Orient Overseas (international) Limited · HKEX:316
Orient Overseas (international) — FY2016 Earnings Presentation
47 slides from Orient Overseas (international)'s earnings presentation, March 2017
Slide 1: 2016 Annual Results
2016 Annual Results Orient Overseas (International) Limited March 2017
Slide 2: Disclaimer
Disclaimer The information provided is for reference only and includes data obtained from sources provided by the relevant information provider(s) and is subject to change without notice. Orient Overseas (International) Limited (“OOIL”) and its affiliates, and the concerned information provider(s),
Slide 3: 2016 Results Summary
2016 Results Summary 3
Slide 4: 2016 Results Highlights
2016 Results Highlights 31-Dec-2016 US$M Group Loss After Tax (219.2) Liner Logistics Segment (273.6) Liner Logistics EBIT % (3.5) 4
Slide 5: Group Results Breakdown
Group Results Breakdown 31-Dec-2016 31-Dec-2015 US$M Container Transportation and Logistics (273.6) 218.0 Property and Investments Wall Street Plaza 16.5 16.7 Hui Xian 5.6 25.6 Interest, Investments and Others 32.3 23.6 54.4 65.9 Total (219.2) 283.9 5
Slide 6: EBIT Breakdown
EBIT Breakdown 31-Dec-2016 31-Dec-2015 US$M Container Transportation and Logistics – (184.6) 294.0 EBIT Property and Investments - EBIT Wall Street Plaza 26.4 27.7 Hui Xian 5.6 25.6 Interest, Investments and Others 32.3 23.6 64.3 76.9 OOIL GROUP - EBIT (120.3) 370.9 Finance Costs (79.4) (63.6) Taxat
Slide 7: Group Balance Sheet Highlights
Group Balance Sheet Highlights US$M 31-Dec-2016 31-Dec-2015 Non-current Assets 6,838 6,815 Current Assets 2,566 2,917 Total Assets 9,404 9,732 Non-current Liabilities 3,572 3,725 Current Liabilities 1,313 1,209 Total Liabilities 4,885 4,934 Shareholders’ Funds and Total Equity 4,519 4,798 7
Slide 8: Total Liquid Assets
Total Liquid Assets US$M 31-Dec-2016 31-Dec-2015 Cash and Bank Balances 1,626 2,016 Portfolio Investments, Equities and 560 532 Bonds Total 2,187 2,549 8
Slide 9: Net Debt Position
Net Debt Position US$M 31-Dec-2016 31-Dec-2015 Liquid Assets 2,187 2,549 Debt 4,091 4,102 Net Debt 1,904 1,553 9
Slide 10: Debt-to-Equity Ratios
Debt-to-Equity Ratios Gross Debt to Equity Net Debt to Equity Gross Debt to Equity Ratio Ratio 1.0 1.0 0.91 0.86 0.85 0.79 0.63 0.64 0.5 0.48 0.5 0.42 0.32 0.28 0.25 0.12 0.06 0 0 2010 2011 2012 2013 2014 2015 2016 2010 2011 2012 2013 2014 2015 2016 10
Slide 11: Net debt to equity
Net debt to equity 18.00 16.00 14.00 12.00 Note: 10.00 Net debt/Equity ratio is based on reported ratio (if available) Mutiple (X) 8.00 6.00 5.14 4.00 2.07 2.00 1.56 1.68 1.30 1.07 0.67 0.71 0.81 0.33 0.33 0.42 Negative Equity 0.00 WHL MSK OOCL COSCO HPL EMC KL CMA NYK MOL HMM YML ZIM Net debt to Eq
Slide 12: Carrier's Z-score
Carrier's Z-score soe Caution Zone Distress Zone ‘ ee) f \ ofl * TERnnan Bee _— 0.00 T T T T T T T T T T T “' 1.00 4 2.00 + 3.00 + 4.00 - é - z¢ @¢ $¢ $$ $$ &§ $ G8 &F ZF E SF 3 § $ = 8 8 8 § § ¥ § F NK F S r) % r) fo) $ 2 ¥ 3g § ° < § 3 8 § ¥ Source: Drewry, Dec 2016
Slide 13: Container Transportation (excl. Logistics)
Container Transportation (excl. Logistics) 2016 2015 Liftings ('000 TEU) 6,081 5,576 Revenue (US$M) 4,704 5,301 Revenue Per TEU (US$) 774 951 Net Operating Capacity (TEU) 574,318 561,421 Load Factor (%) 84.9 82.4 13
Slide 14: Unit Operating Cost Saving 2016
Unit Operating Cost Saving 2016 2016 / 2015 2016 Per Lifting %▲ Proportion Total cost -12% 100% Cargo cost -8% 58% Equipment and repo costs -9% 14% Vessel Voyage cost -13% 19% Bunker cost -33% 9% 14
Slide 15: Cost Saving Ex Bunker 2016
Cost Saving Ex Bunker 2016 2016 2015 Operating Cost (1) 5,017 5,247 (include Logistics) Other Cost (2) 469 442 Bunker Cost (3) 435 603 Total Cost excl. Bunker (4) = (1) + (2) – (3) 5,051 5,086 Total Unit Cost excl. Bunker (4) ÷ total lifting 831 912 15
Slide 16: OOCL Revenue – FY2016
OOCL Revenue – FY2016 Planned deployment of (6x) 20,000 TEU Class in 2017 to grow Asia-Europe trade. Total US$4,701 mil 16
Slide 17: Total Operating Costs – 2016
Total Operating Costs – 2016 2016 2015 14% 14% 13% 13% 58% 56% 6% 6% 11% 9% Note: The cost of OOCL Logistics is included in Cargo Cost 17
Slide 18: 2016 Market
2016 Market 18
Slide 19: 2016 Review
2016 Review Record low freight rates Trade mix impact. Higher fuel prices in 2H16. 19
Slide 20: Trade Volume
Trade Volume YTD YTD YTD Trade 2016 vs 2015 2015 vs 2014 2014 vs 2013 Trans Pacific EB 4.6% 3.6% 6.0% Asia Europe WB 1.2% -3.1% 7.4% Intra Asia (IADA) -2.9% -3.7% 1.9% Trans Atlantic 3.1% 4.7% 8.9% WB Sources: JOC, CTS, IADA 20
Slide 21: SCFI
1,000 1,200 1,400 1,600 1,800 0 200 600 800 400 16/10/2009 27/11/2009 15/1/2010 5/3/2010 SCFI 16/4/2010 28/5/2010 9/7/2010 20/8/2010 1/10/2010 12/11/2010 24/12/2010 11/2/2011 25/3/2011 6/5/2011 17/6/2011 29/7/2011 9/9/2011 21/10/2011 2/12/2011 13/1/2012 24/2/2012 6/4/2012 18/5/2012 29/6/2012 SCFI 8/
Slide 22: Container Transportation Performance
Container Transportation Performance 2009 2010 2011 2012 2013 2014 2015 2016 Revenue Per 924 1,178 1,099 1,131 1,060 1,040 936 774 TEU (US$) 22
Slide 23: Container Transportation Performance
Container Transportation Performance US$ / TEU 2016 2015 Revenue (US$M) 4,704 5,301 Revenue Per TEU (US$) 774 951 Load Factor round trip % 84.9 82.4 23
Slide 24: Bunker price
Bunker price US$/t Sing 380c St (M) 400.00 350.00 300.00 250.00 200.00 150.00 100.00 50.00 - Jan-2016 Feb-2016 Mar-2016 Apr-2016 May-2016 Jun-2016 Jul-2016 Aug-2016 Sep-2016 Oct-2016 Nov-2016 Dec-2016 24
Slide 25: 2016 Review
2016 Review Continued Consolidation. Change in Alliance structures announced. Fleet rationalisation / Network optimisation. Phase One of Long Beach Container Terminal. Cost efficiencies and yield management through IT. 25
Slide 26: Industry Consolidation
Industry Consolidation Market continues to consolidate with 16 alliance carriers now becoming 12, totaling 14 including independents. 2018 will see further consolidation with formation of Japan 3. Extreme fragmentation of the industry slowly reducing A more stable environment better for line
Slide 27: Ocean Alliance
Ocean Alliance New Alliance consisting of OOCL, CMA CGM, COSCO, Evergreen announced in 2016. OOCL together with #3, #4 and #5 largest container shipping companies. Binding agreement from April 2017 for an initial period of 5 years. Founding member of leading alliance. 98 new vessels of app
Slide 28: Ocean Alliance vs G6
Ocean Alliance vs G6 Larger service network More extensive coverage, especially in AE, ME. More service offerings in 5 out of our 7 trade lanes. Most financially robust alliance Increasing customer awareness and preference. Gain scale now, and in the future 10 Weekly Services 9 8 7 6 5 4
Slide 29: New Alliances Comparison
New Alliances Comparison Source: Alphaliner 29 28-02-2017
Slide 30: Independent Analysis of Alliances
Independent Analysis of Alliances More and Younger Ultra Large Vessels Most Weekly Service Offerings 16 100 14 90 80 12 70 10 60 8 50 40 6 30 4 20 2 10 0 0 10,000-13,300 13,300-17,999 18,000-21,000 FE-West Coast FE-East Coast FE-N.Europe FE-Med Ocean Alliance 2M THE Alliance Ocean Alliance 2M THE Al
Slide 31: Independent Analysis of Alliances
Independent Analysis of Alliances Number of Fastest Transit Times Per Route Port Pairs 30 163 25 158 25 24 24 20 121 109 111 17 100 15 15 15 14 12 10 6 5 0 FE-USWC FE-USEC FE-Europe TP Asia Europe Asia Med Source: SeaIntel Ocean Alliance 2M THE Alliance Ocean Alliance 2M 31 Feb 2017
Slide 32: Property Investment
Property Investment Wall Street Plaza Fair value gain of US$18.5 million for 2016 Valuation of US$220 million as at 31 December 2016 Performance is in line with expectations Vacancy rate of 2.4% as at end of 31 December 2016 Hui Xian REIT Long term but non core investment. Originally
Slide 33: Long Beach Container Terminal
Long Beach Container Terminal A significant investment in the future Nov 2016 8-6-2015 33 33
Slide 34: Long Beach Container Terminal
Long Beach Container Terminal Located at the largest Asia-U.S. gateway, ~55% Trans-Pacific volume 1,296m berth, 304 acres 3.3m TEU capacity 3 phases, complete by 2020 40 year lease Port of Long Beach investing US$1.5 billion, OOCL at US$650 million Automation with most advanced technology – first in
Slide 35: Long Beach Container Terminal
Long Beach Container Terminal April 10th 2016 OOCL Long Beach berthed at LBCT 35 35
Slide 36: Long Beach Container Terminal
Long Beach Container Terminal 4Q 2015 1H 2016 2H 2016 New New 2018 Phase Go live – 2020 Full terminal terminal out of old Parallel completion phase one phase one terminals calls completion testing 36
Slide 37: Long Beach Container Terminal
Long Beach Container Terminal Terminal continues to perform above expectation. Anticipating significant cost savings, notwithstanding 2016 start up costs. Over 50% of US$650m budget spent, ongoing spend flat across periods. Depreciation started as from 2016 : non-material impact. Further c
Slide 38: LBCT Operating Status December 2016
LBCT Operating Status December 2016 Automated Pre-Automation Truck Turn Time 42 minutes 85 minutes Unloaded Time: 8800 TEU vessel 4 days 6 days with 7800 moves 38
Slide 39: Industry Environment 2017
Industry Environment 2017 Negative Positive GDP growth present but uncertain. Signs of improving economic data. 2016 contract rates for TransPacific still affecting 2017 revenue till end April Consolidation stablising a highly 2017. fragmented industry. • M & A Activities High numbers of v
Slide 40: New Building Deliveries - Static Slots
New Building Deliveries - Static Slots mil TEU 9.2% < 7,499 TEU ships 1.8 1.73 7,500 -14,500NPX 7.0% 8.5% 1.6 6.2% > 13,300 TEU ships 1.49 1.47 1.41 1.4 0.81 1.2 0.60 4.6% 0.70 1.0 0.93 0.89 0.8 0.48 0.6 0.55 0.70 0.50 1.1% 0.4 0.35 0.27 0.34 0.2 0.32 0.29 0.22 0.22 0.17 0.11 0.02 0.0 0.03 2014 2015
Slide 41: YoY Weekly Capacity Growth
YoY Weekly Capacity Growth TransPacific Trade Asia-Europe Trade 12.0% 6.0% 10.9% 10.1% 10.0% 4.0% 3.8% 4.0% 2.9% 3.0% 8.0% 2.1% 6.2% 2.0% 6.0% 0.8% 4.9% 4.5% 0.0% 0.0% 4.0% -0.2% 2.0% 2.0% -2.0% -1.4% -2.0% -2.5% -2.6% -2.4% 0.0% -4.0% -3.8% -0.5%-0.4% -2.0% -1.6% -6.0% -2.8% -3.0% -4.0% -3.4% -3.6%
Slide 42: Trade Volume – YTD Feb 2017
Trade Volume – YTD Feb 2017 YTD YTD YTD Trade 2017 vs 2016 2016 v 2015 2015 v 2014 Trans Pacific EB -2.8% 21.4% -13.8% Asia Europe 5.2% -1.4% -3.1% WB* Intra Asia -13.8% 4.0% -3.0% (IADA)* Trans Atlantic 8.7% 6.0% 1.3% WB Sources: JOC, CTS, IADA 42 *YTD Jan 2017
Slide 43: Global Demand and Supply Forecasts
Global Demand and Supply Forecasts Global 2008 2009 2010 2011 2012 2013 2014 2015 2016F 2017F 2018F Demand: Alphaliner demand Feb17 5.9% -8.3% 14.2% 8.3% 4.8% 3.6% 5.2% 1.4% 1.7% 1.7% 2.1% Clarkson demand Nov16(#4Q2016) 4.1% -9.2% 13.7% 7.8% 3.1% 5.1% 5.4% 2.2% 3.3% 4.0% Deutsche Bank Jan17 7.3% -6.
Slide 44: 2017 Shareholder Return (excl. dividends)
2017 Shareholder Return (excl. dividends) As at 06-03-2017 44
Slide 45: Price to Book Ratio
Price to Book Ratio > Carrier Price to Book Value (as of 7/3 close) COSCO (H) 1.65 YML 1.30 MSK 1.10 EMC 1.02 HMM 1.00 K Line 0.93 MOL 0.86 NYK 0.83 45
Slide 46: Financial Prudence
Financial Prudence • Robust Balance Sheet and High Liquidity Net debt to equity ratio 0.42 : 1 one of the lowest in the container transportation industry. Relative competitiveness on financing. Ability to retain initiative on Capex. US$ 2.2 billion of Liquid Assets. Interest rate hike hedg
Slide 47: OOIL GROUP
OOIL GROUP Proven Track Record Clear Direction Shareholder Management Alignment Forward Looking Financial Prudence 47
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