Cosco Shipping Ports Limited · HKEX:1199
Cosco Shipping Ports — FY2019 Earnings Presentation
34 slides from Cosco Shipping Ports's earnings presentation, Mar 26, 2020
Slide 1: 2019 FY Results
2019 FY Results With strong financial position and sustainable cash flow, we are well prepared to capture the visible demand once 26 March 2020 the market recovered
Slide 2: Agenda
Agenda 1 Assurances 2 Financial Highlights 3 Operational Review 4 Appendix
Slide 3: Agenda
Agenda 1 Assurances 2 Financial Highlights 3 Operational Review 4 Appendix
Slide 4: Company Assurance: Strong Financial Sustainability to Maintain Dividend Policy
Company Assurance: Strong Financial Sustainability to Maintain Dividend Policy Strong dividend outlook in 2020: • Strong EBITDA, operating cashflow and cashflow received from disposal help to 1 maintain dividend policy • Total cash on hand of USD$957M at the end of 2019 • Received total cash of USD$
Slide 5: Deeply Undervalued: High Dividend Yield
Deeply Undervalued: High Dividend Yield Dividend yield (2) 1199 Peers Average 9.8% 9.1% 7.7% 7.1% 7.1%(1) 6.9% 6.3% 6.1% 2016 2017 2018 2019 Notes: (1) Source: Peers’ forecasted Dividend of 2019 from Bloomberg (2) COSCO SHIPPING Ports’ dividend yield is calculated by historical dividend divided by i
Slide 6: Industry Assurance: Well Prepared to Capture the Pent-up Demand
Industry Assurance: Well Prepared to Capture the Pent-up Demand We see signs of quick recovery and strong momentum • From 15 Mar to 19 Mar 2020, Our subsidiaries’ throughput in China only dropped by 3.4% YoY, compared to 9.0% YoY decline in Feb 2020 • Throughput of Xiamen, Quanzhou, Nantong and Jinj
Slide 7: Agenda
Agenda 1 Assurances 2 Financial Highlights 3 Operational Review 4 Appendix
Slide 8: Financial Highlights – Results Slightly Above Consensus amid Challenging Environment
Financial Highlights – Results Slightly Above Consensus(3) amid Challenging Environment (US$ million, unless stated otherwise) 2019 2018 YoY Change Revenue 1,027.7 1,000.4 +2.7% Cost of sales 754.9 706.7 +6.8% Gross profit 272.7 293.7 -7.1% Share of profits from Joint Ventures & Associates 267.5 292
Slide 9: Revenue & Costs – Gross Profits Contribution Mainly from PCT and Xiamen
Revenue & Costs – Gross Profits Contribution Mainly from PCT and Xiamen Gross profit of PCT and Xiamen in 2019 increased by 17.3% yoy and +8.6% yoy, respectively Growth potential for our newly acquired terminals such as CSP Spain, Zeebrugge, Nantong and Abu Dhabi Revenue Costs of Sales 754.9 1.6% 1,
Slide 10: Terminal Profits – Increased Southwest China exposure
Terminal Profits – Increased Southwest China exposure Terminal Profits by Regions S.W. Coast — We expect Beibu Gulf will share the benefits of economic growth in Southwest China. In order to better participate in the operation of Beibu Gulf, we increased its equity interest to 10.65% which will be u
Slide 11: Financial Position – Stable Balance Sheet and Ample Borrowing Capacity
Financial Position – Stable Balance Sheet and Ample Borrowing Capacity (US million, unless stated otherwise) 2019 2018 Total assets 10,477 9,045 Net asset 5,765 5,820 Total debt 2,916 2,480 Cash on hand 957 607 Net debt to equity 34.0% 32.2% Book value per share (HK$) 14.2 14.6 Average bank borrowin
Slide 12: Agenda
Agenda 1 Assurances 2 Financial Highlights 3 Operational Review 4 Appendix
Slide 13: Operational Results – Balanced Portfolio & Increasing Overseas Exposure
Operational Results – Balanced Portfolio & Increasing Overseas Exposure Total Throughput 2019 2018 YoY Equity Throughput 2019 2018 YoY Total throughput 123,784,335 117,365,360 +5.5% Equity throughput 39,670,783 37,062,172 +7.0% - Subsidiaries 25,104,282 22,507,686 +11.5% - Subsidiaries 16,056,895 14
Slide 14: Effective Growth Strategies
Effective Growth Strategies Globalisation • Building a global terminal network with controlling stake M&A Equity throughput from overseas (CAGR 27.7%) Globalisation 20.7% (FY16) 31.9% (FY19) Synergy Control • Leveraging the synergies with Shipping Alliances Existing terminals 3 Core Total throughput
Slide 15: Globalisation – Managing Portfolio to Improve Quality
Globalisation – Managing Portfolio to Improve Quality • Strategically pursue investment opportunities to create value to our shareholders • Successful achievements on terminals such as PCT, Guangzhou Nansha and Xiamen • Hurdle rate at least low double-digit equity IRR • Potential divestment of under
Slide 16: Synergy – Secured Demand with Shipping Alliances
Synergy – Secured Demand with Shipping Alliances (3) Throughput from COSCO SHIPPING Lines, OOCL, Evergreen + Growth in Throughput (1) CMA, 2M+THE Alliance and others as % of total throughput (1) (2018 vs 2019) COSCO SHIPPING Lines OOCL Evergreen + CMA OCEAN Alliance 2M + THE Alliance Others +17.9% C
Slide 17: Control – Efficiency Improvement and Cost Reduction by Adopting Technology
Control – Efficiency Improvement and Cost Reduction by Adopting Technology • Increasing our subsidiaries from 10 in 2016 to 16 in 2019 • Improving efficiency and reducing cost through the application of Navis N4 system to subsidiaries in the coming 3-4 years Equity Throughput TEU (in terms of termin
Slide 18: Upgrading with Professionalism for Quality Enhancement
Upgrading with Professionalism for Quality Enhancement Upgrading with Quality Professionalism Enhancement 1. Senior management team > an average of 20 years of 1. Strong capability and professionalism, e.g. PCT and experiences in shipping and port industry Xiamen 2. Effective strategies: Globalizati
Slide 19: Assets Divestment for Capital Recycling to improve portfolio quality
Assets Divestment for Capital Recycling to improve portfolio quality Strategic plan to dispose interests in Assets Divestment Update Strategic goal of potential divestment terminals which have relatively small Referring to announcement on 18 profit contribution The Company disposed of the Sept 2019,
Slide 20: 2020 Full-year Throughput Outlook
2020 Full-year Throughput Outlook Challenges Opportunities ⚫ Coronavirus: Negative operation impact in ⚫ We expect a strong rebound when the the short-term outbreak is over, and the company is ready to grasp opportunities in the market ⚫ Despite throughput impact in 1Q2020, we expect that throughput
Slide 21: Q&A Thank you!
cosco sxpems = Aig SSO ARAG COSCO SHIPPING Ports Limited Q&A Thank you!
Slide 22: Agenda
Agenda 1 Assurances 2 Financial Highlights 3 Operational Review 4 Appendix
Slide 23: Terminal Profit Breakdown
Terminal Profit Breakdown % of total % of total US$' 000 2019 terminal 2018 terminal YoY profit profit Bohai Rim 127,828 37.1% 127,925 35.1% -0.1% Qingdao Qianwan Terminal (only include QQCTI in 2017 afterward) 422 0.1% 479 0.1% -11.9% QPI 94,512 27.4% 95,747 26.3% -1.3% Dalian Container 8,105 2.4%
Slide 24: Terminal Profit Breakdown (Cont’d)
Terminal Profit Breakdown (Cont’d) Pearl River Delta 86,481 25.1% 86,163 23.7% 0.4% Yantian International 51,687 15.0% 52,086 14.3% -0.8% Nansha Stevedoring 5,037 1.5% 5,841 1.6% -13.8% *Guangzhou Oceangate Terminal 15,811 4.6% 14,228 3.9% 11.1% COSCO-HIT 8,335 2.4% 8,393 2.3% -0.7% ACT 4,359 1.3% 4
Slide 25: Gearing Up for Growth
Gearing Up for Growth (US$ million) Growth potential for recent greenfield projects 324.6 18.3 332.6 308.0 (20.3) (22.6) yoy yoy -5.1% +2.5% 2018 2019 One-off loss of Loss of Fair value gain of 2019 Vision Net profit Net profit share dilution effect HKFRS 16 Beibu Gulf Adjusted net profit attributab
Slide 26: On Track to Achieve Our 5-Year Target
On Track to Achieve Our 5-Year Target 2016 2019 2021 Restructuring Where we were Vision ◆ As a pure port operator ◆ No. of subsidiaries increased Operations: to 16 (FY2016: 10) ◆ Global terminal network ◆ 3 core strategies ◆ Industry leader in terms of ◆ Linkage effects in costs, total container thr
Slide 27: Return On Equity (ROE) Improvement – Newly Acquired Terminals to Catch Up
Return On Equity (ROE) Improvement – Newly Acquired Terminals to Catch Up 6.5 (3) ROE 6.3 (%) 4.8 (2) 3.5 (1) FY2016 FY2017 FY2018 FY2019 Note: (1) Excluding one-off gain of FCHL transaction of US$59.0 m and three months of share profits of FCHL of US$7.1 m (2) Excluding one-off gain of QPI transact
Slide 28: Incentive Scheme – Aligning Shareholders’ Interests
Incentive Scheme – Aligning Shareholders’ Interests ◼ A total of about 53 million share options were granted to around 238 eligible employees under the share option scheme on 19 June 2018. ◼ Exercising criteria are in line with shareholders’ interests. Batch No. of Percentage of Return on Growth Rat
Slide 29: Sustainability Framework
Sustainability Framework ◆ Providing a healthy and safe working environment ◆ Building an inclusive, diversified and sustainable workforce ◆ Transitioning to “Green Ports” ◆ Ensuring operational compliance ◆ Managing energy consumptions and ◆ Promoting inclusive development emission to respond to cl
Slide 30: Aligning Global Principles
Aligning Global Principles We support the Sustainable Development Goals (SDGs) of the United Nations and identify how these global sustainability challenges relate to our business and integrate them into our daily operations: Global Recognition and Advocacy: 30
Slide 31: Greater China Portfolio
Greater China Portfolio Region Annual Designed Capacity (TEU) Bohai Rim 31,450,000 Yangtze River Delta 17,220,000 S.E. Coast & others 9,000,000 Pearl River Delta 25,600,000 S.W. Coast 1,200,000 Total 84,470,000 31
Slide 32: Overseas Portfolio
Overseas Portfolio Terminal Annual Designed Shareholding Capacity (TEU) Piraeus 6,200,000 100% CSP Spain Group 5,100,000 51% Antwerp 3,700,000 20% Euromax 3,200,000 35% Kumport 2,100,000 26% Vado Reefer 250,000 40% CSP Zeebrugge 1,300,000 85% Suez Canal 5,000,000 20% COSCO-PSA 4,850,000 49% CSP Abu
Slide 33: Disclaimer
Disclaimer This presentation contains certain forward-looking statements with respect to the financial condition, results of operations and business of COSCO SHIPPING Ports Limited (“COSCO SHIPPING Ports”) and certain plans and prospects of the management of COSCO SHIPPING Ports. Such forward-lookin
Slide 34: Thank you!
7 —\™ SQane PSP OsRAA COSCO SHIPPING Ports Limited Thank you!