1 November 2008 Corporate Presentation
Agenda • Business Updates • Operation Overview • Financial Overview 2
Recent Highlights • NO foreign currency hedging arrangements / derivative • Simple debt structure: – Over 80% PRC loans (simple revolving, without covenants) – NO stock-pledged arrangements • NO melamine contamination issue: – Tests / examinations of various indices and criteria began 2 years ago – All products pass relevant approvals domestically and internationally 3
Raw Material - Corn RMB / mt 1,750 1,700 1,650 1,600 1,550 1,500 1,450 1,400 1,350 1,300 Apr-07 Aug-07 Oct-07 Nov-07 Dec-07 Apr-08 Aug-08 Oct-08 Jan-07 Feb-07 Mar-07 May-07 Jun-07 Jul-07 Sep-07 Jan-08 Feb-08 Mar-08 May-08 Jun-08 Jul-08 Sep-08 Source: eFeedlink. Based on average price from northeast regions (Jilin, Dalian, Shandong) • 4Q 08 – corn price 10% Outstanding harvest: 156 million mt ( ↑ 11% yoy ) • • Cost control: the Group collects most of the corn raw material during harvest seasons 4
Amino Acids – Product Price Trend RMB/mt Lysine 16,000 14,000 12,000 10,000 8,000 Protein Lysine 6,000 4,000 2,000 0 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct 2007 2008 Source: efeedlink. • 1H 08 Amino Acid ASP: approx. RMB 9,210 ( 22% YOY) 5
Amino Acids – Business Update 1H 2008 Amino Acid Turnover Breakdown Others 3% Lysine 39% Protein Lysine 58% 1H 08 Quantity (mt) YOY Export YOY change volume (mt) change Lysine 60,150 13% 34,900 1% Protein Lysine 159,750 25% 42,800 36% Others 3,400 (39%) 920 49% • Annual capacity of all Amino Acid products: 450,000 mt. 6
Lysine Market Overview • 2007-2008: healthy market environment – Global market : approx. 1.2 million mt – PRC market : approx. 330,000mt – Supply / Demand : equilibrium • High technological entry barrier • Few major global players - concentrated supply market: Global Bio-chem (China) Ajinomoto (Japan) ADM (United States) CJ (South Korea) Degussa (Germany) 7
Polyol chemicals • Readily markets: – Chemicals demand/consumption in PRC: 5 – 6 million mt – Over 70% demand relies on imports – Petroleum based chemicals vs green products • Cost advantage: Breakeven (approx.): Corn price RMB 1,400/mt vs Oil price: US$40/barrel • Target GP margin from 25 – 30% • 1H: ASP RMB 8,900/mt, GP margin 39% • Various types of resin in the market: e.g. - Synthetic resin - PVC resin - Polythene resin - Polypropylene resin 8
Polyol – Business Update • Production Facilities : – Pilot Plant : 10,000 mtpa (operation for R&D purposes) – First Commercial Plant : 200,000 mtpa (operation at 60-70% utilisation rate) • Future Plan (schedule altered in view of market sentiment) : – New Production Site: 1 million mtpa (to be constructed in 4 – 5 years) Polyol Chemicals Production 100,000 metric tonnes 80,000 Estimated Operation of new business line begins 60,000 40,000 20,000 0 2H 07 1H 08 2H 08 9
Corn Based Polyol Chemicals Newly developed production technology by the Group Corn Starch Saccharification Glucose ((C 6 H 10 O 5 )n + H 2 O) Hydrogenation Reaction Sorbitol (C 6 H 14 O 6 ) Chemical reaction with catalysts Polyol chemicals mixture Sales & (or product: Resin ): Marketing – Ethylene Glycol (C 2 H 6 O 2 ) anti-freeze, Propylene Glycol (C 3 H 8 O 2 ) plastics, textiles Glycerin (C 3 H 8 O 3 ) industries, etc. Butanediol (C 4 H 10 O 2 ) Distillations / Separations Products: EG / PPG 10
Polyol – Sales & Marketing Applications Polyol – collective name for groups of chemicals Adhesive Intermediate Materials Raw Materials Plastics Coatings Footwear Films EG Polymers Glasses PG Fiberglass Polymeric Coolant Glycerin polyol Lubrication Solvent Resin Detersive GBT’s products Fibre Polyester Textile 11
Future Development • New production base: Xinglongshan • Vertically integrated facilities: • Corn refinery: 1.7 million mtpa • Polyol chemicals: 1.0 million mtpa Phase 1: 1 million mtpa Phase 3: 700,000 mtpa Original plan Corn Refinery Corn Refinery at 1Q : Phase 2: 500,000 mtpa Phase 4: 500,000 mtpa Polyol Chemicals Polyol Chemicals 1H 2H 1H 2H 1H 2H 1H 2H 2008 2009 2011 2010 Pending schedule: Phase 1: 1 million Phase 2: 500,000 mtpa mtpa Corn Refinery Polyol Chemicals 12
Corn Sweeteners – Business Update Corn Sweeteners Business Revenue (HK$'million) 619 570 800 600 308 400 200 0 1H 06 1H 07 1H 08 • Stable margin business • Market: strong demand growth in PRC on all natural sweeteners • Growth strategies under Global Sweeteners Holdings: – Diversification of products portfolio – 6 featured sweetener products – Scale participation – capacity expansion – Value adding – retail market 13
Designed Capacity Designed Capacity (mtpa) FY2007 FY2008 FY2009 Upstream Corn Refinery 2,400,000 2,400,000 3,400,000 Downstream • Amino Acids 450,000 450,000 450,000 • Modified Starch 80,000 80,000 80,000 • Polyol Chemicals 210,000 210,000 210,000 • Corn Sweeteners Global Sweeteners Holdings Limited 1,020,000 1,220,000 1,510,000 14
Capex 2008 - 2009 1600 1400 Corn Refinery Corn Refinery & supporting 1200 & supporting facilities facilities Maintanence 1000 HK$ (million) Polyol chemical 800 facilities 600 400 200 0 2008* 2009* 2008 2009 Latest schedule 15 * Original plan at 1Q 08
Operation Overview
Turnover Breakdown 1H 2008 Turnover Breakdown Polyol Turnover 1H 2008 1H 2007 Change Chemicals Corn Refinery 13% (HK$‘000) 32% Upstream Corn Sweeteners • Corn Refinery 1,511,139 753,544 101% 13% Downstream Modified Starch Amino Acids 2% • Amino Acids 1,932,676 1,326,140 46% 40% • Polyol Chemicals 697,252 4,205 N/A 1H 2007 Turnover Breakdown Polyol Chemicals Corn Sweeteners 0% • Modified Starch 91,623 81,016 13% 21% Corn Refinery • Corn Sweeteners 619,263 569,555 9% 28% Modified Starch 3% Amino Acids 48% 17
Gross Profit Breakdown 1H 2008 Gross Profit Breakdown Corn Refinery Gross Profit 1H 2008 1H 2007 Change 23% (HK$‘000) Polyol Chemicals Upstream 21% • Corn Refinery 102,798 180% 288,242 Corn Sweeteners 13% Amino Acids Downstream 42% Modified Starch • Amino Acids 535,905 342,976 56% 1% • Polyol Chemicals 269,034 (10,265) N/A 1H 2007 Gross Profit Breakdown • Modified Starch 13,597 12,313 10% Polyol Corn Refinery Chemicals 17% 0% • Corn Sweeteners 158,855 153,215 4% Corn Sweeteners Amino Acids 25% 56% Modified Starch 18 2%
Sales Analysis Quantity (mt) Gross Profit Margin (%) 1H 08 1H 07 % Change 1H 08 1H 07 % Change Upstream Corn Refinery 650,160 425,540 53% 19% 14% 5% Downstream Amino Acids 223,330 186,350 20% 28% 26% 2% Polyol Chemicals 83,723 985 N/A 39% N/A N/A Modified Starch 33,890 (11%) 15% - 30,090 15% Corn Sweeteners 276,723 309,378 (11%) 26% 27% (1%) 19
Export Breakdown 1H Export Turnover By Regions Turnover Volume Australia Africa US$’000 mt 3% 0% Amino Acids 98,373 70% 78,600 34% South & North America Modified Starch 4,769 3% 12,660 6% 17% Asia Corn Refined Products 38,249 27% 137,000 60% 44% TOTAL 141,391 228,260 Europe 36% Export to Total Turnover : 23% 20
Operating Cost Structure 1H 08 1H 07 Raw materials (Corn + Sweeteners) 56% 56% Other chemicals 11% 5% Utilities 12% 16% Labour 1% 1% 7% Depreciation 5% Packaging 3% 2% Production Overhead 1% 2% Selling and Distribution Expenses 7% 6% 4% Administrative Expenses 3% Other Operating Expenses 1% 1% 21
Financial Overview & Appendix
Operation Results 2008 1H 2007 1H Change HK$ million 4,852 2,734 78% Turnover 1,266 601 111% Gross Profit 977 498 96% • Corn based biochemical products 288 103 180% • Corn refined products 1,111 549 102% EBITDA 883 381 132% Operating Profit 602 230 162% Net Profit to GBT’s shareholders Basic EPS HK 26.0 cents HK 9.9 cents HK 1.5 cents HK 1.0 cent Interim Dividend Per Share 23
Operational Indicators 30 Jun 08 30 Jun 07 Change Gross Profit Margin (%) 26% 22% 4% • Corn based biochemical products 29% 25% 4% • Corn refined products 19% 14% 5% Operating Margin (%) 18% 14% 4% 13% 8% 5% Net Margin (%) 4% 4% ROE 8% 24
Balance Sheet HK$ million 30 Jun 2008 31 Dec 2007 Change (unaudited) (audited) Non-current Assets 9,767 8,732 12% Current Assets 4,666 19% 5,557 3,264 Current Liabilities 5,093 56% Cash and Bank Balances 2,439 2,022 21% Shareholder’s Equity 7,311 6,463 13% Interest-bearing Loans 4,803 16% 5,583 25
Key Financial Ratios 30 Jun 2008 31 Dec 2007 Current Ratio 1.1 1.4 Quick Ratio 0.8 1.1 Gearings: - Total Debt to Total Assets 49% 48% - Net Debt to Equity 43% 43% Inventories Turnover Days 73 87 Debtors’ Turnover Days 52 58 26
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