Indorama Ventures Public Company Limited (“IVL”)
“Metamorphosis”
Analyst Presentation
Thailand Opportunity Day The Stock Exchange of Thailand Bangkok, March 4, 2010
Synonyms: alteration, change, evolution [Webster's]
Metamorphosis Synonyms: alteration, change, evolution [Webster's] - - PowerPoint PPT Presentation
Indorama Ventures Public Company Limited (IVL) Metamorphosis Synonyms: alteration, change, evolution [Webster's] Analyst Presentation Thailand Opportunity Day The Stock Exchange of Thailand Bangkok, March 4, 2010 Disclaimer This
Thailand Opportunity Day The Stock Exchange of Thailand Bangkok, March 4, 2010
Synonyms: alteration, change, evolution [Webster's]
This presentation has been prepared by Indorama Ventures Public Company Limited (“IVL” or the “Company”) solely for use at a presentation to potential investors. By attending the meeting where the presentation is made, or by reading the presentation slides, you agree to the following limitations and notifications and represent that you are a person who is permitted under applicable law and regulation to receive information of the kind contained in this presentation. This presentation does not constitute or purport to be an offer of shares under the laws of Thailand, as the transactions described herein are subject to numerous conditions precedent, contingencies and approvals. This presentation is strictly confidential to the recipient, may not be reproduced, retransmitted or further distributed to the press or any other person, may not be reproduced in any form and may not be published, in whole or in part, for any purpose. This presentation is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, transmission, publication, availability or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction. Neither this presentation nor any copy of it may be taken, published, transmitted or distributed, directly or indirectly, in or into the United States
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are defined in Rule 902 of Regulation S under the United States Securities Act of 1933, as amended (the “Securities Act”), except to “Qualified Institutional Buyers” as defined in Rule 144A under the Securities Act. Any failure to comply with this restriction may constitute a violation of United States securities laws. No securities of the Company may be offered or sold in the United States absent registration or an exemption from registration or in a transaction not subject to, the registration requirements under the Securities Act. The Company has not registered and does not intend to register any portion of the Offering or shares offered thereby under the Securities Act or the securities law of any state in the United States or to conduct a public
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IVL 23rd largest listed company by market cap on SET IVL 16th largest non-bank listed company by market cap on SET Free float enlarged 3 times, 29% of free float of IVL is equal to around Baht 16,340 MM Products resilient to recession, positive demand growth in the Polyester value chain Reduce volatility through seamless integration in the Polyester Value Chain Increase in gross margin through integration and optimized allocation of fixed overheads
Lower effective tax, benefit from integration Stronger financial position to enable future consolidation Larger cashflow from operations to enable future integrated projects of economic sizes
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1. Based on closing price of Baht 13.00 per share on Tuesday, 2 March 2010
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1. Major shareholder and after exercise of over-allotment option for 60 million shares equivalent to 1.4% 2. Based on closing price of Baht 13.00 per share on Tuesday, 2 March 2010
Issued and paid-up capital
IPO Price
and individuals
Use of Proceeds
Shareholding Structure
(1)
Listing & Trading
Market Capitalization
(THB Bn)
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Global Polyester Chain Industry Overview 2009E (2010F)
Source: SBA-CCI (February 2010)
Demand
(Million tonnes)
Growth
(%)
Global Capacity Utilization
(%)
PX 26.3 (28.9) 7.1% (10.0%) 81% (79%) PTA 38.5 (42.2) 5.4% (9.6%) 84% (86%) Polyester Fiber 32.5 (35.7) 7.7% (10.0%) 64% (67%) PET Resin 15.1 (16.1) 2.2% (6.8%) 79% (78%)
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Polyester Fiber Consumer Demand by Region
44.2Mt
1. Real GDP, US$-based, Constant 1998 Prices. Source: IMF 2. SBA-CCI (February 2010)
31.9Mt
North America Asia European Union Central Europe South America Middle East & Africa
2009
North America Asia European Union Central Europe South America Middle East & Africa
2013F
A global demand CAGR of 8.5% from 2009-2013, well above GDP
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PET Resin Demand by Region
20.5Mt
1. Real GDP, US$-based, Constant 1998 Prices. Source: IMF 2. SBA-CCI (February 2010)
15.3Mt
North America Asia European Union Central Europe South America Middle East & Africa
2009 2013F
North America Asia European Union Central Europe South America Middle East & Africa
A global demand CAGR of 7.6% from 2009-2013, well above GDP
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Driven by strong polyester demand and limited capacity additions
Global/Asia PTA Structural Surplus/Deficit
Source: SBA-CCI (February 2010) Surplus (deficit) at 96% capacity utilization less demand
Surplus (Deficit) MMt Capacity Utilization (%) 10 Global Asia
Industry Monthly Integrated PTA/PET and PTA/DTY spreads
Integrated PTA/PET Margins (2004 – 2009) Integrated PTA/DTY Margins (2007-2009)
Source: SBA-CCI Spread definitions: PTA Spread = China Spot PTA CFR PET Spread = China Export FOB PET DTY Spread = China dom. 150 den
US$/tonne US$/tonne
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Large supply additions, putting pressure on utilization rates
PX Structural Surplus/Deficit MEG Structural Surplus/Deficit
Source: SBA-CCI (February 2010) MMt Utilization (%) MMt Utilization (%)
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Crude Oil and Natural Gas Quarterly Price Forecast
Crude Oil Q/Q Price Forecast Natural Gas Q/Q Price Forecast
WTI, US$ per barrel U.S. Gulf Coast Natural Gas Burner Tip, US$ per Million Btu Source: CMAI (February, 2010) *Current Month-to-Date Average Price
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Near Term & Short Term
2010 2011 2009 2012
PX Tightness Delays in PTA/PET project start-ups Long PX/MEG supply position Continued capacity rationalization Robust Polyester & PTA demand growth PTA Inventory Rebuilding
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Potential upside in margins for PTA/PET
Polyester Chain Margin Distribution
(Q/Q, Asia example)
PTA/PET Downtrend – PX/MEG Uptrend PTA/PET Uptrend – PX/MEG Downtrend
Source: SBA-CCI and IVL Analysis MEG spread = MEG CFR China less Asia Spot Ethylene CFR x 0.6 PX spread = ACP less Naphtha price PTA spread = PTA CFR China less ACP x 0.66 PET spread = PET China Average Price less (MEG CFR China x 0.345 + PTA CFR China x 0.87)
PTA/PET Uptrend – PX/MEG Downtrend
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Return on equity
Achieve higher returns on a larger equity and capital base in year 2009
*Earnings per Share Return on capital employed
*Earnings per share based on issued and paid-up capital at the end of year Baht 3,352 million
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Gross Margin Net Profit Margin
Margin improvement from upward integration with PTA in year 2009
Operating EBITDA Margin
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Products resilient to recession and global distribution platform
(„000 tpa)
Volume Growth (2008-2009) PTA/PET Capacity Utilization (2008-2009)
(%)
2008 - Revenues 2008 – *Operating EBITDA 2009 - Revenues 2009 – *Operating EBITDA
EBITDA Margin 9.5% 6.2% 7.0% 7.2% 11.6% 14.9% 12.8% 13.3%
(THB Bn) (THB Bn) (THB Bn) (THB Bn)
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*Based on pro-rata allocation of EBITDA of PTA business calculated on intra-group sales to PET and Polyester fibers
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IVL Net Financial Debt as at 31-Dec-09 IVL Balance Sheet as at 31-Dec-09
(THB Bn) (THB Bn)
*ST Debt includes short term loans, bank overdrafts and Baht 4.7 Bn in current portion of long term loans
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Long-Term Loans by Currency Repayment Schedule for Long Term Loans *Net Operating Debt/EBITDA (x) Net Gearing
*Net operating debt includes net debt less project debt not generating revenues and earnings
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Notes:
2008 2009
Positive free cash flow in year 2009 and limited on-going capex requirement
Funded from project loans and capital increase Repayment
(1) (1)
(THB Bn) (THB Bn)
(2)
4,106 2,642 687 3,785 712 430 62 4,856
1,000 2,000 3,000 4,000 5,000 2008 2009
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Capex in Progress
Polyester
US$ 15 million
Major capex and investment projects undertaken in year 2008-9 completed
Capital Expenditure by Business Segment
(THB MM)
4.7% 9.1% % of Sales
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Around 20% growth in consolidated revenue from external sales
(„000 tpa) („000 tpa)
Year 2009 Available for sale in Year 2010
IPI Rayong facility has switched one line with capacity 108,000 tpa to produce PET resins
(1)
Notes:
1,593 1,600
(1)
Captive consumption Virtual integration - strategic alliance with suppliers (AlphaPet located next door to BP Chemicals PTA plant)
from revenue growth
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PTA Sourcing
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Prepare to enter next phase of growth through acquisitions and brownfield/greenfield expansions
Net gearing
Target level
Net gearing to fall below 50% through:
February, 2010
69.3% to 99.1%
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Larger market cap and liquidity High growth industry provides significant room for expansion Secured PTA feedstock through integration Favorable PX and MEG supply scenario Potential upside in margins for the polyester value chain Stronger financial position Committed top-line growth, Q1 2010 in line with our expectations
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