Orient Overseas (international) Limited · HKEX:316
Orient Overseas (international) — FY2019 Earnings Presentation
37 slides from Orient Overseas (international)'s earnings presentation, Mar 23, 2020
Slide 1: Orient Overseas (International) Limited Annual Results 2019
Orient Overseas (International) Limited Annual Results 2019 March 23, 2020
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: OOIL Highlights
OOIL Highlights Group Revenue (US$b) Group EBIT (US$m) Container Transport & Operating Cash Flow* Logistics EBIT Margin (%) (US$m) Financial 6.9 452 590 753 6.6 314 5.3 3.7 5% 44% 28% 2018 2019 2018 2019 2018 2019 2018 2019 Total Debt (US$b) Liquid Assets Net Debt to Equity 4.2 US$2.9b Balance Sheet
Slide 4: 4Q19 Operational Update
4Q19 Operational Update (“one Q4 2019 Q4 2018 change FY 2019 FY 2018 change REVENUE (US$ '000) : Trans-Pacific 635,082 670,004 -5.2% 2,512,795 2,437,146 3.1% Asia / Europe 305,036 297,334 2.6% 1,233,105 1,186,604 3.9% Trans-Atlantic 150,292 136,793 9.9% 593,206 514,427 15.3% Intra-Asia / Australasia
Slide 5: Group Results Breakdown
Group Results Breakdown US$M 31-Dec-2019 31-Dec-2018 Container Transportation and Logistics – EBIT* 293.4 210.3 EBIT margin* 4.28% 3.21% Property and Investments - EBIT 82.0 67.0 OOIL GROUP - EBIT 375.4 277.3 Finance Costs (151.6) (143.2) Taxation (69.8) (58.6) Profit from discontinued operation 41.
Slide 6: Group Balance Sheet Highlights
Group Balance Sheet Highlights US$M 31-Dec-2019 31-Dec-2018 Non-Current Assets 6,756 6,807 Current Assets 4,446 2,774 Assets Held for Sale - 473 Total Assets 11,202 10,054 Non-Current Liabilities 3,504 3,806 Current Liabilities 2,771 1,372 Liabilities Directly Associated with Assets - 141 Classified
Slide 7: Balance Sheet
Balance Sheet OOIL Net Debt to Equity Continue to maintain stronger than peer average balance sheet Competitive funding arrangements 0.42 0.43 0.41 with diversified network of banks 0.32 0.25 0.28 0.23 0.12 Focus on both cost and amount of 0.06 indebtness 2011 2012 2013 2014 2015 2016 2017 2018 2019
Slide 8: Total Liquid Assets
Total Liquid Assets US$M 31-Dec-2019 31-Dec-2018 Cash and Bank Balances 2,515 1,646 Portfolio Investments, Equities and Bonds 344 601 Total * 2,859 2,247 * Excluding cash and bank balances set aside for special dividend payment 8
Slide 9: Net Debt
Net Debt US$M 31-Dec-2019 31-Dec-2018 Liquid Assets 2,859 2,247 Debt 3,991 4,198 Net Debt 1,132 1,951 9
Slide 10: Container transportation (excl. logistics)
Container transportation (excl. logistics) 2019 / 2018 2019 2018 %▲ Liftings ('000 TEU) 6,954 6,697 4% Freight Revenue (US$M) 6,276 5,963 5% Freight Revenue Per TEU (US$) 902 890 1% Net operating capacity (TEU) 733,580 701,463 5% Load Factor (%) 82.8 82.9 0.1% pt 10
Slide 11: Market Situation
Market Situation Shanghai Container Freight Index US$ 1,350 1074 Freight Revenue per TEU (US$) 1,150 1,200 943 827 833 1,000 902 861 890 950 811 773 724 800 650 600 750 400 200 550 0 350 2016 2017 2018 2019 SCFI Average 11
Slide 12: Supply & Demand
Supply & Demand Demand growth in 2019 was steady but unspectacular GDP World Growth (%) 3.8% Expectations at the start of 3.6% 3.4% 3.6% 2020 were cautiously optimistic 3.2% 3.0% CoVid-19 outbreak makes all current demand forecasts outdated Supply side growth manageable Low orderbook Retrofits 2016
Slide 13: Orderbook-to-Fleet Ratio
Orderbook-to-Fleet Ratio Source: Alphaliner Monthly Monitor 13
Slide 14: New Vessel Orders
New Vessel Orders Size No. of vessels Total TEU 23 Mar 2020 YTD 13K TEU or above 5* 115,000* Below 13K TEU - - Total 5 115,000 2019 13K TEU or above 34 635,616 Below 13K TEU 63 148,765 Total 97 784,381 2018 13K TEU or above 35 621,896 Below 13K TEU 180 674,985 Total 215 1,296,881 2017 13K TEU or abo
Slide 15: Gross New Building Deliveries
Gross New Building Deliveries million TEU 9.2% < 7,499 TEU ships 1.8 1.73 7,500 -14,500NPX 8.5% > 13,300 TEU ships 1.6 1.47 6.2% 1.4 5.9% 1.30 4.9% 0.81 1.19 4.7% 1.2 1.13 0.60 4.6% 1.06 3.4% 1.0 0.94 0.59 0.46 0.84 0.66 0.8 0.55 0.21 0.48 1.8% 0.6 0.55 0.70 0.36 0.44 0.51 0.4 0.48 0.34 0.36 0.33 0.
Slide 16: Scrapping
Scrapping Source: Alphaliner (Feb 2020 Monthly Monitor) 16
Slide 17: Diversified Revenue Base
Diversified Revenue Base 2019 2018 Revenue by Trade (US$000's) Revenue by Trade (US$000's) Intra Asia / Intra Asia / Australasia Australasia $1,936,483 Trans-Pacific $1,825,012 Trans-Pacific 31% $2,512,795 30% $2,437,146 40% 41% Trans-Atlantic Trans-Atlantic (incl. Intra (incl. Intra Europe) Europe)
Slide 18: Industry Trade Volume FY 2019
Industry Trade Volume FY 2019 FY FY FY Trade 2019 vs 2018 2018 vs 2017 2017 vs 2016 Trans Pacific EB (1.9%) 7.8% 6.2% Asia Europe WB 2.6% 2.0% 4.4% Intra Asia 1.1% 4.1% 3.9% Trans Atlantic WB 3.6% 4.5% 7.1% Sources: Datamyne and CTS 18
Slide 19: Industry Trade Volume FY 2019
Industry Trade Volume FY 2019 Trans Pacific EB Asia Europe WB Intra Asia Trans Atlantic WB Demand Demand Demand Demand 2019 2018 2017 2019 2018 2017 2019 2018 2017 2019 2018 2017 JAN 6.4% 7.5% 4.7% 9.7% 1.2% 5.9% 2.4% 10.0% 3.1% 17.1% 1.6% 11.1% FEB (5.2%) 18.8% (11.3%) (16.2%) 30.5% (9.0%) (2.9%) 5
Slide 20: Operating costs 2019
Operating costs 2019 2019 2019 Per Lifting / 2018 Proportion %▲ Total cost 0% 100% Cargo cost 1% 50% Equipment and Repo costs 9% 13% Vessel and Voyage cost 10% 22% Bunker cost 4% 15% Note: Results presented above include liner business continuing operations only. 20
Slide 21: Bunker Costs
Bunker Costs US$M 2019 2018 %▲ Total Bunker Costs (US$M) 839 844 -1% Average Bunker Price (US$ per TON) 442 436 1% Total Bunker Consumption ('000 TON) 1,897 1,936 -2% Net Operating Capacity (‘000 TEU) 734 701 5% 21
Slide 22: New Vessel Order
New Vessel Order 5 x 23000 TEU vessels, delivery 2023 Consistent with OOCL’s long-standing plan ▪ 6 x 21413 TEU vessels ordered in 2015, delivery 2017-18 ▪ Always anticipated order of a further 5 or 6 mega vessels ▪ Order delayed because of 2016 market and then COSCO acquisition ▪ Now in strong posi
Slide 23: LBCT Sale
LBCT Sale CFIUS requirement as part of consent to COSCO / OOIL transaction Completed in Q4 2019 for US$ 1.78 Billion Continuing access to the terminal for OOCL under long-term contract Gain of US$ 1.15 Billion Special dividend of US$ 1.6 per ordinary share, paid in February 2020 23
Slide 24: Covid-19
Covid-19 Sudden outbreak creates tremendous uncertainty February outlook appeared more positive ▪ Good progress in containing outbreak in China ▪ Growth reduced for short period of time ▪ Accompanied by supply chain interruptions ▪ Catch-up demand and economic stimulus could help global economy to r
Slide 25: Developments in World Trade
Developments in World Trade A major topic of uncertainty in 2019 ▪ Generalised feeling of risk of increased protectionism ▪ US-China discussions ▪ Potential for US-EU discussions ▪ Brexit uncertainty Still a question in 2020, but perhaps less so ▪ Signing of the first part of a US-China trade deal ▪
Slide 26: IMO2020 Impact
IMO2020 Impact New regulation as from 1 Jan 2020 ▪ Vessels must use fuel with sulphur content of no more than 0.5% ▪ Vessels may not carry non-compliant fuel onboard as from 1 March ▪ Several alternative ways to comply with 0.5% rule OOCL strategy ▪ Base case is that we use VLSFO ▪ VLSFO supply appe
Slide 27: IMO2020 Impact
IMO2020 Impact Scrubber economics ▪ Value depends on the spread between VLSFO & HSFO ▪ In theory, repay upfront capex with savings from cheaper fuel ▪ Some uncertainties, but in Dec / Jan, VLSFO vs HSFO spread high OOCL position ▪ 1 vessel with scrubber, fitted during a scheduled dry dock ▪ Any furt
Slide 28: Bunker Price - Sing 380c St (M) & Sing VLSFO
Bunker Price - Sing 380c St (M) & Sing VLSFO 800 740 700 600 500 394 400 335 300 200 100 123 - Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Sing 380c St (M) Sing VLSFO Spread 28
Slide 29: Implementation of HKFRS 16
Implementation of HKFRS 16 HKFRS16 implemented from January 2019 Capitalise all leases as at 1 January 2019 except for lease term of 12 months or less and with low value Recategorise operating leases to being on balance sheet EBITDA positively impacted as costs move from ‘Vessel Costs’ to interest a
Slide 30: Implementation of HKFRS 16
Implementation of HKFRS 16 Leases impacted: Smaller vessels >1 year charters, but still short term (typically 2-3 years) No significant distortion of Group credit metrics Only significant impact was LBCT (now sold) Net impact excluding LBCT: Balance Sheet Liabilities increase by US$ 224 million as a
Slide 31: COSCO's Six Commitments
COSCO’s Six Commitments (1) Keep the existing OOIL branding (2) Retain the listing status of OOIL (3) Maintain OOIL’s global headquarters functions and presence in Hong Kong (4) Maintain the reporting lines (5) Commit to the continuity and stability of OOIL management team, business operations and g
Slide 32: Conclusion
Conclusion OOIL produced a very good set of results in 2019 LBCT sale concluded, providing significant extra resources to the group Economic context gave grounds for cautious optimism before Covid-19: Better balance of supply and demand Continuing relative resilience of some major economies Containe
Slide 33: Page 33
sco SHIPPING SZ We take it personally TOGETHER WE ACHIEVE GREATER SUCCESS
Slide 34: Ownership Structure
Ownership Structure (1919.HK) 34
Slide 35: OOIL Board Seats
OOIL OOIL Board Seats Capt. Xu Lirong Chairman & Executive Director 4 x New cornerstone Non-Executive Directors Executive Directors investors: Wang Haimin 5x CEO (OOIL) Yang Zhijian Independent Non-Executive Directors CEO(OOCL) Feng Boming 5x Executive Director Zhang Mingwen Lammy Lee CFO Board Secr
Slide 36: OOCL Management Team
OOCL Management Team €> Pan Zhijian Yang > Lo { Zz Director Erxin Yao Kenny Ye Mingwen Zhang Steve Siu Director / DCFO Director AL Lammy Lee Michael Fitzgerald Shuai Chen Raymond Fung Teddy Fung 36
Slide 37: Orient Overseas (International) Limited
eo Orient Overseas (International) Limited
Orient Overseas (International) — FY2019 Earnings Presentation on 6ix