(TWSE: 1314) Respect Achievement Care Sustainability
Disclaimer This presentation is for informational purposes only, contains preliminary financial and other information about China Petrochemical Development Corporation and is subject to updating, revision, amendment and completion. This presentation does not and is not intended to constitute or contain any offer of securities for sale or a solicitation of an offer to purchase any securities of China Petrochemical Development Corporation or any other company and neither this presentation nor anything contained herein shall form the basis of any contract or commitment. Certain statements contained in this presentation may be statements of future expectations and other forward- looking statements or trend information that are based on management’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those in the forward-looking statements in this presentation. In addition to statements which are forward-looking by reason of context, including without limitation, statements referring to risk limitations, operational profitability, financial strength, performance targets, profitable growth opportunities, and risk adequate pricing, the words “may, will, should, expects, plans, intends, anticipates, believes, estimates, predicts, or continue”, “potential, future, or further”, and similar expressions are intended to identify forward-looking statements. China Petrochemical Development Corporation assumes no obligation to update or revise any such statements or any other information contained herein to reflect events or circumstances that may arise after the date of this presentation. 2
Outline Company Profile Investment Highlight Business Strategy Financial Summary 3
Company Profile Company Profile Investment Highlights Business Strategy Financial Summary 4
Company Profile Company Overview Key Milestones Major products: caprolactam (CPL), acrylonitrile (AN), Apr 1969: Established as a State-Owned-Enterprise July 1991: Listed on the Taiwan Stock Exchange (TWSE: 1314) and nylon chip Principal raw materials: cyclohexane, phenol, propylene Jun 1994: Privatized CPDC (Core Pacific Group assumes control) and ammonia Sep 1999: Started nylon chip production Manufacturing sites: 3 in Taiwan (Tou-Fen, Da-Sheh and Apr 2012: Established cyclohexanone work at Hsiao-Kang plant Hsiaokang) Jun 2012: Expanded AN capacity at Da-Sheh plant Headquarters: Kaohsiung, Taiwan (Da-Sheh Plant) Oct 2012: Implemented 2nd CPL plant at Tou-Fen Employees: 1,231 as of 2015 Nov 2012: Ceased acetic acid production Aug 2015: Established cyclohexanone work at Tou-Fen plant. 2015 Mix Products Other (1) Nylon 6 Fiber & Resin: Acrylic Fiber: Acrylonitrile (AN) Caprolactam (CPL), and Byproducts Nylon Chips (Nylon 6) 17% 34% ABS Plastics: 49.0% 1. Other products include electricity, hydrogen cyanide, ammonium sulfate, industrial/refined/fuming sulfuric acid Company Profile Investment Highlights Business Strategy Financial Summary 5
Production Facilities Plants & Capacities Tou-Fen Plant CPDC Taipei Office Headquarters, Da-Sheh Plant Hsiaokang Plant CPL Capacity: 200,000 tonnes/yr AN Capacity: 220,000 tonnes/yr CPL Capacity: 200,000 tonnes/yr Nylon Chip Capacity: 36,000 tonnes/yr Capacity, Production and Sales Volume (M.T.) Value (NTD mn) Product Capacity Production Sales % Sold Production Sales 2015 CPL, NL6 399,000 256,654 234,625 91.42% 22,106 26,156 AN 220,000 194,161 196,490 101.21% 2014 CPL, NL6 367,000 250,734 245,968 98.10% 29,726 33,249 AN, AC (1) 230,000 203,583 204,628 100.51% 1. Ceased production of acetic acid in November 2012 due to market conditions Company Profile Investment Highlights Business Strategy Financial Summary 6
Investment Highlights Company Profile Investment Highlights Business Strategy Financial Summary 7
Investment Highlights Sustainable leading position with long-term customer relationships Strong end market growth Efficient cost base to benefit from market dynamics Strong reputation for high quality products and research and development capabilities Experienced management team with proven track record Company Profile Investment Highlights Business Strategy Financial Summary 8
Sustainable leading position with long- #1 term customer relationships ONLY CPL manufacturer in Taiwan TOP 2 AN manufacturer in Taiwan TOP 5 CPL manufacturer in the world AN manufacturer in the world TOP 10 Company Profile Investment Highlights Business Strategy Financial Summary 9
Strong End Market Growth #2 Global CPL market is forecast to grow at a CAGR of 2.3% (1) driven by its key end markets General Textile Fiber • Stockings, material for clothing • Umbrella, parachute, air bag • Curtains, carpets Engineering Plastics • Auto parts, gear CPL • Packaging film • High pressure resistant tube Industrial Fiber • Tire cord • Conveyor belt, rope • Fishnet, fishline 1. Source: 2015 World PA6 & PA66 Supply/Demand Report by PCI Nylon. Represents growth from 2015-2020 Company Profile Investment Highlights Business Strategy Financial Summary 10
Strong End Market Growth (cont’d) #2 Global AN market is forecast to grow at a CAGR of 4% (1) driven by its key end markets Acrylic Fiber • Material for clothing • Blanket, carpet • Wool, sweater, stuff toy AN ABS/AS Plastic • PC casing • Automobile (dash board, wheel cap, reflector box) • Home appliance casing • High intensity tool (hair dryer, mixer, mower) Acrylamide NBR Rubber • Water treatment agent • Electric wire insulating material • Soil absorption agent, • Oil-resistant rubber components conditioning agent, flocculant for automobile and machinery • Plastic additives, (e.g. oil seal, coil) leather metal coating • Vesicant insulator 1. Source: Global Acrylonitrile (ACN) Market - Growth, Trends and forecasts (2015-2020), Mordor Intelligence Company Profile Investment Highlights Business Strategy Financial Summary 11
Efficient Cost Base to Benefit from #3 Market Dynamics • Cost advantage as a result of process improvement • Development of proprietary production process using alternative feedstock, phenol, to produce CPL as benzene prices are increasing but phenol prices are dropping Caprolactam Production Processes Rearrangement & Propylene + Ammonia + Oxygen purification Cyclohexanone Caprolactam Nylon Chip Cyclohexanoxime + Hydrogen Phenol Company Profile Investment Highlights Business Strategy Financial Summary 12
Strong Reputation for High Quality #4 Products and R&D Capabilities • Commitment to R&D Leading to High Quality Products • R&D team consist of 58 dedicated staffs, among which 41 staffs have a master or doctorate XXdegree in the related fields • R&D spent NTD $1.24 billion in the last five years • Total of 158 patents awarded as of 2015/12/31 • Stable production driven by advanced production techniques, e.g. less coking by using unique continuous evaporator • High quality products for high speed spinning applications in textile • Quality Commitment • Quality control measures: 5S, TPM, TQM, HAZOP, SHAPE-UP • International standardization: ISO9001, ISO14001 • Industrial safety: OHSAS 18001, CNS 15506 Company Profile Investment Highlights Business Strategy Financial Summary 13
Experienced Management with Proven #5 Track Record Senior management with 30+ years of experience in CPL and AN market Successfully led the company’s expansion to Long-term strategic become one of the vision for the business leading CPL and AN producers Navigated the company through the business cycles Company Profile Investment Highlights Business Strategy Financial Summary 14
Business Strategy Company Profile Investment Highlights Business Strategy Financial Summary 15
Challenges & Potential Obstacles: • Price war on global energy markets • price fluctuations on raw materials • global oil price drop • Tariff barriers • Heightened awareness of environmental protection • Competitive East Asia market (against Japan & South Korea) Benefits of Offshore Sourcing • Business opportunities available from China and Southeast Asia • Solve the issue of raw material integration • Stay close to the market to lower transportation and storage costs • Better grasp market dynamics in production and sales Company Profile Investment Highlights Business Strategy Financial Summary 16
Business Strategy Improve Manufacturing Efficiency Pursue Vertical Integration Capture Strong Growth of China Market Continued Focus to Lower Costs Business Diversification into Property Development Company Profile Investment Highlights Business Strategy Financial Summary 17
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