1Q2019 RESULTS PRESENTATION 30 April 2018 CHINA SUNSINE CHEMICAL - - PowerPoint PPT Presentation

中国尚舜化工控股有限公司

CHINA SUNSINE CHEMICAL HOLDINGS LTD.

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1Q2019 RESULTS PRESENTATION

30 April 2018

PRESENTATION OUTLINE

Our Company Financial Overview Key Developments Industry Info and Outlook

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Our Company

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About China Sunsine Chemical

✓ Specialty rubber chemicals producer ✓ World’s largest producer of Rubber Accelerators ✓ PRC’s biggest producer of Insoluble Sulphur ✓ Superior product-quality and economies of scale ✓ Accredited by a strong customer base of top tire makers ✓ Beneficiary of stringent environmental protection standards

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Our Products - Rubber Chemicals

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Rubber Accelerators

MBT MBTS CBS TBBS TMTD DPG DCBS ….

Insoluble Sulphur Anti-Oxidants

TMQ 6PPD 4010NA

Our Products: Rubber Chemicals

Rubber Chemicals are

Essential Additives

in the production of rubber products

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Global Consumption of Rubber

Car Tyres 61%

Tube/ Tape 6% Boots 10% Other Tire 9% Latex 4% Other Products 10%

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http://www.chemn.com

Accelerators 1.7% Vulcanizing agents 2% Anti-oxidants 2.2%

Rubber

Global rubber consumption in 2017: 28.27 million tons - By IRSG

• By weight, every 100 tons of rubber consumes

about 6 tons of rubber chemicals (100:6)

• By value, rubber chemical’s cost accounts for

about 3% of total tire cost (100:3)

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Our Strong Customer Base

(2006) (2006) (2003) (1997)

• Over 1,000

customers globally

• Serves more than

2/3 of the global top 75 tire makers

• 1/3 output exported

Market Share: Rubber Accelerators

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PRC Market Share Global Market Share 19% 24% 24% 25% 28% 29% 30% 30% 31% 33% 33% 7% 11% 12% 12% 14% 16% 17% 17% 18% 20% 20%

0% 5% 10% 15% 20% 25% 30% 35% 40% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

MARKET SHARE

Our Market Leadership Position

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Company

Annual Capacity 2018

China Sunsine 中国尚舜 Tianjin Kemai 天津科迈 Yanggu Huatai 阳谷华泰 87,000 tons 51,000 tons 45,000 tons GLOBAL TOP 3 ACCELERATOR PRODUCERS Company Annual Capacity 2018 China Sunsine 中国尚舜 Yanggu Huatai 阳谷华泰 30,000 tons 20,000 tons 15,000 tons PRC TOP 3 INSOLUBLE SULPHUR PRODUCERS Sennics 圣奥化学

Our Production Bases

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Five production bases in three locations

Financial Overview

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P&L Highlights

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* SGD to RMB exchange rate @4.9643

RMB ’mln Quarter Ended

31 Mar 19 31 Mar 18 Change Group Revenue 686.6 856.9 (20%) Gross Profit 235.7 298.8 (21%) Gross Profit Margin 34.3% 34.9% (0.6 pts) Profit Before Tax 132.3 181.6 (27%) Profit After Tax 110.2 149.5 (26%) EPS (RMB cents/SGD Cents*) 22.43/ 4.52 30.40/ 6.12 (26%) NAV per share (RMB cents/SGD Cents*) 495.45/ 99.80 384.36/ 77.42

Revenue Growth

14 RMB ’mln

619.5 797.9 718.4 991.4 1,175.1 1,417.3 1,695.9 2,077.3 1,859.1 2,036.9 2,738.4 3,283.30

686.6

0.0 500.0 1,000.0 1,500.0 2,000.0 2,500.0 3,000.0 3,500.0 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 1Q19

Revenue By Quarter

15 RMB ’mln

1Q19 vs 1Q18 : -20% 1Q19 vs 4Q18 : - 11%

445.1 491.1 547.3 553.4 575 656.2 634.4 873.3 856.9 880.6 775.6 770.1

686.9

100 200 300 400 500 600 700 800 900 1000 1Q 2Q 3Q 4Q

2016 2017 2018 2019

1Q2019

1Q19 Revenue down 20% y-o-y due to lower average selling price (ASP)

Sales Contribution (By Region)

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Rest of Asia US Europe Others

PRC

62%

1Q2019 Sales Contribution (y-o-y)

27% 2% 8%

Region 1Q2019 FY2018 FY2017 China

56% 62% 64%

Rest of Asia

23% 25% 24%

US

4% 2% 5%

Europe

14% 9% 5%

Others

3% 2% 2%

Total

100% 100% 100%

Sales Volume

17 Tons

31,03630,787 45,420 54,27560,907 81,371 98,345 108,973 114,572 135,791140,476 151,486

38,715

20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 1Q19

Sales Volume by Products

18 Tons

31,036 29,805 40,196 46,343 50,148 64,252 72,710 76,089 76,090 82,767 83,335 83,255 20,207 464 3,468 4,413 7,873 10,724 11,948 12,102 15,417 20,031 22,283 25,759 7,353 185 1,361 2,971 2,061 5,183 12,281 19,903 21,640 31,214 34,858 42,472 11,155

10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 1Q19

Accelerator Insoluble Sulphure Anti-oxidant and others

Sales Volume 1Q2018 1Q2019 Utilization Rate Accelerators 19,907 20,207 Almost fully utilized Insoluble Sulphur 6,212 7,353 Fully utilized Anti-oxidants 10,353 10,684 About 90%

Sales Volume By Quarter

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30,051 34,483 36,797 34,460 33,046 34,558 34,098 38,774 36,797 37,567 37,166 39,957

38,715

10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 1Q 2Q 3Q 4Q

2016 2017 2018 2019

Tons

1Q2019

1Q19 vs 1Q18 : +5% 1Q19 vs 4Q18: -3 %

Overall Average Selling Price (ASP)

20 RMB/Ton

19.8K 25.9K 15.8K 18.3K 19.3K 17.4K 17.2K 19.1K 16.2K 15.0K 19.4K 21.5K

17.6K

5,000 10,000 15,000 20,000 25,000 30,000 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 1Q19

ASP vs Aniline Price

21 RMB/Ton

17K 16K 16.3K15.6K14.8K14.2K14.8K 16K 17.3K 18.9K18.5K 22.4K23.2K23.3K 20.7K 19.1K 17,637 4.7K 5.7K 5.4K 4.8K 4.6K4.9K 6.1K 6.4K 6.4K 7.8K 7.2K 9.6K 10.2K 9.2K 7.5K 6.1K 4895

5,000 10,000 15,000 20,000 25,000 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19

ASP Aniline

• 1Q19 ASP dropped 24% y-o-y mainly due to the decrease in raw material prices

22 RMB/ Ton

Main Raw Materials Price Trend

2,000 6,000 10,000 14,000 18,000 22,000 Aniline Tert-butylamine Cyclohexylamine Ketone Dicyclohexylamine Carbon Disulfide

Aniline

Gross Profit

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125.2 226.8 160.2 224.1 293.4 243.9 308.0 567.4 492.0 547.1 788.1 1125.9

235.7

0.0 100.0 200.0 300.0 400.0 500.0 600.0 700.0 800.0 900.0 1000.0 1100.0 1200.0 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 1Q19

RMB ’mln

Net Profit

24 RMB ’mln

76.1 106.7 88.3 115.3 99.4 32 76.7 220.2 195.2 221.7 341.3

641.3

110.2 100 200 300 400 500 600 700 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 1Q19

Net Profit

Net Profit By Quarter

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33.6 49.0 72.8 66.3 57.2 74.5 77.6 132.0 149.5 143.4 108.6

110.2

0.0 50.0 100.0 150.0 200.0 250.0 1Q 2Q 3Q 4Q

2016 2017 2018 2019

1Q19 vs 1Q18: - 26% 1Q19 vs 4Q18: +1.5%

1Q2019 RMB ’mln

239.7 48

• 1Q19 Net profit down 26% y-o-y due to the decrease in ASP

Margins Analysis

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20.2% 28.4% 22.3% 22.6% 25.0% 17.2% 18.2% 27.3% 26.5% 26.9% 28.8% 34.3% 34.3% 12.3% 13.3% 12.3% 11.6% 8.5% 2.3% 4.5% 10.6% 10.5% 10.9% 12.5% 19.5% 16.0%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0%

Gross Profit Margin (GPM) Net Profit Margin (NPM)

18.1%

• -- Adjusted by taking out the one-time credit of tax expense of RMB 48 mln in FY17

Margins Analysis By Quarter

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31.7% 24.3% 26.8% 23.5% 24.2% 27.3% 28.2% 27.2% 24.4% 28.5% 26.8% 33.3% 34.9%

36.7%

32.7% 32.4%

34.3%

11.0%9.5% 11.6% 10.0% 7.5% 10.0% 13.3% 11.0% 10.0% 11.4% 12.2% 15.1% 17.4%

27.2%

18.5% 14.1%

16.0%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0%

Gross Profit Margin (GPM) Net Profit Margin (NPM) 21.8%

• -- Adjusted by taking out the one-time credit of tax expense of RMB 48 mln in FY17

Balance Sheet Highlight

31/03/2019 31/12/2018 31/12/2017 Current Assets (RMB’mln) * 2,107.8 2,016.4 1,424.6 Current Liabilities (RMB’mln) 395.5 421.8 385.3 Current Ratio 5.33 4.78 3.70 Shareholders’ Equity (RMB’mln) 2,434.2 2,325.5 1,742.4 D/E ratio ** NAV per share (RMB cents) (equivalent to SGD cents) 495.45/ 99.80 473.32/ 94.6 354.37/ 70.8 Net Cash per share (RMB cents) （equivalent to SGD cents) 238.1/ 48.0 211.4 42.2 101.6/ 20.3 28

* Including Cash RMB 1,169.8 mln ** No bank borrowing

Key Developments

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Expansion Projects

Project Status CapEx

30,000-ton fully-automated, high-end Accelerator TBBS at Shanxian:

Whole project was approved in Jan 2019

• 1. Phase I of 10,000-ton capacity

Commercial production started in Jan 2019 RMB 100 mln

• 2. Phase II of 20,000-ton capacity

New line to be installed in 2019 RMB 60 mln Sunsine Chemical Zone (In phases) Signed Investment Agreement to acquire a piece of land Not finalized yet 30

Annual Capacity

2007

(before IPO)

FY17 FY18 FY9e

Rubber Accelerators 32,000 87,000 87,000 97,000 Insoluble Sulphur nil 20,000 30,000 30,000 Anti-oxidant (TMQ & 6PPD) nil 45,000 45,000 45,000 Total 32,000 152,000 162,000 172,000

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Industry Info and Outlook

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China’s New Car Sales

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8.8 9.4 13.6 18.1 18.5 19.3 22 23.5 24.6 28 28.9 28.1 6.37

• 20
• 10

10 20 30 40 50

5 10 15 20 25 30 35

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 1Q9

sales growth yoy

• 6.37 mln cars sold in China in 1Q2019, down 13.7% y-o-y
• China’s new car sales expected to be slower after robust growth over 28 years

in million units %

Global Vehicle Population

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240 250 260 279 295 310 327

50 100 150 200 250 300 350 400

2012 2013 2014 2015 2016 2017 2018 http://subscribers.wardsintelligence.com/analysis/world-vehicle- population-rose-46-2016

PRC Motor Vehicle Population Mln units

• Global vehicle population is growing, mainly driven by rising car ownership in developing countries

http://www.sohu.com/a/289093749_390500

Riding on Rising Tire Consumption

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• Replacement tire and new car tire sales account for 70% and 30% respectively
• As overseas factories of Chinese tyre makers produce for export to the US and the EU, tire

production in China expected to grow moderately

443 456 470 529 562 565 610 653

100 200 300 400 500 600 700 2010 2011 2012 2013 2014 2015 2016 2017 Source: http://www.tyrefh.org/

PRC Tire Production Volume

2840 2990 3140 3400 3660 1000 2000 3000 4000 5000 2014 2015 2016 2017 2018e

Projected worldwide tire market volume from 2014 to 2018 in million units in million units

www.statista.com

Competitive Strengths

36 Market Leadership Products & Economy of Scale Strong Customer Base Environmental Protection advantage R&D Capability Ready Resources for Future Expansion

• World largest accelerators and China’s biggest IS producer
• Capturing 20% of global and 33% of China’s accelerators markets
• Listed in the first batch of “National Champion Manufacturing Enterprise”
• “High-tech Enterprise” Status
• Academician R&D workstation in collaboration with Tsinghua and CAS
• R&D Centre partnered with Qingdao University of Science and Technology
• Early adopter of Environmental protection initiative
• 1/3 of capex invested in environmental protection and safety
• Transformation and upgrading towards “Green, Intelligent & Miniaturized”
• Strong cash position
• Built-up infrastructures
• Over 1,000 customers worldwide spanning over 40 countries
• Serving 2/3 of global top 75 tire manufacturers
• 1/3 output exported
• Superior quality and Full range of varieties
• Stable supply
• Largest capacity with economy of scale

Trade war tension between US and China makes the world economy uncertain and weakens China’s tire export to US

Turning Challenges into Opportunities

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Challenges Opportunities

Short supply situation may ease as some affected productions resuming gradually which could lead to the decline of ASP The policy affects smaller producers more and will lead to industry consolidation, benefiting bigger players Sunsine's capacity growth will result in sales volume growth and lower unit cost. Profit will grow in long term even if ASP normalises Group’s sales to US are small, about 2-4%. Wherever they are located, tire factories all

• ver the world need rubber chemicals

Stringent environmental and safety enforcement may affects all chemical companies in China

Listed On SGX Mainboard

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SHARE PERFORMANCE

• P/E 5 times & P/B 1.2 times
• Dividend yield 4.6%

Dividend Payment History

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Net Profit (in RMB ’mln) Dividend (in SGD cents) 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.5 6 100 200 300 400 500 600 700

FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY8

Net Profit Dividend

FY2018 Dividend SGD 5.5 cents

• Ex-dividend date: 8 May 2018
• Payment date: 24 May

Chairman’s Message

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• Mr. Xu Chengqiu

Executive Chairman

“Although there was a decrease in our 1Q2019 profits, I am delighted that we have achieved RMB110.2 million net profit amidst a slowing down of the global and China’s

• economies. However, as raw material prices are hovering at lower levels, the Group’s

ASP for rubber chemicals came under pressure. At the same time, as some players have resumed their

• peration

after investing more in technological upgrading and environmental protection & safety production equipment, competition is expected to be more intense for some of our products, which will further challenge our ASP . “However, more frequent inspections may benefit bigger companies that excel in environmental and safety practices, and may lead to industry consolidation.” Mr Xu

• commented. We will continue to maintain our strategy that ‘higher production leads to

higher sales volume, which in turn stimulates even higher production’. We will expand capacity to gain more market share in the rubber chemicals industry. We will also continue to focus on environmental protection and safety production, as well as production technology and innovation, to gain a competitive edge over other producers.”

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Q & A

MEDIA/INVESTOR CONTACT Tong Yiping, CFO, tongyiping@ChinaSunsine.com Jennie Liu, IR Manager, jennie@ChinaSunsine.com 112 Robinson Road #11-01 Singapore 068902 (+65) 6220-9070 www.ChinaSunsine.com