AsiaPhos Limited · SGX:5WV
AsiaPhos — Q2 2017 Earnings Presentation
43 slides from AsiaPhos's earnings presentation, Aug 16, 2017
Slide 1: 2Q2017 Results Summary & Analyst / Investor Briefing
Version: 16/8/2017 4:08 PM Filename: 20170815_2Q17_AnalystBriefing_CorporatePresentation_K&J_v3.ppt 2Q2017 Results Summary & Analyst / Investor Briefing LiFePO4
Slide 2: Disclaimer
Disclaimer This presentation should be read in conjunction with the: • Unaudited financial statements announcement of AsiaPhos Limited for 2Q2017 results dated 4 August 2017 • Audited financial statements announcement of AsiaPhos Limited for the full year ended 31 December 2016, dated 31 March 2017
Slide 3: Contents
Contents Key Messages Who We Are Our Business Financial Highlights Recent Developments Comparatives What are Phosphates? << Return to [Table of Contents] 3
Slide 4: Key Messages
Key Messages 1. Stronger operating cash flows 2. Improved P&L performance, primarily from higher P4 production/ sales 3. 19 June 2017: Announced a proposed internal restructuring, involving the Company’s wholly-owned subsidiary in PRC, to split the upstream mining and downstream chemical operations
Slide 5: Financial Highlights
Financial Highlights << Return to [Table of Contents] 5
Slide 6: Revenue Performance – 1H2017
Revenue Performance – 1H2017 Total Revenue (S$m) 50 44.5 40 34.3 30 28.2 23.8 20 1H17: 8.5 +143% 10 4.9 11.6 YOY 0 FY2012 FY2013 FY2014 FY2015 FY2016 1H2017 Change in business strategy drove topline improvement in 1H2017 1H2017 revenue increased +143% y-o-y due to: Sale of more P4, STPP, SHMP an
Slide 7: Revenue Performance
Revenue Performance Kept higher levels of phosphate rock inventory 5.3 for use/sale in 2H2017 -13% YoY Significantly higher P4 production & sales; +’ve growth from other +274% downstream (STPP, YoY 6.3 SHMP, other P-chemicals) Link to 2Q2017/1H2017 results announcement: http://asiaphos.com/pdf/20170
Slide 8: Operating Cash Flows: Improving Trend
Operating Cash Flows: Improving Trend Operating profit/(loss) before working capital changes (S$'000) 3,500 YTD’2017 3,000 2,500 2,000 1,500 FY2014 1,000 500 0 (500) (1,000) Q1 Q2 Q3 Q4 (1,500) 4Q13 FY2014 FY2015 FY2016 YTD'2017 Q1 (417) 389 (442) 754 Q2 (917) 1,244 1,993 2,928 Q3 462 927 258 Q4 721
Slide 9: P&L Trends
P&L Trends S$m FY2012 FY2013 FY2014 FY2015 FY2016 1H2017 Revenue 4.9 8.5 23.8 44.5 34.3 28.2 Gross Profit 2.1 2.6 4.7 8.5 5.3 4.9 Profit/(loss) After Tax 1.2 (3.7) 19.5 2.2 (1.7) 0.9 (“Net Profit for the period attributable to owners of the company”) Notable 1-timers: • Fair value gains on financial
Slide 10: Balance Sheet Highlights
Balance Sheet Highlights S$m As at 30 June 2017 As at 31 Dec 2016 Assets Current Assets 21.0 16.2 Non-Current Assets 120.5 121.6 Total Assets 141.5 137.8 Liabilities Current Liabilities 21.5 21.1 Non-Current Liabilities 20.0 25.6 Total Liabilities 41.4 46.7 Equity Share Capital 77.3 68.2 Reserves 13
Slide 11: Who We Are
Who We Are << Return to [Table of Contents] 11
Slide 12: Who We Are
Who We Are Established in 1996, AsiaPhos has rights to explore and mine phosphate in Sichuan Province, the PRC First company to be listed on the SGX-ST which is solely focused on exploring and mining phosphate in the PRC Adopts a vertically-integrated strategy from upstream operations (mining)
Slide 13: Our Business
Our Business << Return to [Table of Contents] 13
Slide 14: Vertically-Integrated Business Model
Vertically-Integrated Business Model Upstream: Phosphate Mining Operations Rocks Downstream: Chemical Production Operations P4 … Phosphoric Acid Other Downstream STPP / SHMP Polyphosphates (food & non food grade) << Return to [Table of Contents] 14
Slide 15: Downstream Operations: Gongxing Production Facilities
Downstream Operations: Gongxing Production Facilities Phase 1 (completed) Manufacture of yellow phosphorus (P4) - capacity of 20,000 tonnes per year Facilities designed to withstand earthquakes of up to 7.0 on Richter scale Phase 2 (in-progress) Manufacture of sodium tripolyphosphate (STPP) –
Slide 16: (Video, July 2017) Downstream Operations: Gongxing Production Facilities
(Video, July 2017) Downstream Operations: Gongxing Production Facilities << Return to [Table of Contents] 17
Slide 17: Strategic Locations
Strategic Locations Downstream production facilities are located at Gongxing Industrial Zone, only 40 km from the Group’s mines. P4 factory / bulk storage Mines From Mine to Factory via Truck (section of Mian Mao Highway) Polyphosphate/ STPP factory << Return to [Table of Contents] 18
Slide 18: Recent MOUs signed = Benefits from Fine-tuning the Business Strategy
Recent MOUs signed = Benefits from Fine-tuning the Business Strategy Third Party Shorter inventory Strategic Partner turnover cycle enables revenue to be generated Purchases P4-spec rocks Sells higher quality faster (higher silica) from partner rocks to partner Improve cash flows Channels P4-spec ro
Slide 19: Our Sustainability Achievements
Our Sustainability Achievements P4 Flue Gas Integrated Utilisation Sustainable Practices at various Technology Improvement Project stages of P4 production Objectives: To re-use flue gas to save energy P4 plant designed to comply with and reduce gas emissions (CO) discharge PRC environmental law
Slide 20: Recent Environmental Enhancements
Recent Environmental Enhancements (Wastewater treatment facility, at P4 plant) Before enhancements After enhancements << Return to [Table of Contents] 21
Slide 21: Photos: Phosphate Mines
Photos: Phosphate Mines Portal to CQY, Well #1 (with tramway system / flood prevention upgrades) Rail/Tramway system at Mines CCTV / mine control monitoring & Tunnel construction near mines 矿山轨道车系统 communications systems (redesigned Mian-Mao Highway) In accordance with the local PRC regulations, we
Slide 22: Photos: Mines to Factory
Photos: Mines to Factory Tramway system at Mines From Mine to Factory via Truck Weighbridge: (section of Mian Mao Highway) Rock / materials handling and zoning P4 factory / bulk storage P4 factory control centre Polyphosphate/ STPP factory << Return to [Table of Contents] 23
Slide 23: Recent Developments
Recent Developments << Return to [Table of Contents] 24
Slide 24: Recent Announcements
Recent Announcements May 2017: Incorporated a wholly-owned subsidiary in Hong Kong under the name of APC Limited on 29 May 2017. June 2017: Announced a proposed internal restructuring, involving our fully-owned subsidiary in PRC (Sichuan Mianzhu Norwest Phosphate Chemicals, ‘SMNPC’), to split th
Slide 25: STPP/SHMP & Other Polyphosphates: The Third Growth Engine
STPP/SHMP & Other Polyphosphates: The Third Growth Engine Potential third growth engine in sodium tripolyphosphate (STPP), SHMP & other Polyphosphates (recycling P4 flue gas, as energy source = lower production costs) Can leverage existing STPP/Polyphosphate production facilities, on our Phase 2
Slide 26: Opportunities in Higher Growth Markets
Opportunities in Higher Growth Markets Fertiliser market/ other agriculture Industrial / Non-Fertilizer market • Approx ~85-90% of • ~10-15% of world phosphate rock phosphate rock goes to Fertiliser/Feed market • Growth rate (CAGR) • Higher growth rates approx. 2-3% LiFePO4 e.g. electric vehicles/ b
Slide 27: Export Market for Downstream Chemicals
Export Market for Downstream Chemicals Building customer base outside Sichuan, and beyond the PRC in the medium to long term Government has lowered minimum export price of P4 , enabling improved price competitiveness of PRC- produced P4 in export markets Our marketing efforts (e.g. participati
Slide 28: Potential Demand Growth Driver: Electric Vehicles/Battery Market
Potential Demand Growth Driver: (Electric Vehicles/Battery Market) Phosphorus is used in LiFePO4 (Lithium Iron Phosphate), a new reliable battery material LiFePO4 used in electric vehicles and smart power grids Every LiFePO4 battery in an electric car contains 60kg of phosphorus China’s Lithiu
Slide 29: Strategic Partnership with Mianyang Aostar (QiMingXing)
Strategic Partnership with Mianyang Aostar (QiMingXing) Signed a non-binding MOU in Nov 2016 for several initiatives: Promote development of the P4 market in PRC to establish reasonable pricing and prevent unfair competition Supply of phosphate rocks to Mianyang Aostar (LOI signed to supply 150,
Slide 30: Strategic Partnership with Lomon Chemicals
Strategic Partnership with Lomon Chemicals 四川龙蟒磷化工有限公司 Signed a strategic cooperation framework with Sichuan Lomon Phosphate Chemical Co. Ltd (“Lomon Chemicals”) in March 2017 for several agreements: The Group can supply an aggregate of 120,000 tonnes of phosphate rocks (with P2O5 content of 30% a
Slide 31: Benefits from Electricity Policy Reforms in China
Benefits from Electricity Policy Reforms in China Gov’t: Has encouraged more “Due to the current Increased Pace of Policy Reforms: Some Grid operators have bilateral price and volume severe overcapacity, Enables efficient producers to take been stripped of their negotiation between power power price
Slide 32: Completion of Mian Mao Highway (Hanwang to Qingping section)
Completion of Mian Mao Highway (Hanwang to Qingping section) Started July 2009, completed Maoxian October 2016 Changheba Part of Hong Kong/Sichuan post- earthquake reconstruction Qingping cooperation programme Increase accessibility between mines and production facilities Mianzhu / Hanwang Bef
Slide 33: Photos: Mian Mao Highway
Photos: Mian Mao Highway (Hanwang to Qingping section) Project construction scale: The construction section is about 24 kilometres long, including 5 new tunnels (8.4 kilometres), 20 bridges (2,167 meters), ‘rock-shed’ half-tunnels and other facilities. Project duration: Started construction July 200
Slide 34: Comparatives
Comparatives << Return to [Table of Contents] 35
Slide 35: Share Price vs NAV
Share Price vs NAV Premium to NAV 726.0% 486.3% 353.4% 217.1% 109.5% 106.5% 120.3% 73.3% 65.9% -2.2% Blackgold Geo Golden Resources Data as at Alliance Anchor Natural CNMC GCCP Energy Energy & Prima Wilton 15 August 2017 AsiaPhos Mineral Resources Resources Goldmine Resources Resources Resources Gro
Slide 36: Competitive Strengths
Competitive Strengths << Return to [Table of Contents] 37
Slide 37: Key Competitive Strengths
Key Competitive Strengths 1. Turnaround story • Profitable 1H2017 2. New business strategy • Accelerate revenue generation/inventory cycle 3. P4 output increase with • P4 output & sales increased in 2Q2017 lower production cost • Production cost positively impacted by lower electricity tariff 4. Mar
Slide 38: What Are Phosphates?
What Are Phosphates? << Return to [Table of Contents] 39
Slide 39: What Are Phosphates?
What Are Phosphates? “We may be able to substitute nuclear power for coal power, and plastics for wood and yeast for meat… But for phosphorus there is neither substitution nor replacement” Isaac Asimov’s 1959 essay “Life’s Bottleneck” << Return to [Table of Contents] 40
Slide 40: Uses of Phosphate and Related Chemicals
Uses of Phosphate and Related Chemicals Fertilisers Oral hygiene products Beverages Metal treatment/paint Fire retardants Pharmacy Products LCD/Semi-conductor LiFePO4 electric car battery/ energy storage STPP is used in the manufacturing: SHMP is used in the manufacturing: Food and
Slide 41: Thank You
AsiaPhos Limited 10 Kallang Avenue Aperia #05-11 Singapore 339510 Telephone: +65 6292 311 www.asiaphos.com Thank You << Return to [Table of Contents] 42
Slide 42: Appendix
Appendix << Return to [Table of Contents] 43
Slide 43: Further Reading
Further Reading “Miners regain mojo to spark $18b in exploration hunt, China at forefront” (Bloomberg/DealStreetAsia, 23/26 March 2017): http://www.dealstreetasia.com/stories/miners-regain-mojo-to-spark-18b-in-exploration-hunt-china-at-forefront- 68484/ Report: China adapts to ‘new normal’ of dwindl