Hong Kong - China XLX Fertiliser Ltd
Hong Kong - China XLX Fertiliser Ltd
Hong Kong - China XLX Fertiliser Ltd
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For A Better Tomorrow2010 Interim Results Announcement29 July 2010 · <strong>Hong</strong> <strong>Kong</strong>
DisclaimerThis presentation includes forward-looking statements. All statements,other than statements of historical facts, that address activities, events ordevelopments which <strong>China</strong> <strong>XLX</strong> <strong>Fertiliser</strong> <strong>Ltd</strong>. (“<strong>China</strong> <strong>XLX</strong>”) expects oranticipates will or may occur in the future are forward-looking statements.<strong>China</strong> <strong>XLX</strong>‘s actual results or developments may differ materially fromthose indicated by these forward-looking statements as a result of variousfactors and uncertainties. In addition, <strong>China</strong> <strong>XLX</strong> makes the forward-looking statements referred to herein as of today and undertakes noobligation to update these statements.2
1H2010 FINANCIAL RESULTS 1H2010 Financial Highlights 1H2010 Financial Results Revenue Breakdown by Product Sales Volume Breakdown by Product ASP Breakdown by Product Gross Profit Margins by Product Financial Position3
1H2010 Financial Highlights Due to increased sales volume of urea and methanol andincrease in methanol’s ASP in 1H2010, total revenue for1H2010 expanded significantly from RMB1.03b by 32% toRMB1.35b Total gross profit increased to RMB212m, 43% up YoY and netprofit increased by 52% YoY to RMB98m Overall gross profit margin recovered from 14% in 1H09 to 16%in 1H20104
1H2010 Financial Results(RMB million) 1H09 1H10ChangeYoY (%)Revenue 1,025 1,354 32Cost of sales (877) (1,142) 30Gross profit 149 212 43PBT 80 119 50Tax (15) (21) 38PAT 64 98 52• 1H10 PBT and PAT increased by 50% and 52% respectively comparedto 1H09 due to increased sales of urea as a result of new capacityfrom commencement of Plant III and recovery of methanol ASP5
Revenue Breakdown by Product(RMB million) 1H09 1H10ChangeYoY (%)Urea 778 960 23Methanol 62 182 194Compound <strong>Fertiliser</strong> 181 207 14Other 4.1 5.7 390.4%17.7%75.9%0.4%15.3%70.9%6.0%13.4%1H091H10Urea Methanol Compound <strong>Fertiliser</strong> Other6
Sales Volume Breakdown by Product(‘000 Tons) 1H09 1H10ChangeYoY (%)Urea 425 580 36.6Methanol 41 96 137.4Compound <strong>Fertiliser</strong> 94 112 18.9600400200425580100504196120110100909411201H091H1001H091H10801H091H10Urea Methanol Compound <strong>Fertiliser</strong>7
ASP Breakdown by Product(RMB/tons) 1H09 1H10ChangeYoY (%)Urea 1,713 1,655 (3.4)Methanol 1,521 1,885 23.9Compound <strong>Fertiliser</strong> 1,918 1,844 (3.9)1,7501,7001,6501,6001,5501,7071,5551,7131,5941,6553,0002,5002,0001,5001,0002,4522,2171,6231,8851,5213,0002,5002,0001,5001,0002,8211,7531,8441,895 1,9181,5005005001,450002007 2008 2009 1H09 1H102007 2008 2009 1H09 1H102007 2008 2009 1H09 1H10Urea Methanol Compound <strong>Fertiliser</strong>8
Gross Profit Margins by Product% 1H09 1H10ChangeYoY (bps)Urea 17 20 3Methanol (35) (1) 34Compound <strong>Fertiliser</strong> (2) 11 13Overall 14 16 29
Financial Position(RMB Million)As at31 December 2009As at30 June 2010ChangeFixed Asset 2,380 2,469 89Current Asset 531 324 207Current Liability 509 289 220Non-currentLiability927 961 34Equity 1,475 1,543 6810
BUSINESS REVIEWON 1H2010 OPERATIONS Urea Methanol Compound <strong>Fertiliser</strong>11
UreaProduction Volume Utilization Rate (%)(‘000 Tons)58198453961H091H101H091H10Maintenance Period:1. Plant I: in June, lasting for 7 days2. Plant II: in April, lasting for 13 12 days3. Plant III: in May, lasting for 7 days12
MethanolProduction Volume Utilization Rate (%)(‘000 Tons)95.99646.1611H091H101H091H10Maintenance Period:1. Plant I: in June, lasting for 7 days2. Plant II: in April, lasting for 13 days3. Plant III: in May, lasting for 7 days13
Compound <strong>Fertiliser</strong> In May 2010, there was an onsite testing by a delegation consisting ofindustry experts from Chinese Academy of Science, Henan Academy ofScience, Henan Agriculture Department, etc on slow release compoundfertiliser produced by <strong>China</strong> <strong>XLX</strong>. The results showed the <strong>XLX</strong> brandedcompound fertiliser could increase crop yield by 73.63kg per mu comparedwith other applied compound fertilisers in the marketplace. We expanded the products portfolio of compound fertiliser segment tofurther enhance the brand equity of <strong>China</strong> <strong>XLX</strong>.14
KEY EVENTS IN 2Q2010 Railway Facility Commenced Operation Certificate of Quality Management System15
Recent Strategic DevelopmentIn June 2010, Henan <strong>XLX</strong> <strong>Fertiliser</strong> Co.,<strong>Ltd</strong> obtained Certificate of QualityManagement issued by QualityAssurance Center of <strong>China</strong> Associationof Quality. It recognized our capabilityof operation management.Our self-owned railway facility,connecting with <strong>China</strong> national railwaygrid and only 800m away fromproduction plant, passed the testingand commenced operation in 10 June &will further lower our transportationcost of raw material and end products,approximately RMB18 saving per ton.16
OUTLOOK Industry & Company Outlook Growth Strategies17
Industry & Company OutlookUreaIndustry• More government supporting policiesto benefit fertiliser industry given thesummer crops yield declined• Natural gas price increase could helppush up the urea ASP• Negative impact from bad weathercould be eased in 2H10Company• Cost efficiencies further improvedfrom maintenance in 2Q10• Exploring more advancedtechnologies to further lower ourproduction costMethanol• Strong demand from DME and othermethanol downstream industries• Use of methanol as fuel additiveshould also boost demand• Cost efficiencies further improvedfrom maintenance in 2Q10Compound<strong>Fertiliser</strong>• Expect higher demand as farmersbecome more sophisticated andincreasingly use more compoundfertiliser• Capacity increase from new plantcompleted in 2H09• Exploring M&A opportunities18
Growth StrategiesContinue to focus on our core business and cost control to strengthen urea production andto maintain our leading position in the industryUpstream Production/Operation Downstream/DistributionContinue to maintaingood relationship withraw material suppliersConsider to invest in coalmines or miningcompanies and explorecooperationopportunitiesDevelop business throughvertical businessintegrationInvest on additionalproduction lines andadopt new technology toexpand capacityStrive to reduceproduction cost by usingcost-saving technologyavailableCooperate with top R&Dorganization to applymost advancedtechnologiesDevelop new coalchemicalproducts toincrease diversityContinue to maintaingood relationship withkeycustomers/distributorsStrategic cooperationwith Sinofert andSinoAgric Chain tofacilitate productdistributionContinue to seekcooperative opportunitiesto expand sales networkExpand downstreamproducts to extend valuechainTo become the mostprofitable coal-basedurea supplier in thePRCDual Listing in <strong>Hong</strong> <strong>Kong</strong>/SingaporeEffective platform for capital raisingPrudent capital management and deployment19
20Q & A
<strong>China</strong> <strong>XLX</strong> aims to become the most profitablecoal-based urea producer in the PRCThank YouFor further inquiries, please contact us:stephan.yao@chinaxlx.com.hk, +852 2855 6920or jeremy.cheah@chinaxlx.com.hk, +65 6538 040721
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