Cosco Shipping Ports Limited · HKEX:1199
Cosco Shipping Ports — Q3 2020 Earnings Presentation
37 slides from Cosco Shipping Ports's earnings presentation, Oct 27, 2020
Slide 1: 3Q2020 Results Presentation
3Q2020 Results Presentation Dedicated to implementing Lean Operations Enhance the Company’s profitability progressively October 27, 2020
Slide 2: Agenda
Agenda 1 Recovery & Stable Dividend Policy 2 Financial Highlights 3 Operational Review 4 Outlook 5 Appendix
Slide 3: Agenda
Agenda 1 Recovery & Stable Dividend Policy 2 Financial Highlights 3 Operational Review 4 Outlook 5 Appendix
Slide 4: Gradual Recovery in Equity Throughput and Terminal's Profitability
Gradual Recovery in Equity Throughput and Terminal’s Profitability ➢ In 3Q 2020, the overall equity throughput has further recovered, reaching 10.3 million TEU, up 2.1% YoY and 9.2% QoQ. ➢ Terminal profit in the second quarter and third quarter this year increased by 54.8% and 13.7% QoQ respectively
Slide 5: Strong Cash Flow to Maintain Dividend Policy
Strong Cash Flow to Maintain Dividend Policy Increasing cash flow ➢ Our cash and cash equivalents reached USD$1,187M at the end of September 2020, an increase of 28% compared to the end of FY2019 due to operating cash inflow, cash received from disposal of interest in Yangzhou and Zhangjiagang termi
Slide 6: Sustainable High Dividend Yield and Long-term Investment Value
Sustainable High Dividend Yield and Long-term Investment Value ➢ Amid economic Dividend Yield (2) uncertainty, some 1199 Peers Average companies have cut or even cancelled their 7.5% dividend; however, we 7.0% 7.2% expect to maintain our 5.9% 5.9% dividend policy 6.5% 5.8% 5.2% 5.3% 5.3% (1) 2016 20
Slide 7: Agenda
Agenda 1 Recovery & Stable Dividend Policy 2 Financial Highlights 3 Operational Review 4 Outlook 5 Appendix
Slide 8: Financial Highlights – Strong Profit Growth in 3Q2020
Financial Highlights – Strong Profit Growth in 3Q2020 Adjusted (Excluding Nanjing Longtan, Zhangjiagang, Reported Yangzhou and Jiangsu Yangtze Petrochemical (US$ million, unless stated otherwise) terminals which have been disposed) 3Q2019 3Q2020 YoY Change 3Q2019 3Q2020 YoY Change Revenue 254.7 270.
Slide 9: Financial Highlights – Improving 9-month Profit Due To Robust Performance of 3Q2020
Financial Highlights – Improving 9-month Profit Due To Robust Performance of 3Q2020 Adjusted (Excluding Nanjing Longtan, Zhangjiagang, Reported Yangzhou and Jiangsu Yangtze Petrochemical terminals which have been disposed) (US$ million, unless stated otherwise) 9 months 9 months 9 months 9 months Yo
Slide 10: Revenue & Costs – 3Q2020 Solid Revenue Growth Along with Improving Cost Control
Revenue & Costs (1) – 3Q2020 Solid Revenue Growth Along with Improving Cost Control in Greater China Region Revenue (US$ million) Costs (US$ million) 3.0% 270.0 199.5 2.3% 180.1 5.0% 242.5 2.9% 3.1% 3.0% 3.5% 2.2% 3.4% 2.4% CSP Abu Dhabi 3.5% 27.1% 28.3% Nantong 32.2% 30.8% CSP Zeebrugge 17.8% 16.0%
Slide 11: Terminals Profit – 3Q2020 Strong Terminal Profit Growth in Greater China Region
Terminals Profit (1) – 3Q2020 Strong Terminal Profit Growth in Greater China Region • Benefiting from throughput improvement in 2Q and 3Q, cost reduction and revenue growth have gradually shown positive effects, and Greater Top 10 Terminal Contributors China's terminals profit has seen strong recove
Slide 12: Financial Position – Continuous Enhancement in Balance Sheet and Cash Position
Financial Position – Continuous Enhancement in Balance Sheet and Cash Position As at the end of September 2020, the Company’s balance sheet and cash position have continuously improved： • Cash and cash equivalents of USD$1,187M at the end of September 2020, up 28% compared to the end of FY19 • Net g
Slide 13: Agenda
Agenda 1 Recovery & Stable Dividend Policy 2 Financial Highlights 3 Operational Review 4 Outlook 5 Appendix
Slide 14: Operational Results – Further Recovery in 3Q Throughput
Operational Results (1) – Further Recovery in 3Q Throughput Total Throughput ('000 TEU) 1Q2020 2Q2020 3Q2020 Equity Throughput ('000 TEU) 1Q2020 2Q2020 3Q2020 - Subsidiaries 5,098 5,404 5,969 - Subsidiaries 3,298 3,459 3,787 - Non-subsidiaries 22,382 24,750 27,493 - Non-subsidiaries 5,353 5,948 6,48
Slide 15: Worldwide M&A Opportunities
Worldwide M&A Opportunites Annual Terminals Designed Capacity (TEU) PCT (1) 6,200,000 CSP Spain Group (1) 5,100,000 CSP Abu Dhabi (1) 2,500,000 CSP Zeebrugge (1) 1,300,000 Chancay (1) 1,000,000 Suez Canal 5,000,000 COSCO-PSA 4,850,000 Busan Port 4,000,000 Antwerp 3,700,000 • Strategically pursue inv
Slide 16: Increasing Overseas Exposure
Increasing Overseas Exposure Equity Throughput by geographic location (in '000 TEU) Asset Investments CAPEX: CAPEX: CAPEX: Investments – US$128m Investments – US$57m 10,345 10,274 Investments – US$147m PP&E – US$366m PP&E – US$142m PP&E – US$487m Examples: Examples: 8,685 Example: • COSCO-PSA (one n
Slide 17: Enhance Synergy in the Subsidiaries – Secured Demand with Shipping Alliances
Enhance Synergy in the Subsidiaries– Secured Demand with Shipping Alliances (1) Throughput from COSCO SHIPPING Lines, OOCL, Evergreen + Growth in Throughput (2) CMA, 2M+THE Alliance and others as % of total throughput (2) (3Q2020 YoY Change) COSCO SHIPPING Lines OOCL Evergreen + CMA OCEAN Alliance 2
Slide 18: Increasing Terminal Control and Management Capability
Increasing Terminal Control and Management Capability Equity Throughput in '000 TEU (in terms of terminals) With more control, we could provide more value- added services in our terminals, such as: • Developing High-end warehouses and logistics parks 10,345 10,274 • Promoting technology and innovati
Slide 19: Promote Technology Development to Provide Value-added Services for Customers
Promote Technology Development to Provided Value-added Services for Customers Total Area Warehouse Capex Commencement (sqm) Area (sqm) (Million) date CSP Abu Dhabi CFS Phase 1 (1) 273,970 50,666 77mUSD Q42020 CSP Verbrugge CFS 77,869 41,580 13mEUR Now operating Further enhance terminals’ Nansha CFS
Slide 20: Optimizing Terminal Assets Portfolio
Optimizing Terminal Assets Portfolio The disposal of the interest in Yangzhou The after-tax gain for disposal of It is expected that the Company will dispose Yuanyang Terminal and Zhangjiagang interest in Jiangsu Yangtze its interest in Taicang Terminal in 2020. Terminal was completed on 10 Feb 2020
Slide 21: Agenda
Agenda 1 Recovery & Stable Dividend Policy 2 Financial Highlights 3 Operational Review 4 Outlook 5 Appendix
Slide 22: Lean Operations – Cost Reduction
Lean Operations – Cost Reduction Cost Reduction ➢ Establish the cost management system which focuses on financial management and control and bases on “cost per TEU” to place great emphasis on the importance of ports operation and management. Introduce “cost per TEU” in the KPI to formulate operation
Slide 23: Lean Operations – Revenue Growth and Headquarters' Empowerment
Lean Operations – Revenue Growth and Headquarters’ Empowerment ➢ Build customer value analysis model to mainly analyze the profit contribution from different shipping companies and different boxes to understand the profit comes from which customer and business. Headquarters and terminals can precise
Slide 24: Lean Operations – Increase Revenue
Lean Operations – Increase Revenue ➢ Strengthen overall marketing activities, formulate effective marketing and negotiation strategies to further tap customer value, in order to increase volume and revenue. Terminals maintain good relationship with shipping companies and have achieved some positive
Slide 25: Lean Operations – Cost Control
Lean Operations – Cost Control Four measures to improve lean operations A series of cost control measures and cost control capabilities Innovatively set up ports operations management COE Actively promote and enhance automation in the Team terminal to improve efficiency and lower outsourcing cost Es
Slide 26: 4Q2020 Throughput Outlook
4Q2020 Throughput Outlook Challenges Opportunities ⚫ Some overseas terminals are still affected by ⚫ Potential for profitability improvement COVID-19 under the effective Lean Operations strategy ⚫ Sino-US trade tensions ⚫ A rebound in throughput of domestic terminals since April as we have been alwa
Slide 27: Q & A Session Thank you!
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Slide 28: Agenda
Agenda 1 Recovery & Sustainability 2 Financial Highlights 3 Operational Review 4 Outlook 5 Appendix
Slide 29: Upgrading with Professionalism for Quality Enhancement
Upgrading with Professionalism for Quality Enhancement Upgrading with Quality Professionalism Enhancement 1. Senior management team > an average of 20 years of 1. Strong capability and professionalism, e.g. PCT and experiences in shipping and port industry Xiamen 2. Effective strategies: Globalizati
Slide 30: On Track to Achieve Our 5-Year Target
On Track to Achieve Our 5-Year Target 2016 2019 2021 Restructuring Where we were Vision ◆ As a pure port operator ◆ No. of subsidiaries increased Operations: to 16 (FY2016: 10) ◆ Global terminal network ◆ 3 core strategies ◆ Industry leader in terms of ◆ Linkage effects in costs, total container thr
Slide 31: Return On Equity (ROE) Improvement – Newly Acquired Terminals to Catch Up
Return On Equity (ROE) Improvement – Newly Acquired Terminals to Catch Up 6.5 (3) ROE 6.3 (%) 4.8 (2) 3.5 (1) FY2016 FY2017 FY2018 FY2019 Note: (1) Excluding one-off gain of FCHL transaction of US$59.0 m and three months of share profits of FCHL of US$7.1 m (2) Excluding one-off gain of QPI transact
Slide 32: Incentive Scheme – Aligning Shareholders' Interests
Incentive Scheme – Aligning Shareholders’ Interests ◼ A total of about 53 million share options were granted to around 238 eligible employees under the share option scheme on 19 June 2018. ◼ Exercising criteria are in line with shareholders’ interests. Batch No. of Percentage of Return on Growth Rat
Slide 33: Sustainability Framework
Sustainability Framework ◆ Providing a healthy and safe working environment ◆ Building an inclusive, diversified and sustainable workforce ◆ Transitioning to “Green Ports” ◆ Ensuring operational compliance ◆ Managing energy consumptions and ◆ Promoting inclusive development emission to respond to cl
Slide 34: Aligning Global Principles
Aligning Global Principles We support the Sustainable Development Goals (SDGs) of the United Nations and identify how these global sustainability challenges relate to our business and integrate them into our daily operations: Global Recognition and Advocacy: 34
Slide 35: Greater China Portfolio (As of the end of September 2020)
Greater China Portfolio (As of the end of September 2020) Region Annual Designed Capacity (TEU) Bohai Rim 31,450,000 Yangtze River Delta 15,520,000 S.E. Coast & others 9,000,000 Pearl River Delta 25,600,000 S.W. Coast 12,000,000 Total 93,570,000 35
Slide 36: Disclaimer
Disclaimer This presentation contains certain forward-looking statements with respect to the financial condition, results of operations and business of COSCO SHIPPING Ports Limited (“COSCO SHIPPING Ports”) and certain plans and prospects of the management of COSCO SHIPPING Ports. Such forward-lookin
Slide 37: Thank you!
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