中国尚舜化工控股有限公司
CHINA SUNSINE CHEMICAL HOLDINGS LTD.
1
1Q2019RESULTS PRESENTATION
30 April 2018
PRESENTATION OUTLINE
Our Company
Financial Overview
Key Developments
Industry Info and Outlook
2
Our Company
3
About China Sunsine Chemical
✓ Specialty rubber chemicals producer
✓ World’s largest producer of Rubber Accelerators
✓ PRC’s biggest producer of Insoluble Sulphur
✓ Superior product-quality and economies of scale
✓ Accredited by a strong customer base of top tire makers
✓ Beneficiary of stringent environmental protection standards
4
Our Products - Rubber Chemicals5
Rubber AcceleratorsMBT MBTS CBS TBBS TMTD
DPG DCBS ….
Insoluble
Sulphur
Anti-OxidantsTMQ
6PPD
4010NA
Our Products: Rubber Chemicals
Rubber Chemicals are
Essential Additivesin the production of rubber products
6
Global Consumption of Rubber
Car Tyres61%
Tube/ Tape6%
Boots10%
Other Tire9%
Latex4%
Other Products10%
7
http://www.chemn.com
Accelerators1.7%
Vulcanizing agents 2%
Anti-oxidants2.2%
Rubber
Global rubber consumption in 2017:
28.27 million tons - By IRSG
• By weight, every 100 tons of rubber consumes
about 6 tons of rubber chemicals (100:6)
• By value, rubber chemical’s cost accounts for
about 3% of total tire cost (100:3)
8
Our Strong Customer Base
(2006)
(2006)
(2003)
(1997)
• Over 1,000
customers globally
• Serves more than
2/3 of the global
top 75 tire makers
• 1/3 output exported
Market Share: Rubber Accelerators9
PRC Market Share
Global Market Share19%
24% 24% 25%
28%29% 30% 30%
31%33% 33%
7%
11% 12% 12%14% 16% 17% 17%
18%20% 20%
0%
5%
10%
15%
20%
25%
30%
35%
40%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
MARKET SHARE
Our Market Leadership Position10
CompanyAnnual
Capacity 2018
China Sunsine中国尚舜
Tianjin Kemai
天津科迈
Yanggu Huatai
阳谷华泰
87,000 tons
51,000 tons
45,000 tons
GLOBAL TOP 3 ACCELERATOR PRODUCERS
Company Annual Capacity 2018
China Sunsine中国尚舜
Yanggu Huatai
阳谷华泰
30,000 tons
20,000 tons
15,000 tons
PRC TOP 3 INSOLUBLE SULPHUR PRODUCERS
Sennics
圣奥化学
Our Production Bases11
Five production bases in
three locations
Financial Overview
12
P&L Highlights13
* SGD to RMB exchange rate @4.9643
RMB ’mln Quarter Ended
31 Mar 19 31 Mar 18 Change
Group Revenue 686.6 856.9 (20%)
Gross Profit 235.7 298.8 (21%)
Gross Profit Margin 34.3% 34.9% (0.6 pts)
Profit Before Tax 132.3 181.6 (27%)
Profit After Tax 110.2 149.5 (26%)
EPS
(RMB cents/SGD Cents*)
22.43/
4.52
30.40/
6.12
(26%)
NAV per share
(RMB cents/SGD Cents*)
495.45/
99.80
384.36/
77.42
Revenue Growth14
RMB ’mln
619.5797.9
718.4
991.41,175.1
1,417.3
1,695.9
2,077.3
1,859.1
2,036.9
2,738.4
3,283.30
686.6
0.0
500.0
1,000.0
1,500.0
2,000.0
2,500.0
3,000.0
3,500.0
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 1Q19
Revenue By Quarter15
RMB ’mln
1Q19 vs 1Q18 : -20%
1Q19 vs 4Q18 : - 11%
445.1491.1
547.3 553.4575
656.2634.4
873.3856.9 880.6
775.6 770.1686.9
0
100
200
300
400
500
600
700
800
900
1000
1Q 2Q 3Q 4Q
2016 2017 2018 2019
1Q2019
1Q19 Revenue down 20% y-o-y due to lower average selling price (ASP)
Sales Contribution (By Region)16
Rest of Asia
US
Europe
Others
PRC
62%
1Q2019 Sales Contribution (y-o-y)
27%
2%
8%
Region 1Q2019 FY2018 FY2017
China 56% 62% 64%
Rest of Asia 23% 25% 24%
US 4% 2% 5%
Europe 14% 9% 5%
Others 3% 2% 2%
Total 100% 100% 100%
Sales Volume17
Tons
31,036 30,787
45,42054,275
60,907
81,371
98,345
108,973114,572
135,791140,476
151,486
38,715
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 1Q19
Sales Volume by Products18
Tons
31,036 29,805
40,196
46,34350,148
64,252
72,71076,089 76,090
82,767 83,335 83,255
20,207
0464
3,468 4,413 7,873
10,724 11,94812,102
15,41720,031 22,283
25,759
7,353
0 185 1,361 2,971 2,0615,183
12,281
19,903 21,640
31,21434,858
42,472
11,155
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 1Q19
Accelerator Insoluble Sulphure Anti-oxidant and others
Sales Volume 1Q2018 1Q2019 Utilization Rate
Accelerators 19,907 20,207 Almost fully utilized
Insoluble Sulphur 6,212 7,353 Fully utilized
Anti-oxidants 10,353 10,684 About 90%
Sales Volume By Quarter19
30,051
34,483 36,79734,460
33,046 34,55834,098
38,77436,797
37,567 37,166
39,95738,715
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
1Q 2Q 3Q 4Q
2016 2017 2018 2019
Tons1Q2019
1Q19 vs 1Q18 : +5%
1Q19 vs 4Q18: -3 %
Overall Average Selling Price (ASP)20
RMB/Ton
19.8K
25.9K
15.8K
18.3K19.3K
17.4K
17.2K
19.1K
16.2K
15.0K
19.4K21.5K
17.6K
0
5,000
10,000
15,000
20,000
25,000
30,000
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 1Q19
ASP vs Aniline Price21
RMB/Ton
17K16K 16.3K
15.6K14.8K 14.2K 14.8K
16K17.3K
18.9K 18.5K
22.4K23.2K 23.3K
20.7K19.1K
17,637
4.7K5.7K 5.4K 4.8K 4.6K
4.9K6.1K 6.4K
6.4K
7.8K7.2K
9.6K10.2K
9.2K
7.5K6.1K
4895
0
5,000
10,000
15,000
20,000
25,000
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19
ASP
Aniline
• 1Q19 ASP dropped 24% y-o-y mainly due to the decrease in raw material prices
22
RMB/ Ton
Main Raw Materials Price Trend
2,000
6,000
10,000
14,000
18,000
22,000
Aniline
Tert-butylamine
Cyclohexylamine
Ketone
Dicyclohexylamine
Carbon Disulfide
Aniline
Gross Profit23
125.2
226.8160.2
224.1293.4
243.9308.0
567.4492.0
547.1
788.1
1125.9
235.7
0.0
100.0
200.0
300.0
400.0
500.0
600.0
700.0
800.0
900.0
1000.0
1100.0
1200.0
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 1Q19
RMB ’mln
Net Profit24
RMB ’mln
76.1106.7
88.3115.3 99.4
32
76.7
220.2195.2
221.7
341.3
641.3
110.2
0
100
200
300
400
500
600
700
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 1Q19
Net Profit
Net Profit By Quarter25
33.6
49.0
72.866.3
57.2
74.5 77.6
132.0
149.5143.4
108.6110.2
0.0
50.0
100.0
150.0
200.0
250.0
1Q 2Q 3Q 4Q
2016 2017 2018 2019
1Q19 vs 1Q18: - 26%
1Q19 vs 4Q18: +1.5%
1Q2019
RMB ’mln
239.7
48
• 1Q19 Net profit down 26% y-o-y due to the decrease in ASP
Margins Analysis26
20.2%
28.4%
22.3% 22.6%
25.0%
17.2%18.2%
27.3% 26.5% 26.9%28.8%
34.3% 34.3%
12.3%13.3%
12.3% 11.6%
8.5%
2.3%4.5%
10.6% 10.5% 10.9%12.5%
19.5%
16.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
Gross ProfitMargin (GPM)
Net Profit Margin(NPM)
18.1%
--- Adjusted by taking out the one-time credit of tax expense of RMB 48 mln in FY17
Margins Analysis By Quarter27
31.7%
24.3%
26.8%
23.5%24.2%
27.3%28.2%27.2%
24.4%
28.5%26.8%
33.3%34.9%
36.7%
32.7%
32.4%
34.3%
11.0%9.5%
11.6%10.0%
7.5%
10.0%
13.3%11.0%
10.0%11.4%12.2%
15.1%
17.4%
27.2%
18.5%
14.1%16.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
Gross ProfitMargin (GPM)
Net ProfitMargin (NPM)
21.8%
--- Adjusted by taking out the one-time credit of tax expense of RMB 48 mln in FY17
Balance Sheet Highlight
31/03/2019 31/12/2018 31/12/2017
Current Assets (RMB’mln) * 2,107.8 2,016.4 1,424.6
Current Liabilities (RMB’mln) 395.5 421.8 385.3
Current Ratio 5.33 4.78 3.70
Shareholders’ Equity (RMB’mln) 2,434.2 2,325.5 1,742.4
D/E ratio ** 0 0 0
NAV per share (RMB cents) (equivalent to SGD cents)
495.45/
99.80
473.32/
94.6
354.37/
70.8
Net Cash per share (RMB cents)（equivalent to SGD cents)
238.1/
48.0
211.4
42.2
101.6/
20.3
28
* Including Cash RMB 1,169.8 mln
** No bank borrowing
Key Developments
29
Expansion Projects
Project Status CapEx
30,000-ton fully-automated, high-end
Accelerator TBBS at Shanxian:Whole project was approved in
Jan 2019
1. Phase I of 10,000-ton capacityCommercial production started in
Jan 2019RMB 100 mln
2. Phase II of 20,000-ton capacity New line to be installed in 2019 RMB 60 mln
Sunsine Chemical Zone
(In phases)
Signed Investment Agreement to
acquire a piece of land
Not finalized
yet
30
Annual Capacity
2007
(before IPO)FY17 FY18 FY9e
Rubber
Accelerators 32,000 87,000 87,000 97,000
Insoluble
Sulphur nil 20,000 30,000 30,000
Anti-oxidant
(TMQ & 6PPD) nil 45,000 45,000 45,000
Total 32,000 152,000 162,000 172,000
31
Industry Info and Outlook
32
China’s New Car Sales33
8.8 9.4
13.6
18.1 18.5 19.322
23.5 24.6
28 28.9 28.1
6.37
-20
-10
0
10
20
30
40
50
0
5
10
15
20
25
30
35
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 1Q9
sales
growth yoy
• 6.37 mln cars sold in China in 1Q2019, down 13.7% y-o-y
• China’s new car sales expected to be slower after robust growth over 28 years
in million units %
Global Vehicle Population34
240 250 260279
295310
327
0
50
100
150
200
250
300
350
400
2012 2013 2014 2015 2016 2017 2018
http://subscribers.wardsintelligence.com/analysis/world-vehicle-
population-rose-46-2016
PRC Motor Vehicle Population
Mln units
• Global vehicle population is growing, mainly driven by rising car ownership in developing countries
http://www.sohu.com/a/289093749_390500
Riding on Rising Tire Consumption35
• Replacement tire and new car tire sales account for 70% and 30% respectively
• As overseas factories of Chinese tyre makers produce for export to the US and the EU, tire
production in China expected to grow moderately
443 456 470529
562 565610
653
0
100
200
300
400
500
600
700
2010 2011 2012 2013 2014 2015 2016 2017
Source: http://www.tyrefh.org/
PRC Tire Production Volume
2840 2990 31403400
3660
0
1000
2000
3000
4000
5000
2014 2015 2016 2017 2018e
Projected worldwide tire market volumefrom 2014 to 2018
in million unitsin million units
www.statista.com
•
Competitive Strengths36
Market Leadership
Products & Economy of Scale
Strong Customer Base
Environmental Protection advantage
R&D Capability
Ready Resources for Future Expansion
- World largest accelerators and China’s biggest IS producer
- Capturing 20% of global and 33% of China’s accelerators markets
- Listed in the first batch of “National Champion Manufacturing Enterprise”
- “High-tech Enterprise” Status
- Academician R&D workstation in collaboration with Tsinghua and CAS
- R&D Centre partnered with Qingdao University of Science and Technology
- Early adopter of Environmental protection initiative
- 1/3 of capex invested in environmental protection and safety
- Transformation and upgrading towards “Green, Intelligent & Miniaturized”
- Strong cash position
- Built-up infrastructures
- Over 1,000 customers worldwide spanning over 40 countries
- Serving 2/3 of global top 75 tire manufacturers
- 1/3 output exported
- Superior quality and Full range of varieties
- Stable supply
- Largest capacity with economy of scale
Trade war tension between US and China makes
the world economy uncertain and weakens
China’s tire export to US
Turning Challenges into Opportunities37
Challenges Opportunities
Short supply situation may ease as some
affected productions resuming gradually which
could lead to the decline of ASP
The policy affects smaller producers more
and will lead to industry consolidation,
benefiting bigger players
Sunsine's capacity growth will result in sales
volume growth and lower unit cost. Profit will
grow in long term even if ASP normalises
Group’s sales to US are small, about 2-4%.
Wherever they are located, tire factories all
over the world need rubber chemicals
Stringent environmental and safety enforcement
may affects all chemical companies in China
Listed On SGX Mainboard38
SHARE PERFORMANCE
• P/E 5 times & P/B 1.2 times
• Dividend yield 4.6%
Dividend Payment History39
Net Profit
(in RMB ’mln)Dividend
(in SGD cents)
00.511.522.533.544.555.56
0
100
200
300
400
500
600
700
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY8
Net Profit
Dividend
FY2018 Dividend SGD 5.5 cents
• Ex-dividend date: 8 May 2018
• Payment date: 24 May
Chairman’s Message40
Mr. Xu Chengqiu
Executive Chairman
“Although there was a decrease in our 1Q2019 profits, I am delighted that we have
achieved RMB110.2 million net profit amidst a slowing down of the global and China’s
economies. However, as raw material prices are hovering at lower levels, the Group’s
ASP for rubber chemicals came under pressure. At the same time, as some players have
resumed their operation after investing more in technological upgrading and
environmental protection & safety production equipment, competition is expected to be
more intense for some of our products, which will further challenge our ASP.
“However, more frequent inspections may benefit bigger companies that excel in
environmental and safety practices, and may lead to industry consolidation.” Mr Xu
commented. We will continue to maintain our strategy that ‘higher production leads tohigher sales volume, which in turn stimulates even higher production’. We will expand
capacity to gain more market share in the rubber chemicals industry. We will also
continue to focus on environmental protection and safety production, as well as
production technology and innovation, to gain a competitive edge over other producers.”
41
Q & A
MEDIA/INVESTOR CONTACT
Tong Yiping, CFO, [email protected]
Jennie Liu, IR Manager, [email protected]
112 Robinson Road #11-01
Singapore 068902
(+65) 6220-9070
www.ChinaSunsine.com
