Singapore Exchange Ltd. · SGX:S68
Singapore Exchange — China Essence Group — Q3 FY2010 Earnings Presentation
23 slides from Singapore Exchange's earnings presentation, Feb 9, 2010
Slide 1: 3Q FY2010 Results Presentation
3Q FY2010 Results Presentation 9 February 2010
Slide 2: Key Highlights
Key Highlights “A leading integrated producer of potato products in the PRC , harnessing the goodness of the potato to develop a range of primary, downstream and by-products for use across numerous industries”
Slide 3: Key Highlights
Key Highlights • China Essence continues to be impacted by challenging economic conditions for the three months (3Q FY2010) and nine months (9M FY2010) ended 31 December 2009 • There are however signs of recovery, shown by a 39.5% quarter-on- quarter increase in revenue to RMB314.0m for 3Q FY2010 •
Slide 4: Financial Performance (3Q FY2010)
Financial Performance (3Q FY2010) • Group revenue at RMB314.0m for 3Q FY2010 • 11% year-on-year decline, from RMB352.6m in 3Q FY2009 • This was however a strong 39.5% quarter-on-quarter increase, from RMB225.0m in 2Q FY2010 • Net profit at RMB68.8m, a 15% decline from 3Q FY2009 • Overall gross profi
Slide 5: Update on Production Facilities
Update on Production Facilities Potato starch • Annual production capacity for potato starch stands at 170,000 t.p.a (production facilities in Lindian and SuiLing in Heilongjiang, and Ahlihe in Inner Mongolia) • Construction of the two new plants at Nenjiang, Heilongjiang and Zhalantun, Inner Mongol
Slide 6: Update on Production Facilities
Update on Production Facilities Potato protein • Production started in Sept 2008; sales commenced in Jun 2009 • Construction to double annual production of potato protein from the current capacity of 8,000 t.p.a to 16,000 t.p.a has progressed well. • Expected to commence production by harvest season
Slide 7: Financial Highlights
Financial Highlights “A leading integrated producer of potato products in the PRC , harnessing the goodness of the potato to develop a range of primary, downstream and by-products for use across numerous industries”
Slide 8: Results Highlights (YOY Comparison)
Results Highlights (YOY Comparison) RMB’m 3Q FY2010 3Q FY2009 % Change Revenue 314.0 352.6 (11) Gross profit 126.9 143.9 (12) PBT 80.8 98.4 (18) Tax (12.0) (17.3) (30) NPATMI 68.8 81.2 (15) EPS (basic) cents 17.6 20.7 (15) 8
Slide 9: Results Highlights (QOQ Comparison)
Results Highlights (QOQ Comparison) RMB’m 3Q FY2010 2Q FY2010 % Change Revenue 314.0 225.0 40.0 Gross profit 126.9 68.4 85.5 PBT 80.8 40.3 100.5 Tax (12.0) (10.1) 18.8 NPATMI 68.8 30.2 127.8 EPS (basic) cents 17.6 7.7 128.6 9
Slide 10: Revenue
RMB million Revenue 900 800 700 536.8 600 3Q 2010 500 314.0 858.8 400 300 521.2 3Q 2009 1H 2010 200 385.2 352.6 311.3 315.9 100 184.3 0 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 10
Slide 11: Revenue Analysis (3Q FY2010)
Revenue Analysis (3Q FY2010) 3Q FY2010 3Q FY2009 5.3% Potato starch 8.9% 9.6% Potato starch 15.6% Potato starch- 15.5% based products 70.2% Potato starch- Modified starch 74.9% based products Modified starch Potato protein and fibre 11
Slide 12: Change in sales volume and ASP
Change in sales volume and ASP Percentage change in sales volume/ ASP (%) 3Q FY2010 vs. 3Q FY2009 Sales Volume ASP Potato starch (11.1) (8.4) Potato starch-based products (2.7) (8.0) Modified starch (5.6) (14.1) Percentage change in sales volume/ ASP (%) 3Q FY2010 vs. 2Q FY2010 Sales Volume ASP Pota
Slide 13: Price Trends
Price Trends Average price of potatoes (per tonne) Average selling price of potato starch-based products (per tonne) (with VAT) Calendar Year / Calendar Year / Price (RMB) Price (RMB) Financial Year Financial Year 2006 / FY2007 320 2006 / FY2007 10,850 2007 / FY2008 450 2007 / FY2008 10,900 2008 / F
Slide 14: Price Trends
Price Trends Average price of potato protein (with VAT) Average selling price of potato fibre (with VAT) Calendar Year / Calendar Year / Price (RMB) Price (RMB) Financial Year Financial Year 1H FY2010 8,020 1H FY2010 1,200 3Q FY2010 9,511 3Q FY2010 1,200
Slide 15: Margin Review (YOY Comparison)
Margin Review (YOY Comparison) RMB’m Potato starch Potato starch- Modified starch Potato protein and based fibre 3Q 3Q % 3Q 3Q % 3Q 3Q % 3Q 3Q % FY2010 FY2009 Change FY2010 FY2009 Change FY2010 FY2009 Change FY2010 FY2009 Change Turnover 220.4 264.0 (16.5) 49.0 54.8 (10.5) 28.0 33.8 (17.2) 16.7 - -
Slide 16: Margin Review (QOQ Comparison)
Margin Review (QOQ Comparison) RMB’m Potato starch Potato starch- Modified starch Potato protein and based fibre 3Q 2Q % 3Q 2Q % 3Q 2Q % 3Q 2Q % FY2010 FY2010 Change FY2010 FY2010 Change FY2010 FY2010 Change FY2010 FY2010 Change Turnover 220.4 136.5 61.5 49.0 47.3 3.6 28.0 23.6 18.6 16.7 17.6 (5.6)
Slide 17: Operating Expenses
Operating Expenses 9M FY2010 vs 9M FY2009 Selling and distribution costs • Increased by 39.7% to RMB44.5 million due to • Increase in advertising and promotional expenses for the new products, potato protein and potato fibre • Increase in logistics and transportation costs as a result of the higher
Slide 18: Capacity Utilisation
Capacity Utilisation 3Q FY2010 FY2009 Lines Potato Potato Modified Potato Potato Potato Potato Modified starch starch- starch protein fibre starch starch- starch based based Max APC* 170,000 22,000 18,000 8,000 80,000 170,000 22,000 18,000 Actual 126,631 15,178 10,123 3,929 18,125 169,040 19,470 12,
Slide 19: Balance Sheet Highlights and Ratios
Balance Sheet Highlights and Ratios RMB’m As at 31 Dec 2009 As at 31 Mar 2009 Total assets 1,967.2 1,706.6 Non-current assets 1,096.5 1,103.9 Cash and bank balances 376.5 168.3 Shareholders’ equity 1,131.3 1,034.1 NTA per share (RMB) (1) 2.884 2.637 NTA per share (S$) (2) 0.60 0.57 Gearing (Total bo
Slide 20: Cash Flow Highlights
Cash Flow Highlights RMB’m 3Q FY2010 3Q FY2009 Cash flows from: Operating activities 107.6 (55.9) Investing activities (20.9) (490.8) Financing activities (120.3) 326.1 Net increase/(decrease) in C&CE 207.0 (220.6) C&CE at beginning of period 168.3 484.0 C&CE at end of period 376.5 262.6 20
Slide 21: Capex for Production Plants
Capex for Production Plants Products FY2011 FY2010 & FY2009 FY2008 Potato starch Nenjiang: 40,000 t.p.a Sui Ling: 40,000 t.p.a. Zhalantun: 40,000 t.p.a Ahlihe: 40,000 t.p.a. Potato starch-based - - - Modified starch - - - Potato by-products - Daqing and Ahlihe: Sui Ling: (protein and fibre) – protei
Slide 22: Outlook
Outlook • Slow but steady signs of recovery for China Essence with pick-up in orders; growth pace calibrated by still-tentative wider economic climate • Long term demand for potato starch remains supported by wide application in food and non-food industries, in line with growing world population • G
Slide 23: Thank You
fe China Essence Group Ltd. . ‘ The Essence Of Success
China Essence Group — Q3 FY2010 Earnings Presentation on 6ix