2014 ANNUAL RESULTS - TodayIRMarket Review: (1) Global Total Shipping Capacity Source: Clarkson...
41
2014 ANNUAL RESULTS March 19, 2015 1
Transcript of 2014 ANNUAL RESULTS - TodayIRMarket Review: (1) Global Total Shipping Capacity Source: Clarkson...
2014 ANNUAL RESULTS
March 19, 2015
1
Agenda
Results Highlights
Market and Business Review
Financial Review
Outlook
Appendix: Corporate Profile
2
Results Highlights
3
5.5
13.0 34%
55%
2013 2014
Annual DPS (HK cents) Payout Ratio
242
359
2013 2014
HK$ mn
4
Highlights (1)
Profit Attributable to Equity Holders
Annual DPS and Payout Ratio
Strong profit growth in 2014, owing to:
marked increase in operating profits from coatings,
ship trading agency, and marine equipment and spare
parts supply;
higher finance income generated from the Group’s
cash on hand; and
significant rebound in profit contribution from the
Group’s joint venture, Jotun COSCO.
Increased dividend payout
Basic EPS: 23.70 HK cents (2013: 15.96 HK cents)
Proposed final DPS: 10 HK cents (2013: 3.5 HK cents)
Annual DPS: 13 HK cents (2013: 5.5 HK cents)
Payout ratio: 55% (2013: 34%*)
*: The previous dividend policy of the Company was to pay no less than 25% of the profit attributable to equity holders as annual dividend.
5
Highlights (2)
Strong cash position supports future business expansion
Net cash: HK$6.1 bn as at 31 Dec 2014 (HK$6.3 bn as at 31 Dec 2013)
Study in areas related to shipping services has been ongoing.
Dividend payout ratio is temporarily increased to no less than 50% of net profit
Temporarily increases its annual dividend payout ratio from previously no less than 25% of net
profit to no less than 50%, prior to practical progress in major investment project in the future
In case, after the Company publishes major transaction announcement in relation to
investment project, the annual dividend payout ratio will maintain at the level of no less than
25% of net profit, subject to the results, availability of distributable reserves and cash flow of
the Company at that time.
Marine Equipment & Spare Parts Supply Network
U.S.
Japan
Germany
Hong Kong
Beijing
Highlights (3)
6
Existing Business Development
Marine Equipment & Spare Parts Supply:
COSCO Yuantong further expanded its global presence of marine equipment & spare parts
supply services by acquiring 51% equity interest in Yuan Hua Technical & Supply Corporation
in the US from COSCO Americas in Aug 2014 at a consideration of approximately HK$3.7 mn.
Production & Sale of Coatings: COSCO Kansai started the construction of its new plant
in Shanghai in Mar 2014, which is scheduled to commence production in Jun 2015; and the
construction of Jotun COSCO’s new plant in Qingdao was completed, which it is currently in
trial production and will commence full production in May 2015.
Shanghai
Singapore
Market and Business Review
7
Market Review: (1) Global Total Shipping Capacity
Source: Clarkson Research
Shipping Services Industry: Beneficiary of Shipping Capacity Growth
8
756 773 840
893 947
1,013 1,080
1,153
1,235
1,352
1,467
1,556 1,618
1,672
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
mn DWT
Bulkers Tankers Container Ships World Cargo Fleets
166 156
109
91 100 104
70 68
45 36 38 41
0
50
100
150
200
2011 2012 2013 2014 2015E 2016E
mn DWT Global Total Delivery
Chinese Shipyards' Delivery
China
47%
150 mn DWT
South Korea
26%
83 mn DWT
Japan
19%
60 mn DWT
Others
8%
25 mn DWT
58
160
85
56
179
110
30
78
38 22
85
51
0
50
100
150
200
2009 2010 2011 2012 2013 2014
mn DWT Global Total Contracting
Chinese Shipyards' Contracting
*: As at the end of 2014
Source: Clarkson Research
Newbuild Ship Contracting
Chinese shipyards maintained the world’s No. 1
market share in newbuild ship delivery, newbuild
contracting and the orderbook as at the end of 2014.
Chinese shipowners has accelerated fleet
restructuring in 2013, which led to a historic high in
newbuild contracting volume in 2013 and it started
to decline in 2014.
The newbuild ship delivery by Chinese shipyards is
expected to mildly recover in the coming two years.
Breakdown of Orderbook by Country *
Newbuild Ship Delivery
Market Review: (2) Newbuild Ship Delivery & Contracting
9
267
2,744 2,882
2,428 2,409
3,060
US$1,940
US$2,548 US$2,612
US$2,396
US$2,128 US$2,096
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2009 2010 2011 2012 2013 2014
'000 TEU
Annual Production Volume Average Selling Price
Market Review: (3) Newbuild Container Volume & Price
Drivers of Container Coatings’ Demand & Price
1,800
1,900
2,000
2,100
2,200
2,300
2,400
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
US$/20' Dry Containers
2013 2014 10 Source: Company Statistical Data
0
50
100
150
200
250
300
350
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
'000 TEU
2013 2014
Production Volume of New Containers
Selling Price of New Containers
Annual Production and Average Selling Price
of New Containers in China
300
350
400
450
500
550
600
650
700
Jan-1
3
Feb-1
3
Mar-1
3
Apr-1
3
May-1
3
Jun-1
3
Jul-1
3
Aug-1
3
Sep-1
3
Oct-1
3
Nov-1
3
Dec-1
3
Jan-1
4
Feb-1
4
Mar-1
4
Apr-1
4
May-1
4
Jun-1
4
Jul-1
4
Aug-1
4
Sep-1
4
Oct-1
4
Nov-1
4
Dec-1
4
US$/tonne (Platts)
Singapore 380cst Bunker Price Hong Kong 380cst Bunker Price
Market Review: (4) Marine Bunker Sales Volume & Price
11
Sources: 1.Maritime and Port Authority of Singapore (MPA) 2. Census and Statistics Dept. of the Government of the Hong Kong Special Administrative Region 3. Reuters
Sales Volume of Marine Bunker
36,387
40,853 43,154 42,685 42,682 42,417
6,525
9,137 7,245 6,820 7,035
5,925
0
10,000
20,000
30,000
40,000
50,000
2009 2010 2011 2012 2013 2014
'000 tonnes
Bunker Sales Volume in Singapore Bunker Sales Volume in Hong Kong
Selling Price of Marine Bunker
-0.6%
Average Price of 380cst
bunker in Singapore and
Hong Kong: -9% YOY
124 133
181
240 257
325
410
488
403
294
393
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
HK$ mn
Business Review: Shipping Services
12
2014 revenue from shipping services*: HK$6.64 bn (-18% YOY)
2014 profit before income tax from shipping services: HK$393 mn (+34% YOY)
Shipping Services PBT
* Excluding inter-segment revenue
Business Review: Shipping Services (cont’d)
13
1. Ship Trading Agency Services
113 124
107
69 66
81
74% 78%
71% 63% 64% 63%
2009 2010 2011 2012 2013 2014
HK$ mn
Operating Profit Margin
Orders through
COSCO International
Ship Trading
2013 2014
No. of
vessels
mn
DWT
No. of
vessels
mn
DWT
Newbuild delivery 22 1.50 18 1.86
Newbuild contracts 18 2.39 58 5.15
Secondhand vessels 67 3.21 82 3.98
Orderbook on hand * 45 6.03 85 9.32
* As at year end
The growth of both revenue and operating profit was mainly
driven by the increases in new vessel commission,
secondhand vessel commission and other commission
income during the year.
The newbuild contracts on hand of 85 vessels/ 9.32 mn
DWT as at Dec 2014 will be delivered in the coming 2-3
years at a relatively even pace.
Revenue Operating Profit
152 159
150
109 103
129
2009 2010 2011 2012 2013 2014
HK$ mn
revenue from newbuilding revenue from secondhand & others
Business Review: Shipping Services (cont’d)
14
2. Marine Insurance Brokerage Services
67
78
85 85 89 91
2009 2010 2011 2012 2013 2014
HK$ mn
47
57 60 61
63 63
70% 73%
71% 71% 71% 69%
2009 2010 2011 2012 2013 2014
HK$ mn
Operating Profit Margin
flat
Revenue Operating Profit
COSCO Insurance Brokers has strived to increase business volume by developing new insurance products such as ship
repairer’s liability and ship builder’s risks insurance, motor vehicle insurance and terminal insurance, etc.
445
598
970 923 889
1,050
2009 2010 2011 2012 2013 2014
HK$ mn
revenue from maintenance demand revenue from newbuilding demand
Business Review: Shipping Services (cont’d)
15
3. Supply of Marine Equipment and Spare Parts
The increases in both revenue and operating profit were attributable to: (1). increased demand for marine equipment
of newbuild ships; (2). remarkable results in expanding non-COSCO business. (3). consolidation of the results from
Hanyuan Technical Service Centre in Germany, which was acquired in Jun 2013 and Yuan Hua Technical & Supply
Corporation in the USA, which was acquired in Aug 2014.
In Aug 2014, COSCO Yuantong acquired 51% equity interest in Yuan Hua Technical & Supply Corporation in the USA,
further improved its on-site technical service ability in North America.
Revenue Operating Profit
33
44
63
49
31
42
7% 7% 7%
5%
3% 4%
2009 2010 2011 2012 2013 2014
HK$ mn
Operating Profit Margin
400
1,292
1,609
1,275 1,323 1,391
2009 2010 2011 2012 2013 2014
HK$ mn
revenue from industrial anti-corrosion coatings and othersrevenue from container coatings
Business Review: Shipping Services (cont’d)
16
Revenue Operating Profit
4. Production and Sale of Coatings: (1). Container & Industrial
Anti-corrosion Coatings by COSCO Kansai Companies*
13
70
181
114
86 105
3% 5%
11% 9%
7% 8%
2009 2010 2011 2012 2013 2014
HK$ mn
Operating Profit Margin
*** five-year average
Source: Company Statistical Data
**
The increase in revenue was mainly attributable to the
increased sales volume of industrial anti-corrosion coatings.
The prices of raw materials for coatings, mainly composed
of petroleum refined products and metal powder, declined
year-on-year, which improved the gross profit margin of
coatings segment.
* 64% owned subsidiaries, and the total annual capacity of the three
plants located in Tianjin, Shanghai and Zhuhai is about 100,000 tonnes
** Including reversal of provision for impairment of trade receivables (net)
of HK$22.18 mn
Cost Composition of Raw Materials
for Coatings***
Petroleum Refined Products
Metal Powder
Others
3,835
55,594 56,979
46,656 49,540 49,516
10,113 10,379 10,701 11,670 12,121 15,061
2009 2010 2011 2012 2013 2014
Tonnes
Container Coatings Industrial Anti-Corrosion Coatings
Business Review: Shipping Services (cont’d)
17
4. Production and Sale of Coatings: (1). Container & Industrial
Anti-corrosion Coatings by COSCO Kansai Companies
13,098
17,300 17,230
14,741 14,305
13,863
21,749 21,382 21,230
21,812 21,086
20,334
12,000
14,000
16,000
18,000
20,000
22,000
24,000
2009 2010 2011 2012 2013 2014
Revenue (RMB)/Tonnes
Container Coatings Industrial Anti-Corrosion Coatings
Sales Volume Average Selling Price
Flat
The average selling prices of both container and industrial coatings dropped, owing to keen competition with other coatings
peers and lowered container price during the year.
The decline of average selling price of containers coatings was less than that of raw materials prices during the year.
Business Review: Shipping Services (cont’d)
18
92,800 100,616
132,189
114,724
78,758 86,308
2009 2010 2011 2012 2013 2014
Tonnes
sales volume from newbuilding sales volume from maintainance & repair
101
77
49
38
11
65
2009 2010 2011 2012 2013 2014
HK$ mn
Sales Volume Share of Profit
4. Production and Sale of Coatings:
(2). Marine Coatings by Jotun COSCO*
* A 50% owned joint venture
The significant increase in share of profit was attributable to: (1). improved gross profit margin caused by the decrease
of raw material prices; (2). a one-off exchange gain of HK$14.3 mn realized by Jotun COSCO upon the liquidation of
its subsidiary; (3). a one-off provision for the impairment of trade receivables was made for certain marine coatings
customers in 2013, which resulted in a significant decline of the Group’s share of profit of about HK$38 mn, net of tax.
As at the end of Dec 2014, Jotun COSCO had coatings contracts on hand for 382 newbuild vessels, totaled 33.6 mn
DWT, which were scheduled to be delivered in the coming two to three years.
Chugoku
28%
KCC
16%
Hempel
11%
Others
15%
Business Review – Shipping Services (cont’d)
19 Source: Company Statistical Data
4. Production and Sale of Coatings (cont’d)
Chugoku
17%
IP
23%
Hempel
8%
Others
12%
2014 Market Share of
Newbuilding
Marine Coatings
in China
COSCO Kansai and Jotun COSCO
have maintained the No. 1 market share in China for years.
IP
23%
Chugoku
17%
Hempel
15%
Others
15%
2014 Market Share of
Maintenance & Repair
Marine Coatings
in China
Jotun COSCO
40% Jotun COSCO
30%
2014 Market Share of
Container Coatings
in China
COSCO Kansai
30%
Business Review: Shipping Services (cont’d)
20
4. Production and Sale of Coatings (cont’d)
96 93
54
12
70
182
121
98 114
11 22
44
101
77
49
38
11
65
2006 2007 2008 2009 2010 2011 2012 2013 2014
HK$ mn
Profit before income tax from COSCO Kansai Share of profit of Jotun COSCO
107 115
98
113
147
231
159
109
179
Segment PBT from Coatings
5,759
6,680
6,228
5,656
3,979 1,578
1,371 1,200 1,162
864
0
500
1,000
1,500
2,000
2,500
3,000
3,500
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2010 2011 2012 2013 2014
'000 Tonnes HK$ mn
Revenue (LHS) Sales Volume (RHS)
Business Review: Shipping Services (cont’d)
21
5. Trading and Supply of Marine Fuel
Revenue and Sales Volume*
31.5
18.5
54.6
17.5 19.9
2010 2011 2012 2013 2014
HK$ mn
Segment PBT * *
* Both sales volume and revenue are from the wholly-owned subsidiary, Sinfeng, in Singapore
** Including the share of profit from a 18%-owned associate, Double Rich, in Hong Kong
*** Including a reversal of provision for impairment of trade receivables of HK$29.65 mn
***
The declines in both sales volume and revenue were mainly due to: (1) reduction in trading business of higher risks
for stringent risk control; (2) year-on-year decrease in average price of marine fuel.
781
1,162
1,386
1,248
948
101
125 121 134 136
0
50
100
150
200
250
300
0
200
400
600
800
1,000
1,200
1,400
1,600
2010 2011 2012 2013 2014
'000 Tonnes HK$ mn
Revenue (LHS) Sales Volume (RHS)
Business Review: General Trading
22
28
32
24
14
8
2010 2011 2012 2013 2014
HK$ mn
Revenue* and Asphalt Sales Volume Operating Profit
***
**
* Including revenue from trading of asphalt, general ship supplies, and other commodities
** Including a provision for impairment of certain other receivables of HK$17.50 mn
*** Including a provision for impairment of certain other receivables of HK$ 18.94 mn
The decline in revenue was mainly due to the cessation of steel trading business by COSCO International Trading
for the sake of risk control.
The decline in operating profit was mainly attributable to the exchange loss generated from intra group loans
denominated in foreign currencies due to the fluctuation of Renminbi exchange rate.
23
Financial Review
24
Financial Summary (HK$ mn) 2014 2013 Changes
Revenue 7,588 9,308 -18%
Gross profit 804 694 +16%
Gross profit margin 10.6% 7.5% +3.1pts
Other income and gains 40 54 -26%
Selling, administrative and general expenses (578) (507) +14%
Other expenses and losses (21) (23) -7%
Operating profit 246 219 +12%
Finance income 143* 94 +52%
Finance costs (3) (4) -29%
Share of profits of joint ventures 65 10 +583%**
Share of profits of associates 17 13 +31%
Profit before income tax 468 332 +41%
Income tax expenses (73) (59) +25%
Profit attributable to:
Equity holders of the Company 359 242 +49%
Non-controlling interests 36 31 +14%
Basic earnings per share (HK cents) 23.70 15.96 +48%
* Increase in finance income in 2014 was mainly due to higher cash deposit rates as compared to 2013
** Increase in share of profits of joint ventures was mainly due to the significant growth in the share of profit of Jotun COSCO
Production and
Sale of
Coatings
38%
Ship Trading
Agency
Services
19%
Marine
Insurance
Brokerage
Services
14%
Supply of
Marine
Equipment and
Spare Parts
9%
Trading and
Supply of
Marine Fuel
4%
General
Trading
1%
Others
15%
2014
25
Profit Breakdown
Profit Before Income Tax (HK$ mn) 2014 2013 Changes
Shipping Services 393 294 +34%
Ship Trading Agency Services 89 73 +22%
Marine Insurance Brokerage Services 64 64 flat
Supply of Marine Equipment and Spare
Parts 42 30 +37%
Production and Sale of Coatings 179 109 +64%
Trading and Supply of Marine Fuel 20 17 +14%
General Trading 3 6 -48%
Others* 72 32 +122%
Total 468 332 +41%
*: Including net corporate finance income deducting corporate expenses
26
Financial Position & Financial Ratio Highlights
(HK$ mn) As at 31 Dec 2014 As at 31 Dec 2013 Changes
Trade receivables (net) 942.6 960.4 -2%
Total deposits and cash 6,133.8 6,327.8 -3%
Total assets 9,665.3 9,450.0 +2%
Bank borrowings 26.1 59.8 -56%
Total liabilities 1,556.8 1,660.9 -6%
Equity (excluding non-controlling interests) 7,739.1 7,475.2 +4%
Net cash 6,107.7 6,268.0 -3%
NAV per share (HK$) 5.05 4.94 +2%
Net cash per share (HK$) 3.99 4.14 -4%
Return on total assets (ROA) 3.8% 2.5% +1.3ppts
Return on equity (ROE) 4.7% 3.3% +1.4ppts
27
Cash Flow Summary
(HK$ mn) 2014 2013
Cash & Cash Equivalents - Beginning 1,699 4,079
Cash Inflow/(outflow)
Net cash (used in)/generated from operating activities (155) 361
Net cash (used in) investing activities (286) (2,679)
Net cash (used in) financing activities (91) (85)
Net (decrease) in cash and cash equivalents (532) (2,403)
Exchange (loss)/gain (2) 23
Cash & Cash Equivalents – Ending 1,165 1,699
Plus: cash investments with maturity more than three
months from date of placement 4,955 4,566
Plus: restricted bank deposits 14 63
Total Deposits and Cash & Cash Equivalents - Ending 6,134 6,328
28
Outlook
To help shipowners carry
out their newbuilding plans
smoothly
To explore and develop
new business in response to
the market changes and
customers’ needs
Shipwoners will continue to order new vessels, which will increase demand for shipping services from
new vessels in the future.
More business opportunities will emerge from new supportive policies such as “One Belt and One
Road”, “Yangtze River Economic Belt”, and “Free Trade Zones”, etc.
Shipowners will continue to take stringent cost control measures in a weak shipping market.
Shipowners will continue to restructure their fleet, resulting in lower demand in insurance brokerage
and spare parts supply as the number of operating vessels will decrease.
Outlook in 2015
Opportunities
Strategy
Ship Trading
Agency
Marine Insurance
Brokerage Marine Equipment &
Spare Parts Supply
To explore more non-COSCO customers by taking advantage of being COSCO Group’s centralised procurement platform
To develop more non-marine insurance products to mitigate shipping cyclical impact
To expand the third party business such as reinsurance business
To generate more synergies with other shipping services segments by capitalising on the global network
To explore more non-COSCO customers by leveraging on the centralised procurement platform of COSCO Group
29
Challenges
30
Outlook in 2015 (cont’d)
Increasing demand for industrial
coatings for petroleum and
petrochemical facilities, port facilities
and infrastructure projects, etc.
Challenges
&
Opportunities
Strategy
Container coatings: flat with 2014
Industrial coatings: slight increase
To increase efforts in developing
and promoting the Hull and
Performance Solution and anti-
fouling coatings Sea Quantum X200
To expand the market share of
marine coatings for ship
maintenance and repair
To ensure smooth operation of
Jotun COSCO Qingdao
To continue prudent
operational strategy
Demand Forecast
Fierce competition, increasing raw material price and labour cost will cause
pressure to gross profit margin
Newbuild deliveries by Chinese
shipyards will recover
Marine coatings: slight increase
Increasing demand for high-
performance anti-fouling coatings
which can help accelerate vessel
speed and reduce bunker
consumption
Keen competition
Marine fuel prices will
maintain at low level
To strengthen the promotion and
sales of industrial anti-corrosion
coatings for bridges, nuclear plants
and steel construction works
To continue construction of
COSCO Kansai Shanghai new plant
which is scheduled to commence
production in Jun 2015
Global marine fuel
demand will remain stable
Container Coatings &
Industrial Anti-Corrosion
Coatings
Marine Coatings Marine Fuel
Supply
Phase 1
Pure shipping service agent
Phase 3
Globally integrated shipping service
provider, with high-end & high value-
added manufacturing and technology development
Development Objectives of COSCO International
Phase 2
Integrated shipping service
provider
Scope of Business
• Main businesses focus on trading or agency
• Provide customized services based on specific customer requirements
• Enter high-end & high value-added manufacturing and technology development areas at a proper time
• Transform from pure agent to service provider
• Develop new business, add more service offerings
Geographic
Market
• Focus on Mainland China, Hong Kong, Singapore
• Set up offices in Japan, Europe, USA
• Form a complete global network
• Establish regional HQ/offices, operation offices, owned service network and supplier service network
• Begin to enrich and expand global network
Outlook (cont’d)
31
32
Thank you!
IR team contact
Mr. Zheng Xiaofeng
Tel: 852 2809 7810
Email: [email protected]
Ms. Candy Cheung
Tel: 852 2809 7706
Email: [email protected]
Ms. Crystal Lu
Tel: 852 2809 7820
Email: [email protected]
For further information, please visit
our company website: www.coscointl.com
33
Appendix: Corporate Profile
COSCO International
Vision: to become a global leading one-stop shipping services
provider
Central Procurement Platform for COSCO fleet, in ship
trading, marine insurance and supply of marine equipment and spare
parts
China No. 1 largest producer of container coatings and
marine coatings
Strong cash position to support potential business expansion:
HK$6.1 billion net cash (or HK$3.99 per share) as at 31 Dec 2014
Dividend payout ratio is temporarily increased to no less
than 50% of net profit.*
ROE of core business: 18% (2010-2014 average)
34
*: In case, after the Company publishes major transaction announcement in relation to investment project, the annual dividend payout ratio will
maintain at the level of no less than 25% of net profit, subject to the results, availability of distributable reserves and cash flow of the Company
at that time.
* As at Dec 2014, the total number of issued shares was 1,531,805,429.
Corporate Profile – Business Structure
COSCO International is a HK-based shipping services provider,
offering diversified and specialized shipping related services or
products to customers such as shipping companies, ship yards,
container manufacturers, etc.
COSCO International
Ship Trading
Public shareholders
COSCO International
Trading
COSCO Kansai
(Container Coatings)
COSCO (HK)
Insurance Brokers
Yuantong Marine Service (HK)
100%
35.7%
64%
50%
100%
18%
64.3%
Ship Trading Agency Marine Insurance
Brokerage
Marine Equipment &
spare parts supply
Production and Sale
of Coatings General Trading
Shenzhen COSCO
Insurance Brokers
100%
55%
Jotun COSCO Marine
Coatings
Marine Bunker
Supply
Sinfeng Marine Services
(SGP)
Double Rich (HK)
100% 100%
COSCO Group
100%
Shin Chung Lin (Japan)
Xing Yuan (Singapore)
100%
100%
Yuantong Marine Trade (Shanghai)
100%
Central Procurement Platform
for COSCO Fleet
Hanyuan Technical Service (Germany)
100%
COSCO (Beijing)
Marine Electronic
Equipment Limited
100%
COSCO (HK) Group Ltd
COSCO International (00517.HK)*
Yuan Hua Technical & Supply (U.S.A.)
51%
35
Ship Trading Agency Marine Insurance Brokerage
Marine Equipment & Spare Parts Supply
Coatings Marine Bunker Supply
High earnings’
visibility: already locked-
in commission income
from ship newbuilding,
which is recognised once
the instalment payments
paid during the
construction process
specified in the relevant
contracts.
Provides exclusive agency
services in shipbuilding and
ship trading for the fleet of
COSCO Group
Agency commission from
ship newbuilding is the
major income, and the
commission rate is usually
based on the ship price
Provides insurance
intermediate services including
risk assessment, designing
insurance program, placing
insurance cover, loss
prevention, claims handling to
vessels insured worldwide.
Brokerage commission as its
income is normally based on
the insurance premium
Provides services in
purchasing and installation of
marine equipment and spare
parts and voyage repair
upon the request of ship
owners
Business network spreads
across Hong Kong, Beijing,
Shanghai, Japan, Singapore,
Europe and the USA etc.
Two JVs in production and sale
of container coatings (COSCO
Kansai) and marine coatings
(Jotun COSCO)
New plants in Qingdao and
Shanghai will commence
operation in 2015.
Profit of coatings is decided by
raw materials prices and the
average selling prices.
Two subsidiary companies (Sinfeng:100% owned in SGP; Double Rich: 18% owned in HK) in trading and supply of marine fuel and related products.
Business network or connection covers Singapore, Malaysia, Hong Kong and other major refueling ports worldwide.
Well-known brands and No. 1 market share in China
Demand of container coatings is driven by volume of newbuild containers, and demand of marine coatings is mainly driven by the volume of newbuild vessel deliveries by Chinese shipyards.
Overv
iew
B
usi
ness
Hig
hligh
ts
Cu
sto
mer
Container manufacturers,
shipyards, ship owners Ship operators
Proved stable growth: ship
insurance contracts usually
renew at the beginning of every
year, and business growth in
recent years comes from
newbuild vessels and new
insurance products
Expand customer base
outside COSCO Group
Explore manufacturers and
providers for domestic-
made spare parts
Ship owners, shipyards
About 90% revenue is for
the fleet of COSCO
Group.
Ship owners
About 60% revenue is from
COSCO Group.
Plays the role of “sole agent” for the centralised procurement for COSCO fleet
Vision: To become a Global Leading “One-stop” Shipping Services Provider
Corporate Profile – Business Overview
Ship owners
About 80% revenue is from
COSCO Group.
To adopt prudent operating strategy
36
With strong parent company’s support
COSCO International
COSCO Shipping COSCO Corporation
Container Manufacturing
China COSCO
52.01%
COSCO Group*
64.3% 43.92%
COSCO (HK) Group
100%
COSCO Pacific
Container Shipping
Dry Bulk Shipping
Terminal Operation
Container Leasing
50.52%
600428.SH
53.35%
COSC.SI
Ship Repair
Ship Building
Marine Engineering
Specialized Shipping
Other Major Unlisted
Companies
COSCO Dalian (100%)
Tanker Shipping
COSCO Shipbuilding Industry
Co. (100%)
Shipbuilding
CHIMBUSCO (50%) **
Marine Bunker Supply
COSCO Logistics (100%)
……
Shipping Services
517.HK
22.75%
China International Marine Containers (CIMC)
2039.HK/ 000039.SZ
1919.HK /601919.SH
1199.HK
* China Ocean Shipping (Group) company, a 100% state-owned company in China, is one of the largest shipping conglomerates
in the world, operating a fleet of 649 ships or 47.6 million DWT as at the end of Dec 2014.
**China Marine Bunker (Petro China) Co., Ltd., a 50:50 JV of COSCO Group and PetroChina
Corporate Profile – Position in COSCO Group
37
0.00
2.00
4.00
6.00
8.00
10.00
12.00
2008 2009 2010 2011 2012 2013 2014
A. COSCO Group
purchased
51,416,000 shares in
open market in
2008.
56.55% of 1,478,031,291
issued share capital
(31st Dec 2007)
B. In Jun/Jul 2009 ,
COSCO Group
increased 17,221,775
shares as scrip
dividend.
59.60% of 1,489,671,291
issued share capital
(31st Dec 2008)
59.87% of 1,510,597,429
issued share capital
(8th Jul 2009)
A
B C
59.76%
of 1,513,527,429
issued share
capital
(30th Jun 2011)
C. COSCO Group
bought a total of
38,426,240 shares in
open market from
30 Jun to 31 Dec
2011.
D
Parent Company Raises Stake
Parent company always shows confidence in COSCO International by raising its stake over the past few years
62.29% of 1,513,627,429
issued share
capital
(31st Dec 2012)
D. COSCO Group
bought a total of
26,370,000 shares in
open market from 1
Jan 2013 to 19 Jun
2013.
E
E. COSCO Group
bought a total of
15,074,000 shares
in open market
from 19 Jun to 23
Sept 2013.
64.02% of
1,513,731,429
issued share
capital
(19th Jun 2013)
65.02% of
1,513,731,429
issued share
capital
(23rd Sept 2013)
38
2006 2007 2004 2005 2011 2009 2010 2003 2002 1997 2008 1992
Development Milestones
Completion of strategic transformation into a shipping services provider, who has a strong cash position after disposal of non-core business
Transformed from a conglomerate into a specialised shipping services provider over the past decade
Commenced construction of COSCO Kansai Zhuhai plant
Listing of its associated company of Sino-Ocean Land
Acquired COSCO Ship Trading from COSCO Group, the beginning of the development of shipping services
Acquired COSCO Kansai Companies to develop container coatings
Acquired COSCO HK Brokers to develop marine insurance brokerage and Yuantong from COSCO Group to develop marine equipment supply
Established joint venture Jotun COSCO to develop marine coatings
Disposed property investments in Hong Kong
Acquired 18% of Double Rich in Hong Kong and established Sinfeng Marine Services in Singapore, the first expansion in marine fuel supply
Acquired Xing Yuan from COSCO Singapore and established Shin Chung Lin, the expansion of marine equipment supply business in Singapore and Japan
Disposed all shares of Sino-Ocean with net sales proceeds of HK$5.26 billion
COSCO HK acquired Shun Shing Construction and renamed as COSCO International.
Divested building construction business & a property investment in Shenyang
Commenced construction of Jotun COSCO Qingdao plant
Interests in Sino-Ocean diluted from 44% to 30%
Disposed interests of a power plant in Henan
Shun Shing Construction was incorporated and listed on the main board of HKSE
2012
Acquired Germany Hanyuan to expand marine equipment supply network outside Asia
2013
Commenced construction of COSCO Kansai plant in Shanghai
39
COSCO International: a Specialized and Integrated Shipping Related Services Provider
Ship Owners Ship Operators Ship Builders
Ship Trading Brokers
Marine Coatings
Insurance Brokers
Supply of Marine Fuel
Container
Manufacturers
Container Coatings Supply of Equipment & Spare Parts
Our
Customers:
Corporate Profile - Competitive Advantage
Significant Synergies across our Business Segments
40
41
Disclaimer
This presentation contains certain forward-looking statements with respect to the financial
position, results of operations and business of COSCO International and certain plans and
prospects of the management of COSCO International.
Such forward-looking statements involve known and unknown risks, uncertainties and other
factors which may cause the actual result or performance of COSCO International to be
materially different from any future results or performance expressed or implied by such
forward looking statements. Such forward-looking statements are based on numerous
assumptions regarding COSCO International’s present and future business strategies and
the political and economic environment in which COSCO International will operate in the
future.
The representations, analysis and advice made by COSCO International in this presentation
shall not be construed as recommendations for buying or selling shares of COSCO
International. COSCO International shall not be responsible for any action or non-action
made according to the contents of this presentation.
