SCN CREATING SUSTAINABLE ENERGY 1 In 2015, The Company has - - PowerPoint PPT Presentation

SCN

CREATING SUSTAINABLE ENERGY

• In 2015, The Company has produced approximately 235,000 tons per year of CNG for auto application (NGV)
• Comparable to replacing gasoline and diesel up to 283 million liters per year
• Replacing gasoline at 94 million liters per year
• Replacing diesel at 189 million liters per year
• Contributed to 4,800 million baht per year of cost saving in the transportation and the logistics sectors in Thailand
• CNG for industrial sector (iCNG) was first introduced in 2015 and contributed to approximately 116 million baht of cost

savings with a strong growth potential in the following years

Diagram showing the amount of fuel type replacement diagram showing NGV consumption separated by the types of vehicles

• We are able to deduce over 640,000 tons of carbon dioxide equivalent green house gases in 2015 from NGV and CNG for

industrial sectors

• Equivalent to an annual amount of greenhouse gases emissions of a 200 megawatts coal power plant
• Our greenhouse gases reduction contribution is equal to a 960 megawatts solar power plant in replacement of a

traditional coal power plant, using up to 9,600 acres (comparable to 2,870 football fields) or equivalent to planting 426,666 trees per year

Diagram indicating the amount of greenhouse gases deduction

85.04 159.82 225.39 110.14 153.48

50 100 150 200 250 2013 2014 2015 1H2015 1H2016

• 129.57
• 200.00

400.00 600.00 800.00 1,000.00 1,200.00 2013 2014 2015 R&M Conrtact PMS TPL NGV Retail iCNG

THB M

Net Profit

• Between 2013 and 2015, SCN experienced healthy earning growth with CAGR of 62.80% with net profit Improved impressively from THB 85.04 mm

to THB 225.39 mm or by 165% driven by continuous business operations, especially recurring income that the Company has been focusing on.

• Continuous growth resulted from 2015 when the Company gained recurring revenue from natural gas business including
• Increasing the capacity of PMS and PBS in quarter 3/2015 and purchasing 3 additional service stations.
• Having more contracted clients who distribute iCNG.
• This contributes from contracting and maintaining natural gas quality improvement from PTT, which started noticing the revenue in quarter

1/2016. THB M

Recurring Revenue

Contents I Business Overview II Financial Overview

• I. Business Overview

Natural Gas Pipeline

1 2 1 2 3

1 2

Natural Gas-Related Business Overview

EPC & Maintenance NGV Stations and Related Gas System

• SCN’s core value is being the only

CNG Compressors & the related components manufacturer in ASEAN

• Creating cost competitiveness in

EPC & maintenance services for NGV & CNG applications

• Thus being the first mover and the

pioneer of all the CNG business in Thailand and South East Asia

Natural Gas-Related Business Overview

• 11 out of 16 PTT’s NGV Mother Stations in Thailand were built by SCN
• More than 50 % market share of EPC of NGV Stations
• More than 50% market share of contract maintenance of NGV stations

Natural Gas-Related Business Overview

Private Mother Station (PMS)

• SCN is the owner of the largest

NGV Mother Station in the nation at the current production capacity at 643 ton/day

• Providing energy service to PTT

by compressing natural gas from the pipeline to the CNG trailers to serve the retail stations in Bangkok and the suburban areas

Natural Gas-Related Business Overview

• Max. capacity of 234,695 ton/year with current 71% utilization or avg. 456.29 ton/day in 2015
• Since Q4/2015, the PMS capacity was increased by 20% to 643 ton/day

Natural Gas-Related Business Overview

Natural Gas Transportation (TPL)

• Providing NGV logistic service for PTT

by transporting the compressed natural gas from our Private Mother Station to the NGV retail stations in Bangkok and the suburban areas

• Using the state of the art safety

protocol including GPS tracking system, onboard monitoring system and well trained personnel

Natural Gas-Related Business Overview

• SCN has 31 trucks and 130 trailers to support 24-hour service to our end users
• Max. capacity of 183,807 ton/year with current 64.70% utilization or avg. 326 ton/day in 2015

Natural Gas-Related Business Overview

NGV Retail Stations

SCN is seeking perspective location for NGV retail stations on the continuing basis

• SCN currently owns 9 NGV Retail

Stations nationwide

• 1 conventional station (pipeline

connected) in Patumthani with the total capacity of 146 ton/day (increased from 73 ton/day since Q4/2015)

• 1 conventional station (pipeline

connected) in Rayong with the total capacity of 95 ton/day

• 3 daughter stations operating in

consortium contract with Susco Public Company Limited

• 1 daughter stations operating

under PTT’s name in Bangkok area

• 1 daughter stations operating

under PTT’s name in Prachinburi area

• 1 conventional station (pipeline

connected) is under construction in Chonburi and is expected to be completed by Q2/2016

• 1 conventional station (pipeline

connected) is under construction in Prachinburi

Natural Gas-Related Business Overview

• Currently the maximum capacity of our conventional station at Samkhok is 146 ton/day (increase

• Currently the maximum capacity of our conventional station at Rayong is 95 ton/day with the

• 1 daughter stations operating under PTT’s name in Bangkok area with retailing average is

• 1 daughter stations operating under PTT’s name in Prachinburi area with retailing average is

• 3 consortium daughter stations retailing average is approximately 15-20 ton/day/station

Natural Gas-Related Business Overview

Natural Gas Quality Improvement

• Quality of natural gas in the

pipeline it’s not suitable for NGV use

• Inert gas has to be injected to

sustain the quality of natural gas to be applicable for NGV application

• Depending on the quality of

natural gas in the pipeline, approximately 20 - 25% by weight of inert gas have to be mixed to the natural gas to

• btain the useable standard

Natural Gas-Related Business Overview

• Currently Providing Natural Gas Quality Improvement service at the service rate of the Mother Station at more than 450 ton/day whilst the

• Accounting to approximately 50% of the total natural gas quality improvement service by the private Mother Stations in the country
• Improve natural gas quality at the retail station (PBS) at the current rate of approximately 60 ton/day while the total capacity is 146 ton/day

• Natural Gas Quality Improvement project is operating since October 2015

Natural Gas-Related Business Overview

Installation of NGV and LPG Conversion System in Vehicles

• SCN focuses on converting NGV vehicles

such as taxis, personal cars, corporate cars, government cars, buses and logistic trucks on the fleet contracts basis

• Named the Authorized Retrofit Center of

Mitsubishi Motors (Thailand) and Toyota Motors (Thailand)

• More than 50% of market share for taxis

conversion

Natural Gas-Related Business Overview

Testing Center

• According to ISO11439, CSA/ANSI NGV-

2, UN ECE R110 and TISI2311/ISO11436 standards, the NGV cylinders used in Thailand have to be tested for safety every 5 years since the initial use

• Since 2015 the company finds the

potential in NGV cylinder testing business by being the test provider for the used NGV cylinders

• The testing center is completed in

Q4/2015 to serve the potential customers such as the NGV trailers

• wned by PTT Public Company

Limited, the private companies with NGV logistic service for PTT, and the NGV users in Thailand.

2670 2695 2740 2859 628 635 653 651 958 930 960 950 278 307 317 304 500 1000 1500 2000 2500 3000 3500 2012 2013 2014 2015

Consumption Share of Natural Gas by sector

Electricity Industry GSP NGV

Natural Gas in Thailand

• At present, Thailand’s demand for natural gas consumption

has continuously increased. In the year 2014, the demand for natural gas for final commercial energy was 4,670 million cubic feet per day.

• As for the year 2015, the consumption of gas was 4,764

cubic feet per day, or an increase of 2% compared to the year 2014.

Reference: Ministry of Energy Thailand 4,534 4,567 4,764 4,670

Unit : MMSCFD

60% 14% 20% 6%

Consumption Share of Natural 2015

Electricity Industry GSP NGV

As for the quantity of vehicles that use NGV, a continuous increase was noticed. In 2014, there were 462,414 vehicles that used NGV while by the end of 2015 472,793 vehicles used NGV. The increase mentioned results from the expansion of NGV service stations and also reflects the consumer’s greatened popularity who alternated to NGV vehicles, even though oil prices have dropped.

NGV Vehicles in Thailand

Reference: NGV Vehicles in Thailand 2011-2015, PTT PLC

300581 374857 438821 462414 472793 50000 100000 150000 200000 250000 300000 350000 400000 450000 500000 2011 2012 2013 2014 2015

Quantity of NGV Vehicles

The structure of the NGV retail price

• Results from the adjustment of NGV retail price according to the price-floating policy has enabled new NGV

stations to gain revenue of 3.4367 baht per kilogram, from the former private NGV stations which had a marketing fee of 1.80-2.00 baht per kilogram

• From the NGV price-float policy, the Energy & Policy planning Office has anticipated the retail price of NGV

in 2016 to continuously drop, as shown in diagram 2.2. The Company has studied and researched to ensure that the retail price of NGV will be cheaper than diesel up to 50%

Reference: Energy Policy and Planning Office, Ministry of Energy 2016

Gasoline vs NGV

The difference between the price of benzene 95 and NGV increased from 16.86 Baht, or 56% in January 2016 to 19.24 Baht or 60% in June. This indicates that the floating of NGV price reflects the true cost and can save money for benzene consumers after switching to NGV.

Diesel vs NGV

• The Difference between the price of diesel and NGV has increased at a twofold from 6.37 Baht or 32% in January 2016 to 12.46

Baht or 50% in June. The average price of diesel and NGV is at 23.15 Baht and 13.04 Baht accordingly (January-August) This helps diesel consumers to save costs up to 10.11 Baht, or a fold of savings.

• This indicates that the floating of NGV price reflects the true cost and can save money for diesel consumers after switching to

NGV, even though the price of diesel has decreased since July. However, the NGV price shall decrease at a slower rate than the price of crude oil, compared to benzene and diesel that shall immediately change referring to the price of crude oil.

• Therefore the NGV price float policy which also agrees to the crude oil price in the past shall affect the price of NGV, or will

make the price adjustment budge after the change of diesel price. On the other hand, if diesel prices increase, the NGV price shall also increase afterwards, but the difference percentage stills remains competitive in the long term since the difference in price (Baht) shall increase when oil prices increase.

Future Growth NGV

“NGV consumption varies directly to the number of stations available and shows indirect correlation to the NGV price.”

7 7.5 8.5 8.5 8.5 8.5 8.5 8.5 8.5 10.5 10.5 12 13.5 16 28 43 102 166 303 391 428 469 483 490 497 500 0.38 0.85 1.53 2.60 6.52 20.57 37.40 50.55 64.15 77.33 85.42 88.09 85.66 0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00 80.00 90.00 100.00 100 200 300 400 500 600 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 PRICE STATION TON/DAY ( x 100 )

Natural Gas-Related Business Overview

Industrial Compressed Natural Gas

Pressure Reducing System (PRS)

Industrial Compressed Natural Gas Project Outlook

Project 1 Project 2

Project Site Samkhok, Pathumthani Banmhor, Saraburi Installed Capacity 10,048 MMBTU/day (279.54ton/day) 12,005 MMBTU/day (333.98 ton/day) Contract Capacity 4,000 - 5,000 (111.3-139.1ton/day) 4,000 - 5,000 (111.3-139.1ton/day)

Total Contract Capacity 8000 – 10,000 MMBTU/day

iCNG Entry Barrier

Pipeline Compressor Logistic PRS Factory

iCNG Mother Station Need to be familiar with CNG equipment CNG compressor & high pressure equipment. Need to be experienced with the operation of CNG mother station. SCN strength

• Low capacity investment

due to in house production

• f CNG Compressor and all

relate equipment

• 27 years experiences with

petro station

• The first company to be

involve with NGV (CNG) since it’s first introductory in Thailand Logistic Need to be familiar with CNG trailers and it’s maintenance procedures. Need to be experience with hazardous product & petroleum fuel transportation. SCN strength

• Low capital investment due

to in house production of CNG trailer

• Highly experience by being
• ne of the first company

providing CNG logistic for PTT Decompress Need to find a method to reduce the pressure of CNG from 3600psi to the pipeline pressure(200psi) at a continuous rate. SCN strength

• The only patent holder for

the pressure reducing system(PRS), the essential component of the iCNG project Catalyze Need to be familiar with CNG station construction. Need to understand the construction and gas utilization rules and regulation. SCN strength

• Well experienced in NGV

and petro station construction(27 years experience ) Pipeline Need to understand the layout

• f Thai natural gas pipeline

and be experienced with pipeline tapping/Connecting SCN strength

• Involved in the

petroleum/natural gas industry for more than 27 years .

• Is the services provider for

natural gas pipeline “hot tapping” to draw natural gas from the main pipeline to it’s applications.

Auto Dealer Branch 2 Natural Gas Quality Improvement

PMS Capacity Expansion Industrial Compressed Natural Gas (PATUMTHANI)

2015 ACCOMPLISHMENTS

Industrial Compressed Natural Gas (SARABURI) PBS Capacity Expansion NGV Cylinder Testing Center M&A KAOKONG

2015 ACCOMPLISHMENTS

M&A WORAPRAPA M&A BPA INTERTRADE OPEN VIETNAM MARKET

STRATEGIC MOVES 2016

Industrial Compressed Natural Gas

STRATEGIC MOVES 2016

EXPANSION OF NGV NETWORK

M&A of existing NGV Station

• Target by the end of 2016
• 3 Stations

Develop new NGV Stations

• Comply to PTT policy to expand new

NGV station in the near future

iCNG

Expand iCNG customer from the existing iCNG mother station

• Target by the end of 2016
• Utilize full contract capacity of both

stations (8,000 MMBTU/DAY)

Business Expansion to CLMV

Continue to expand in Vietnam Strategy to expand business to CLMV

• Use in conjunction with the iCNG

business model

NON PIPELINE iCNG/NGV MODEL

• 1. Gas Field
• 2. Biogas

SOLAR POWER PLANT

5 MW Solar Power Plant

• COD 30th December 2016

EPC of CNG Related Projects

Current Backlog

• 700 MB backlog of CNG related projects

Future EPC Work

• Expand in-line with the future

expansion of NGV/CNG in Thailand and CLMV (Great potential due to the new price-float policy)

II Financial Overview

SCN’s Net Profit Growth

Impressive Net Profit Growth from SCN’s Continuous Business Operations Net Profit Growth

THB M

• From 2013 to 2015, SCN experienced healthy earning growth from THB 85.04 mm to THB 225.39 mm with CAGR of 62.80%, driven by continuous business
• perations, especially recurring income that the Company has been focusing on.
• The growth in 2015 resulted mainly from Gas Related Businesses including
• NGV retail stations that SCAN acquired in 2015
• SCN’s new business, iCNG which started operation at the end of Q12015
• Gas quality improvement for PMS and PBS
• Exporting Pressure Reducing System (SCN’s Patent) to Vietnam

85.04 159.82 225.39 110.14 153.48

50 100 150 200 250 2013 2014 2015 1H2015 1H2016

693.04 486.02 666.13 196.14 375.79 1,188.64 1,221.31 1,284.94 648.26 795.70 294.31 229.96 172.41 99.82 85.93

• 500.00

1,000.00 1,500.00 2,000.00 2,500.00 2013 2014 2015 1H2015 1H2016 Auto Dealer Business Gas related Business Other Income

2,175.99 1,937.29 2,123.48 944.22 1,257.42

• 500.00

1,000.00 1,500.00 2,000.00 2,500.00 2013 2014 2015 1H2015 1H2016

Strong Consolidated Revenue

Strong Growth in Revenue

THB M

Total Revenue

Total Revenue Structure

THB M

• Between Q12015 and Q12016, Revenue increased 36.5% from 1. iCNG 2. Gas Quality Improvement in PBS and PMS 3. PRS to

Vietnam 4. Backlog from PTT 5. NGV Stations that SCN acquired at the end of 2015

• Total Revenue Structure graph shows the increase in Gas Related Business since 2013 as SCN has been focusing on recurring

revenue of Gas Related Business such as NGV retail stations, iCNG, PMS, TPL, etc.

Revenue Structure

Total Revenue Structure 1H2016 : 1257.42 MMTHB 1H2015 : 944.22 MMTHB Diversified Source of Revenue, Focusing on Gas Related Business

• Auto Dealer Business or Mitsubishi Dealer Business increased strongly between 1H2015 and 1H2016 because of an upward trend

in new Pajero sports sales

• However, Gas Related Business still plays the main role in SCN’s revenue.
• Percentage-wise, iCNG and NGV retails increased while construction & MA dropped since recurring revenue has been focused

more in the past years

Other Income 7% Auto Dealer Business 30% Installation of NGV & LPG 1% Construction & MA 15% NGV Retail 21% TPL 7% PMS 13% iCNG 6% Gas Related Business 63% Other Income 11% Auto Dealer Business 21% Installation of NGV & LPG 4% Construction & MA 26% NGV Retail 12% TPL 10% PMS 12% iCNG 4%

Gas Related Business

68%

1,188.64 1,221.31 1,284.94 648.26 795.70

• 200.00

400.00 600.00 800.00 1,000.00 1,200.00 1,400.00 2013 2014 2015 1H2015 1H2016

Gas Related Business Overview

SCN’s Core Business Healthy Growth Revenue – Gas Related Business Gross Profit vs GPM – Gas Related Business

THB M THB M

• Gas Related Business Revenue increased gradually since 2013, where YOY growth is 22.7%.
• Gross margin is in range of 25%-30% depending mainly on Construction and MA margin as different projects, different margin

226.09 356.57 327.79 165.86 230.27 19.0% 29.2% 25.5% 25.6% 28.9% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%

• 50.00

100.00 150.00 200.00 250.00 300.00 350.00 400.00 2013 2014 2015 1H2015 1H2016 Gross Profit (LHS) GPM (RHS)

102.59

• 113.11

158.73 94.67 93.87 117.28 264.85 40.59 73.53

• 100.00

200.00 300.00 400.00 500.00 600.00 700.00 1H2015 1H2016 R&M Conrtact PMS TPL NGV Retail iCNG

Recurring Revenue

Creating Sustainable Income with Recurring Revenue

THB M

• 129.57
• 200.00

400.00 600.00 800.00 1,000.00 1,200.00 2013 2014 2015 R&M Conrtact PMS TPL NGV Retail iCNG

Recurring Revenue

• To create sustainable income, SCN has been focusing on recurring businesses which is shown impressive recurring revenue growth with CAGR
• f 28% and growth 26.2% between 1H2015 and 1H2016.
• Realizing that R&M Contract made small margin comparing to other businesses, SCN has shifted from R&M Contract to selling gas related

spare parts, which SCN is the only manufacturer of those spare parts in Thailand, to other contractors. The gross profit of selling gas related spare parts alone is approximately 30 MMTHB, while the gross profit of R&M contract in 1H2015 is only 14 MMTHB. THB M

Recurring Gross Profit and Margin

Solid Gross Margin of Recurring Revenue

THB M

Recurring Gross Profit and Margin

• The main factor of decreasing in gross margin in 2014 is R&M contract.
• SCN managed cost more efficiently in 2015 especially in 1H2015 as some materials in stock obsolescence provision since 2012-2013 had been

used in 2015.

• 1H2016, gross margin of recurring revenue increase from recurring revenue in 2015 the whole year and almost the same margin as 1H2015.

41% 27% 30% 250.33 219.59 307.74 0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

• 50.00

100.00 150.00 200.00 250.00 300.00 350.00 2013 2014 2015 Gross Margin Gross Profit THB M 138.65 193.62 30% 33% 20% 22% 24% 26% 28% 30% 32% 34%

• 50.00

100.00 150.00 200.00 250.00 1H2015 1H2016 Gross Profit Gross Margin

Surging of Return & Sound Capital Structure

D/E Ratio vs. IBD/E Ratio ROE & ROA

• In case of Equity portion still remain, ROE has increased continuously from 10.68 to 17.9
• ROA between 2013 and 2015 has increased continuously from 4.70 to 8.59
• D/E ratio and IBD/E ratio in 2013 is quite large from an increase of long-term loan from financial institutions to support auto dealer

business and solar power plant

• During 2013 to 2015, D/E ratio and IBD/E ratio continued to decrease due to repayment of overdraft, short-term loan, long-term loan

from financial institutions as well as equity increase from IPO in 2015

• D/E Ratio 0.66 in Q12016 after the company paid dividend.

2.6 1.4 0.67 0.74 2 1.1 0.46 0.57 0.5 1 1.5 2 2.5 3 2013 2014 2015 1H2016 D/E Ratio IBD/E 10.68 15.11 16.5 17.9 12.64 11.82 4.70 6.89 7.69 8.59 0.00 5.00 10.00 15.00 20.00 2013 2014 2015 1H2016 ROE (Exclude IPO) ROE ROA

Q&A

50

SCN