
1.53
0.72
0.53
(0.42)
0.37 0.42
(0.50)
0.00
0.50
1.00
1.50
2.00
2010 2011 2012 2013 2014 2015 2016
EPS
Sold in 2015Q2/Q3, thus revenue had decreased, but the
gross profit margin had increased
Stable supply from CPC since Q3 2017
Globalization,
the Belt and Road
Failure in Joint-Venture(Shatong
Taixing, Jiangsu Shengtai)
Investment
Kaohsiung Plant was in short supply in
the past three years due to the side
effect of gas explosion and shut down
of No.5 Naphtha Cracker in Kaohsiung
China Market for Detergent Raw
Material is slowly growing
Note: EPS is $0.36 in Q3 2017
Chemical Development
& Strategic Planning
America
1. Establishing logistic center2. Downstream distribution
Asia Pacific
1. To ensure source of raw material
2. Downstream distribution3. Developing logistic channels
Africa
1. Developing new customers 2. Downstream distribution3. Developing logistics
TWNBusiness Center
China
1. Set-up Operation Centerin China to perform ResourceIntegration (Procurement/ Sales)2. Gulei Investment
Directions:1. Strengthen in vertical integration of supply chain, business globalization
and adding core competency2. Initiate market development in differentiated/ high value adding products,
and to increase margin of product3. Building stronger relationship with downstream customers
and to expand logistics and business field
Tianjin(Completed in
2015)
• NTD 1 Billion from compensation for relocation includes: Loss in plant shutdown,Reconstruction fee,Remaining from compensation for relocation
• Annual Capacity: 61,600MT →91,200MT
• Plant Relocation Completed in May 2016: Production Efficiency ↑Production Period ↑
Nanjing(Processing)
• To cooperate the city renewal program running by Nanjing Government, the industrial zone will become commercial & residential area where Ho Tung’s existed plants will be prepared to relocate by 2020. The site is about 30 hectares which is 4.4% out of 680 hectares in “New Yao Block” planned by Nanjing government. Therefore, Ho Tung’s site in Nanjing is in the priority list to be relocated..
• Applying compensation for relocation
• There are 5.6 hectares of land ready to be activate in advance. A professional team was hired to evaluate and to plan construction of commercial buildings and hotel apartments.
Other Location(eg. Xiamen,
Shanghai..etc)
• To cooperate the urbanization developing in China, Ho Tung’s operations in each city might be relocated gradually.
Asset Activation – China
18
Nanjing Plant Geographical Location
Residential
Area
R&D Office
Area
Project
Location
The site is located in the belt of
residential area, R&D office area and
industrial zone, and its in transition
between residential area and R&D office
area. Extending office and residential
functions to keep regional advantages.
Industrial
Zone
North East of Nanjing CBD
20.4KM away from Jiangsu Province
Government (38 mins by car)
18.5KM away from Nanjing City
Government (32 mins by car)
7.2KM away from Qixia District
Government (18 mins by car)
56KM away from Nanjing Lukou
International Airport (1 hour by car)
Many metro stations nearby with
excellent external traffic conditions
5.7KM away from Nanjing East Station
(15 mins by car)
56KM away from Xianlin High Speed
Railway Station (20 mins by car)
56KM away from Nanjing Railway
Station (23 mins by car)
Asset Activation – Land in Taipei Danangang
Ho Tung 100% of
subsidiary Ho Shin
Cheng engineering has
joint development with 7
construction companies’
eg: KSECO, KUO YANG
This property includes
more than 6,339 Ping, Ho
Shin Cheng holds 12.5%
Land after RezoningCivic Blvd
Section 3, Nangang Road
La
ne
14
9, S
ectio
n 3
, Na
ng
an
gR
oa
d
Gulei Integrated Petrochemical
Complex Project Introduction
Purpose of Investment:
In order to obtain sufficient, long term stable supply in petrochemical upstream feedstocks, to explore development opportunities and business scale expansion. The investment of this Joint Venture Project to China has been running by six Taiwanese companies.
Gulei Joint-Venture Company
• Taiwanese Shareholders :50%
• Chinese Shareholders: 50%
Gulei Investment Project
Project Milestone:• DEC 2015:Gulei Zone was founded.
• MAY 2016:The Joint-Venture contract and the
articles of association was signed.
• NOV 2016:Fujian Gulei Petrochemical Co.,
Ltd. in Zhangzhou City Zhangpu County
industrial and commercial sector registration
was completed.
• DEC 2017: Planned construction begin.
Investment Capital:• Total Investment: RMB27.38 Billion
• Ho Tung had made investment via a
third party with investment of: Ho
Tung: USD83.7Million、Hsin Tay:
USD15.82Million、Chenergy:
USD14.5Million,Total 17.8% of
Taiwanese Joint Venture Company
Company Profile
Financial Report
Q&A
Outline
Consolidated Income Statement
Accounting Subjects2017/09/30 2016/09/30
Amount(Thousand) % Amount(Thousand) %
Operating Revenue 23,577,353 100.00 21,630,555 100.00
Operating Costs 21,784,627 92.40 19,593,392 90.58
Gross Profit 1,792,726 7.60 2.037,163 9.42
Operating Expenses 1,313,050 5.57 1,465,248 6.77
Operating Income 479,676 2.03 571,915 2.64
Non-Operating Income
and Expenses19,997 0.08 45,624 0.21
Profit Before Tax 499,673 2.12 617,539 2.85
Tax Expense 63,309 0.27 170,643 0.79
Profit 436,364 1.85 446,896 2.07
Profit attributable to
owners of parent360,085 1.53 248,342 1.15
Non-Controlling Interest 76,279 0.32 198,554 0.92
Basic Earning Per Share 0.36 0.25
Financial Ratio Analysis
Financial Ratio 2017/09/30 2016/09/30
Financial StructureShareholders' equity as asset ratio 53.82% 50.28%
Liabilities to asset ratio 46.18% 49.72%
SolvencyCurrent ratio 171.22% 148.38%
Quick ratio 114.74% 97.64%
ProfitabilityGross margin 7.60% 9.42%
Operating interest rate 2.03% 2.64%
Operational
capacity
Average collection period 60 Days 62 Days
Average payment period 34 Days 25 Days
Rate of returnShareholders' return on equity 4.31% 2.98%
Total return on assets 2.40% 1.78%
EPS and Dividends
Note: EPS is $0.36 in Q3 2017
0.2
1.2 1.2
0.5
0.5
0
0.3 0.35
1.74
1.53
0.72 0.53
-0.42
0.37 0.42
-1
-0.5
0
0.5
1
1.5
2
2010 2011 2012 2013 2014 2015 2016
Cash Dividend Share Dividend EPS
和桐化學2017年度法人說明會
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