China Sunsine Chemical Holdings Ltd. · SGX:QES
China Sunsine Chemical — H1 2021 Earnings Presentation
50 slides from China Sunsine Chemical's earnings presentation, Aug 17, 2021
Slide 1: Company Presentation & First Half 2021 Interim Financial Results
Company Presentation & First Half 2021 Interim Financial Results 17 August 2021 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 MARKET SHARE 40% 33% 33% 34% 35% 33% 29% 30% 30% 31% PRC Market Share 30% 28% 24% 24% 25% 25% 22% 19% 20% 20% 20% 20% 17% 17% 18% Global Market Share 14% 16% (Est.) 15% 11% 12% 12% 10% 7% 5% 0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20
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 2020 Capacity 2020 China Sunsine 117,000 tonnes Yanggu Huatai 40,000 tonnes 中国尚舜 阳谷华泰 Yanggu Huatai 60,000 tonnes China Sunsine 30,000 tonnes 阳谷华泰 中国尚舜 +3
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 • Heating plant: Centralised steam production • Hengshun New M
Slide 12: Financial Overview
12 Financial Overview
Slide 13: Financial Highlights
Financial Highlights 13 RMB ’mln First Half Year Ended 30/06/21 30/06/20 Change Group Revenue 1,757.5 1,042.6 69% Gross Profit 552.3 241.9 128% Gross Profit Margin 31.4% 23.2% 8.2 pts Adjusted EBITA 408.7 165.9 146% Profit Before Tax 360.7 114.9 214% Profit After Tax 265.2 82.4 222% EPS 27.32/ 8.46/
Slide 14: Revenue Growth
Revenue Growth 14 RMB ’mln 4000 3500 3,283.3 3000 2,738.4 2,691.6 2500 2,333.7 2,077.3 2,036.9 2000 1,859.1 1,757.5 1,695.9 1500 1,417.3 1,175.1 991.4 1,042.6 1000 797.9 718.4 619.5 500 0 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 1H20 1H21 1H21 Revenue increased by 69% du
Slide 15: Sales Contribution - by region
Sales Contribution-by region 15 Rest of Asia Region 1H2021 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 4% 8% Others 4% 3% 2% Total 100% 100% 100% • International sales rebounded due to the global economy recovery in 1
Slide 16: Sales Contribution - by products
Sales Contribution-by products 16 IS 9% Product 1H2021 FY2020 FY2019 Accelerators 62% 63% 66% Anti- IS 27% 9% 10% 10% Accelerators oxidants 28% Anti-oxidants 28% 26% 23% 62% 2% Others 8% 1% 1% 1% Others Total 100% 100% 100%
Slide 17: Overall Average Selling Price (ASP)
Overall Average Selling Price (ASP) 17 RMB/Tonne 30,000 25.9K 25,000 21.5K 19.8K 20,000 19.3K 19.1K 19.4K 18.6K 18.3K 17.4K 16.0K 16.2K 17.2K 15,000 15.8K 15.0K 13.6K 10,000 5,000 0 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 1H21
Slide 18: ASP vs Aniline Price (half-yearly)
ASP vs Aniline Price (half-yearly) 18 RMB/Tonne 25,000 23.3K 20.5K 20,000 19.9K 18.6K 18.1K 17.2K 15.4K 14.3K 14.9K 15,000 13.6K 13.6K ASP 10,000 8.4K 9.7K 9.0K Aniline 6.2K 7.1K 6.8K 5.0K 6.0K 5.0K 4.8K 4.9K 5,000 0 1H16 2H16 1H17 2H17 1H18 2H18 1H19 2H19 1H20 2H20 1H21 • ASP increase due to: - Hig
Slide 19: Sales Volume
Sales Volume 19 Tonnes 200,000 169,876 167,455 160,000 151,486 140,476 135,791 120,000 114,572 108,973 98,345 93,162 81,371 76,320 80,000 60,907 54,275 45,420 40,000 31,036 30,787 0 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 1H20 1H21 1H21 sales volume up 22% y-o-y mainly
Slide 20: Sales Volume by Products
Sales Volume by Products 20 Tonnes 60,000 49,660 40,480 40,000 21,564 25,595 17,076 20,000 13,333 0 1H20 1H21 Accelerator Insoluble Sulphure Anti-oxidants Others Utilization Rate 1H20 1H21 Accelerators 83% 85% Insoluble Sulphur 89% 114% Anti-oxidants 96% 114% Overall 87% 97% Note: New 20,000-tonne h
Slide 21: Sales Volume (half-yearly)
Sales Volume (half-yearly) 21 Tonnes 100,000 95,000 93,556 93,162 90,000 85,377 85,000 82,078 1H21 vs 1H20 : +22% 80,000 77,123 76,320 1H21 vs 2H20 : - 0.4% 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 1H21
Slide 22: Gross Profit
Gross Profit 22 RMB ’mln 1200.0 1125.9 1000.0 788.1 780.8 800.0 567.4 600.3 600.0 547.1 552.3 492.0 400.0 308.0 293.4 226.8 224.1 243.9 241.9 200.0 125.2 160.2 0.0 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 1H20 1H21
Slide 23: Net Profit
Net Profit 23 RMB ’mln 700 641.3 600 500 388.9 400 341.3 300 265.2 220.2 221.7 218.8 195.2 200 106.7 88.3 115.3 99.4 100 76.1 76.7 82.4 32 0 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 1H20 1H21
Slide 24: Net Profit (half-yearly)
Net Profit (half-yearly) 24 RMB ’mln 400.0 350.0 341.2 300.0 266.0 265.2 1H21 vs 1H20: +222% 252.0 250.0 1H21 vs 2H20: +94% 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
Slide 25: Margins Analysis
Margins Analysis 25 40.0% 34.3% 35.0% 31.4% 28.4% 28.8% 29.0% 30.0% 27.3% 26.5%26.9% 25.7% 25.0% 25.0% 22.3% 22.6% 20.2% Gross Profit Margin 19.5% 20.0% 17.2% 18.2% (GPM) 14.4% 15.1% 15.0% 13.3% 12.3% 12.3%11.6% 10.6% 10.9% 12.5% Net Profit Margin 10.0% 8.5% (NPM) 10.5% 9.4% 5.0% 2.3% 4.5% 0.0% FY07
Slide 26: Margins Analysis (half-yearly)
Margins Analysis (half-yearly) 26 40.0% 35.8% 34.5% 35.0% 32.6% 31.4% 30.6% 30.0% 27.7% 26.6% 27.8% 25.8% 25.0% 22.4% 22.9% 23.2% Gross Profit Margin 18.8% (GPM) 20.0% 16.3% 15.1% Net Profit Margin 13.9% (NPM) 15.0% 12.6% 10.7% 9.6% 10.6% 10.0% 8.8% 7.9% 5.0% 0.0% • 1H21 GPM continued to grow due ma
Slide 27: Balance Sheets Highlight
Balance Sheets Highlight 27 31/12/2020 31/12/2020 31/12/2019 Current Assets (RMB’mln) * 2,479.7 2,239.2 2,219.6 Current Liabilities (RMB’mln) 567.6 451.4 347.4 Current Ratio 4.37 4.96 6.39 Shareholders’ Equity (RMB’mln) 2,937.3 2,720.7 2,561.6 D/E ratio * 0 0 0 NAV per share (RMB cents) 302.66/ 280.
Slide 28: Key Developments
28 Key Developments
Slide 29: Expansion Projects-1
Expansion Projects-1 29 Project Status CapEx Comprehensive Chemical Zone (Hengshun New Materials Co.) Pending for trial-run approval 30,000-tonne Insoluble Sulphur RMB270 mln Commercial production: 4Q2021 Testing stage 30,000-tonne Anti-oxidant TMQ Commercial production: RMB 150 mln (Yongshun New Di
Slide 30: Expansion Projects-2
Expansion Projects-2 30 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 Start and complete in 2021 (including some area of 50 mu common facilities) Kick-off soon Phase II 50,000-tonne with land Expectin
Slide 31: Annual Capacity
Annual Capacity 31 2007 FY17 FY18 FY19 FY20 FY21e (before IPO) Rubber Accelerators 32,000 87,000 87,000 97,000 117,000 117,000 Insoluble Sulphur nil 20,000 30,000 30,000 30,000 60,000 Anti-oxidant (TMQ & 6PPD) nil 45,000 45,000 45,000 45,000 45,000 Total 32,000 152,000 162,000 172,000 192,000 222,00
Slide 32: Industry Info and Outlook
32 Industry Info and Outlook
Slide 33: China's New Car Sales
China’s New Car Sales 33 in million units % 35 35 28.9 30 30 28 28.1 25.8 25.3 25 23.5 24.6 25 22 20 18.5 19.3 15 20 18.1 sales 10 15 12.9 5 growth yoy 10 0 -5 5 -10 0 -15 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 1H2021 • 12.89 mln cars sold in China in 1H2021, up 25.6% y-o-y • Boosted
Slide 34: PRC Vehicle Population
PRC Vehicle Population 34 PRC Motor Vehicle & Car Population In mln units 450 400 372 383 348 350 327 310 279 290 281 292 300 264 250 260 240 250 217 194 200 172 154 150 137 100 50 0 2013 2014 2015 2016 2017 2018 2019 2020 1H2021 Car Population Motor Vehicle Poluation • China’s car population, tied
Slide 35: Global Vehicle Population
Global Vehicle Population 35 Source: Electric car forecast to 2040 | Wood Mackenzie • Global vehicle population is growing, mainly driven by rising car ownership in developing countries
Slide 36: Riding on Rising Tire Consumption
Riding on Rising Tire Consumption 36 Global Tyre Production 2014-2024 PRC Vehicle Outer Tyre Production in million units % 1200 1,114 10 965 947 8 1000 832 892 •925 926 816 842 818 6 800 4 600 2 0 400 -2 200 -4 0 -6 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 • OEM (for new cars) and replaceme
Slide 37: Some Investors' Concerns -1
Some Investors’ Concerns -1 37 Q : Are rubber chemicals commodities? A : No. They are products in the niche market. Reasons: 1. Commodity companies cannot have sustained high profits and good returns on capitals. China Sunsine has been profitable since 1998. It ROE has been between 15-25% since 2014
Slide 38: Some Investors' Concerns -2
Some Investors’ Concerns -2 38 Q : Are entry barriers high for the rubber chemical industry? A : Yes. Reasons: 1. Capital intensive -- land, environmental protection and safety infrastructure. 2. Know-how -- technology, talents and management skills are required to produce specialty chemicals. 3. St
Slide 39: Some Investors' Concerns -3
Some Investors’ Concerns -3 39 Q : Will weakening car sales affect the rubber chemical industry? A : There will be material impact only if the new car sales experience significant negative growth Reasons: 1. New cars accounts for around 30% of tyre consumption. Cars in-use consume the remaining 70%
Slide 40: Some Investors' Concerns -4
Some Investors’ Concerns -4 40 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 & supply situation and r
Slide 41: Some Investors' Concerns -5
Some Investors’ Concerns -5 41 Q : Will the US Tariffs against Chinese goods affect the Group’s performance? A : The Group expects the impact to be minimal and manageable. Reasons: 1. Our sales to US accounts for about 2-4% of our total revenue. 2. The Group is the world largest accelerators produce
Slide 42: Macro Economy
Macro Economy 42 • The global economy growth is forecast to 6% in 2021 from 3.5% contraction in 2020, but widening gaps between advanced economies and many emerging market – IMF forecast July 2021 Update • The Chinese economy shows strong resilience and a robust rebound. In 1H2021, GDP grew 12.7%, t
Slide 43: Industry Outlook
Industry Outlook 43 • The utilization rate of tyre manufacturing was improving in 1H2021, driven by the economy recovery and robust auto market, but it appears to have declined since May 2021 • Raw material prices have steadily recovered from their trough in 2020, providing a strong support to our A
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 34% of PRC market and 22% 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 6 5.5 600 5 4.5 500 4 400 3.5 3 Net Profit 300 2.5 Dividend 2 200 1.5 100 1 0.5 0 0 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 -- 1: 2 share split in Nov 2019 -- FY20 payout ratio 22%
Slide 48: Investment Merits
Investment Merits 48 ✓ Market leadership position and largest market share in rubber accelerators ✓ Strong customer base ✓ Capacity expansion ongoing, aiming to grow sales volume and market share ✓ Strong cash position (cash per share SGD0.287) with no bank loan ✓ 14-year track record & annual divid
Slide 49: Chairman's Message
Chairman’s Message 49 “We are pleased to deliver a strong set of financial results in 1H2021. China’s economy was recovering rapidly in the first half of this year from the devastation of COVID-19. The Chinese rubber chemicals industry has experienced consolidation over the past few years. Now, we s
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 — H1 2021 Earnings Presentation on 6ix