Chememan Public Company Limited Analyst presentation August 2018 - - PowerPoint PPT Presentation

Chememan Public Company Limited

Analyst presentation

August 2018

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TABLE OF CONTENT

• 1. Key Highlight Q2 and 1st half year of 2018
• 2. Financial Performance Q2 and 1st half year of 2018
• 3. Progress update

Key Highlight Q2 and 1st half year of 2018

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KEY HIGHLIGHT FOR 1st HALF YEAR OF 2018

Capacity Expansion In Thailand

• BoD has approved the construction of new kiln quicklime KK4 with the installed capacity of 73,000

MT/year, expected to spend around 9 months to be completed

Capacity Expansion in India

• Company increased capital in Easternbulk
• Easternbulk Production plant is in construction process and expected to start COD within Q1/2019
• Siriman Production plant is in construction process and expected to start COD within Q3/2019

CMAN’s IPO Offering

• CMAN has been listed in SET on March 21, 2018 with offering size of Baht 921.60 million

The Company’s Performance The Company’s Financial Position

As at 30 June 2018,

• Total assets is Baht 3,443.75 million, increased by Baht 227.22 million or 7.06% from 31 December 2017
• Total liabilities is Baht 1,228.72 million, decreased by Baht 765.11 million or 38.37% from 31 December 2017
• Total shareholders’ equity is Baht 2,215.03 million, increased by Baht 992.33 million or 81.16% from 31

December 2017

• Net profit attributable to equity holders for Q2/2018 of Baht 58.11 million increased from Q2/2017 by Baht

39.25 million or 208.06% and increased from Q1/2018 by Baht 20.80 million or 55.76%.

• Net profit attributable to equity holders for 1st half year of 2018 of Baht 95.41 million increased from the 1st

half of 2017 by Baht 22.24 million or 30.39%

Financial Performance Q2 and 1st half year of 2018

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NORMALIZED EBITDA AND PROFIT COMPARISON

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REVENUE

Total Revenue from Sales Classified by Product (THB million) Revenue Analysis

Total revenue from sales of Q2/2018 attributed to the Company of Baht 647.10 million

• QoQ: Q2/2018 vs Q1/2018 : increased by Baht million 50.55 or 8.47% due to

1) higher selling price from export sales 2) higher volumes from quicklime and limestone

• YoY: Q2/2018 vs Q2/2017 : increased by Baht 132.62 million or 25.78% from

higher volumes from quicklime and hydrated lime (L-T contract) while lower selling price from export sales because of lower in exchange rate Total revenue from sales of 1st half 2018 attributed to the Company of Baht 1,243.66 million increased from 1st half of 2017 by Baht 136.28 million or 12.31% mainly from higher volumes from quicklime and hydrated lime (L-T contract) while lower selling price from export sales because of lower in exchange rate

Quantity Sales (Tons) Sales Price Per Unit (BPT)

379 459 491 815 950 88 98 97 180 195 47 39 59 113 99 Q2 2017 Q1 2018 Q2 2018 6M 2017 6M 2018 Quicklime Hydrated Lime Limestone

HL QL LS 647 596 514 1,244 1,107

112,073 152,262 153,551 247,417 305,814 20,125 25,684 24,243 41,537 49,927 125,512 90,909 146,939 319,837 237,848 Q2 2017 Q1 2018 Q2 2018 6M 2017 6M 2018 Quicklime Hydrated Lime Limestone

QL HL LS

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REVENUE ANALYSIS by PRODUCT

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1.77 1.77 1.71 1.75 1.75 1.73 51.44% 55.21% 57.66% 61.93% 62.02% 75.11% 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 1.55 1.60 1.65 1.70 1.75 1.80 1.85 1.90 1.95 2.00 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 LS Usage : QL Yield Kiln Feed Stone (%)

COST OF SALES

Cost of Sales (THB million) Cost Per Unit (BPT) Cost Analysis

Total cost of sales of Q2/2018 was Baht 432.40 million

• QoQ: Q2/2018 vs Q1/2018 : increased by Baht million 36.66 or 9.26% due to 1)

increased in cost per unit by higher production from PBB plant and cost of purchase from other lime producers 2) higher volumes from quicklime and limestone

• YoY: Q2/2018 vs Q2/2017 : increased by Baht 114.59 million or 36.06% from
• 1) higher volumes from quicklime and hydrated lime (L-T contract)
• 2) higher cost because of higher production from PBB plant and increasing in

purchase from other lime producers and

• 3) classification of certain manpower costs

Total cost of sales of 1st half 2018 was Baht 828.14 million increased from 1st half of 2017 by Baht 147.20 million or 21.61% mainly from

• 1) higher volumes from quicklime and hydrated lime
• 2) higher production from PBB plant even through having lower cost from KK6

kiln

• 3) higher portion of purchase from other lime producers bad tolling
• 4) classification of certain manpower costs

LS Usage : QL Yield and Kiln Feed Stone (%)

238 307 339 517 646 55 64 62 106 126 25 25 32 59 57 Q2 2017 Q1 2018 Q2 2018 6M 2017 6M 2018 Quicklime Hydrated Lime Limestone

QL LS HL 432 396 829 318 681

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COST ANALYSIS by PRODUCT

Cost per unit – QL increased entirely by

• Higher production from PBB plant and cost of purchase

from other lime producers while having benefit from KK6 kiln Q2/2018 vs Q2/2017 and 1st half year of 2018 vs 2017, increased

• Reallocation of manpower cost from admin expense to

production cost while having benefit from KK6 kiln Cost per unit – HL Q2/2018 vs Q1/2018, increased

• Higher in tolling portion

Q2/2018 vs Q2/2017 and 1st half year of 2018 vs 2017, decreased

• Lower of quicklime usage from PBB plant (lower

production cost) Cost per unit – LS Q2/2018 vs Q1/2018, decreased

• Lower sale volumes of ground limestone

Q2/2018 vs Q2/2017 and 1st half year of 2018 vs 2017, increased

• Reallocation of manpower cost from admin expense to

production cost

• Cost increased from tie-in TK plant

Quicklime Q2/2018 Q1/2018 Q2/2017 1St 2018 1St 2017 Quantities MT 153,551 152,262 112,073 305,814 247,417 Cost QL cost MB (305.33) (286.87) (213.67) (592.20) (471.75) Transportation cost to WH in AU MB (33.74) (19.67) (24.33) (53.40) (45.10) Total cost MB (339.07) (306.54) (237.99) (645.60) (516.85) Cost per unit QL cost BPT (1,988) (1,884) (1,906) (1,936) (1,907) Transportation cost to WH in AU BPT (220) (129) (217) (175) (182) Cost per unit BPT (2,208) (2,013) (2,124) (2,111) (2,089) Cost per unit (net reallocation cost) BPT (2,135) (1,938) (2,124) (2,037) (2,089) Hydrated lime Q2/2018 Q1/2018 Q2/2017 1St 2018 1St 2017 Quantities MT 24,243 25,684 20,125 49,927 41,537 Cost HL cost MB (58.19) (59.88) (52.40) (118.07) (99.75) Transportation cost to WH in AU MB (3.60) (4.15) (2.90) (7.75) (5.81) Total cost MB (61.79) (64.03) (55.29) (125.82) (105.56) Cost per unit HL cost BPT (2,400) (2,331) (2,604) (2,365) (2,401) Transportation cost to WH in AU BPT (149) (162) (144) (155) (140) Cost per unit BPT (2,549) (2,493) (2,747) (2,520) (2,541) Cost per unit (net reallocation cost) BPT (2,540) (2,482) (2,747) (2,510) (2,541) Limestone Q2/2018 Q1/2018 Q2/2017 1St 2018 1St 2017 Quantities MT 146,939 90,909 194,325 237,848 319,837 Cost LS cost MB (31.54) (25.17) (24.52) (56.71) (58.53) Transportation cost to WH in AU MB 0.00 0.00 0.00 0.00 0.00 Total cost MB (31.54) (25.17) (24.52) (56.71) (58.53) Cost per unit LS cost BPT (215) (277) (126) (238) (183) Transportation cost to WH in AU BPT

• Cost per unit

BPT (215) (277) (126) (238) (183) Cost per unit (net reallocation cost) BPT (177) (252) (126) (206) (183)

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GROSS PROFIT NET TRANSPORTATION

THB million and %

Per Unit (BPT)

72 82 69 160 151 17 24 22 43 46 9 2 8 15 10 23.45% 21.53% 18.58% 24.36% 20.01% 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 50 100 150 200 250 300 Q2 2017 Q1 2018 Q2 2018 6M 2017 6M 2018 Quicklime Hydrated Lime Limestone GP net Transport

99 219 207 98 108

643.95 613.15 520.81 648.50 566.79 827.92 955.88 913.61 1,045.12 935.36 67.95 51.38 92.48 48.12 76.77 Q2 2017 Q1 2018 Q2 2018 6M 2017 6M 2018 Quicklime Hydrated Lime Limestone

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99 92 116 207 208 5 6 6 11 13 2 1 2 4 3 Q2 2017 Q1 2018 Q2 2018 6M 2017 6M 2018 Transport Manpower Others

SG&A

Selling Expenses (THB million)

SGA Analysis

Selling expenses in Q2/2018 was Baht 124.12 million QoQ: Q2/2018 vs Q1/2018 : increased by Baht 24.18 million or 24.19% and Baht 12.97 million or 20.49%, respectively because

• Increase in oversea transport from new L-T contract (CIF incoterm)

starting from Q2/2018

• Higher volumes of export sale

YoY: Q2/2018 vs Q2/2017 : increased by Baht 17.73 million or 16.67% due to

• Higher volumes of export sale although cost per unit of oversea

transport decreased (portion of FOB in Q2/2018 more than Q2/2017) Selling expenses of 1st half 2018 was Baht 224.07 million increased from 1st half of 2017 by 2.75 million or 1.24%

• Higher volumes of export sale from L-T contract (started from

Q2/2017) although cost per unit of oversea transport decreased (portion of FOB this year more than previous year) Administration expenses in Q2/2018 was Baht 28.38 million QoQ: Q2/2018 vs Q1/2018 : decreased by 21.95 million or 43.61% because of no forex loss in Q2/2018 YoY : Q2/2018 vs Q2/2017 : decreased by 25.74 million or 47.56%

• Reallocation
• f

manpower cost from admin expense to production cost

• Decrease in warehouse rental fee from outsourcer

Administration expenses of 1st half 2018 was Baht 78.71 million decreased from 1st half of 2017 by 26.36 million or 25.09%

• Reallocation
• f

manpower cost from admin expense to production cost

• Decrease in warehouse rental fee from outsourcer

Administration Expenses (THB million)

*Other admin exp. consist of depreciation, rental, professional fee

124 99 106 224 222

34 20 21 65 42 4 2 2 8 4 16 16 17 32 33 12 (12) Manpower Warehouse Others* FX Loss Reverse FX Loss Q1 2018

Q2 2017 Q1 2018 Q2 2018 6M 2017 6M 2018 28 50 54 79 105

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Financial Cost (THB million) Corporate Income Tax Expense (Income)(THB million)

Financial Cost Analysis

Financial cost in Q2/2018 was Baht 11.03 million. QoQ and YoY : Q2/2018 vs Q1/2018 and Q2/2018 vs Q2/2017 : decreased by Baht 6.9 million or 38.48% and 5.63 million or 33.79% due to repayment of short-term and long-term loans in Q2/2018 Finance cost of 1st half 2018 was Baht 28.95 million decreased from 1st half of 2017 by 1.06 million or 3.53%

Tax Income (Expense) Analysis

Tax expense (income) changed based

• n

tax planning (BOI/NON-BOI portion)

1,345 1,332 864 1,345 864 17 18 11 30 29 (3) 2 7 12 17 22 27 32 (200) 300 800 1,300 1,800 2,300 2,800 Q2 2017 Q1 2018 Q2 2018 6M 2017 6M 2018 Interest Bearing Debt Financial Cost (1.84) 2.67 (0.49) (4.37) 2.18 Q2 2017 Q1 2018 Q2 2018 6M 2017 6M 2018

FINANCE COST AND TAX

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Normalized EBITDA (THB million) and margin (%) Normalized net profit (THB million) and margin (%)

NORMALIZED EBITDA vs. NET PROFIT (THB MILLION) AND MARGIN (%)

78 110 100 186 210 15.22% 18.49% 15.39% 16.81% 16.88%

• 1.00%

1.00% 3.00% 5.00% 7.00% 9.00% 11.00% 13.00% 15.00% 17.00% 19.00% 50 100 150 200 250 300 350 Q2 2017 Q1 2018 Q2 2018 6M 2017 6M 2018 EBITDA EBITDA Margin 19 37 58 73 95 3.65% 6.21% 8.85% 6.55% 7.59% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00%

• 20

40 60 80 100 120 140 160 Q2 2017 Q1 2018 Q2 2018 6M 2017 6M 2018 NP NP Margin Normalized EBITDA Q2/2018 vs Q1/2018 decreased by Baht 10.75 million or 9.74%

• Sales : higher in sale volumes
• COS: higher production from PBB plant and cost of purchase from
• ther lime producers
• SGA: Increase in oversea transport from new L-T contract (CIF

incoterm starting from Q2/2018) Q2/2018 vs Q2/2017 increased by Baht 21.26 million or 27.14% due to

• Sales : higher in sale volumes
• COS: lower cost of sales from KK6 kiln even through higher production

from PBB plant and cost of purchase from other lime producers 1st half year of 2018 vs 2017 increased by Baht 23.76 million or 12.76%

• Sales : higher sale volumes from L-T contract
• COS: lower cost of sales from KK6 although cost of sales slightly

increased because of purchase cost from other lime producers

• SGA: lower transport cost (portion of FOB this year more than previous

year) Normalized net profit (addition from EBITDA) Q2/2018 vs Q1/2018

• Finance cost: decreased from repayment of short-term and long-

term loans Q2/2018 vs Q2/2017

• Finance cost: decreased from repayment of short-term and long-

term loans

• Deprecation: increased from KK6, new warehouse, new TK plant

1st half year of 2018 vs 2017

• Deprecation: increased from KK6, new warehouse, new TK plant
• Tax: changed based on tax planning (BOI/NON-BOI portion)

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Assets (THB million)

Balance Sheet

Interest Bearing Debt (THB million) Equities (THB million)

Assets Analysis

As at 30 June 2018, total assets were Baht 3,443.74 million, increased by Baht 227.22 million or 7.06% from 31 December 2017. The increase was resulted from

• Increase in PPE from KK6 (completed), KK4 (under construction)

and TK crushing plant expansion (partly completed), warehouse (completed) and big silos (under construction)

• Increase in investment in JV in India

Interest Bearing Debt and Shareholders’ Equity Analysis

As at 30 June 2018, Interest Bearing Debt was Baht 863.89 million, decreased by Baht 691.84 million or 44.47% from 31 December 2017, which was resulted from repayment of short-term and long- term loan As at 30 June 2018, total shareholders’ equity was Baht 2,215.03 million, increased by Baht 992.33 million

• r

81.16% from 31 December 2017, which was resulted from issuance of new ordinary shares in March 2018 (increase of a fully paid-up share capital and share premium)

2,223 2,782 3,217 3,817 3,444 2015 2016 2017 Q1 2018 Q2 2018 917 1,070 1,223 2,154 2,215 2015 2016 2017 Q1 2018 Q2 2018 952 1,298 1,556 1,332 864 2015 2016 2017 Q1 2018 Q2 2018

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Current Ratio (x)

Ratios

Interest-Bearing Debt-to-Equity Ratio(x)

1.74 3.02 1.43 1.74 1.43 Q2 2017 Q1 2018 Q2 2018 6M 2017 6M 2018 1.13 0.62 0.39 1.13 0.39 1.07 0.33 0.36 1.07 0.36 Q2 2017 Q1 2018 Q2 2018 6M 2017 6M 2018 Interest-Bearing Debt-to-Equity Ratio Net Interest-Bearing Debt-to- Equity Ratio

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USD

Exchange Rate

AUD

30.00 31.00 32.00 33.00 34.00 35.00 36.00 37.00 USD

• Avg. USD

Q1/17 34.9231 Q2/17 34.1550 Q1/18 31.3285 Q2/18 31.5932 Jul 18 33.2661

22.00 23.00 24.00 25.00 26.00 27.00 28.00 AUD

• Avg. AUD

Q1/17 26.0828 Q2/17 25.2464 Q1/18 24.3417 Q2/18 23.6853 Jul 18 24.6321

Progress Update

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PROJECT PROGRESS UPDATE

Project Location Ownership Estimated CAPEX Actual CAPEX Installed Capacity (MT/year) Commercial Operation Date To increase production capacity : Thailand

New Quicklime kiln (KK6) Kangkoi, Saraburi 100% 221.0 MB THB 210.0 MB 109,500

COD Q1’2018

Crushing plant at Tubkwang quarry Kangkoi, Saraburi 100% 131.0 MB 130.0 MB 3,102,500

COD Q2’2018

Quicklime grinder machine Kangkoi, Saraburi 100% 17.0 MB 17.0 MB 120,000

COD Q1 2018

New Quicklime kiln (KK4) Kangkoi, Saraburi 100% 235.0 MB CIP 73,000

Q4 2018

To reduce cost of production : Thailand

Big silo Kangkoi, Saraburi 100% 80.0 MB CIP 4 Big Silos capacity 12,000 MT

Q4 2018 – Q2 2019

Warehouse Kangkoi. Saraburi 100% 14.3 MB 10.8 MB Capacity 4,000 MT

Operation date Q4 2017

To expand the business : India

Joint venture established lime manufacturing and distributing company Visakhapatnam, Andhra Pradesh 50% 87.5 THBm CIP 109,500 of Quicklime

Q3 2019

87,600 of Hydrated Lime Joint venture established Quicklime manufacturing and distributing company Tuticorin, Tamil Nadu 50% 115.0 THBm

(without borrowing due to religious limitation of alliance)

CIP 47,450 of Quicklime

Q1 2019

73,000 of Grinding Limestone

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BIG SILOS – IN PROGRESS

• Location Kangkoi Saraburi
• Storage Capacity 12,000

MT

• Construction in progress

end of July 2018 = 50%

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KK4 KILN – IN PROGRESS

• Location at Kangkoi Saraburi
• Installed capacity 73,000 TPY
• Board approved and start

foundation on April 04,2018

• Construction in progress
• Foundation fully

completed

• Blower house

completed 20%

• Kiln and Quicklime

grinding will Import and ship to KK Site in October 2018

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KK6 KILN – COMPLETED

• Location at Kangkoi Saraburi
• Installed capacity 109,500

TPY

• COD on Jan 20, 2018

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CRUSHING PLANT - COMPLETED

• Location at Kangkoi Saraburi
• Capacity increase to approx.

3,000,000 TPY

• Production line completed

100%

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QUICKLIME GRINDER MACHINE - COMPLETED

• Location at Kangkoi Saraburi
• Installed capacity 120,000

TPY

• COD on Jan 24, 2018

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WAREHOUSE - COMPLETED

• Location Kangkoi Saraburi
• Storage Capacity 4,000 MT
• Operation date on

February 15, 2018

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EASTERNBULK LIME PRODUCTS PRIVATE LIMITED

• Location at Tuticorin, Tamilnadu
• Kiln foundation fully completed
• Blower house will be ready by end of

July 2018

• Coal grinding plant civil will be

completed by 15th October 2018

• Quick lime handling building will be

ready by early November 2018

• Boundary wall 100 % completed
• Anticipated commissioning by Q1

2019

Kiln Foundation Coal Mill Foundation Kiln shell

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SIRIMAN CHEMICALS INDIA PROVATE LIMITED

• Location at Visakhapatnam , Andhra Pradesh
• Serves markets in Andhra Pradesh, Telangana, Orissa, and Chattisgarh

Ground Breaking :

• Completed on 31st March 2018

Progress update :

• Received the pollution control board permission for the new land
• Payment to Maerz was done in June 2018
• Land registration was completed on 3rd July 2018
• Build 2 of 150 tpd lime kilns almost simultaneously along with hydration plant
• Anticipated commissioning of the plant in Q3 2019

Thank you