Cosco Shipping International (hong Kong) Co., Ltd. · HKEX:517
Cosco Shipping International (hong Kong) — Citi's Pan-Asia Regional Investor Conference 2023
45 slides from Cosco Shipping International (hong Kong)'s conference presentation, Jun 1, 2023
Slide 1: Green and Smart Shipping Leads the Future
綠色領航，智能引航 Green and Smart Shipping Leads the Future
Slide 2: Merits of COSCO SHIPPING International
Merits of COSCO SHIPPING International (517.HK) 2022 Results Highlights Market Review and Segmental Performance Market Outlook and Strategy ESG Initiatives Appendix 2
Slide 3: Merits of COSCO SHIPPING International
Having COSCO SHIPPING Group as our hinterland with world-class reputation and business supports Well diversified shipping services business portfolio Strong business resilient to withstand macro challenges Sturdy cashflow and track record dividend payout Extraordinary growth potential with Green and
Slide 4: Shipping services business portfolio
Ship Planning & Ship Trading Agency Ship Building and Services Ordering Services Maintenance Services Insurance Brokerage Supply of Marine Equipment Services Shipping and Spare Parts Services Industrial Cluster Trading and Supply of Marine Production and Sale Fuel and Related Products of Coatings Sh
Slide 5: Core Business Network
Core Business Network ~~ North é America 14
Slide 6: Ship Trading Agency Services
•Represents ship owners to negotiate with shipyards in shipbuilding projects, and provides agency services in Business trading of secondhand vessels and demolition of obsolete vessels •Asset-light Customer •About 80-90% revenue from COSCO SHIPPING Group Ship Trading Agency Services •Majority of comm
Slide 7: Insurance Brokerage Services
•Provides insurance intermediary services to vessels on behalf of ship owners, including risk assessment, designing Business insurance policies, placing insurance cover, advice on loss prevention, claims handling, etc. •Asset-light Customer •About 60% revenue from COSCO SHIPPING Group Insurance Brok
Slide 8: Supply of Marine Equipment and Spare Parts
•Helps ship owners purchase, install and repair marine equipment and spare parts Business •Provides procurement and technical service upon order •Asset-light Customer •About 70-80% revenue from COSCO SHIPPING Group Supply of Marine Equipment and Spare Parts Income •90% revenue from maintenance deman
Slide 9: Production and Sale of Coatings
•COSCO-Kansai: Container and industrial heavy-duty anti- corrosion coatings Business •Jotun COSCO: Marine coatings •Nasurfar: Eco-friendly technology, coating’ materials •Asset-based •Container manufacturers: CIMC, Singamas, CXIC, DongFang International, etc. Customer •Major Chinese shipyards: Jiang
Slide 10: Trading and Supply of Marine Fuel and Related Products
Status •Purposedly trimmed down the business Trading and Supply of Marine Fuel and Related Products Prospects •Transforming into Green and Digital Intelligence Services 10
Slide 11: 2022 Results Highlights and Financial Performance
Merits of COSCO SHIPPING International (517.HK) 2022 Results Highlights and Financial Performance Market Review and Segmental Performance Market Outlook and Strategy ESG Initiatives Appendix 11
Slide 12: 2H2022 profit surged 41.0% YoY, FY2022 profit up 20%
2H2022 profit surged by 41.0% YoY, FY2022 profit increased by 20% Strong profit growth was resulting from increase in share of profits of joint ventures and finance income as well as prudent cost control 2H22 Profit attributable to Shareholders FY22 Profit attributable to Shareholders HK$’ m HK$
Slide 13: Earnings per share and dividend per share
Earnings per share increased by 21% YoY to HK$22.74 cents Proposed final dividend per share of HK$11.50 cents FY2022 dividend per share increased by 18% YoY to HK$22.50 cents，payout ratio at 99.0% Earnings per Share Dividend per Share HK$’ cents HK$’ cents 22.74 22.50 18.81 19.0 10.80 11.00 10
Slide 14: Share repurchases and total shareholder return
Repurchased shares from open market, no. of shares repurchased and canceled of 51,262,000 shares Total return for shareholders in FY2022 was approximately HK$458m [HK$340m (Dividends) + HK$118m (Buybacks)] Payout ratio Buybacks Cash spent on repurchases 101.0% Shares repurchased in 2022 99.6% 99
Slide 15: Shipping services segment profit and ROA
Profit after tax from shipping services segment surged 33.9% YoY to HK$316m ROA of shipping services segment increased by 2.6ppts to 8.7% through business optimization HK$’ m 4500 10.0% 4000 3,742.3 8.7% 9.0% 3,488.5 3500 8.0% 3000 7.0% 6.1% 6.0% 2500 5.0% 2000 4.0% 1500 3.0% 1000 2.0% 500 236.0
Slide 16: Interest income surged by 105%
Interest income surged by 105% to HK$98.4m as rate of cash return increased by 86 basis points to 1.62% HK$’ m 250 3.50% 3.00% 200 2.50% 150 2.00% 1.62% 100 1.50% 0.75% 98.4 1.00% 50 48.0 0.50% 0 0.00% FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 Interest Income on deposit
Slide 17: Strong financial position as of 31 Dec 2022
As of 31 Dec 2022, our position remained strong and amounted HK$5,933m Debt ratio reduced to 0% as an amount of HK$42.8m short-term borrowing is repaid Latest NAV per share further increase as repurchased shares was cancelled (HK$’ m) As of 31 Dec 2021 As of 31 Dec 2022 Total Assets 9,742.22 9
Slide 18: FY2022 income statement summary
FY2022 strong profit growth was resulting from 452.9% YoY increase in share of profits of joint ventures and associates Selling, Admin & General expenses reduced by 17.8% on prudent cost control (HK$’ m) 2H2021 2H2022 YoY FY2021 FY2022 YoY Revenue 2,302.3 2,158.5 -6.2% 4,533.5 3,962.5 -12.6% Gro
Slide 19: Market Review and Segmental Performance
Merits of COSCO SHIPPING International (517.HK) 2022 Results Highlights Market Review and Segmental Performance Market Outlook and Strategy ESG Initiatives Appendix 19
Slide 20: Clarkson Newbuilding Price Index, Delivery and Order Book
Clarkson Newbuilding Price Index 154 162 133 138 131 123 125 130 130 126 125.6 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Newbuilding Delivery Newbuilding Contracting Global Order Book mDWT mDWT mDWT Global China Global China Global China 119.8 226 206 223 99.7 88 85.8 94.9 197 160 81 75
Slide 21: Output and ASP of Newbuild Containers in China
Output and Average Selling Price of Newbuild Containers in China ‘000 TEU Total Output ASP USD per TEU 6,283 3,786 3,704 3,185 2,791 2,365 2,650 2,086 2,256 1,763 2018 2019 2020 2021 2022 Source: Company Statistical Data 21
Slide 22: Revenue by Segment
2H2022 revenue down 6.2% YoY, FY2022 revenue down 12.6% YoY Decline in revenue mainly due to the decrease in revenues from coatingsnote1, ship trading agency and general trading segments HK$’ m 2H2022 Revenue by Segment FY2022 Revenue by Segment HK$’ m HK$’ m Ship Trading Insurance Brokerage Mar
Slide 23: Segmental PBT
2H2022 Segmental PBT surged 58.7% YoY, while FY2022 Segmental PBT rose 19.1% YoY Strong growth in segmental PBT was mainly driven by robust performance in coatings business and sustained growth in 2H2022 Segment PBT FY2022 Segment PBT HK$’ m HK$’ m Ship Trading Insurance Brokerage Marine Equipme
Slide 24: Ship trading agency segment
Delivery of New build vessels slowed down, but orders increased by 150% YoY No. of traded 2nd-hand vessel increased by 53% in FY2022 FY2020 FY2021 FY2022 HK$’ 000 No. of new build 35 26 18 Segment revenue Segment PBT vessels delivery New build vessels 103,772 2,811,900 4,993,900 855,400 delivery
Slide 25: Insurance brokerage segment
Revenue and PBT from insurance brokerage segment rose 12% and 17% respectively on strong growth in war insurance and P&I insurance While PBT achieved approximately 9% CAGR since FY2018, PBT Margin remained steady at an average of approximately 70% HK$’ 000 Revenue PBT PBT Margin 140,000 80.0% 72
Slide 26: Supply of marine equipment segment
Revenue from supply of marine equipment segment rose 6% YoY to HK$1,670m and achieved approximately 9% CAGR since FY2018 PBT down 16% as a result of declined gross profit margin and fx-losses incurred HK$’ 000 Revenue PBT PBT Margin 1,800,000 1,669,821 8% 1,578,889 1,600,000 7% 1,400,000 1,262,0
Slide 27: Coatings segment
Revenue from coatings down 37% YoY to HK$1,067m as demand for new container coating has peaked in 2021 Operating margin improved by 1.2 percentage points to 3.3% as production cost declined Sales volume (tonnes) Segment performance Container coatings Revenue Operating profit OP Margin HK$’ 000 I
Slide 28: Share of profit from Jotun COSCO
Share of profit from Jotun COSCO surged 125% YoY to HK$107m Total sales volume of marine coatings increased by 26% to 91,981,000 litres Gross margin further improved as ASP rose and production cost reduced since 2H2022 Sales volume Share of profit FY2021 FY2022 HK$’ 000 106,720 New build vesse
Slide 29: Nasurfar share of profit
33% stakes in Nasurfar was acquired in May 2018 at a consideration of Rmb89,830,000 Nasurfar is principally engaged in the R&D, production and sales of eco-friendly biochemical products, which creates synergy to our coatings business Share of profit from Nasurfar declined 42 % YoY to HK$8,036,
Slide 30: Marine fuel and other products segment
During the year, loss before income tax from marine fuel and other products segment was HK$8,647,000 (2021: loss of HK$46,764,000), which mainly consisted of provision for impairment of assets held for sale of HK$8,275,000 (2021: nil). Trading and supply of marine fuel and related products busin
Slide 31: General trading business
PBT from general trading business down 75% YoY to HK$4.58m as revenue declined and due to the increase in provision for impairment of trade and other receivables 48% stakes of Zhejiang Four Brothers Rope Co. was acquired in Apr 2021 at a consideration of RMB120m Share of profit from Zhejiang F
Slide 32: Market Outlook and Strategy
Merits of COSCO SHIPPING International (517.HK) 2022 Results Highlights Market Review and Segmental Performance Market Outlook and Strategy ESG Initiatives Appendix 32
Slide 33: Digital and smart shipping technologies
Advanced Internet of Autonomous Blockchain Cyber- E-platforms AI Analytics Things Vessels and Security Robotics Online Network Vessel E-service Automated E-bill of Security booking optimization machinery centers vessel lading assurance for Online cargo Lead monitoring Dynamic navigation Payment cust
Slide 34: Carbon intensity
2022 2023 2024 2025 Carbon intensity Source: Alphaliner 34
Slide 35: Challenges, Opportunities and Strategies
◼ Seaborne trade will be affected by weak global economy growth outlook ◼ The uncertainty of the shipping market will increase，affected by factors such as tightening Challenges monetary policy and continued geopolitical conflicts ◼ Ship owners will take stringent cost control measures amid weaker ec
Slide 36: Green digital intelligence ship services joint venture
COSCO SHIPPING International COSCO SHIPPING Technology (00517.HK) 51% 49% COSCO SHIPPING Green Digital Intelligence Ship Services Co., Ltd* Provide comprehensive operational solutions for ships such as energy saving and emission reduction, navigation safety, spare parts/energy supply and ship operat
Slide 37: ESG Initiatives
Merits of COSCO SHIPPING International (517.HK) 2022 Results Highlights Market Review and Segmental Performance Market Outlook and Strategy ESG Initiatives Appendix 37
Slide 38: MSCI ESG Ratings: A
MSCI ESG Ratings: A Industry-Adjusted Score: 5.9 38
Slide 39: ESG Topics of COSCO SHIPPING International
ESG Topics Of COSCO SHIPPING International Business Environment Occupational compliance compliance health and safety Product and Anti-corruption Supply chain technology management innovation 39
Slide 40: Environment, Social and Governance
• Environmental- • Employee Well-being • Reporting and Governance Social Environment conscious Operations and development Investigation Mechanism • Biodiversity and • Inclusive and Marine Environment Supportive Conservation Workplace • Green Products and • Safety Committee Service Innovations and Ma
Slide 41: Appendix
Merits of COSCO SHIPPING International (517.HK) 2022 Results Highlights Market Review and Segmental Performance Market Outlook and Strategy ESG Initiatives Appendix 41
Slide 42: Strategic Transformation from a Conglomerate into a Shipping Services Cluster
Strategic Transformation from a Conglomerate into a Shipping Services Cluster COSCO HK Group acquired Established the Company’s Dividend payout ratio a HK-listed Shun Shing dividend policy. Dividend payout further improved to Construction & Engineering ratio to not less than 50% of net approximately
Slide 43: Corporate structure and business segments
COSCO SHIPPING International (Hong Kong) is a HK-based shipping services provider, offering COSCO SHIPPING diversified and specialized shipping related services or products to customers such as shipping companies, 100% shipyards, container manufacturers, etc. COSCO SHIPPING (HK) Public shareholders
Slide 44: Share option performance targets
Performance Target ROE for the year 2020 shall be not less than 7.1% and not fall below the ROE of the 75th percentile of the Peer Benchmark Companies Based on the results for the year 2018, the compound growth rate on operating revenue of the Company for the year 2020 shall be not less 1st batch of
Slide 45: Disclaimer
Disclaimer ⚫ This presentation contains certain forward-looking statements with respect to the financial position, results of operations and business of COSCO SHIPPING International and certain plans and prospects of the management of COSCO SHIPPING International. ⚫ Such forward-looking statements i
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