China Sunsine Chemical Holdings Ltd. · SGX:QES
China Sunsine Chemical — FY2021 Earnings Presentation
50 slides from China Sunsine Chemical's earnings presentation, Feb 24, 2022
Slide 1: 2H2021 & FY2021 Results Briefing
2H2021 & FY2021 Results Briefing 24 February 2022 CHINA SUNSINE CHEMICAL HOLDINGS LTD. 中国尚舜化工控股有限公司 1
Slide 2: Presentation Outline
2 PRESENTATION OUTLINE Our Company Financial Overview Key Developments Industry Info and Outlook
Slide 3: Our Company
3 Our Company
Slide 4: About China Sunsine Chemical
About China Sunsine Chemical 4 ✓ Specialty rubber chemicals producer ✓ World’s largest producer of Rubber Accelerators ✓ One of the world’s largest producers of Insoluble Sulphur ✓ Superior product-quality and economies of scale ✓ Accredited by a strong customer base of top tyre makers ✓ Beneficiary
Slide 5: Our Products: Rubber Chemicals
Our Products: Rubber Chemicals 5 Rubber Chemicals are Essential Additives in the production of rubber products
Slide 6: Our Products - Rubber Chemicals
Our Products - Rubber Chemicals 6 Rubber Accelerators Insoluble Sulphur Anti-Oxidants MBT MBTS CBS TBBS TMTD (IS) TMQ DPG DCBS …. 6PPD 4010NA
Slide 7: Global Consumption of Rubber
Global Consumption of Rubber 7 Anti-oxidants Other Products Latex 10% Vulcanizing 2.2% agents 2% 4% Other tyre Accelerators 9% 1.7% Boots 10% Car Tyres Rubber 61% Tube/ Tape 6% • By weight, every 100 tonnes of rubber consumes http://www.chemn.com about 6 tonnes of rubber chemicals (100:6) • By value
Slide 8: Our Strong Customer Base
Our Strong Customer Base 8 (2006) (1997) (2003) (2006) • Over 1,000 customers globally • Serves more than 2/3 of the global top 75 tyre makers • 1/3 output exported
Slide 9: Our Rubber Accelerators Products' Market Share
Our Rubber Accelerators Products’ Market Share 9 40% 36% 35% 33% 33% 33% 34% PRC 29% 30% 30% 31% 30% 28% 24% 24% 25% 24% 25% 22% Global 19% 20% 20% 20% 20% 17% 17% 18% 14% 16% (Est.) 15% 11% 12% 12% 10% 7% 5% 0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Group’s market sha
Slide 10: Our Market Leadership Position
Our Market Leadership Position 10 GLOBAL TOP 3 PRC TOP 3 ACCELERATOR PRODUCERS INSOLUBLE SULPHUR PRODUCERS Annual Company Annual Company Capacity 2021 Capacity 2021 China Sunsine 117,000 tonnes China Sunsine 60,000 tonnes 中国尚舜 中国尚舜 Yanggu Huatai 60,000 tonnes Yanggu Huatai 40,000 tonnes 阳谷华泰 阳谷华泰 Se
Slide 11: Our Production Bases
Our Production Bases 11 6 production bases in 3 locations Weifang Plant Dingtao Base • RA: 27,500-tonne • 20,000-tonne IS Shanxian • Home base: - RA: 59,500-tonne - IS: 10,000-tonne - AO: 45,000-tonne • Sub-base: - RA(TBBS): 30,000-tonne • Hengshun New Materials: - IS: 30,000-tonne (2021) RA: Rubber
Slide 12: Financial Overview
12 Financial Overview
Slide 13: Financial Highlights
Financial Highlights 13 RMB ’mln 6 Months Ended 12 Months Ended 31/12/21 31/12/20 Change 31/12/21 31/12/20 Change Group Revenue 1,967.7 1,291.1 52% 3,725.2 2,333.7 60% Gross Profit 494.2 358.4 38% 1,046.5 600.3 74% Gross Profit Margin 25.1% 27.8% (2.7 pts) 28.1% 25.7% 2.4 pts Profit Before Tax 338.4
Slide 14: Revenue Growth
Revenue Growth 14 RMB ’mln 4,000.0 3,725.2 3,500.0 3,283.3 3,000.0 2,738.4 2,691.7 2,500.0 2,333.7 2,077.3 2,036.9 2,000.0 1,859.1 1,695.9 1,500.0 1,417.3 1,175.1 1,000.0 500.0 0.0 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY2021 Revenue increased by 60% yoy due to higher ASP and sales
Slide 15: Revenue (half-yearly)
Revenue (half-yearly) 15 RMB ’mln 2,500.0 1,967.7 2,000.0 1,737.5 1,757.5 1,507.7 1,545.7 2H21 vs 2H20: +52% 1,500.0 1,413.6 2H21 vs 1H21: +12% 1,230.7 1,278.0 1,291.1 1,100.7 1,042.6 1,000.0 936.2 500.0 0.0 1H16 2H16 1H17 2H17 1H18 2H18 1H19 2H19 1H20 2H20 1H21 2H21
Slide 16: Sales Contribution - by region
Sales Contribution-by region 16 Rest of Asia Region FY2021 FY2020 FY2019 27% China 61% 68% 62% PRC Rest of 27%Asia 27% 21% 22% US 3% US 3% 2% 3% 61% Europe 5% Europe 2% 5% 6% 11% Others 3% 8% Others 3% 3% 2% Total 100% 100% 100% • International sales rebounded due to the global economy recovery in 2
Slide 17: Sales Contribution - by products
Sales Contribution-by products 17 IS 8% Product FY2021 FY2020 FY2019 Accelerators 60% 63% 66% Anti- IS 27% 8% 10% 10% Accelerators oxidants 30% Anti-oxidants 30% 26% 23% 60% 2% Others 8% 2% 1% 1% Others Total 100% 100% 100%
Slide 18: Overall Average Selling Price (ASP)
Overall Average Selling Price (ASP) 18 RMB/Tonne 25,000 21.5K 20,000 19.3K 19.1K 19.4K 18.8K 17.4K 16.2K 16.0K 17.2K 15,000 15.0K 13.6K 10,000 5,000 0 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21
Slide 19: ASP vs Major Raw Material Price (half-yearly)
ASP vs Major Raw Material Price (half-yearly) 19 RMB/Tonne 25,000 23.3K 20.5K 18.8K 20,000 19.9K 18.6K 18.1K 17.2K 15.4K 14.3K 14.9K ASP 15,000 13.6K 13.6K 9.7K 9.9K Aniline 10,000 8.4K 9.0K 7.1K 6.8K 6.0K 4.8K 6.2K 5.0K 4.9K 5.0K 5,000 0 1H16 2H16 1H17 2H17 1H18 2H18 1H19 2H19 1H20 2H20 1H21 2H21 •
Slide 20: Sales Volume
Sales Volume 20 Tonnes 240,000 195,405 200,000 167,455 169,876 160,000 151,486 135,791 140,476 120,000 108,973 114,572 98,345 81,371 80,000 60,907 40,000 0 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY21 sales volume up 15% y-o-y mainly due to: • Chinese and Global market recovered rapid
Slide 21: Sales Volume (half-yearly)
Sales Volume (half-yearly) 21 Tonnes 105,000 102,243 100,000 95,000 93,556 93,162 90,000 85,377 85,000 82,078 2H21 vs 2H20 : +9.3% 80,000 2H21 vs 1H21 : +9.7% 77,123 76,320 74,364 75,000 72,872 71,257 70,000 67,604 64,534 65,000 60,000 55,000 50,000 1H16 2H16 1H17 2H17 1H18 2H18 1H19 2H19 1H20 2H20
Slide 22: Sales Volume by Products
Sales Volume by Products 22 Tonnes 120,000 101,970 100,000 90,950 80,000 46,035 54,566 60,000 37,274 40,000 30,655 20,000 0 FY20 FY21 Accelerators Insoluble Sulphure Anti-oxidants Others FY2020 FY2020 FY2021 FY2021 Effective Capacity Utilisation Rate Effective Capacity Utilisation Rate Accelerators
Slide 23: Gross Profit
Gross Profit 23 RMB ’mln 1,200.0 1,125.9 1,046.5 1,000.0 788.1 780.8 800.0 567.4 600.3 600.0 547.1 492.0 400.0 293.4 308.0 243.9 200.0 0.0 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY2021 Gross profit increased by 74% y-o-y due to higher ASP and sales volume
Slide 24: Gross Profit (half-yearly)
Gross Profit (half-yearly) 24 RMB ’mln 700.0 622.4 600.0 552.3 503.4 488.0 494.2 500.0 461.0 2H21 vs 2H20: +38% 400.0 2H21 vs 1H21: -11% 358.4 327.1 305.1 292.8 300.0 242.0 241.9 200.0 100.0 0.0 1H16 2H16 1H17 2H17 1H18 2H18 1H19 2H19 1H20 2H20 1H21 2H21 2H21 Gross profit down 11% as compared with 1
Slide 25: Net Profit
Net Profit 25 RMB ’mln 700 641.3 600 506.3 500 388.9 400 341.3 300 220.2 221.7 218.8 195.2 200 99.4 100 76.7 32 0 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21
Slide 26: Net Profit (half-yearly)
Net Profit (half-yearly) 26 RMB ’mln 400.0 350.0 341.2 300.0 266.0 265.2 2H21 vs 2H20: +77% 252.0 241.1 250.0 2H21 vs 1H21: -9% 209.6 200.0 150.0 139.1 131.7 136.4 123.0 100.0 82.6 82.4 50.0 0.0 1H16 2H16 1H17 2H17 1H18 2H18 1H19 2H19 1H20 2H20 1H21 2H21
Slide 27: Margins Analysis
Margins Analysis 27 40.0% 34.3% 35.0% 30.0% 28.8% 29.0% 28.1% 27.3% 26.5% 26.9% 25.0% 25.7% Gross Profit Margin 25.0% (GPM) 18.2% 19.5% 20.0% 17.2% Net Profit Margin 14.4% (NPM) 15.0% 12.5% 13.6% 10.6% 10.5% 10.9% 9.4% 10.0% 8.5% 4.5% 5.0% 2.3% 0.0% FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20
Slide 28: Margins Analysis (half-yearly)
Margins Analysis (half-yearly) 28 40.0% 35.8% 34.5% 35.0% 32.6% 30.6% 31.4% 30.0% 27.7% 26.6% 27.8% 25.8% 25.1% 25.0% 22.4% 22.9%23.2% Gross Profit Margin 18.8% (GPM) 20.0% 16.3% Net Profit Margin 15.1% 13.9% (NPM) 15.0% 12.6% 12.3% 10.7% 9.6% 10.6% 10.0% 8.8% 7.9% 5.0% 0.0% • 2H21 GPM slid compared
Slide 29: Balance Sheet Highlight
Balance Sheet Highlight 29 31/12/2021 31/12/2020 31/12/2019 Current Assets (RMB’mln) * 2,839.5 2,239.2 2,219.6 Current Liabilities (RMB’mln) 747.2 451.4 347.4 Current Ratio 3.80 4.96 6.39 Shareholders’ Equity (RMB’mln) 3,176.1 2,720.7 2,561.6 D/E ratio * 0 0 0 NAV per share (RMB cents) 327.3/ 280.28
Slide 30: Key Developments
30 Key Developments
Slide 31: Expansion Projects-1
Expansion Projects-1 31 Project Status CapEx Comprehensive Chemical Zone (Hengshun New Materials Co.) Commercial production started in 30,000-tonne Insoluble Sulphur RMB270 mln Dec 2021 Pending approval for trial run, 30,000-tonne Anti-oxidant TMQ Commercial production expected RMB 150 mln (Yongshun
Slide 32: Expansion Projects-2
Expansion Projects-2 32 Project Status CapEx 700,000-tonne Controlled total RMB 600 mln Landfill (funded by internal resources) RMB 80 mln Phase I 50,000-tonne with land Operation started in 2021 (including some area of 50 mu common facilities) Phase II 50,000-tonne with land Expecting to complete b
Slide 33: Annual Capacity
Annual Capacity 33 FY17 FY18 FY19 FY20 FY21 FY22e Rubber Accelerators 87,000 87,000 97,000 117,000 117,000 117,000 Insoluble Sulphur 20,000 30,000 30,000 30,000 60,000 60,000 Anti-oxidants (TMQ & 6PPD) 45,000 45,000 45,000 45,000 45,000 75,000 Total 152,000 162,000 172,000 192,000 222,000 252,000
Slide 34: Industry Info and Outlook
34 Industry Info and Outlook
Slide 35: China's New Car Sales
China’s New Car Sales 35 in million units % 35 35 28.9 30 30 28 28.1 25.8 25.3 26.3 25 23.5 24.6 25 22 20 18.5 19.3 15 20 18.1 sales 10 15 5 growth yoy 10 0 -5 5 -10 0 -15 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 • 26.3 mln cars sold in China in 2021, up 3.8% y-o-y, boosted by New
Slide 36: PRC Vehicle Population
PRC Vehicle Population 36 PRC Motor Vehicle & Car Population In mln units 450 395 400 372 348 350 327 310 302 279 290 281 300 264 250 260 240 250 217 194 200 172 154 150 137 100 50 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 Car Population Motor Vehicle Poluation • China’s car population on par w
Slide 37: Riding on Rising Tyre Consumption
Riding on Rising Tyre Consumption 37 PRC Vehicle Outer Tyre Production in million units % 1200 1,114 12 The global tyre market showed 965 10 1000 892 925 947 926 899 moderate growth during the period 832 816 842 818 8 800 6 between 2015-2020. Looking forward, 4 IMARC Group expects the market to 600
Slide 38: General Info about Our Industry & Business -1
General Info about Our Industry & Business -1 38 Q : Are rubber chemicals commodities? A : No. They are products in a niche market. Reasons: 1. Commodity companies cannot have sustained high profits and good returns on capitals. China Sunsine has been profitable since 1998. Its ROE has been between
Slide 39: General Info about Our Industry & Business -2
General Info about Our Industry & Business -2 39 Q : Are entry barriers high for the rubber chemicals industry? A : Yes. Reasons: 1. Capital intensive -- land, environmental protection and safety infrastructure. 2. Technical capabilities -- technology, talents and management skills are required to p
Slide 40: General Info about Our Industry & Business -3
General Info about Our Industry & Business -3 40 Q : Will weakening car sales affect the rubber chemicals industry? A : Significant impact on sales occur only if new car sales experience critical negative growth Reasons: 1. New cars accounts for around 30% of tyre consumption. Cars in-use consume th
Slide 41: General Info about Our Industry & Business -4
General Info about Our Industry & Business -4 41 Q : Will weakening ASP affect the Group’s performance? A : Our ASP moves in tandem with the price movements of raw materials. In the long run, growing sales volume is what we are pursuing for sustainable growth Reasons: 1. ASP depends on demand & supp
Slide 42: Macro Economy Environment
Macro Economy Environment 42 • IMF projected the global economy to grow by 4.4% in 2022, down 0.5 percentage point from October 2021’s forecast, due to supply disruptions, higher inflation, record debt and persistent uncertainty • The Chinese economy shows strong resilience and robust rebound. Howev
Slide 43: Industry Outlook
Industry Outlook 43 • The utilization rate of tyre manufacturing was improving in 2021, driven by the economy recovery and robust auto market, but it is still at a relatively low level. We expect it will slowly recover in 2Q2022 • International crude oil prices are volatile, which leads to the fluct
Slide 44: Group's Strategy
Group’s Strategy 44 Production and Sales Equilibrium Higher production leads to higher sales volume, which in turn stimulates even higher production • Our goal - Increase market share and strengthen our market leadership position • Capacity expansion to meet the increased demand for our products • F
Slide 45: Competitive Strengths
Competitive Strengths 45 - World largest accelerators and China’s biggest IS producer Market Leadership - Our accelerator products capture 36% of PRC market and 24% of global market - Listed in the first batch of “National Champion Manufacturing Enterprise” - Superior quality and Full range of varie
Slide 46: Listed On SGX Mainboard
Listed On SGX Mainboard 46 SHARE PERFORMANCE • Since IPO, no new share placement and rights issue
Slide 47: Dividend Payment History
Dividend Payment History 47 Net Profit Dividend (in RMB ’mln) (in SGD cents) 700 641.3 6 5.5 5.5 600 5 506.3 4.5 500 4 388.9 3.5 400 341.3 3 3 Net Profit 300 2.5 Dividend 220.2 221.7 218.8 195.2 2 2 200 76.1 106.7 88.3 115.3 99.4 76.7 1.5 1.5 1.5 1.5 100 1 1 1 1 1 1 1 1 1 1 32 0.5 0 0 FY07 FY08 FY09
Slide 48: Investment Merits
Investment Merits 48 ✓ Market leadership position and largest market share in rubber accelerators ✓ Strong customer base ✓ Capacity expansion ongoing, focusing on growing sales volume and market share ✓ Strong cash position (cash per share SGD0.30) with no bank loan ✓ 15-year track record & annual d
Slide 49: Chairman's Message
Chairman’s Message 49 Riding on the strong recovery of China's economy and the global economy, as well as the resilient auto market, the Group delivered a stellar performance in FY2021. Our strategy of 'sales and production equilibrium' has helped us successfully to ride out the storm of the past 2
Slide 50: Q & A / Media/Investor Contact
50 Q&A MEDIA/INVESTOR CONTACT Tong Yiping, CFO, tongyiping@ChinaSunsine.com Jennie Liu, IR Manager, jennie@ChinaSunsine.com 112 Robinson Road #11-01 Singapore 068902 (+65) 6220-9070 www.ChinaSunsine.com
China Sunsine Chemical Holdings — FY2021 Earnings Presentation on 6ix