Cosco Shipping Ports Limited · HKEX:1199
Cosco Shipping Ports — Q1 2020 Earnings Presentation
32 slides from Cosco Shipping Ports's earnings presentation, Apr 27, 2020
Slide 1: 1Q2020 Results Presentation
1Q2020 Results Presentation With strong financial position and sustainable cash flow, we are well prepared to capture the 27 April 2020 visible demand once 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 cashflow including cashflow received from disposal help to maintain dividend policy • We completed disposal of interest in Yangzhou Terminal and Zhangjiagang Terminal at considera
Slide 5: Deeply Undervalued – High Dividend Yield
Deeply Undervalued – High Dividend Yield • Our dividend yield has Dividend yield (2) always been higher than 1199 Peers Average the peers average since the year of 2016. • In 2019, our dividend yield 8.8% was 8.1%, which further 8.1% outperformed the peers 6.8% average with 4.5% in the 6.2% same yea
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 • From 1 Apr to 14 Apr 2020, Our subsidiaries’ throughput in China only dropped by 2.4% YoY • Leverage our synergy with OCEAN Alliance and other Shipping Alliances • Benefit more from the pent-up demand •
Slide 7: Agenda
Agenda 1 Assurances 2 Financial Highlights 3 Operational Review 4 Appendix
Slide 8: Financial Highlights – Q1 Profit Growth Driven by Disposal Gain
Financial Highlights – Q1 Profit Growth Driven by Disposal Gain (US$ million, unless stated otherwise) 1Q2020 1Q2019 YoY Change Revenue (1) 220.5 247.7 -11.0% Cost of sales 174.9 177.6 -1.5% Gross profit 45.6 70.1 -34.9% Share of profits from Joint Ventures & Associates 52.3 61.9 -15.5% EBITDA 183.4
Slide 9: Revenue & Costs – Revenue Decreased in Greater China Region
Revenue & Costs – Revenue Decreased in Greater China Region Revenue (US$ million) Costs of Sales (US$ million) - 11.0% 247.7 220.5 177.6 175.0 1.5% 2.1% 4.7% 2.1% 2.9% 3.0% Abu Dhabi 3.8% 2.7% 3.3% 2.6% 28.2% Nantong 33.4% 31.7% 27.8% Zeebrugge 15.7% 11.4% CSP Spain 10.5% 9.4% 15.1% 7.0% Guangzhou N
Slide 10: Terminal Profits – Mainly Impacted by Coronavirus
Terminal Profits – Mainly Impacted by Coronavirus Top 10 Terminal Contributors 1Q2019 1Q2020 Terminal Profits by Regions (US$ million) QPI 23.2% QPI 43.8% Beibu Gulf 19.5% Yantian 14.5% 97.2 Yantian 11.6% PCT 10.6% Overseas PCT 8.3% Shanghai Pudong 6.9% Shanghai Pudong 4.1% Guangzhou Nansha 5.7% 13.
Slide 11: Terminals Profitability – Mainly Impacted by Coronavirus
Terminals Profitability – Mainly Impacted by Coronavirus Subsidiaries EBITDA (in millions USD) (1) Share of profits from non-subsidiaries (in millions USD) 93.5 80.9 76.5 8.7% Overseas 39.3% 52.3 Greater 42.1% China 8.2% 91.3% 60.7% 91.8% 57.9% 1Q2019 1Q2020 1Q2019 1Q2020 Note: (1) Subsidiaries EBIT
Slide 12: Financial Position – Stable Balance Sheet and Ample Borrowing Capacity
Financial Position – Stable Balance Sheet and Ample Borrowing Capacity We are more prudent to the cash management amid challenging and uncertain environment in 2020 • Cash and cash equivalents of USD$832M at the end of 1Q20, up 47.8% yoy • Net gearing ratio of 33.9% at the end of 1Q20, which was 1.7
Slide 13: Agenda
Agenda 1 Assurances 2 Financial Highlights 3 Operational Review 4 Appendix
Slide 14: Operational Results – Throughput Declined due to Coronavirus
Operational Results – Throughput Declined due to Coronavirus Total Throughput (TEU) 1Q2019 1Q2020 YoY Equity Throughput (TEU) 1Q2019 1Q2020 YoY Total throughput 28,731,733 27,479,714 -4.4% Equity throughput 9,282,056 8,671,140 -6.6% - Subsidiaries 5,943,433 5,097,361 -14.2% - Subsidiaries 3,753,652
Slide 15: Effective Growth Strategies
Effective Growth Strategies Globalisation • Building a global terminal network with controlling stake M&A Equity throughput from overseas (CAGR 21.9%) Globalisation 20.3% (1Q16) 35.6% (1Q20) Synergy Control • Leveraging the synergies with Shipping Alliances Existing terminals 3 Core Total throughput
Slide 16: Globalisation – Managing Portfolio to Improve Quality
Globalisation – Managing Portfolio to Improve Quality • Strategically pursue investment opportunities to create value to our shareholders • To target Hurdle rate at least low double-digit equity IRR • Potential divestment of under-performing assets for capital recycling Equity Throughput in TEU (by
Slide 17: Synergy – Secured Demand with Shipping Alliances
Synergy – Secured Demand with Shipping Alliances (4) Throughput from COSCO SHIPPING Lines, OOCL, Evergreen + Growth in Throughput (1) CMA, 2M+THE Alliance and others as % of total throughput (1) (Q1 2019 vs Q1 2020) COSCO SHIPPING Lines OOCL Evergreen + CMA OCEAN Alliance 2M + THE Alliance Others +7
Slide 18: Control – Efficiency Improvement and Cost Reduction by Adopting Technology
Control – Efficiency Improvement and Cost Reduction by Adopting Technology 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 terminals) 9,282,056 8,671,140 2019 2020 8,621,476 7,319,965 6,898,9
Slide 19: Assets Divestment for Capital Recycling to improve portfolio quality
Assets Divestment for Capital Recycling to improve portfolio quality We disposed of the interest in Nanjing In April 2020, we entered into an It is expected that we will sell its Longtan Terminal in 2019. The disposal gain agreement related to disposal of interest in Taicang Terminal in after tax wa
Slide 20: 2020 Full-year Throughput Outlook
2020 Full-year Throughput Outlook Challenges Opportunities ⚫ Coronavirus epidemic in China has been ⚫ We expect a strong rebound when the under control and factories have gradually outbreak is over, and the company is ready resumed operation to grasp opportunities in the market ⚫ However, overseas r
Slide 21: Q&A Thank you!
Skene hes OSIRA SHIPPING Ports Limited oe £7— Osco
Slide 22: Agenda
Agenda 1 Assurances 2 Financial Highlights 3 Operational Review 4 Appendix
Slide 23: 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 24: 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 25: 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 26: 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 27: 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 28: 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: 28
Slide 29: Greater China Portfolio (As of the end of March 2020)
Greater China Portfolio (As of the end of March 2020) Region Annual Designed Capacity (TEU) Bohai Rim 31,450,000 Yangtze River Delta 15,520,000 S.E. Coast & others 9,000,000 Pearl River Delta 25,600,000 S.W. Coast 12,000,000 Total 93,570,000 29
Slide 30: Overseas Portfolio (As of the end of March 2020)
Overseas Portfolio (As of the end of March 2020) 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% CO
Slide 31: 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 32: Thank you!
“ee | £7— Ci SQane POSES ORRAA COSCO SHIPPING Ports Limited Ports for ALL 9