Cosco Shipping Ports Limited · HKEX:1199
Cosco Shipping Ports — Q3 2021 Earnings Presentation
46 slides from Cosco Shipping Ports's earnings presentation, Oct 29, 2021
Slide 1: 3Q2021 Results Presentation
3Q2021 Results Presentation Capturing Strategic Development Opportunities Continuing to Enhance Lean Operations October 29, 2021
Slide 2: Agenda
Agenda 1 3Q2021 Highlights 2 Financial Performance 3 Operational Review 4 Strategy & Outlook 5 Appendix
Slide 3: Agenda
Agenda 1 3Q2021 Highlights 2 Financial Performance 3 Operational Review 4 Strategy & Outlook 5 Appendix
Slide 4: Highest 3Q & 9M Terminal Profit since 2016
Highest 3Q & 9M Terminal Profit since 2016 ➢ 3Q terminal profit increased by 11.7% YoY to USD 104.7 M; 9M terminal profit surged by 40.2% YoY to USD 321.5 M ➢ We achieved the highest 3Q and 9M terminal profit on the back of our lean operations strategy as well as macro environment improvement 3Q Ter
Slide 5: Substantial Enhancement for Subsidiaries Terminal Profit Through Effective Lean Operation
Substantial Enhancement for Subsidiaries Terminal Profit Through Effective Lean Operation 3Q Terminal profit of subsidiaries (US$ million) 9M Terminal profit of subsidiaries (US$ million) 60.2 20.0 48.8 13.1 11.9 69% 72% 18.4 70% China +14.3% YoY China 76% 92% +72.0% YoY 138% 31% 30% 28% 24% 8% Over
Slide 6: Agenda
Agenda 1 3Q2021 Highlights 2 Financial Performance 3 Operational Review 4 Strategy & Outlook 5 Appendix
Slide 7: Continued YoY Growth in Revenue per TEU of Subsidiaries During 3Q2021
Continued YoY Growth in Revenue per TEU of Subsidiaries During 3Q2021 (US$ million, unless stated otherwise) 3Q2020 3Q2021 YoY Change (%) Consolidated throughput from Subsidiaries (in ’000 TEU) 5,968.9 5,919.3 -0.8 Revenue 270.0 295.8 +9.5 Cost of sales 199.5 218.3 +9.4 Gross profit 70.5 77.5 +9.9 G
Slide 8: Strong Net Profit YoY Growth in 9M2021
Strong Net Profit YoY Growth in 9M2021 (US$ million, unless stated otherwise) 9M2020 9M2021 YoY Change (%) Consolidated throughput from Subsidiaries (in ’000 TEU) 16,470.3 17,282.2 +4.9 Revenue 722.7 860.6 +19.1 Cost of sales 553.1 634.9 +14.8 Gross profit 169.6 225.8 +33.1 Gross profit margin 23.5%
Slide 9: Solid Revenue Growth & Effective Cost Control in Overseas terminals 3Q2021
Solid Revenue Growth & Effective Cost Control in Overseas terminals 3Q2021 Revenue (US$ million) Cost of sales (US$ million) 295.8 218.3 Guangzhou Nansha 199.5 270.0 Xiamen Oceangate 13.7% 18.0% 11.6% China 17.8% China Nantong 7.4% +17.7% 7.6% 3.0% 9.8% 3.1% 9.0% +10.8% 3.2% Other subsidiaries in th
Slide 10: Further GP Enhancement in Overseas Terminals During 3Q2021
Further GP Enhancement in Overseas Terminals During 3Q2021 Gross profit (US$ million) Greater China 3Q20 % 3Q21 % YoY Gross profit 49.9 71% 50.8 65% +1.7% (US$ million) Gross profit 77.5 margin 43.2% 39.7% -3.5 pps Guangzhou Nansha 70.5 Xiamen Oceangate 30.0% 35.3% Nantong Overseas region 3Q20 % 3Q2
Slide 11: Continued Terminal Profitability Enhancement in 3Q2021
Continued Terminal Profitability Enhancement in 3Q2021 ➢ Benefiting from effective lean operations strategy, terminal profit in 3Q2021 increased by 11.7% YoY and the portfolio has become more diversified and sustainable Terminals Profit from Subsidiaries & Non-subsidiaries Terminals Profit by Region
Slide 12: Solid Financial Position to Support Further M&A Projects
Solid Financial Position to Support Further M&A Projects ➢ As at 30 September 2021, our cash position maintained strong with cash and cash equivalents of USD 1.04 billion ➢ Net gearing ratio remained at a healthy level of 29.1% (US$ million, unless stated otherwise) As at 31 Dec 2020 As at 30 Sep 20
Slide 13: Capital Expenditure
Capital Expenditure FY2019 CAPEX: 9M 2021 CAPEX: Investments – US$224m PP&E – US$400m Investments – US$212m Total – US$624m PP&E – US$163m Total – US$375m Including: • QPI (Added equity interest) Including: • Beibu Gulf Port (Added equity interest) • RSGT • CSP Zeebrugge CFS • Vado (Capital increase
Slide 14: Agenda
Agenda 1 3Q2021 Highlights 2 Financial Performance 3 Operational Review 4 Strategy & Outlook 5 Appendix
Slide 15: Operational Results – Continued Stable Throughput Growth in 3Q2021
Operational Results – Continued Stable Throughput Growth in 3Q2021 Total Throughput Equity Throughput 3Q2020 3Q2021 YoY Change 3Q2020 3Q2021 YoY Change ('000 TEU) ('000 TEU) - Subsidiaries 5,969 5,919 -0.8% - Subsidiaries 3,787 3,774 -0.4% - Non-subsidiaries 27,493 27,801 +1.1% - Non-subsidiaries 6,
Slide 16: Further Enhancing Synergy with OCEAN Alliance
Further Enhancing Synergy with OCEAN Alliance Customers percentage of total throughput in 3Q2021 (1) 3Q2021 YoY growth in total throughput (1) COSCO SHIPPING Lines OOCL Evergreen + CMA OCEAN Alliance 2M + THE Alliance Others +5.2% COSCO SHIPPING Lines ➢ Driven by throughput growth at CSP Zeebrugge a
Slide 17: 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 18: Optimizing Terminal Assets Portfolio
Optimizing Terminal Assets Portfolio ACQUISITIONS DISPOSALS ➢ RSGT ➢ Yangzhou Yuanyang Terminal & has a wide coverage of container market in the Middle East Zhangjiagang Terminal and East Africa, bringing growth momentum disposal gain after tax of around USD$61M (The transaction was completed in Jul
Slide 19: Technology Development to Facilitate Lean Operations
Technology Development to Facilitate Lean Operations 9M 2021 Coming2020 3-4 years Quanzhou Terminal and Application of Navis Jinjiang Terminal N4 system to most of implemented Navis N4 our subsidiaries in system during 9M2021 the coming 3-4 years ➢ Actively advocate 5G smart ports ➢ Demonstration po
Slide 20: Agenda
Agenda 1 3Q2021 Highlights 2 Financial Performance 3 Operational Review 4 Strategy & Outlook 5 Appendix
Slide 21: 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 21
Slide 22: 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- optimize terminal portfolio subsidiarie
Slide 23: Lean Operations — Enhance Revenue
Lean Operations — Enhance Revenue Increasing volume from third-party customers (1) Evergreen + CMA 2M+THE Alliance Other customers ➢ Strengthen overall marketing activities and negotiation strategies to further increase customer value. Terminals maintain good relationships with shipping companies an
Slide 24: 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 25: 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 26: 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 27: 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 28: 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 29: 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 30: Agenda
Agenda 1 3Q2021 Highlights 2 Financial Performance 3 Operational Review 4 Strategy & Outlook 5 Appendix
Slide 31: Solid Revenue Growth & Effective Cost Control in 9M2021
Solid Revenue Growth & Effective Cost Control in 9M2021 Revenue (US$ million) Cost of sales (US$ million) 860.6 Guangzhou Nansha 634.9 722.7 17.3% Xiamen Oceangate 553.1 12.4% China Nantong China 7.5% 11.4% 16.9% +22.3% 9.6% 3.1% 3.1% 7.2% +19.1% 11.2% YoY Other subsidiaries in the 3.1% 2.9% 8.4% 12
Slide 32: Remarkable GP Enhancement During 9M2021
Remarkable GP Enhancement During 9M2021 Gross profit (US$ million) Greater China 9M20 % 9M21 % YoY Gross profit 225.8 (US$ million) 117.7 69 149.9 66 +27.4% Gross profit Guangzhou Nansha 39.3% 40.9% +1.6 pps margin 30.9% 169.6 Xiamen Oceangate China 34.8% +27.4% Nantong Overseas region 9M20 % 9M21 %
Slide 33: Strong Terminal Profit with an increase of 40.2% YoY in 9M2021
Strong Terminal Profit with an increase of 40.2% YoY in 9M2021 Terminals Profit from Subsidiaries & Non-subsidiaries Terminals Profit by Regions (US$ million) Subsidiaries Subsidiaries 321.5 8.0% 18.7% +40.2% YoY Bohai Rim 9M2021 9M2020 USD321.5M USD229.3M 229.3 35.2% Yangtze River Delta Non-subsidi
Slide 34: Operational Results – Continued Stable Throughput Growth in 9M2021
Operational Results – Continued Stable Throughput Growth in 9M2021 Total Throughput Equity Throughput 9M20 9M21 YoY ('000 TEU) 9M20 9M21 YoY ('000 TEU) - Subsidiaries 16,470 17,282 +4.9% - Subsidiaries 10,586 10,959 +3.5% - Non-subsidiaries 74,626 79,149 +6.1% - Non-subsidiaries 17,765 18,826 +6.0%
Slide 35: Further Maximizing Synergy with SHIPPING Alliances
Further Maximizing Synergy with SHIPPING Alliances Customers percentage of total throughput in 9M2021 (1) 9M2021 YoY growth in total throughput (1) COSCO SHIPPING Lines OOCL Evergreen + CMA ➢ Throughput growth of CSP OCEAN Alliance 2M + THE Alliance Others Zeebrugge and CSP Abu Dhabi +14.5% COSCO SH
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