Orient Overseas (international) Limited · HKEX:316
Orient Overseas (international) — H1 2019 Earnings Presentation
37 slides from Orient Overseas (international)'s earnings presentation, 2019
Slide 1: Orient Overseas (International) Limited Interim Results 2019
Orient Overseas (International) Limited Interim Results 2019
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 Revenue (US$b) Op. Profit (US$m) Container Transport & Cash Generation* 3.3 Logistics EBIT Margin (US$m) 198 (%) Financial 390 4.6 232 3.1 51 6% 292% -0.1 68% 1H 2018 1H 2019 1H 2018 1H 2019 1H 2018 1H 2019 1H 2018 1H 2019 Synergy Savings Fleet & Network Planning, Commercial, Procure
Slide 4: 2Q19 Operational Update
2Q19 Operational Update €> ( Q22019 ) Q22018 Change 1H 2019 1H 2018 Change LIFTINGS (TEU's) Trans-Pacific 502,507 505.712 _ -0.6% 943,691 963,173 -2.0% Asia / Europe 366,575 335,094 9.4% 691,815 637,773 8.5% Trans-Atlantic 123,472 106,124 16.3% 240,294 209,172 14.9% Intra Asia / Australasia 776,294
Slide 5: Group Result Breakdown
Group Result Breakdown US$M 30-Jun-2019 30-Jun-2018 Container Transportation and Logistics – EBIT 152.7 (3.1) EBIT margin 4.6% (0.1%) Property and Investments - EBIT Wall Street Plaza 4.4 44.4 Hui Xian 9.3 20.5 Interest, Investments and Others 40.1 (3.2) 53.8 61.7 OOIL GROUP - EBIT 206.5 58.6 Financ
Slide 6: Group Balance Sheet Highlights
Group Balance Sheet Highlights US$M 30-Jun-2019 31-Dec-2018 Non-current Assets 6,827 6,807 Current Assets 2,548 2,774 Assets held for sale 1,317 473 Total Assets 10,692 10,054 Non-current Liabilities 3,431 3,806 Current Liabilities 1,582 1,372 Liabilities directly associated with assets classified a
Slide 7: Balance Sheet
Balance Sheet OOIL Net Debt to Equity Continue to maintain stronger than peer average balance sheet 0.42 0.43 0.41 0.41 0.32 Competitive funding 0.25 0.28 arrangements with diversified 0.12 0.06 network of banks 2011 2012 2013 2014 2015 2016 2017 2018 1H 2019 Net Debt to Equity Comparison 5.00 4.64
Slide 8: Total Liquid Assets
Total Liquid Assets US$M 30-Jun-2019 31-Dec-2018 Cash and Bank Balances 1,412 1,646 Portfolio Investments, Equities and Bonds 577 601 Total 1,989 2,247 8
Slide 9: Net Debt Position
Net Debt Position US$M 30-Jun-2019 31-Dec-2018 Liquid Assets 1,989 2,247 Debt 3,938 4,198 Net Debt 1,949 1,951 9
Slide 10: Container Transportation (excl. logistics)
Container Transportation (excl. logistics) 1H 2019 1H 2019 1H 2018 / 1H 2018 %▲ Liftings ('000 TEU) 3,374 3,271 3% Revenue (US$M) 2,972 2,846 4% Revenue Per TEU (US$) 881 870 1% Load Factor (%) 81.6 82.5 0.9% pt Net operating capacity (TEU) 709,019 710,823 0% Note: Results presented above include th
Slide 11: Market Situation
Market Situation Shanghai Container Freight Index US$ Revenue per TEU (US$) 1,350 1,200 1,040 1,150 1,000 936 890 897 861 1,074 950 800 773 827 833 814 600 750 724 650 400 550 200 350 0 Apr-17 Oct-14 Oct-15 Oct-16 Oct-17 Oct-18 Jan-14 Apr-14 Jul-14 Jan-15 Apr-15 Jul-15 Jan-16 Apr-16 Jul-16 Jan-17 Ju
Slide 12: Supply & Demand
Supply & Demand Lower supply side growth than in 1H 2018, higher scrapping Limited new build ordering, good for 2020 & 2021 Industry adapting to fluctuations in market demand GDP World Growth (%) Global Container Trade Demand vs Supply (%) 3.8% 7% 3.6% 6% 3.5% 5% 4% 3% 3.2% 3.2% 2% 1% 0% 2016 2017 2
Slide 13: Orderbook-to-Fleet Ratio
Orderbook-to-Fleet Ratio Source: Alphaliner (projections based on orderbook as at 1 Jul 2019) 13
Slide 14: New Vessel Orders
New Vessel Orders Size No. of vessels Total TEU 1H19 13K TEU or above 10 150,000 Below 13K TEU 48 121,304 Total 58 271,304 2018 13K TEU or above 35 621,896 Below 13K TEU 180 674,985 Total 215 1,296,881 2017 13K TEU or above 31 623,476 Below 13K TEU 99 159,898 Total 130 783,374 Source: Alphaliner Dat
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 0.81 4.9% 1.19 4.7% 1.2 1.12 0.60 4.6% 1.05 1.0 0.94 0.59 0.66 0.48 0.8 0.52 2.3% 0.48 0.6 0.55 0.55 0.70 0.04 0.51 0.39 0.4 0.30 0.36 0.36 0.34 0.2 0.32 0.2
Slide 16: Scrapping
Scrapping Scrapping forecast 350K TEU in 2019 & 400K in 2020 Source: Alphaliner (July 2019 Monthly Monitor) 16
Slide 17: Diversified Revenue Base
Diversified Revenue Base 1H 2019 1H 2018 Revenue by Trade (US$000's) Revenue by Trade (US$000's) Intra Asia / Intra Asia / Australasia Australasia $937,690 Trans-Pacific $895,466 Trans-Pacific 31% $1,180,734 31% $1,116,157 39% 39% Trans-Atlantic Trans-Atlantic (incl. Intra (incl. Intra Europe) Europ
Slide 18: Industry Trade Volume YTD Jun 2019
Industry Trade Volume YTD Jun 2019 YTD YTD YTD Trade 2019 vs 2018 2018 vs 2017 2017 vs 2016 Trans Pacific EB 0.3% 7.3% 4.5% Asia Europe WB 5.2% 1.8% 3.7% Intra Asia 3.9% 4.5% 4.6% Trans Atlantic 5.8% 4.8% 6.6% WB Sources: Datamyne and CTS 18
Slide 19: Industry Trade Volume YTD Jun 2019
Industry Trade Volume YTD Jun 2019 Trans Pacific EB Asia Europe WB Intra Asia Trans Atlantic WB Demand Demand Demand Demand 2019 2018 2017 2019 2018 2017 2019 2018 2017 2019 2018 2017 JAN 6.4% 7.5% 4.7% 9.7% 1.2% 5.9% 2.4% 10.0% 3.1% 17.1% 1.6% 11.1% FEB (5.2%) 18.8% (11.3%) (16.2%) 30.5% (9.0%) (2.
Slide 20: TransPacific EB Commodity Volume Growth
TransPacific EB Commodity Volume Growth Source: Datamyne 2018 / 2019 20
Slide 21: Operating Costs 1H 2019
Operating Costs 1H 2019 1H 2019 1H 2019 Per Lifting / 1H 2018 Proportion %▲ Total cost 2% 100% Cargo cost 3% 54% Equipment and Repo costs 16% 12% Vessel Voyage cost 11% 20% Bunker cost 0% 14% Note: Results presented above include the discontinued operation, Long Beach Container Terminal. 21
Slide 22: Bunker Price - Sing 380c St (M)
- 100 200 300 400 500 600 700 Jan-14 US$/t Mar-14 May-14 562 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 288 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 Tighter range of prices in 1H 2019 May-16 Jul-16 233 Sep-16 Sing 380c St (M) Nov-16 Jan-17 Mar-17 May-17 Jul-17 327 Average Sep-17 Nov-17 Bunker Price - Sing
Slide 23: Bunker Costs
Bunker Costs US$M 1H 2019 1H 2018 %▲ Total Bunker Costs (US$M) 407 396 3% Average Bunker Price (US$ per TON) 441 403 9% Total Bunker Consumption ('000 TON) 922 982 -6% Net Operating Capacity ('000TEU) 709 711 0% 23
Slide 24: US-China Trade Discussions
US-China Trade Discussions Impossible to predict impact Positive steps towards a trade deal being negotiated Entirely appropriate to be cautious Some front-loading, but also strong corporate and consumer demand Goods shipped in containers often lower value Financial impact of tariffs small in US$ te
Slide 25: Implementation of IFRS 16
Implementation of IFRS 16 IFRS16 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 and
Slide 26: Implementation of IFRS 16
Implementation of IFRS 16 Leases impacted: Smaller vessels >1 year charters, but still short term (typically 2-3 years) No significant distortion of Group credit metrics LBCT: Discontinued Operations Right to use terminal space for terminal business No impact as of 31 Dec 2019 Net impact excluding L
Slide 27: IMO 2020
IMO 2020 Group will comply fully with IMO 2020 regulations Some limited scrubber experimentation Container industry will adopt a range of solutions: Compliant low sulphur fuel Scrubber LNG Consumers will have to bear majority of increased fuel expense 27
Slide 28: Property Investment
Property Investment Long term but non-core property investments Wall Street Plaza ▪ No fair value change for 2019 interim ▪ Valuation of US$310 million as at 30 June 2019 ▪ Vacancy rate of 11% as at end of 30 June 2019 Hui Xian REIT ▪ US$14.7 million on balance sheet as at 30 June 2019 28
Slide 29: LBCT Update
LBCT Update • CFIUS requirement to sell as part of COSCO acquisition of OOIL • Sale announce by OOIL on 30 April 2019 • Purchaser is a Macquarie managed fund • Price is US$ 1.78 billion • Estimated pre-tax gain of US$ 1.3 billion • Conditions precedent in progress • H2 closing expected • OOIL will u
Slide 30: 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 31: Conclusion
Conclusion OOIL produced a very good set of results in H1 2019 Trading environment more resilient than expected, but challenges remain: Unknown impact of ongoing trade discussions Risk of slowdown in some major economies Introduction of IMO2020, expected increase of fuel cost from Q4 2019 OOIL and C
Slide 32: Page 32
sco SHIPPING SZ We take it personally TOGETHER WE ACHIEVE GREATER SUCCESS
Slide 33: Ownership Structure
Ownership Structure (1919.HK) (1199.HK) (0316.HK) 33
Slide 34: OOIL Board Seats
OOIL OOIL Board Seats Capt. Xu Lirong Chairman & Executive Director 4 x New cornerstone Independent Non-Executive Directors Executive Directors investors: Huang Xiaowen 2x CEO (OOIL) Continuing Wang Haimin Co-CEO(OOCL) Zhang Wei Executive Director 3 x New Andy Tung Co-CEO(OOCL) Zhang Mingwen Lammy L
Slide 35: OOCL Management Team
OOCL Management Team €> Haimin Wang Andy Tung Director Director Xiang Chen Erxin Yao Jiandong Zhu Mingwen Zhang Steve Siu / / Director / DCFO AL Director Lammy Lee Michael Fitzgerald Kenny Ye Raymond Fung Teddy Fung 35
Slide 36: COSCO Shipping Holdings Organisational Structure
COSCO Shipping Holdings Organisational Structure VP VP 36
Slide 37: Orient Overseas (International) Limited
eo Orient Overseas (International) Limited
Orient Overseas (International) — H1 2019 Earnings Presentation on 6ix