ROADSHOW WITH PHATRA : INVESTOR...
Transcript of ROADSHOW WITH PHATRA : INVESTOR...
ROADSHOW WITH PHATRA : INVESTOR PRESENTATION
MAY 31, 2016
Disclaimer
This presentation includes forward-looking statements that are subject to risks and uncertainties, including those pertaining to the anticipated benefits to be realized from the proposals described herein. This presentation contains a number of forward-looking statements including, in particular, statements about future events, future financial performance, plans, strategies, expectations, prospects, competitive environment, regulation and supply and demand. PTTGC has based these forward-looking statements on its views with respect to future events and financial performance. Actual financial performance of the entities described herein could differ materially from that projected in the forward-looking statements due to the inherent uncertainty of estimates, forecasts and projections, and financial performance may be better or worse than anticipated. Given these uncertainties, readers should not put undue reliance on any forward-looking statements. Forward-looking statements represent estimates and assumptions only as of the date that they were made. The information contained in this presentation is subject to change without notice and PTTGC does not undertake any duty to update the forward-looking statements, and the estimates and assumptions associated with them, except to the extent required by applicable laws and regulations.
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Agenda
PTTGC’s BUSINESS OVERVIEW
2016 HIGHTLIGHT
STRATEGIC EXECUTION
1Q/2016 FINANCIAL RESULTS
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Agenda
PTTGC’s BUSINESS OVERVIEW
2016 Highlight
STRATEGIC EXECUTION
1Q/2016 FINANCIAL RESULTS
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Overview of PTTGC
PTT Group’s Chemical Flagship Thailand’s largest ethane-base cracker with integrated aromatics and refining business Highly competitive cost structure with pricing arrangement for gas feedstock based
upon equitable return on investment for both PTT and PTTGC Fully integrated petrochemical and refinery operations with diversified product
portfolio covering full hydrocarbon chain Committed to operational excellence targeting best in class/ first quartile business
efficiency Ranked in Dow Jones Sustainability Indices’ Chemicals Sector for the 3rd Consecutive
Year
PTTGC at a Glance
Strong footprint in fast growing regions with 6 operating countries
Historical Dividend Payment
Dividend Policy >=30% Foreign Limit <=37%
• Incorporated on October 19, 2011 from the amalgamation of PTTAR and PTTCH
• 2015 Sales : $11.7 bn; Adj. EBITDA: $1.5 bn
• Asset size: $11.0 bn (as of Dec 31, 15) • Number of employees:
6,113 persons
4,509 mil shares
Shareholding Structure
1.68 0.95 1.62 1.00 1.50
1.30 2.45 1.78 1.37
1.30
2.98 3.40 3.40 2.37
2.80
45% 45% 46%
71%
61%
0%
10%
20%
30%
40%
50%
60%
70%
80%
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
2011 2012 2013 2014 2015
1st Half 2nd Half Payout Ratio
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Agenda
PTTGC’s BUSINESS OVERVIEW
2016 Highlight
STRATEGIC EXECUTION
1Q/2016 FINANCIAL RESULTS
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2016 Highlight : New capacity on stream
ARO II Expansion on stream
Phenol II commissioning
• Commission : Dec 2015 • COD : May 2016 • Capacity :
• PX 115 KTA, • BZ 35 KTA, • OX 20 KTA
• CAPEX : 128.8 MUSD • EBITDA Uplift /Y*: 24 MUSD
VCR TH ready for commissioning
VCR FR ready for commissioning
• Commission : 2Q/2016 • COD : 3Q/2016 • Capacity :
• HDI Deriv. 12 KTA • CAPEX : 43 MUSD • Product : HDI derivative • EBITDA Uplift /Y*: 9 MUSD
• Commission : 2Q/ 2016 • COD : 3Q/2016 • Capacity :
• HDI Mono. 70 KTA • CAPEX : 18 MUSD • Product : HDI monomer • EBITDA Uplift /Y*: 24 MUSD
• Commission : Feb 2016 • COD : May 2016 • Capacity :
• PH 250 KTA • AC 155 KTA
• CAPEX : 345 MUSD • EBITDA Uplift /Y*: 63 MUSD
*EBITDA Uplift per year at mid cycle price
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PTTGC is anticipated to benefit from on stream of new capacity of expansion / debottleneck project in this year . By including MEG plant improvement project that completed since late of last year, this will deliver additional volume by 7%.
2016 Highlight : Operation improvement
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Maximize benefit by expecting to receive high ethane flow average 264T/h, maximum 280T/h in May, with 95% run rate in olefins plant.
Positive trend in projected oil price
Rebound in oil price is anticipated to support HDPE price to be average at 1,160$/T. This also translated to downside risk on stock loss.
2016
Highlight
Improved in Ethane flow and OLE U-rate Upside in Aromatic
Aromatic is expected to benefit from higher utilization rate, from 74% last year to 88%, which based on higher BTX nameplate capacity since early of this year.
This translated to fully benefit on surge in BTX spread especially in 1H of this year.
Refinery Outlook
Lower utilization rate mainly due to planned shutdown in 2Q/16. GRM is expected to slightly decrease to approximately $ 4.7/bbl
51.9 61.3
49.7 40.7
30.4
42.2 39.7
10
30
50
70
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16(F) 2016 (F)
241 236 249 251
264 Ethane Flow (Ton/hour)
2012 2013 2014 2015 2016 (F)
Overview of Business Unit’s Performance
% Adj. EBITDA Margin 1Q/15 4Q/15 1Q/16
Business Unit :Refinery 6 15 8Aromatics 13 11 14Olefins and Derivative 19 22 20Green 6 11 8HVS 12 3 (3)
Average 12 16 12
1Q/16 Revenue and Adjusted EBITDA Structure
80,764 M.Baht
9,789 M.Baht
(Unit: Million Baht) 1Q/15 4Q/15 1Q/16YoY
% + /(-)QoQ
% + /(-)Sales Revenue 99,251 96,088 80,764 -19% -16%EBITDA 10,473 10,387 9,515 -9% -8%EBITDA Margin (%) 11% 11% 12% 1% 1%Net Profit 5,631 4,690 4,707 -16% 0%EPS (Baht/Share) 1.25 1.04 1.06 -16% 1%
Adjusted EBITDA* 11,606 14,970 9,789 -16% -35%Adjusted EBITDA Margin (%) 12% 16% 12% 0% -3%Note: * Adjusted EBITDA refers EBITDA excluding impact of inventory value (Inventory and NRV)
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Agenda
PTTGC’s BUSINESS OVERVIEW
2016 Highlight
STRATEGIC EXECUTION
1Q/2016 FINANCIAL RESULTS
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Strategic Direction
Sustain Core
Accelerate Growth levers
Balance Business & Social
Value
To be a Leading chemical company for Better living
Performance excellence
Maximize value creation
Map Ta Phut retrofit
International hub
Performance chemicals
Green business
Sustainable development
Effective CSR programs
Stakeholder management
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Implementation Detail Study
Sustain Core : Value Creation
Plant Operational Excellence
Top Down Study
• Due diligence process to estimate project potential
• Develop initiatives and execution plans
• Execute per plan to capture value
6 Weeks 12 Weeks 18 Months
Commercial & Marketing Excellence
Procurement Excellence
Capex Excellence
Asset Performance
Excellence
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• Build new Cracker 500 KTA
ethylene for flexible feed cracker to
utilize internal naphtha
• Maximize utilization of the existing
utilities and support facilities to
reduce investment cost
Project Scope Unit: KTA
500
261
163
208
• Issued pre qualification enquiry
package to prospect bidders.
• Awarded project manager
contractor
• Issued conceptual design to
licensors
• Completed EPCa Scope package
• Submitted BOI application
Sustain Core :MTP Retrofit
Project Update
Timeline :
2018 2020
1Q/18 Construction
COD 2020
2016
ITB
Ad
ditio
nal C
apacity
Ethylen
e 50
0 K
TA, P
rop
ylene 2
61
KTA
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Captive and Committed
80%
Merchant Volume
20%
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200 KTA
Merchant Market
≈ 80% Reserved Volume
PO Market Survey Polyols Market Survey
• Completed PO & Polyols market survey • Building sale & marketing strategy • Ongoing FEED work and preparing ITB • Preparing EIA report • Negotiating feedstock arrangement • Engaged FA and expect FID in 4Q/16
Project Update
Market survey result concluded that SEA and India are the target market. • Target market growth rate average
at 5 - 7 % during 2014 - 2023 • The highest growth rate is in
Automotive segment 6.8 % Marketing strategy is to focus on high value application segment
Timeline :
Accelerate Growth Levers : PO & Polyols Project
Co
nst
ruct
ion
Polyols 130 KTA System House 40 KTA -------------------------------------- Licensor
E&E
Au
tom
oti
ve
After surveyed 106 customers, we have arrived to Potential Customers
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Accelerate Growth Levers : US Petrochemical Complex
• Investment cost justify investment return • Enough ethane capacity with competitive
pricing structure • Partner can distribute products in N. America
Key Criteria for FID
Project Update
• FEED : FEED contractors on schedule to deliver cost estimates within 3Q/16
• Feedstock : In discussion with specific names of ethane supplier to finalize contract terms
• Marketing & Logistic : • Preparing marketing and sale plan as well as key
terms in offtake agreement • Received proposals from barge, railcar leasing,
and packing service • Discuss with potential offtaker.
• Permit: Signed off on the First Energy land option agreement
• Partner : Approached FA in the process to short list of potential partner
Project Overview
Marcellus Shale Gas Reserve
United States
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• Sign MOU with Sahapat and DITP to collaborate in product development, area development and market development
• Introduce InnoPlus’
customer to the area and conduct survey for investment interest
• Three customers have confirmed to expand business in Mae Sot area
Accelerate Growth Levers : Growing in AEC Market
• Indo Thai Trading (ITT) – Trading company, a JV between PTTGC and Pertamina to penetrate into Indonesia polymer market. Sales of ITT has been increasing with volume of approx. 9,500 / month.
1500 1,500 1200 1100
600
200 60 24 11
Estimated Demand for PE Product (KTA) in 2015
Potential demand in AEC with high growth rate
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Strategic Investment
Existing Non Captive Upstream
and Downstream
HDI Deriv. 12 KTA
Phenol II 405 KTA Aromatics 170 KTA
HDI Monomer 70 KTA
mLLDPE 400 KTA
PO/Polyol 250 KTA
MTP Retrofit 761 KTA
8,000
8,500
9,000
9,500
10,000
10,500
11,000
2015A 2016F 2017F 2018F 2019F 2020F
ARO2 Phenol2 HDI Thailand HDI France MLLDPE PO/Polyol MTP Retrofit
CAPEX 128.8 MUSD 345 MUSD 43 MUSD 18 MUSD 288.2 MUSD TBC TBC
Additional PetChem* (per year)
PX 115 KTA BZ 35 KTA OX 20 KTA
PH 250 KTA AC 155 KTA
HDI Derivative 12 KTA
HDI Monomer 70 KTA
MLLDPE 400 KTA Hexene-1 34 KTA
PO 200 KTA Polyol
130 KTA
Ethylene 500 KTA Propylene 261 KTA
Period Q2’16 Q2’16 Q3’16 Q3’16 2018 2019 2020 EBITDA Uplift/Year**
24 MUSD 63 MUSD 9 MUSD 24 MUSD 59 MUSD
• 100% stake of additional capacity
** Estimate EBITDA uplift with 100% stake at mid cycle price
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Agenda
PTTGC’s BUSINESS OVERVIEW
2016 Highlight
STRATEGIC EXECUTION
1Q/2016 FINANCIAL RESULTS
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1Q/2016 Income Statements Consolidated
1Q/2015 (restate) 4Q/2015 (restate) 1Q/2016 YoY QoQ MB % MB % MB % MB % MB %
Sales Revenue 99,251 100 96,088 100 80,764 100 (18,487) -19% (15,324) -16%
Feedstock Cost (75,721) (76) (71,547) (74) (59,635) (74) (16,086) -21% (11,912) -17%
Product to Feed Margin 23,530 24 24,541 26 21,129 26 (2,401) -10% (3,412) -14%
1 Variable Cost (6,809) (7) (6,586) (7) (5,898) (7) (911) -13% (688) -10%
2 Fixed Cost (3,685) (4) (4,827) (5) (4,178) (5) 493 13% (649) -13%
3 Stock Gain/(Loss) & NRV (1,133) (1) (2,053) (2) (274) (0) 859 76% 1,779 87%
4 Gain/(Loss) Commodity Hedging (188) (0) 2,853 3 43 0 231 123% (2,810) -98%
5 Other Income 1,097 1 2,024 2 978 1 (119) -11% (1,046) -52%
6 SG&A (2,339) (2) (3,035) (3) (2,285) (3) (54) -2% (750) -25%
7 Extraordinary Item 0 0 (2,531) (3) 0 0 0 N/A (2,531) N/A
EBITDA 10,473 11 10,386 11 9,515 12 (958) -9% (871) -8%
Depreciation & Amortization (3,979) (4) (4,208) (4) (4,141) (5) 162 4% (67) -2%
EBIT 6,494 7 6,178 6 5,374 7 (1,120) -17% (804) -13%
Finance Cost (1,076) (1) (937) (1) (822) (1) (254) -24% (115) -12%
8 FX Gain/(Loss) 526 1 510 1 632 1 106 20% 122 24%
9 Shares of profit/(loss) from investments 301 0 (209) (0) 178 0 (123) -41% 387 185%
10 Income Tax Expense (499) (1) (769) (1) (623) (1) 124 25% (146) -19%
Net Profit 5,746 6 4,773 5 4,739 6 (1,007) -18% (34) -1%
Profit/(loss) attributable to:
Owners of the Company 5,631 6 4,690 5 4,707 6 (924) -16% 17 0%
Non-controlling interests 115 0 83 0 32 0 (83) -72% (51) -61%
Adjusted EBITDA * 11,606 12 14,970 16 9,789 12 (1,817) -16% (5,181) -35%
Note: * Adjusted EBITDA refers to EBITDA excluding impact of inventory value (excludes Inventory gain/(loss) and NRV) and Extraordinary Item
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Strong Financial Position
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Repayment Profile
Interest Rate Currencies
52% Fixed 60% THB
48% Float 40% USD & Others
Loan Type
• Cost of long term debts ~ 4.17% (Include W/H Tax)
• Average loan life after refinancing - 4.51 Years
Treasury policy Net IBD to EBITDA ratio of ≤ 2.4x Net IBD to Equity ratio of ≤ 0.7x
THB Bn
* After Refinance
Key Financial Ratios
Statements of Financial Position
As of Dec 31, 2015 As of Mar 31, 2016
THB 378 Bn THB 386 Bn
Cash +ST Investment
CA
Non CA
PPE
Liab.
IBD
Share Holder’s Equity
THB 106 Bn
ST Bank Loan, 0%
LT Bank Loan, 53%
Debenture, 47%
1.59
1.28
1.72
1.30 1.12
0.23 0.21 0.26 0.25 0.21
31 Mar 15 30 Jun 15 30 Sep 15 31 Dec 15 31 Mar 16
Net IBD/EBITDA NET IBD/Equity
6.40% 7.57% 4.80%
8.99% 8.38%
4.92% 6.10% 4.27% 7.36% 6.92%
31 Mar 15 30 Jun 15 30 Sep 15 31 Dec 15 31 Mar 16
ROE ROA
THB Bn
* After Refinance
9.8
16.0
11.2 9.0
13.5 12.8
1.2 1.3 1.4 1.4
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Total
USD Bond
THB Bond
EUR Loan
USD Loan
THB Loan
35.4
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For further information & enquiries, please contact our Investor Relations Team at [email protected]
Thank You
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1 Thitipong Jurapornsiridee VP-Corporate Finance & IR [email protected] +662-265-8574
2 Jittasak Soonthornpan IR Manager [email protected] +662-265-8172
3 Prang Chudasring IR Analyst [email protected] +662-265-8327
4 Nattchanon Chawinsittangkul IR Analyst [email protected] +662-265-8364
5 Pantaree Nantanakom IR Analyst [email protected] +662-140-8714
6 Chutima Jarikasem IR Coordinator [email protected] +662-140-8713
Shut Down Schedule 22