China Aviation Oil (Singapore) Corporation Ltd
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Transcript of China Aviation Oil (Singapore) Corporation Ltd
China Aviation Oil (Singapore) Corporation Ltd 1
China Aviation Oil (Singapore) Corporation Ltd
Fuelling The Rapidly Growing China Aviation Industry
China Aviation Oil (Singapore) Corporation Ltd 2
Presentation Outline
Section 1 Who We are
Section 3 Proven Track Record
Section 4 Growth Strategy
Section 2 Our Unique Business
Section 5 Summary
Section 6 Issue Statistics
China Aviation Oil (Singapore) Corporation Ltd 3
Who We AreSection 1
China Aviation Oil (Singapore) Corporation Ltd 4
Who We Are
The Sole Jet Fuel Procurement Arm Of
China’s Civil Aviation Industry
Who We Are
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Business
International Trading
Jet Fuel Procurement
Pudong & HK
Jet fuel procurement is low risk and provides steady earning growth
International trading is built up on the jet fuel procurement business
Planned investments will strengthen and grow our business
Who We Are
China Aviation Oil (Singapore) Corporation Ltd 6
Milestones
1993
Established as a joint venture in Singapore
1995
Became the wholly-owned subsidiary of CAOSC
1998
Turned loss into profit
1999
Expanded regionally and increased product portfolio
2000
Implemented risk manage-ment
Who We Are
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Our Unique BusinessSection 2
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CAO’s Uniqueness
Leveraging On the Growing Chinese Aviation Industry
Sole Jet Fuel Importer
Our Unique Business
Proposed Acquisition of a Stake in Shanghai Pudong International Airport Aviation Fuel Supply Corporation Ltd. --- the most profitable jet fuel operations in China
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Leveraging On the Growing Chinese Aviation IndustryOur Unique Business
GDP will grow at 7% and above, probably exceeds 10% in some years- Far East Economic Summit
Foreign Reserve will exceed USD 200 bn, Chinese people’s deposit will exceed USD 400 bn in the year of 2002- Lianhe Zaobao
China will overtake Japan and Germany as the second largest trading country by 2012 and will be the largest trading country by 2016- Lianhe Zaobao
China is expected to be the same economic entity as the USA by 2020- World Bank
The Macro Picture of China’s Growth
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Leveraging On the Growing Chinese Aviation Industry
Our Unique Business
China has been a net oil importing country since 1993
Petroleum Demand Outstrips Supply In The Long-Term
0
2,000
4,000
6,000
8,000
10,000
12,000
Production Consumption
Source: Energy Information Administration, US (EIA)
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Leveraging On the Growing Chinese Aviation IndustryOur Unique Business
Source: Civil Aviation Administration of China
0.0251.5
16
1991 2000 2016
Million MT
Growing Jet Fuel Import
Projected 16% Annual
Growth Rate From 2000 &
Beyond
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Our Unique Business
Short haul consumes more jet fuel per km
Independent of world trends
New order for 30 Boeing a/c Oct 2001
Expected 500 a/c in the next 5-7years
Demand Is Driven By Domestic Air Travel
Leveraging On the Growing Chinese Aviation Industry
1985 1990 1995 2000 2005 2010 2015 2020
Source: 1. Boeing Company
2. Lianhe Zaobao
Domestic Air Travel Growth
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Leveraging On the Growing Chinese Aviation IndustryOur Unique Business
Solid Growth Potential
Population (billion)
Jet Fuel Consumption
Airport
Aircraft
18,443
0.28 (billion)
USA China
219,646
72.9 (Mil MT)
949
149
4.6 (Mil MT)
1.25 (billion)
Source: Dept. of Transportation of USA, Energy Information Administration of USD and Civil Aviation Administration of China
Note: All the figures are as at the end of 1999
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Sole Jet Fuel ImporterOur Unique Business
CAO is currently the only wholly-owned overseas subsidiary of CAOSC
CAOSC committed not to set up another company to compete with CAO
Chairman and other non-executive Directors of CAO are key executives of CAOSC
Strong Backup from Parent Company (CAOSC)
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No Negative Impact More Benefits
China’s Entry Into WTO Has Positive Impact On Our Business
- Indonesia is a WTO member earlier than China, its jet fuel supply is controlled by its national oil company
- High entry barriers to potential jet fuel suppliers to access to infrastructure
- Proven track record as a niche player will be able to withstand foreign competition
- More jet fuel
consumption
a. Import & export
cargo
b. Business travel
c. Switch from
train to aircraft- Lift of import quota
will create more
demand for overseas
jet fuel
Sole Jet Fuel ImporterOur Unique Business
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Sole Jet Fuel Importer Our Unique Business
The announcement of merger of CAOSC and CASC imply the emphasis placed by government on the economic scale
The small volume of current jet fuel consumption is not justified for many players, economic scale is key
Jet fuel is a national strategic resource, we believe that government will pay attention to the supply of jet fuel
Parent’s Controlling Position Will Be Likely Maintained
Current jet fuel supply infrastructure is complete and systematic, breaking such a system will not create competition, but operational inefficiency
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Proposed Acquisition of Pudong Aviation Fuel Corporation
Our Unique Business
Exclusive right in supplying jet fuel in Pudong International Airport
Own the sole jet fuel supplying infrastructure
Low maintenance cost and repair expenses
Pudong vs Chicago
Attractive Business
Great Potential
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Proven Track RecordSection 3
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Financial PerformanceProven Track Record
40
6.48.8
13.5
0
5
10
15
20
25
30
35
40
45
50
1998 1999 2000 2001 Forecast
S$’ Mil
Increasing Profit After Tax
CAGR 84%
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Financial PerformanceProven Track Record
1998 1999 2000 2001 Forecast
1,085
170.7
414.5
963.7
0
200
400
600
800
1000
1200
1400
Strong Revenue Growth (Physical Cargo)
S$’ Mil
CAGR 85%
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Financial PerformanceProven Track Record
1.3
3.23.6
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
1998 1999 2000
Growing Procurement and Trading Volume
Million MT
CAGR 66%
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Financial PerformanceProven Track Record
• No Gearing
• No bad debts
• Growing cash position
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Growth StrategySection 4
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Strategies For GrowthGrowth Strategy
InvestmentsFuel facilities and end users -complementary to procurement / trading business
Jet Fuel Procurement Maintain and increase profit margin
STRATEGY
Geographical Expansion
USA/Europe
New market and end users
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SummarySection 6
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SummarySummary
China
Sole Importer
Pudong
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Tan Jeh Wuan, DBS Bank
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Issue StatisticsSummary
Issue size : 144 million New Shares
- 10 mln public offer shares
- 134 mln placement shares
Issue price : S$0.56 per share
Gross Proceeds : S$80.64 mln
Historical PER : 18.1
Forecast PER : 6.2
Gross Dividend Yield : 5.0%
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Use of ProceedsSummary
Net Proceeds of approximately S$76.6 million:
S$57.0 million for future expansion through joint ventures and/or strategic investments in China and Hong Kong;
S$15.5 million to acquire companies and/or set up subsidiaries in USA and Europe within the next two years; and
S$4.1 million for working capital
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Important DatesSummary
Open : 26th Nov 2001, Monday, 12 noon
Close : 4th Dec 2001, Tuesday, 12 noon
Trading : 6th Dec 2001, Thursday, 9.00 a.m.
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Q&A
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China Aviation Oil (Singapore) Corporation Ltd
Fuelling The Rapidly Growing China Aviation Industry