Hilong Holding Ltd. · HKEX:1623
Hilong — FY2011 Earnings Presentation
26 slides from Hilong's earnings presentation, March 2012
Slide 1: 2011 Annual Results Presentation
2011 Annual Results Presentation March 2012
Slide 2: Disclaimer
Disclaimer The presentation material contains forward-looking statements. Such forward-looking statements are subject to various risks, uncertainties and assumptions, certain of which are not under our control, causing actual results and growth which may differ materially from these direct or indire
Slide 3: Hilong: A Leading Integrated Global Oilfield Equipment and Services Provider
Hilong： A Leading Integrated Global Oilfield Equipment and Services Provider Vertically Integrated Business Segments Along the Value Chain Drill Pipes and Coating Materials Oilfield Related Products and Services Services Products： Products & Services: Services: Drill pipe: the key drilling equipme
Slide 4: Key Competitive Strengths
Key Competitive Strengths Market leadership in 1 key oilfield equipment products and services Established Experienced relationships with management team major international oil 5 with a proven track 2 and gas companies record supported by proven product quality Innovation-driven Significant benefits
Slide 5: Performance Highlights
Performance Highlights SS 2.1/1 ONG
Slide 6: Significant Growth in Revenue and Profit
Significant Growth in Revenue and Profit Revenue Gross Profit Profit to Equity Owners RMB MM RMB MM RMB MM RMB MM RMB MM RMB MM 2,000 800 320 747 302 1,821 169 424 1,500 600 240 557 1,356 108 272 206 178 506 1,007 386 1,000 53 400 160 17 372 187 435 203 500 200 80 891 371 61 713 261 519 166 0 0 0 20
Slide 7: Solidified Leadership in the PRC and Expanded Internationally
Solidified Leadership in the PRC and Expanded Internationally World Leading Drill Pipe Producer Others Hilong Hilong Hilong 20% 13% 34% 20% Others Tenaris 46% 9% Vallourec NOV 47% NOV 11% Others 20% 80% Global Drill Pipe Market Chinese Drill Pipe Market Russian Drill Pipe Market World Leading OCTG a
Slide 8: Established Relationships with Quality Customers Supported by Proven Product Quality
Established Relationships with Quality Customers Supported by Proven Product Quality Stable Long Term Relationship with Major Domestic Customers Growing Overseas Customer Base with Great Quality 2011 2010 2008 2007 8
Slide 9: Expanded Financing Channels Since IPO & Maximize Values for Shareholders
Expanded Financing Channels Since IPO & Maximize Values for Shareholders The successfully IPO expanded Hilong’s financing channels that provide funding support to our long term growth On April 21, despite the volatile market condition, Hilong successfully listed on the Main Board of the Hong Kong
Slide 10: Business Review
Business Review SS 2,1) ONG
Slide 11: Drill Pipes and Related Products
Drill Pipes and Related Products Segment Revenue: +25.0% YoY Drill Pipe Analysis RMB MM Gross Margin% 1,000 60% 2010 2011 Change 891 Annual capacity (Ton) 40,600 40,600 0.0% 41 11 50% 16 Sales Volume (Ton) 25,019 27,131 8.4% 800 94 713 Domestic 14,469 14,549 0.6% 32 25 1 40% 41.7% 21 International 1
Slide 12: Drill Pipes and Related Products (Cont'd)
Drill Pipes and Related Products (Cont’d) New Products and Technologies Drill pipe for shale gas exploration Made bulk sales of the drill pipes designed for shale gas exploration Modified and upgraded our existing double shoulder drill pipes to adapt to the requirement for shale gas exploration
Slide 13: Drill Pipes and Related Products (Cont'd)
Drill Pipes and Related Products (Cont’d) New Products and Technologies (Cont’) Double box tool joint drill pipe Firstly specially designed for special requirements of Jiangsu Oilfield, and has been used in various oilfields Effectively reduce the workload of the platform operation, thus improve
Slide 14: Coating Materials and Services
Coating Materials and Services Segment Revenue: +36.0% YoY Capacity Expansion Progress RMB MM Gross Margin% 700 60% 2010 2011 Change Development Line pipe 20,760 25,000 20.4% 3 new production 600 coating lines in Shanghai 50% 50.3% materials started working in 506 (ton) June 500 40.8% 40% 179 Line p
Slide 15: Oilfield Services
Oilfield Services Segment Revenue: +56.2% YoY Highly Recognized by Int’l Customers RMB MM Gross Margin% 500 50% 9 sets of onshore drilling equipment are engaged in oilfield services overseas by high quality international customers 424 Ecuador: two 2000HP rigs, one 650HP 400 40% 39.8% 39.8% workove
Slide 16: Research and Development
Research and Development Dedicated research and development team with 105 members, has developed a series of proprietary technologies and products based on 65 patents as well as a full suite of chemical formulas for coating materials, and there are 57 patents applications that are being processed We
Slide 17: Financial Performance
Financial Performance ES 2,11 ONG
Slide 18: Revenue: Strong Growth Across Segments
Revenue: Strong Growth Across Segments Revenue Increased by 34.3% YoY in 2011 RMB MM 2,000 1,821 424 1,500 1,356 272 1,007 506 1,000 53 372 435 500 891 713 519 0 2009 2010 2011 Drill pipes and related products Coating materials and services Oilfield services 18
Slide 19: Revenue Breakdown
Revenue Breakdown Revenue Breakdown by Product Oilfield services Oilfield services Oilfield services 5% 20% 23% Drill pipes and Drill pipes and Drill pipes and related products related products related products 52% 53% 49% Coating Coating Coating materials and materials and materials and services se
Slide 20: Gross Profit Analysis
Gross Profit Analysis Gross Profit +34.1% YoY in 2011 Gross Margin by Segment RMB MM Gross Margin% 41.7% 800 45% 36.7% 31.9% 747 169 41.0% 600 41.0% 40% 557 2009 2010 2011 38.3% 50.3% 108 46.6% 206 40.8% 386 400 35% 17 187 2009 2010 2011 203 200 30% 39.8% 39.8% 371 32.1% 261 166 0 25% 2009 2010 2011
Slide 21: Operating and Net Profit
Operating and Net Profit Operating Profit +31.4% YoY in 2011 Net Profit +69.1% YoY in 2011 RMB MM Operating Margin % RMB MM Net Margin % 320 302 25% 500 23.6% 23.1% 25% 421 20% 400 20% 240 16.6% 16.6% 320 300 15% 178 15% 160 13.1% 200 10% 10% 168 6.0% 80 61 100 5% 5% 0 0% 0 0% 2009 2010 2011 2009 20
Slide 22: Capital Structure and Return
Capital Structure and Return Capital Structure Return on Average Assets (1) RMB MM % 2009 2010 2011 9.5% 7.2% 2.9% Cash and Equivalent 142 247 322 2009 2010 2011 Current Assets 1,418 1,845 2,202 Total Assets 2,188 2,768 3,574 Return on Average Equity (2) % 23.7% 23.7% Short-Term Debt 426 803 583 7.6
Slide 23: Liquidity and Turnover Days
Liquidity and Turnover Days Current Ratio Average Inventory Turnover Days(1) % Days 178.1% 194 128.7% 160 104.2% 149 2009 2010 2011 2009 2010 2011 Average Trade Payable Days(2) Average Trade Receivable Days(3) Days Days 154 200 187 180 110 103 2009 2010 2011 2009 2010 2011 Note: 1: Average Inventory
Slide 24: Capital Expenditure
Capital Expenditure Capital Expenditure RMB MM 400 359 300 226 203 197 200 133 134 25 100 6 108 43 58 26 0 2009 2010 2011 Drill pipes and related products Coating materials and services Oilfield services 24
Slide 25: 2012 Outlook
2012 Outlook 2111 ONG
Slide 26: 2012 Outlook
2012 Outlook Continue to enhance our competitiveness to maintain the momentum of growth Adapting to the market condition, upgrade and expand production capacity, focus on R&D of high end products and widen products applications Further expand international markets and recruit more high quality c