Corporate Presentationapp.pmgasia.com/InvestAsean2018/pdf/SG China Aviation Oil...Corporate...
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Title
Corporate Presentation
Maybank KimEng Invest ASEAN Singapore 2018
27 March 2018
Title
This presentation slides may contain forward-looking statements that involve risks and uncertainties. These statements reflect management’s current expectations, beliefs, hopes, intentions or strategies regarding the future and assumptions in the light of currently available information. Such forward-looking statements are not guarantees of future performance or events. Accordingly, actual performance, outcomes and results may differ materially from those expressed in forward-looking statements as a result of a number of risks, uncertainties and assumptions. Representative examples of these factors include (without limitation) general industry and economic conditions, competitive factors and political factors. You are cautioned not to place undue reliance on these forward-looking statements, which are based on current view of management on future events.
Cautionary note on forward-looking statements
Title
Corporate Overview
Title
Listed on SGX since 2001– a constituent stock of the MSCI
Singapore Small Cap Index, FTSE ST China Index and
FTSE ST Small Cap Index
Key supplier of imported jet fuel to the
PRC Civil Aviation industry
Largest purchaser & trader of physical jet fuel
in Asia Pacific
2nd largest jet fuel supplier at
Los Angeles International Airport
3rd licensed refueller at Hong Kong International Airport
Supplies to 48 international airports outside mainland China
Revenue in FY2017 : US$16.3 billion
Revenue in FY2016 : US$11.7 billion
PBT in FY2017 : US$92.2 million
PBT in FY2016 : US$91.9 million
PATMI in FY2017 : US$85.3 million
PATMI in FY2016 : US$88.9 million
Dividends Payout for FY2017: S$0.045 per share,
first and final (one-tier, tax exempt)
Singapore Headquarter
Subsidiaries
Associated Companies
CAO - A Forbes Global 2000 Company, 2017
- Ranked 32nd Largest Oil & Gas Company, 2018 Sino-Global Energy magazine
4
Expanding Global Presence –
A Diversified and International Growth Platform
Title
Oil-Related Assets Trading of
Other Oil Products
Jet Fuel
Supply & Trading
CAO
China
International
Gas Oil
Fuel Oil
Aviation Gas
Storage Tanks & Jetties
Pipelines
Airport Refuelling Facilities
5
Aviation Marketing Crude Oil
Our Businesses
Title
Strategy: to leverage on trading expertise to expand revenue
streams and reduce reliance on jet fuel
6
Gasoil
Fuel Oil
Aviation Gas
Established in 2010
Built effective relationships with oil majors, large trading houses
and reliable end users worldwide
Reliable supplier of bunker fuel in Singapore and Middle East
Established in 2014
An avgas importer to China; and active player in Asia Pacific and Middle
East markets
Secured European refinery’s exclusive distribution rights in 14 Asia
Pacific countries
Established in 2012
Successfully supplied gasoil to Southeast Asia and North Asia regions
To expand presence in Asia Pacific region by securing more
supply contracts
Crude Oil
Established in 2016
Leveraged on the Group’s integrated value chain and well positioned
collaborations with regional counterparties and teapot refineries for
supply and trading activities
Expanding Revenue Stream
Title
Large Central SOE directly under SASAC
Fortune Global 500 company (ranked 439 in 2017)
Extensive nationwide sales network, logistics and distribution system
Owns jet fuel supply facilities at over 210 airports across China
Provides refuelling services to over 200 airline companies
7
Strong Shareholder Support
CNAF
Jet Fuel Refuelling
Trading of Other Oil Products
Logistics International
Business
(CNAF) – 51%
Title
BP Investments Asia Limited – 20%
CAO’s strategic business partner
Assists CAO in enhancing its trading and risk management system
Business cooperation with BP enables access to new markets
8
Strong Shareholder Support
Title
June 2016
9
Entrenched Positioning in Aviation Fuel
Title
16.5 20.4 20.2 32.6
37.3
2013 2014 2015 2016 2017
Total Supply & Trading Volume
million tonnes
Key supplier of imported jet fuel into
China
Provides approximately 30% - 40%
of China’s total jet fuel demand on a
cost plus basis
Supplies mainly to key international
airports in China and other airports
in fast-growing Chinese cities
(Shenzhen, Chengdu, Qingdao etc.)
Strategic alliances with major
Chinese airlines to supply jet fuel
outside China
10
Jet Fuel Supply – Stable Income Generator
Title
Strong Balance Sheet, Strong cash-flows, Strengthened credit profile
Robust risk management and corporate governance framework
Global supply and trading network spanning Asia Pacific, North America and Europe
International revenue base; diversified product base
Integrated business model
11
Optimisation and Trading Enhances Profitability
Title
Structure
Measures
Group Wide Risk Awareness Culture
Management/Company Risk Meeting
Audit Committee Risk Management
Committee
Board of Directors
Heads of Department
Head of Risk Management
Heads of Department
Internal Audit (outsourced)
Risk Management Dept
Front Office Back Office
Remuneration Committee Nominating Committee
Pre-deal Checklists
Evaluation of New Business Risks and/or New Investment Risks
Credit Assessments
Product Limits
Traders’ Guidelines
Periodic Stress Testing
Regular Reporting etc.
12
Effective Risk Control System
Title
CAO Presence
Associated Companies
13
ASIA NORTH
AMERICA EUROPE ASIA
AUSTRALIA
ME
EUROPE
NAFCO
CAOHK
CAOE
CAO
CAO’s Transformation :
A Global Supply & Trading Network
Title
3.2 3.5
3.8 4.1
4.4
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
2013 2014 2015 2016 2017
SPIA Refuelling Volumes 33% stake in Shanghai Pudong
International Airport Aviation Fuel
Supply Company (SPIA)
Exclusive jet fuel supplier to
Shanghai Pudong International
Airport
Owns all refuelling facilities at
Pudong Airport
Other SPIA shareholders:
Shanghai International Airport Co
Ltd (40%) and Sinopec Shanghai
Gaoqiao Petrochemical Co., Ltd
(27%)
14
Million tonnes
Oil-related Assets – SPIA
Title
2.6 2.5
2.8
3.1
2.8
0
0.4
0.8
1.2
1.6
2
2.4
2.8
3.2
3.6
2013 2014 2015 2016 2017
TSN-PEKCL Pipeline Volumes 49% stake in China National
Aviation Fuel TSN-PEK Pipeline
Transportation Corporation Ltd
(TSN-PEKCL)
CNAF Logistics holds remaining
51% stake
Key asset is a 185km long pipeline
transporting majority of jet fuel
requirements of Beijing Capital
International Airport and Tianjin
Binhai International Airport
15
Million tonnes
Oil-related Assets – TSN-PEKCL
Title
39% stake in China Aviation Oil
Xin Yuan Petrochemicals Co. Ltd
Remaining stakes held by
Shenzhen Juzhengyuan
Petrochemical Co Ltd (60%) and
CNAF (1%)
Engaged in the storage and
trading of jet fuel and other oil
products
Owns 75,000m3 storage tank
16
Oil-related Assets – Xin Yuan
Title
26% stake in Oilhub Korea
Yeosu Co Ltd (OKYC)
OKYC operates the largest
commercial oil storage terminal
in Korea
CAO is second largest
shareholder after Korea
National Oil Corporation (29%)
Korea is a main source of jet
fuel for CAO
OKYC’s Oil StorageTerminal in Yeosu, Korea
Storage
Capacity
1,300,000m3
Shipping
Time
1.88 days to Tianjin, China
1.21 days to Shanghai, China
Terminal
Facilities
4 berths with draft of 17.7 metres
Capacities ranging between 10,000 to
200,000 dwt
Able to access KNOC owned jetty
with 325,000 dwt capacity
Others Able to support trading activities to
Europe, west coast of United States
and Southeast Asia
17
Oil-related Assets - OKYC
Title
39% stake in CNAF Hong Kong
Refuelling Limited (CNAF HKR)
Remaining stakes held by Shenzhen
Cheng Yuan Aviation Oil Company
(37%), China United Petroleum
(Holding) Company Limited (14%)
and Cheer Luck Investment Limited
(10%)
Provide into-plane refuelling services
at Hong Kong International Airport
Operations commenced in August
2015
18
Oil-related Assets – CNAF HKR
Title
FY2017 Financial Results
FY2017 Highlights
The Group remained on track to deliver record volumes and a creditable financial performance for
FY2017, notwithstanding persisting macro-economic and geopolitical risks, coupled with falling global oil
inventories which led to the rise of oil prices and caused global oil markets to slip into backwardation in 2H
2017.
Total supply and trading volumes for middle distillates and other oil products increased 14.6% to hit a new
high of 37.3 million tonnes in FY2017 on the back of CAO’s successful globalisation strategy:
Revenue jumped 39.0% year-on-year to US$16.3 billion, backed by higher supply and trading volumes
and higher oil prices;
Gross Profit decreased 12.1% to US$38.7 million, attributable to lower gains from trading and
optimisation activities as markets reclined to backwardation in 2H 2017, further exacerbated by increase
in supply and operational costs incurred due to various supply disruptions caused by weather and
refineries outages in 3Q 2017;
Net Profit decreased 4.0% to US$85.3 million mainly due to higher income tax expenses.
Share of Profits from associates increased 7.8% to US$71.5 million (FY2016:US$66.4 million) due mainly to:
Share of profits from SPIA rose 5.8% to US$64.2 million in FY2017 (FY2016: US$60.6 million), primarily
due to higher refuelling volumes, resulting in higher operating profit;
Share of profits from OKYC increased 19.5% to US$5.0 million (FY2016: US$4.1 million), attributable to
higher operating profit from its tank storage leasing activities.
20
15,571.9 17,061.0
8,987.5
11,703.2
16,267.6
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
2013 2014 2015 2016 2017
Revenue rose 39.0% to US$16.3 billion in FY2017 on the back of higher oil prices and record
supply and trading volumes, underpinned by sustained growth momentum of the Group’s
diversified transportation fuels portfolio.
Jet fuel prices averaged US$66.07 per barrel for FY2017 versus US$53.85 per barrel for
FY2016.
21
US$ millions
21
Revenue
Strong Revenue Growth
16.5
20.4 20.2
32.6
37.3
0
5
10
15
20
25
30
35
40
2013 2014 2015 2016 2017
Total supply and trading volumes reached new high of 37.3 million tonnes for FY2017,
supported by:
healthy growth in core jet fuel supply and trading business, backed by a growing
diversified customer base across key aviation markets;
sustained momentum across other oil products segment with 25.2% jump to 17.5 million
tonnes in supply and trading volume, backed by increased supply and trading activities
for fuel oil.
Globalisation & Diversification Drive Record
Supply & Trading Volumes
22
million tonnes
22
Total Volume
12,456.0 13,507.6
7,009.5
7,754.1
10,233.2
2,233.32,778.8
-4,000
1,000
6,000
11,000
16,000
2013 2014 2015 2016 2017 4Q2016 4Q2017
Core jet fuel supply and trading volume increased 7.8% year-on-year to 16.1 million tonnes
compared to 15.0 million tonnes in FY2016, driven by :
strong demand growth from the Chinese civil aviation industry with total air passenger
throughput hitting a new high of 552 million* in 2017, an increase of 13% year-on-year;
Aviation Marketing segment continued to extend geographic footprint across North America,
Europe and Asia Pacific regions, lifted by:
an extended market reach to 48 supply locations in over 20 countries with supply
volumes outside mainland China growing 8% year-on-year to 2.06 million tonnes;
healthy global air travel demand hitting a record of 4.1 billion air passengers in 2017
with a 7.1% year-on-year growth for global civil aviation industry.
23
Revenue - Middle Distillates
Core Jet Fuel Business Remains Resilient
US$’millions
*Source: Civil Aviation Administration of China (CAAC)
3,115.83,553.4
1,978.0
3,949.1
6,034.4
1,042.41,282.0
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2013 2014 2015 2016 2017 4Q2016 4Q2017
Supply and trading volumes of other oil products jumped 25.2% to 17.5 million tonnes in FY2017,
reflecting underlying growth momentum in:
diversified transportation fuels portfolio in global demand markets;
further inroads made in growing Middle East market for Fuel Oil and expanding oil product
services such as bunker refuelling, thereby establishing an integrated global supply and
trading value network for other oil products segment;
expanding geographical customer base with secured supply contracts for Crude Oil.
24
Revenue - Other Oil Products US$’millions
Strong Performance from Other Oil Products
China 80%
South Korea 5%
Singapore 9%
Other Regions 6%
FY2017
US$5.5
billion
US$16.3
billion
FY2010
China
47.4%
Singapore
13.6%
USA
5.5%
Hong Kong SAR
8.0%
Australia
1.0%
Middle East
6.1%
Europe
3.9%
Other Regions
8.9%
25
Malaysia
2.9%
CAO’s International Revenue Base
South Korea
2.7%
70.2
49.2
61.3
88.985.3
17.914.0
52.5
27.435.4
44.138.7
10.6 8.30
10
20
30
40
50
60
70
80
90
100
2013 2014 2015 2016 2017 4Q2016 4Q2017
Net Profit Gross Profit
26
US$’ millions
Net Profit declined 4.0% to US$85.3 million due mainly to increased tax exposure arising from
accounting for deferred taxation with the Group’s increased profit contribution from its associates
Gross Profit declined 12.1% to US$38.7 million due to lower gains from trading and optimisation
activities as oil markets slipped into backwardation in 2H 2017, further exacerbated by higher
supply and operational cost across the value chain due to adverse weather conditions and
refineries outages in 3Q 2017.
Sustained Growth Performance
Strategic oil-related investments yield healthy recurring incomes:
Share of profits from SPIA increased 5.8% to US$64.2 million for FY2017, mainly
attributable to higher operating profit as a result of higher refuelling volumes in FY2017.
Share of profits from OKYC increased 19.5% to US$5.0 million for FY2017, attributable to
higher operating profit from its tank storage leasing activities.
46.543.2 42.3
66.471.5
13.316.8
0
10
20
30
40
50
60
70
80
2013 2014 2015 2016 2017 4Q2016 4Q2017
27
Sustainable Income Streams from Associates
US$’ millions
Share of Results from Associates
FY2017 Profit & Loss Summary
28
Revenue
FY2017 : US$16,267.6m FY2016 : US$11,703.2m
Higher revenue primarily due to the increase in trading volume
and oil prices
FY2017 : US$38.7m FY2016 : US$44.1m
Gross Profit
Lower gains from trading and optimisation activities as markets
reclined to backwardation in 2H 2017, further exacerbated by
increase in supply and operational costs incurred due to various
supply disruptions caused by weather and refineries outage in
3Q 2017
FY2017 : US$21.8m FY2016 : US$19.9m
Total Expenses
Mainly attributable to higher professional fees incurred for
business development and higher interest expense from short-
term borrowings
FY2017 : US$71.5m FY2016 : US$66.4m
Share of Results
of Associates Higher profit contribution from SPIA and OKYC
FY2017 : US$85.3m FY2016 : US$88.9m
Net Profit
Mainly due to decrease in gross profit and increased tax
exposure with the Group’s increased profit contribution from its
associates
+39.0%
-12.1%
+9.7%
+7.8%
-4.0%
29
Revenue
4Q2017: US$4,060.7m 4Q2016: US$3,275.7m
Higher revenue primarily due to increase in oil prices
4Q2017 : US$8.3m 4Q2016 : US$10.6m
Gross Profit Lower gains derived from trading and optimisation activities
4Q2017 : US$8.8m 4Q2016 : US$6.0m
Total Expenses
Higher professional fees incurred for business development and
interest expenses from short-term borrowings drawdown for
working capital purposes
4Q2017 : US$16.8m 4Q2016 : US$13.3m
Share of Results
of Associates Mainly due to higher contributions from SPIA
4Q2017 : US$14.0m 3Q2016 : US$17.9m
Net Profit
Due mainly to increased tax exposure arising from accounting for
deferred taxation with the Group’s increased profit contribution
from its associates
+24.0%
-21.3%
+45.3%
+26.2%
-21.7%
4Q 2017 Profit & Loss Summary
30
Inventories
31 Dec 2017: US$209.6m 31 Dec 2016: US$170.7m
Increase in inventories held for trading +22.8%
Trade and Other Receivables
31 Dec 2017: US$1,069.1m 31 Dec 2016: US$590.6m
Due to higher oil prices and monthly trading volume +81.0%
Cash and Cash Equivalents
31 Dec 2017: US$300.0m 31 Dec 2016: US$287.3m
Mainly due to higher bank interest income and dividend income
received from associates +4.4%
Trade and Other Payables
30 Dec 2017: US$1,060.2m 31 Dec 2016: US$587.8m
Due to higher oil price and monthly trading volume in December
2017 compared to a year ago +80.3%
Loans and Borrowings
30 Dec 2017: US$120.0m 31 Dec 2016: US$100.0m
Mainly due to higher short-term working capital requirements
Balance Sheet Summary
+20.0%
31
Significant volatility with intensified geopolitical uncertainties to remain, leading to significant
volatility in oil trading environment as global oil demand and supply undergoes re-balancing.
Nonetheless, CAO remains focused on driving its developmental strategy of “Globalisation,
Integration & Asset Investment” to deliver sustainable profitable growth through :
continuing to drive globalisation strategy to further expand global footprint in target key
aviation hubs and strengthen the core jet fuel supply and trading business;
leveraging improved operational initiatives to optimise a global integrated value chain
and seek opportunities to grow its diversified transportation fuels portfolio;
exercising stringent risk management to mitigate trading risks, heightened corporate
governance practices to ensure safe global operations and;
pursuing market opportunities for inorganic growth through strategic acquisitions and
investments in synergetic businesses.
CAO will remain focused on its vision to create long-term value for its shareholders.
Outlook & Priorities
Title
Vision
To be a constantly innovating global top-tier
integrated transportation fuels provider
CAO is a constituent stock of the MSCI Singapore Small Cap Index,
FTSE ST China Index and FTSE ST Small Cap Index since June 2017.
Thank You