Cosco Shipping Ports Limited · HKEX:1199
Cosco Shipping Ports — H1 2021 Earnings Presentation
46 slides from Cosco Shipping Ports's earnings presentation, Aug 26, 2021
Slide 1: 1H2021 Results Presentation
1H2021 Results Presentation Capturing Strategic Development Opportunities Continuing to Enhance Lean Operations August 26, 2021
Slide 2: Agenda
Agenda 1 2Q2021 Highlights 2 Financial Performance 3 Operational Review 4 Strategy & Outlook 5 Appendix
Slide 3: Agenda
Agenda 1 2Q2021 Highlights 2 Financial Performance 3 Operational Review 4 Strategy & Outlook 5 Appendix
Slide 4: Continued Strong YoY Growth Momentum in 2Q2021
Continued Strong YoY Growth Momentum in 2Q2021 ➢ 2Q21 equity throughput posted an 8.2% YoY growth to 10.2 million TEU, maintaining recovery momentum ➢ 2Q21 terminal profit recorded a strong YoY growth of 49.3% to USD 123.0 million, the highest quarterly profit since last year ➢ Effective lean operat
Slide 5: Highest 2Q & 1H Terminal Profit since 2016
Highest 2Q & 1H Terminal Profit since 2016 ➢ We achieved the highest 2Q and 1H terminal profit on the back of our lean operations strategy as well as macro environment improvement 2Q Terminal Profit (USD) 1H Terminal Profit (USD) 135.0 240.0 123.0M 216.9 M 120.0 112.7M 195.4M 210.0 104.7M (1) 182.9
Slide 6: Agenda
Agenda 1 2Q2021 Highlights 2 Financial Performance 3 Operational Review 4 Strategy & Outlook 5 Appendix
Slide 7: Continued Strong Growth Momentum with Further Margin Enhancement in 2Q2021
Continued Strong Growth Momentum with Further Margin Enhancement in 2Q2021 (US$ million, unless stated otherwise) 2Q2020 2Q2021 YoY Change (%) Consolidated throughput from Subsidiaries (in ’000 TEU) 5,404.1 5,997.3 +11.0 Revenue 232.1 299.5 +29.0 Cost of sales 178.6 213.2 +19.4 Gross profit 53.6 86.
Slide 8: Strong Net Profit YoY Growth in 1H2021
Strong Net Profit YoY Growth in 1H2021 (US$ million, unless stated otherwise) 1H2020 1H2021 YoY Change (%) Consolidated throughput from Subsidiaries (in ’000 TEU) 10,501.5 11,362.8 +8.2 Revenue 452.7 564.9 +24.8 Cost of sales 353.5 416.6 +17.8 Gross profit 99.2 148.3 +49.6 Gross profit margin 21.9%
Slide 9: Solid Revenue Growth & Effective Cost Control in 2Q2021
Solid Revenue Growth & Effective Cost Control in 2Q2021 Revenue (US$ million) Cost of sales (US$ million) 299.5 213.2 Guangzhou Nansha 232.1 17.1% Xiamen Oceangate 178.6 11.7% China 7.7% China 9.4% Nantong 12.2% +23.1% 3.1% 17.6% +31.0% 3.1% Other subsidiaries in the 3.3% 6.6% YoY 11.5% 13.8% 3.4% 7
Slide 10: Further GP Enhancement in Greater China & Robust GP Growth in Overseas During 2Q2021
Further GP Enhancement in Greater China & Robust GP Growth in Overseas During 2Q2021 Gross profit (US$ million) Greater China 2Q20 % 2Q21 % YoY Gross profit 40.3 75% 57.4 66% +42.4% (US$ million) 86.3 Gross profit 40.6% 44.1% +3.5 pps Guangzhou Nansha margin Xiamen Oceangate 30.3% Nantong Overseas r
Slide 11: Continued Strong Terminal Profitability
Continued Strong Terminal Profitability ➢ Benefiting from continued throughput recovery as well as effective lean operations strategy, terminal profit in 2Q2021 surged by 49.3% YoY and the portfolio has become more diversified and sustainable Terminals Profit from Subsidiaries & Non-subsidiaries (US
Slide 12: Solid Financial Position to Support Further M&A Projects
Solid Financial Position to Support Further M&A Projects ➢ As at 30 June 2021, our cash position maintained strong with cash and cash equivalents of USD 1.19 billion ➢ Net gearing ratio remained at a healthy level of 27.3% (US$ million, unless stated otherwise) As at 31 Dec 2020 As at 30 Jun 2021 To
Slide 13: Capital Expenditure
Capital Expenditure FY2019 CAPEX: 1H2021 CAPEX: Investments – US$224m PP&E – US$400m Investments – US$8.8m Total – US$624m PP&E – US$91.6m Including: Total – US$100.4m • QPI (Added equity interest) Including: • Beibu Gulf Port (Added equity interest) • Vado (Capital increase) • CSP Zeebrugge CFS FY2
Slide 14: Agenda
Agenda 1 2Q2021 Highlights 2 Financial Performance 3 Operational Review 4 Strategy & Outlook 5 Appendix
Slide 15: Strong Total Throughput Growth in Subsidiaries and Overseas Regions During 2Q2021
Strong Total Throughput Growth in Subsidiaries and Overseas Regions During 2Q2021 Total throughput 1Q2020 2Q2020 3Q2020 4Q2020 1Q2021 2Q2021 ➢ Subsidiaries (million TEU) 5.1 5.4 6.0 5.9 5.4 6.0 YOY Growth -14.3% -16.8% -9.1% -3.9% 5.3% 11.0% ➢ Non-subsidiaries (million TEU) 22.4 24.8 27.5 26.8 24.8
Slide 16: Continued Equity Throughput Growth in Subsidiaries and Overseas Regions During 2Q21
Continued Equity Throughput Growth in Subsidiaries and Overseas Regions During 2Q21 Equity throughput 1Q2020 2Q2020 3Q2020 4Q2020 1Q2021 2Q2021 ➢ Subsidiaries (million TEU) 3.4 3.5 3.8 3.7 3.4 3.8 YOY Growth -11.1% -16.5% -10.0% -7.0% 1.8% 9.4% ➢ Non-subsidiaries (million TEU) 5.3 5.9 6.5 6.4 5.9 6.
Slide 17: Further Enhancing Synergy to Secure Demand with SHIPPING Alliances
Further Enhancing Synergy to Secure Demand with SHIPPING Alliances Customers percentage of total throughput in 2Q2021 (1) 2Q2021 YoY growth in total throughput (1) COSCO SHIPPING Lines OOCL Evergreen + CMA OCEAN Alliance 2M + THE Alliance Others ➢ Throughput from COSCO +24.9% COSCO SHIPPING Lines SH
Slide 18: Global Footprint and Future M&A Opportunities
Global Footprint and Future M&A Opportunities Key Overseas Annual Designed Terminals 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 RSGT 5,200,000 Suez Canal 5,000,000 COSCO-PSA 4,850,000 Antwerp 3,700,000
Slide 19: Optimizing Terminal Assets Portfolio
Optimizing Terminal Assets Portfolio ACQUISITIONS DISPOSALS ➢ Beibu Gulf Terminal ➢ Yangzhou Yuanyang Terminal & is expected to share the benefits of economic growth in Zhangjiagang Terminal Southwest China and Southeast Asia disposal gain after tax of around USD$61M (The transaction was completed i
Slide 20: Technology Development to Facilitate Lean Operations
Technology Development to Facilitate Lean Operations 1H2021 Coming2020 3-4 years Quanzhou Terminal and Application of Navis Jinjiang Terminal N4 system to most of implemented Navis N4 our subsidiaries in system in 1H2021 the coming 3-4 years ➢ Actively advocate 5G smart ports ➢ Demonstration port fo
Slide 21: Agenda
Agenda 1 2Q2021 Highlights 2 Financial Performance 3 Operational Review 4 Strategy & Outlook 5 Appendix
Slide 22: Corporate Strategies — Global Terminal Network, Lean Operations and Value-Added Projects
Corporate Strategies — Global Terminal Network, Lean Operations and Value-Added Projects Capitalize on global economic growth optimize terminal portfolio Further implement lean operations to boost quality and efficiency Accelerate value-added projects to create new sources of profit growth 22
Slide 23: Global Terminal Network and Lean Operations
Global Terminal Network and Lean Operations Capitalize on ◼ Identifying potential projects and tapping into the markets such as Southeast Asia, the global economic growth Middle East and Africa, particularly in strategic subsidiaries and highly-profitable non- subsidiaries amid global economic growt
Slide 24: Lean Operations — Enhance Revenue
Lean Operations — Enhance Revenue Increasing volume from third-party customers (’000 TEU) (1) ➢ Strengthen overall marketing activities and negotiation strategies to further tap customer +12.9% YoY value. Terminals maintain good relationship 1,600 1,512 with shipping companies and have made good pos
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: Accelerating Development of Value-Added Projects to Create New Sources of Growth
Accelerating Development of Value-Added Projects to Create New Sources of Growth Accelerate supply ◼ Develop the supply chain business and accelerate the CSP Abu Dhabi CFS Phase 1 chain business to construction of the extended supply chain platform create new sources of profit ◼ Build up logistics n
Slide 27: First Water-rail Intermodal Container Transport Project in Yangtze River Commenced Operation
First Water-rail Intermodal Container Transport Project in Yangtze River Commenced Operation ➢ On 1 August 2021, Wuhan Yangluo International Port water-rail intermodal container transport project commenced operation. The terminal designed capacity is 1m TEU/year and water-rail intermodal transport c
Slide 28: Outlook
Outlook Challenges Opportunities ➢ Negative impact to global economy due to COVID-19 ➢ Long term opportunities for overseas terminals development ➢ Global economy growth looks stagnant ➢ Opportunities amid domestic terminals consolidation ➢ Geopolitical risk ➢ Good prospect on the back of our effect
Slide 29: 5-Year Target Plan Starting from Year 2021
5-Year Target Plan Starting from Year 2021 To achieve targets by the end of 2025 (1) ➢ Equity throughput 57 million TEU 5-year growth rate 48% (5-year CAGR of about 8.2%) ➢ Operational cost per TEU Decrease by 15~20% in 5 years (Average annual decline by 3~4% in 5 years) Notes: (1) Year 2021 - year
Slide 30: Q & A Session Thank you!
e oe e e e cosco SHIPPING Pe SESORRAA \S<~“" _ COSCO SHIPPING Ports Limited The Ports for ALL e Q &A Session A Se
Slide 31: Agenda
Agenda 1 2Q2021 Highlights 2 Financial Performance 3 Operational Review 4 Strategy & Outlook 5 Appendix
Slide 32: Solid Revenue Growth & Effective Cost Control in 1H2021
Solid Revenue Growth & Effective Cost Control in 1H2021 Revenue (US$ million) Cost of sales (US$ million) 564.9 416.6 Guangzhou Nansha 16.9% Xiamen Oceangate 353.5 11.7% 452.7 China China Nantong 11.3% 7.5% 16.4% +29.6% 9.5% 3.1% +19.8% 3.2% 7.0% 11.1% 8.1% YoY 12.7% Other subsidiaries in the 3.2% Y
Slide 33: Remarkable GP Enhancement During 1H2021
Remarkable GP Enhancement During 1H2021 Gross profit (US$ million) Greater China 1H20 % 1H21 % YoY Gross profit 67.8 68% 99.2 67% +46.4% (US$ million) 148.3 Gross profit Guangzhou Nansha 36.8% 41.6% +4.8 pps margin Xiamen Oceangate 31.4% 99.2 Nantong Overseas region 1H20 % 1H21 % YoY Gross profit Ch
Slide 34: Strong Terminal Profitability in 1H2021
Strong Terminal Profitability in 1H2021 Terminals Profit from Subsidiaries & Non-subsidiaries (US$ million) Terminals Profit by Regions (US$ million) Subsidiaries Subsidiaries 3.9% 18.6% 216.9 +59.9% YoY Bohai Rim 1H2020 1H2021 USD135.7M USD216.9M 36.3% Yangtze River Delta Non-subsidiaries Non-subsi
Slide 35: Further Maximizing Synergy with SHIPPING Alliances
Further Maximizing Synergy with SHIPPING Alliances Customers percentage of total throughput in 1H2021 (1) 1H2021 YoY growth in total throughput (1) COSCO SHIPPING Lines OOCL Evergreen + CMA ➢ Throughput from COSCO OCEAN Alliance 2M + THE Alliance Others SHIPPING Lines and OOCL +20.0% COSCO SHIPPING
Slide 36: Lean Operations – Cost Control
Lean Operations – Cost Control Cost Reduction ➢ Develop cost management system focusing on financial control and featuring “cost per TEU” to enhance terminal operations and management; incorporate “cost per TEU” in KPI to set Cost operating cost control targets for subsidiaries Reduction Lean ➢ Faci
Slide 37: Lean Operations – Revenue Growth and Headquarters’ Empowerment
Lean Operations – Revenue Growth and Headquarters’ Empowerment ➢ Develop customer analysis model to identify profit contribution from shipping companies and container types, allowing headquarters and terminals to engage customers and leverage on their competitive edges to enhance effective marketing
Slide 38: Sustainable High Dividend Yield and Long-term Investment Value
Sustainable High Dividend Yield and Long-term Investment Value ➢ We have confidence in being the best yield play within this industry Dividend Yield (1) 1199 Peers Average 6.0% 5.9% 5.0% 5.4% 4.8% 5.8% 5.8% 4.7% 4.5% 4.1% 2016 2017 2018 2019 2020 Notes: (1) COSCO SHIPPING Ports’ dividend yield is ca
Slide 39: Continued Return On Equity (ROE) Improvement
Continued Return On Equity (ROE) Improvement ROE 6.6 6.5 (3) (%) 6.3 4.8 (2) 3.5 (1) FY2016 FY2017 FY2018 FY2019 FY2020 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 transaction of US$285.4 m
Slide 40: On Track to Achieve Our Previous 5-Year Target
On Track to Achieve Our Previous 5-Year Target 2016 2020 2021 Restructuring Where we were Vision ◆ As a pure port operator ◆ No. of subsidiaries increased Operations: to 14 (FY2016: 10) ◆ Global terminal network ◆ 3 core strategies ◆ Industry leader in terms of ◆ Linkage effects in costs, total cont
Slide 41: 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 Rate
Slide 42: 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 43: Sustaining High Standard of Corporate Governance
Sustaining High Standard of Corporate Governance Balanced and Diverse Board Composition Structure of ESG Committee ✓ High level of independent representation on the Executive Director Board ✓ Diversified skills, expertise and professional Independent ESG experience The Board non-executive Committee
Slide 44: 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: 44
Slide 45: 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 46: Thank you!
®BZBOBRAA (O SHIPPING Ports Limit IPPING ig COSC: Thank you! __ 4