SITC International Holdings Company Limited September 2010 - - PowerPoint PPT Presentation

SITC International Holdings Company Limited

September 2010

This document does not constitute an offer to sell or issue or the solicitation of an offer to buy or acquire securities of SITC International Holdings Company Limited (the “Company”) in any jurisdiction or an inducement to enter into investment activity, nor may it or any part of it form the basis of or be relied on in connection with any contract or commitment whatsoever. Specifically, this document does not constitute a “prospectus” within the meaning of the U.S. Securities Act of 1933 or the Hong Kong Companies Ordinance (Chapter 32 of the Laws of Hong Kong), as amended. Any decision to purchase securities in the Company shall only be made at your own assessment of the market and the market position of the Company and at your own risk. Shareholders and investors are reminded to exercise caution when dealing in the securities of the Company. This document has been prepared by the Company solely for the reference of the shareholders and investors. The information contained in this presentation has not been independently verified. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness

• f the information or the opinions contained herein. The information contained in this document should be considered in the

context of the circumstances prevailing at the time and has not been, and will not be, updated to reflect material developments which may occur after the date of the document. These materials do not contain all of the relevant information relating to the Company or its securities. None of the Company or any of its affiliates, advisors or representatives will be liable (in negligence

• r otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection
• therewith. The Company may alter, modify or otherwise change in any manner the content of this document, without obligation

to notify any person of such revision or changes. Any information on the past performance of the Company is not necessarily indicative of its future performance. This document contains statements that constitute forward-looking statements that are based on current assumptions and beliefs as well as information currently available to the Company. These statements include descriptions regarding the intent, belief

• r current expectations of the Company or its officers with respect to the consolidated results of operations and financial

condition of the Company. These statements can be recognized by the use of words such as “expects,” “plans,” “will,” “estimates,” “projects,” “intends,” or words of similar meaning. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ significantly from those in the forward-looking statements as a result of various factors and assumptions. The Company has no obligation and does not undertake to revise forward-looking statements to reflect future events or circumstances.

Disclaimer

Contents

Company Overview Business Highlights Business Strategy Financial Information 1 2 3 4

1

• 1. Company Overview

Our Business

Container shipping Trucking Freight forwarding Ship agency Depot and Warehousing

We are a leading shipping logistics company in the PRC, exclusively focused on the intra-Asia market, providing integrated transportation solutions to our customers.

Largest Non-State- Owned Shipping Logistics Company in the PRC 3rd Largest Container Shipping Company in the PRC 4th Largest Container Shipping Company in the Intra-Asia Market 1st 3rd 4th

Source: Drewry. 2 Company Overview

Our Corporate Milestones

SITC has achieved a leading market position within a short period of 19 years since its establishment in 1991.

• SITC Corp was established to operate freight forwarding

business 1991

• Purchased first vessel and started serving PRC-Japan

trade lane

• Began our depot and warehousing services

1992

• Expanded into ASEAN Market

2004

• Strategically relocated operating center

from Qingdao to Shanghai 2007

• Became market leader along PRC-

Japan route 2008

• Became market leader along

PRC-Vietnam and PRC- Philippines routes 2009

• Established Qingdao logistics park

2003

• Signed strategic cooperation

agreement with Shanghai Port to jointly develop depot, warehousing and other logistics businesses 2010 2006

• Became largest PRC-based non-state-
• wned shipping logistics company

3 Company Overview

• 2. Business Highlights

Business Highlights

Exclusively Focused on the Fast Growing Intra-Asia Market 1 Integrated “One-Stop” Logistics Services 2 Distinctive High Frequency, High Density Service Model 3 Stable and Experienced Management Team 4

4 Business Highlights

Intra-Asia Market: Largest and Fastest Growing

25.1% 6.0% 5.6% 5.5% 3.0% 2.5% 1.5% Intra-Asia Far East - Europe World container trade Core East- West Transatlantic Transpacific 9.9% (5.2%) (9.0%) (11.1%) (12.4%) (13.3%) (19.0%) Intra-Asia Far East - Europe World container trade Core East- West Transpacific Transatlantic

Intra-Asia: Fastest Growing, Most Resilient Market Intra-Asia: The Largest Trade Market

17.4% 13.0% 58.0% 2.7% 8.9% Intra-Asia Transpacific Far East - Europe Transatlantic Other 2009 World Container Trade: 134.0 million TEU

Source: Drewry. Note: (1) Includes Northeast Asia and Southeast Asia Market; refers to trade within China, Japan, Korea, Taiwan, Hong Kong and ASEAN countries. (2) Core East-West trade refers to the Transpacific, Far East – Europe, and Transatlantic trade routes.

The intra-Asia market(1) is the largest, fastest growing and most resilient trade market in the world.

2009 Container Shipping Volume (Million TEU)

Intra-Asia: Fast Growing, Economically Active Market

2006 – 2008 CAGR Container Shipping Volume Growth (%)

Intra-Asia: Most Resilient to Economic Fluctuations

2008 – 2009 Container Shipping Volume Growth (%)

(2)

1

(1)

5 Business Highlights

7,743 7,730 8,057 7,519 8,239 2006 2007 2008 2009 2010E 2006 – 2008 CAGR: 2.0%

Our Leading Position in the Intra-Asia Market

737 758 772 109 322 415 279 845 1,080 1,187 367 646 2007 2008 2009 1H 2010 Northeast Asia Southeast Asia 14,134 15,760 16,543 15,806 17,349 2006 2007 2008 2009 2010E 2006 – 2008 CAGR: 8.2%

Southeast Asia Market (1) Northeast Asia Market (1)

• Growth driven by strong

economic growth in Southeast Asia countries, especially Thailand and Vietnam

The Northeast Asia Market is mature and has stable growth while the Southeast Asia Market is fast growing and

• emerging. We have a leading position in the Northeast Asia Market. Since 2004, we entered into the Southeast

Asia Market and have achieved strong growth.

• Connects the PRC and Japan,

the second and third largest economies in the world, respectively

• These countries have fast

growing industrial sectors with high import demand for raw materials

• Lower tariffs from China –

ASEAN Free Trade Agreement in January 2010 to further boost trade between PRC and ASEAN countries 9 . 5 % 9.8% ( 6 . 7 % ) (4.5%)

(Thousand TEU)

1 Our Container Shipping Volume

65.1% 2.4% 34.9% 95.2% % of 2009 Volume （%） 2007 – 2009 CAGR (%) (Thousand TEU) (Thousand TEU)

Source: Drewry. (1) The Northeast Asia Market refers to trade solely between the PRC, Japan and China while the Southeast Asia Market refers to trade within intra-Asia that involves Taiwan, Hong Kong or ASEAN countries 6 Business Highlights

Integrated “One-Stop” Logistics Services

Our integrated “one-stop” services provide high quality and convenient supply chain solutions for our customers.

Our sea freight logistics and land-based logistics business are closely interconnected and are equally important profit drivers for our business. Our ability to provide one-stop shop services is crucial to maintaining our long-term customer relationships. Our presence along the logistics value chain allows us to provide high quality and consistent service.

2

Manufacturer Retailer Land Transportation Depot and Warehousing Freight Forwarding Shipping Customs Clearance Ship Agency

7 Business Highlights

Extensive Logistics Service Network

2 Our integrated “one-stop” services cover 7 countries and 37 major ports and cities.

Our Freight Forwarding Network

• Extensive freight forwarding services network
• Covers 22 major cities in China, Japan and

Korea Our Shipping Agency Network

• Covers 27 major ports in the PRC, Japan, Hong

Kong, Korea, Vietnam, Thailand and Philippines

• Our shipping agency business helps to source

volumes for our freight forwarding business, and is highly complementary to our freight forwarding network

Freight forwarding Shipping agency Freight forwarding and shipping agency

Our Integrated Logistics Service Network

Lianyungang Hong Kong Qinhuangdao Manila Ho Chi Minh City Shidao Tokyo Haiphong Wenzhou Guangzhou Seoul Hanoi Bangkok Kobe Weihai Dalian Qingdao Tianjin Shanghai Yantai Ningbo Xiamen Nanjing Shenzhen Suzhou Yiwu Shaoxing Osaka Busan Zhuhai Foshan Dongguan Incheon Pyeongtaek Laem Chabang Tanggu Wuhan

8 Business Highlights

Highly Efficient Integrated Logistics Park Business Model

Description

• Joint ventures with international and PRC-based blue-chip

companies

• Include Maersk, Tsingdao Beer, Singamas, Itochu, and

Hanjin

• Approximately 480,000m2 of depot and 47,000m2 of

warehousing space

• Real-time monitoring of warehousing operations and

inventory management systems Qingdao Logistics Park

• Our Qingdao Logistics Park was awarded the PRC Logistics

Award for Best Solution Design from the China Communications and Transport Association

• Formed joint ventures with blue chip customers to provide

tailored logistics services, enhancing customer loyalty

• Warehouses equipped with computer systems that enable

real-time operations management and allow customers to make service inquiries online

• Proximity to port, major expressway and train station
• Facilitates interaction between parties involved in the supply

chain

We enhance customer loyalty through win-win partnerships to provide depot and warehousing services with

• ur domestic and international blue chip customers.

JV Partner JV Description Warehousing and value- added (e.g. goods inspection) services Depot and warehousing services Depot and warehousing services Location Qingdao Qingdao Qingdao Refrigerated warehousing services Qingdao Depot and warehousing services Qingdao Depot and warehousing services Shanghai

2

9 Business Highlights

Unique High Frequency, High Density Service Model

• High Density

– One of the highest density networks in intra-Asia – Covers 8 countries and regions, 36 major ports, 48 trade lanes – Highest density in Northeast Asia Market – Wide range of shipping options for customers

• High Frequency

– One of the highest service frequencies in intra-Asia – 242 port calls per week – Highest service frequency in Northeast Asia Market – Higher flexibility in scheduling for customers Our Container Shipping Network We operate a high frequency and high density service model. 3

10 Business Highlights

Manila Tokyo

Advantage of Our Network Driven Model

Hong Kong Shanghai Bangkok Ho Chi Ming

• Other container shipping companies
• SITC

Players Illustrative Diagram

• Profitability may be affected due to inability to fill

large vessels during industry downturn

• Adapt shipping routes to achieve optimal
• verall load factors

Resilience

• Fill large vessel on the long-haul route using small

feeder vessels

• Maximize overall vessel load factors

Objective

• Relatively linear routes that call at major ports
• Uses a combination of point-to-point,

continuous loop and network services

• Able to flexibly combine different service

formats within network Routes Hub-Spoke Model Network Driven Model Model

In contrast to many long-haul carriers and feeder service providers that use the hub-spoke shipping model,

• ur model seeks to optimize efficiency and profitability through our high-frequency, high-density short-haul

service network

Hong Kong (Hub) Feeder lines connect various points within network to the hub New York (Hub)

Source: Drewry.

3

Pyeongtaek Haiphong

11 Business Highlights

Single-Typed, Flexible Fleet Drives Our Network Driven Model Our single-typed fleet provides us with higher flexibility and lower vessel costs, and is fundamental to our network driven model. 3

86% 14%

• Young fleet with average age of 5.7 years. Younger

vessels are more efficient, technologically advanced and have lower maintenance cost

• 1,000 TEU type vessel best suits our business model in

terms of space utilization, operating efficiency and speed

• Lower operating cost from lower port charges and lower

maintenance cost as a result of fleet standardization

• Uniformed fleet provides higher flexibility in allocating

vessels along different routes 1,000 TEU type Other

36 of 42 Vessels are 1,000 TEU Type

Self owned Chartered

15 Out of 42 Vessels Are Self Owned

• Able to flexibly adjust fleet size to respond to changing

demand, with large proportion of chartered vessels on

• ne year charters
• Self owned vessels purchased at relatively low cost,

providing long term cost advantage

36% 64%

12 Business Highlights

Stable and Experienced Management Team

• 80% of senior management team has been with us for over 10

years, with average shipping industry experience of about 20 years

• Chairman and CEO each have over 30 and 20 years of

experience in the shipping logistics industry. Both were awarded “Outstanding Person in the Shipping and Logistics Industry over the 60 Years since 1949” by China Communications and Transportation Association

• Independent directors have diverse and international business

and finance experience – Tsui Yung Kwok: 17 years of finance and accounting experience; previously served on the board of several Hong Kong listed entities – Yeung Kwok On: Expert in organizational management and human resource management; advisor for several universities including Harvard University –

• Dr. Lo Wing Yan, William: PhD from Cambridge University;

strong international experience in a wide range of business; adjunct professor at several Hong Kong universities; and independent director for several listed companies –

• Dr. Ngai Wai Fung: Expert in corporate governance; served

as company secretary for China Unicom, ICBC Asia, and

• ther well-known listed companies; and is currently an

independent director of several listed companies

• Management has excellent industry and management acumen,

strong grasp of the industry cycle and strong ability to identify and mitigate potential risks

Our stable and experienced management team has been critical to our success. 4 Board of Directors Management Team

13 Business Highlights

Management Team Has Strong Grasp of Industry Cycle

1,000 – 1,100 TEU New-Build Prices

10 15 20 25 30 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: Clarksons, Company.

Our management team has strong grasp of the industry cycle, purchasing a majority of our vessels at relatively low prices, giving us a long term cost advantage

(US$ million)

4

Purchased 2 ships in 2001 1,694 TEU Purchased 4 ships in 2004 3,628 TEU Purchased 1 ship in 2007 938 TEU Purchased 3 ships in 2003 2,493 TEU

40% drop

Purchased 3 ships in 2009 3,048 TEU Purchased 2 ships in 1998 1,574 TEU

14 Business Highlights

• 3. Business Strategy

Business Strategy

Strengthen and Expand Our Intra-Asia Service Network, and Replicate Our Integrated Services Model Throughout Our Network

1

Expand Fleet and Optimize Composition

2

Seek Opportunities for Complementary Acquisitions and Partnerships

3

• Northeast Asia Market: Solidify our leading position and create additional headroom for growth. Expand into

South China and Northeast Asia countries trade

• Southeast Asia Market:Capture growth opportunities through route and network expansion
• Acquire new sites to build warehousing and other logistics facilities near ports
• Replicate integrated services model throughout intra-Asia network, beginning with Ningbo, Shanghai and

Vietnam.

Enhance Information Technology Systems

4

• Take advantage of attractive new build prices to expand our fleet and further solidify our long term cost

advantage

• Expand self-owned fleet by 15 to 25 vessels by 2013

Our long term objective is to be a world-class integrated logistics service provider.

15 Business Strategy

• 4. Financial Information

6.0% 10.3% 4.9% 14.1% 14.6% 16.1% 13.4% 17.1%

Financial Snapshot

353.7 497.0 228.8 222.7 274.9 264.0 171.8 576.4 771.9 694.2 400.7 430.1 2007 2008 2009 1H 2010

(US$ million)

Net Income and Net Income Margin Revenue

(US$ million)

Gross Profit and Gross Profit Margin

51.3 34.3 35.4 37.1 32.5 4.6 2007 2008 2009 1H 2010 6.0% 4.6% 12.8% 5.3% Share based compensation Profit from continuing

• perations

Margin

(US$ million)

Total Debt 137.9 108.5 90.5 82.5 2.9x 2.1x 0.9x 2.4x 2007 2008 2009 1H2010

(US$ million)

Total Debt and Total Debt / LTM EBITDA(1)

Total Debt / LTM EBITDA

(1) EBITDA is defined as operating profit adding back depreciation and amortization.

Sea Freight Logistics Land-Based Logistics Sea Freight Logistics Land-Based Logistics 24.4 59.6 42.6 31.8 40.7 43.8 30.4 56.2 100.4 70.0 26.2 73.0 2007 2008 2009 1H 2010

16 Financial Information

Cash Flow Management

20.2 20.8 17.1 17.0 24.7 23.3 28.0 37.1 36.9 44.0 2007 2008 2009 1H 2009 1H 2010

Trade Receivables and Payables Turnover Days

(Days) Trade Receivable Turnover Days Trade Payable Turnover Days

Capital Expenditure

(US$ million)

46.2 4.1 3.8 50.4 2.2 25.2 2.5 10.4 11.0 2007 2008 2009 1H 2010 Other Container vessels Office buildings

EBITDA / Interest Expense

(x)

7.3x 11.3x 25.2x 67.5x 2007 2008 2009 1H 2010

(1) As defined in the prospectus.

Operating Cash Flow(1)

(US$ million)

(25.3) 51.7 45.8 69.9 2007 2008 2009 1H 2010

17 Financial Information