Hyflux Ltd Full Year FY2010 Results...
Transcript of Hyflux Ltd Full Year FY2010 Results...
Hyflux LtdFull Year FY2010 Results Review
Cho Wee PengGroup CFO
23 February 2011
Executive Headlines
• Our 2010 results represent a historic high in revenues and profits
• Tight cost control has enabled our profit growth to keep in line with our revenue growth, notwithstanding higher forex losses
• Our regional and sectoral diversification strategies which we embarked on 5 years ago, show strong performance embarked on 5 years ago, show strong performance
• Our orderbook continues to gain momentum with Hyflux having won US$76 mil in projects in China in the past 2 months
• Our investments in human capital have significantly grown in the last 2 years to position ourselves for the future
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• Our core competitive advantage relies on innovative membrane technologies coupled with integrated engineering and delivery capabilities across the value chain
• Notwithstanding political tensions in one of our future growth markets (Libya), currently with no revenue contribution in 2010, the intrinsic need for clean water only continues to grow as governments and
Executive Headlines
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need for clean water only continues to grow as governments and people strive to quality water security
• Our strategic alliances with JBIC, JGC and Mitsui enable market and capital access to propel our future growth
85
105
131
83
101
100
120
140EBITDA PBT
S$ mil
Our 2010 revenues & profits are highest in company’s 10-year listing history …
11 1422
33
57
34
55
85
9 12
20
29
50
20
39
70
83
0
20
40
60
80
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
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EBITDA and PBT CAGR ; 32% and 31% respectively from 2001 – 2010
Through stringent cost management, our profit increase is in line with revenue …. overcoming higher forex losses
S$ mln FY2010 FY2009 % Change
Raw Materials & Consumables 303.0 309.4 (2)
Staff Costs 65.4 59.4 10
Depreciation & Amortisation 17.1 16.5 4
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Other Expenses 78.4 57.9 35
Finance Costs 16.8 9.3 81
Total Operating & Fin Expenses 480.7 452.5 6
S$ mln FY2010 FY2009 % Change
Total Revenue 569.7 524.8 9
PBT 100.5 83.0 21
PATMI 88.5 75.0 18
Our PATMI is a healthy 18% increase over 2009
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PATMI 88.5 75.0 18
Our EPS is ahead of last year
FY2010 FY2009
Gross Margin 47% 41%
Net Margin 16% 14%
EPS (cents) 10.5 9.5
ROE 17% 19%
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ROE 17% 19%
Key highlights
• EPS for FY2009 has been restated to reflect the 1-for-2 bonus share issue.
• ROE decreased as a result of the increase in the share capital arising from shares issued under the Warrant Subscription Agreement with Istithmar.
2.29
3.33
4.17
Dividend Per Share (S$ cents/share)
We propose our shareholders receive the highest dividend payout in Hyflux’s listing history
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0.47
0.85 0.90 0.90
1.26
2.29
2003 2004 2005 2006 2007 2008 2009 2010
*Dividends have been restated to reflect 1-for-2 bonus share issue
Through our growth, we continue to maintain a healthy balance sheet
S$ mln 31 Dec 10 31 Dec 09
Equity 515 393
LT Assets 666 523
LT Liabilities 529 361
Current Liabilities 316 318
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Current Liabilities 316 318
Net Current Assets 378 231
Net Gearing 0.73x 0.59x
We maintain good cash balances to capitalise on future growth opportunities
S$ mln FY2010 FY2009
CF Operations (49) 61
CF Investing (96) (93)
CF Financing 213 112
Net Cash Changes 68 80
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Net Cash Changes 68 80
Cash & Equivalents 222 167
Our 2010 revenues exhibit the results of our geographic and sectoral diversification strategy
Revenue by Country Revenue by Sector
400
500
600
75.1 (14%)SG/OTH
400
500
600
55.1 (9%)
3.4 (1%)
INDUSTRIAL
OTHERS
S$ milS$ mil
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0
100
200
300
400
FY2005 FY2010
CHINA
343.8 (60%)
150.8 (26%)
73.6 (56%)
23.7 (18%)
MENA
0
100
200
300
400
FY2005 FY2010
MUNICIPAL
511.2 (90%)
74.2 (56%)
56.6 (44%)34.2 (26%)
74.2 (56%)
Last 2 Months’ Orders
We have secured US$76 mil in China projects in last 2 months
Jan 2011 30-year BOT contract for plants at Hechuan Industrial Park, China• Hexin District Wastewater Treatment Plant (20,000m3/day), • Weituo Wastewater Treatment Plant (20,000m3/day), and• Weituo Water Treatment Plant (50,000m3/day)
US$45 mil
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• Weituo Water Treatment Plant (50,000m3/day)
Feb 2011 30-year BOT contract for Zunyi Wastewater Treatment Plant (150,000m3/day), China
US$31 mil
S$ mil
7481500
2000
2500
1,480
1,848
1,608
653
We see growth in the China market
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30166 254 335
1100
435
435
863
1,450
0
500
1000
Dec 05 Dec 06 Dec 07 Dec 08 Dec 09 Feb 11
EPC
O&M
601
1,117
465
653
955
Note:
O&M order book is a summation of future revenues of our portfolio of plants over the concession periods.
•Possibility of delay in start of work for Tobruk desalination project
•Potential delay in negotiations for two desalination plants in Libya
•Though political unrest affects Libya today, we do not have any
Long-term water management and security will continue to be key concerns for any government
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•Though political unrest affects Libya today, we do not have any investments in Libya
•Our 2 Algerian desalination projects are progressing as planned
•Risk management procedures, including evacuation measures, all in place for all overseas projects
Key Milestone
Our strategic alliances with the likes of Mitsui, JBIC and JGC enhance market and capital access
� Joint venture (Galaxy NewSpring) with Mitsui & Co to develop water projects in China
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O & MEPCProcess
EngineeringComponent
Manufacturing
Our core competitive advantage relies on innovative membrane technologies coupled with integrated engineering and delivery capabilities across the value chain
Project Origination /Market Access
R&D
Supported by strong financial platform
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Today, Hyflux enjoys unique differentiation and advantage in the critical links of the value chain
Financial structuring capability as demonstrated through
Scalability with expertise in large-scale projects
Scalability with growing portfolio
Manufacturing of Hyflux’s proprietary membranes with
+ ++
Capital EPC O&M Component Manufacturing
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demonstrated through credible JVs established with JBIC, JGC and Mitsui
scale projects membranes with entrenched replacement demand
+ ++
Independent publications rate Hyflux as a significant global player … And Asia’s only
18 Source: GWI Desalination Market Report, 2010
6,900
8,000
)
1,5001,500
Wa
ter
Su
pp
ly/D
em
an
d (
bil
lio
n m
3)
GLOBALLY
2,800 billion m3 by 2030
Caused by increased demand for agriculture and industry
CHINA & INDIA
By 2030, China and India together will account for around 41% of projected global water demand
Wastewater treatment/recycling has to develop in tandem with demand to ensure water quality
The future need for water remains unquestioned
19 Source: McKinsey Report: Charting Our Water Future, 2009
4,5004,200
0
2,000
4,000
6,000
Existing
Withdrawals
2030
Withdrawals
Existing Supply
Vo
lum
e o
f W
ate
r (b
illi
on
m3)
818740
618
0
500
1,000
India China
Wa
ter
Su
pp
ly/D
em
an
d (
bil
lio
n m
Forecasted 2030 Domestic Demand
Existing Water Supply
Gap between current supply and 2030 demand
Gap between current supply and 2030 demand
For a young listed company, we’re proud to have delivered stellar returns to our shareholders
Total annualised shareholder returns over the last 10 years since IPO
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last 10 years since IPO
≈ 32% (About 21x since IPO)
AppendicesAppendices
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China Boosts Budget for Water Infrastructure Projects
� China to invest US$300 bil in water infrastructure projects from 2011 to 2015
� At the same time, China will implement firm targets, assign responsibility and strengthen supervision of:
– quantity of water consumption– efficiency of water use– water pollution levels
to enhance the enforcement of water management measures
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to enhance the enforcement of water management measures
� Local governments will be required to spend 10% of land sales revenue on water projects (gross land sales totaled over US$300 bil in 2010)
� China’s banking regulator has asked banks to expand loans for water conservancy projects and water treatment facilities in spite of the credit tightening
Source: Xinhua, Wall Street Journal
World Water Availability, 2025
Water Scarcity
23 Source: GWI Desalination Market Report, 2010
Global Forecast for Water, Wastewater and Desalination Expenditure
80
100
120
US$ bil
24 Source: GWI Global Water Market Report, 2011
0
20
40
60
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Desalination
Water
Wastewater
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Annual A
dditio
nal C
apacity
(mill
ion m
3/d
ay)
Desalination and Water Reuse Additional Capacity
25 Source: GWI Global Water Market Report, 2011
0
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6
8
1990
1991
1992
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1997
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2000
2001
2002
2003
2004
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2010
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2012
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2016
Desalination
Water Reuse
Annual A
dditio
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apacity
(mill
ion m
Disclaimer
This presentation has been prepared by Hyflux Ltd for the information of the attendees of this presentation.
This presentation is not and does not constitute or form part of any offer, invitation or recommendation to subscribefor or purchase any security and neither this presentation nor anything contained in it shall form the basis of, or befor or purchase any security and neither this presentation nor anything contained in it shall form the basis of, or berelied upon in connection with, any contract, commitment or investment decision. This document may not be used orrelied upon by any party, or for any other purpose, and may not be reproduced, disseminated or quoted without theprior written consent of Hyflux Ltd.
No representation or warranty express or implied is made as to, and no reliance should be placed on, thefairness, accuracy, completeness or correctness of the information or opinions contained herein. None of Hyflux Ltdor any of its affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) forany loss howsoever arising from any use of this document or its contents or otherwise arising in connection with thispresentation.
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WATER SOLUTIONS THAT
IMPACT LIVES