LUZHOU BIO-CHEM TECHNOLOGY LIMITED. 1HFY2006 Results Briefing. August 15, 2006

Transcription

1 LUZHOU BIO-CHEM TECHNOLOGY LIMITED 1HFY2006 Results Briefing August 15, 2006

2 Agenda Who We Are A Growing Industry Financial Review Corporate Updates Future Plans Q&A 2

3 Who We Are

4 Leading Corn Sweetener Producer Established in 1988 Corn refiner and producer of sweeteners Believed to be PRC s leading corn sweetener producer Annual capacity of *650,000 tonnes of sweeteners *25 30% market share in the PRC One of the largest exporters of corn sweeteners *40% of total PRC output Export to various countries including South Korea, Japan, USA, Australia, South Africa, Philippines & Malaysia * Figures as of FY2005 4

5 Our Production Process Raw material By-products End products Corn starch Corn sweeteners Maltose sweeteners CORN Corn steep Corn fibre Corn gluten Liquid corn germ Corn oil Corn germ Steepwater Corn meal fibre Corn gluten meal Glucose sweeteners 5

6 Our Products & Applications Product Range Products E.g.s of Industrial Application Maltose sweeteners # High Maltose Syrup # Maltodextrin # Isomaltooligosaccharide Syrup # Maltitol # Crystalline Maltose * Maltose Powder Food Beverage Health products Beer Glucose sweeteners # Current Products *New Products ^R&D stage Products # Liquid Glucose # Dextrose Powder # High Fructose Syrup * Sorbitol *Crystallized Glucose *Glutamic Acid ^Lactic Acid Food Beverage Health products Sugar replacement 6

7 Our Products & Applications Primary Product Sweeteners Intermediate Product Corn Starch Food products, beverages, fermentation and medicines Eg: Dairy products, beer, health products, frozen food products Corn sweeteners, food and medicines By-products Corn meal, corn fibre, corn germ, steepwater Animal feeds and corn oil 7

8 Product Applications GENERAL APPLICATIONS Food Fermentation Beverages Others 8

9 Our Network Haerbin Lanzhou Beijing LIAONING PLANT Tianjin SHAANXI PLANT SHANDONG PLANT HENAN PLANT Chengdu Shanghai Chongqing Changsha Quanzhou Guiyang Shaoyang Shantou Kunming Guangzhou 9

10 A Growing Industry

11 A Growing Industry KEY INDUSTRY DATA Relatively young industry in the PRC Only began commercial industrialisation in the 90s Low current PRC per capita sugar and sweetener consumption 10kg World average of 20kg and US average of 70kg Supported by PRC government through subsidies, tax rebates and lower interest rate loans Luzhou accredited with Provincial Level Agriculture Industry Key Flagship Company status 11

12 Consumption Trend of KEY Corn INDUSTRY DATA Sweeteners in the US (Pounds/year) Per Capita Consumption of Corn sweeteners has exceeded Refined Sugar in the US Data: US Corn Refiners Association Refined Sugar Corn Sweeteners (HFCS, Glucose & Dextrose) 12

13 Upward Trend of Refined KEY Sugar INDUSTRY DATA Prices US$ Data: Bloomberg, August 11, Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06

14 KEY INDUSTRY DATA Price Trend Comparison Price Trend Comparison 6,000 5,000 4,000 3,000 2,000 1,000 0 Source: Company 14 Jan-05 Feb-05 Mar-05 Apr-05 May-05 Jun-05 Jul-05 Aug-05 Sep-05 Oct-05 Nov-05 Dec-05 Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 RMB per tonne Sugar Corn Sweeteners

15 KEY INDUSTRY DATA Price Trend Comparison Price Trend Comparison 2,500 2,000 1,500 1, Jan-05 Feb-05 Mar-05 Apr-05 May-05 Jun-05 Jul-05 Aug-05 Sep-05 Oct-05 Nov-05 Dec-05 Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 RMB per tonne Source: Company 15 Corn Sweeteners Corn

16 Financial Review

17 Financial Highlights RMB m 2QFY06 2QFY05 Chg YoY (%) Revenue Gross Profit Net Profit * EPS (RMB cents) GP Margin (%) ppt Net Profit Margin (%) ppt * Earnings per share is based on post-invitation number of shares of 360,000,000 17

18 Financial Highlights RMB m 2QFY06 1QFY06 Chg YoY (%) Revenue Gross Profit Net Profit * EPS (RMB cents) GP Margin (%) ppt Net Profit Margin (%) ppt * Earnings per share is based on post-invitation number of shares of 360,000,000 18

19 Financial Highlights RMB m 1HFY06 1HFY05 Chg YoY (%) Revenue Gross Profit Net Profit * EPS (RMB cents) GP Margin (%) ppt Net Profit Margin (%) ppt * Earnings per share is based on post-invitation number of shares of 360,000,000 19

20 Strong Revenue Growth RMB million 1,200 1, % Revenue growth due to stronger demand F&B up 77.2% Growth in customer base - from 4,728 in 1HFY05 to 6,699 in 1HFY06 (FY05: 5,632) FY03 FY04 FY05 1HFY05 1HFY06 Growth in maiden contribution from new plant in Xiping, Henan Province Financial year ended 31 December 20

21 Revenue by Product Categories 1HFY06 1HFY % 16.2% 62.8% 17.7% 20.0% 63.8% Corn starch By products Sweeteners Financial year ended 31 December 21

22 Revenue by Industries 1HFY06 1HFY % 16.2% 16.8% 22.7% 10.1% 50.4% 7.9% 59.9% Food Beverages Fermentation Others Financial year ended 31 December 22

23 Revenue by Geography 1HFY % (RMB94.3m) 1HFY % (RMB48.7m) 85.7% (RMB566.7m) PRC Overseas 89.8% (RMB430.8m) Financial year ended 31 December 23

24 GP & GP Margins RMB million % % Improvement in GP margins: Achieved economies of scale in production facilities Increased sweeteners production 50 5 Commenced production in Henan plant 0 0 1HFY05 1HFY06 GP GP Margins Financial year ended 31 December 24

25 Net Profit & Net Profit Margins RMB million % % Net profit grew 123.6% In line with revenue growth and GP margin improvement HFY05 1HFY06 0 Net Profit Net margin Financial year ended 31 December 25

26 Balance Sheet Highlights Shareholders equity (RMB m) Cash & cash equivalents (RMB m) Fixed assets (RMB m) Receivables (RMB m) Receivable turnover days Payables (RMB m) Payable turnover days Inventories (RMB m) Inventory turnover days Loans (RMB m) Gearing (times) * NAV per share (RMB cents) 1HFY FY * NAV per share for 1HFY06 and FY2005 is based on post-invitation shares of 360,000,000 and pre-invitation shares of 260,000,000 respectively 26

27 Corporate Updates

28 Corporate Updates Commenced Production of Higher Value Sweeteners Yishui, Shandong Province 40,000 tonnes sorbitol per annum Convert existing liquid glucose into higher margin sorbitol/maltitol Fushun, Liaoning Province Utilise surplus corn starch to produce higher value sweeteners 10,000 tonnes of dextrose powder 30,000 tonnes of high maltose syrup 28

29 Future Plans

30 Focus on Higher Value Sweeteners Product Range Existing Products Enhanced Capabilities Maltose sweeteners High Maltose Syrup Maltodextrin Isomaltooligosaccharide Syrup Maltitol High Maltose Syrup Maltitol Glucose sweeteners Liquid Glucose Dextrose Powder / Crystallized Glucose High Fructose Syrup Sorbitol Dextrose Powder High Fructose Syrup 30

31 Enhance Production Capabilities Xiping, Henan Province 65,000 tonnes high fructose syrup per annum Convert surplus corn starch into high fructose syrup Commence production in 4Q06 Xingping, Shaanxi Province 70,000 tonnes high fructose syrup per annum Convert surplus corn starch into high fructose syrup Commence production in 4Q06 Shift in product mix to higher value products 31

32 Expand Production Capacity Set up new plant in Yishui, Shandong Province Additional production capacity of 150,000 tonnes of corn sweeteners per annum Start construction in May 2006 Commence production in 1H2007 Increases Group s total annual production capacity to 800,000 tonnes in

33 Our Capacity & Utilisation Rates Sweeteners FY05 FY06 FY07(E) Facility / Location Fushun, Liaoning Yishui, Shandong Xingping, Shaanxi Xiping, Henan* Total Capacity Region Served Northeast of PRC Shandong, Hebei, Anhui, Guangdong, Zhejiang Shaanxi, Shanxi, Gansu, Chongqing, Sichuan, Inner Mongolia Henan, Hubei, Hunan, Anhui, Jiangxi *Commence production in Jan 2006 Production Capacity/ Output (tonnes) 160,000 (98,829) 190,000 (190,308) 160,000 (90,116) 140, ,000 tonnes Utilisation Rate 61.8% 100.2% 56.3% % Production Capacity (tonnes) 160, , , , ,000 tonnes Production Capacity (tonnes) 160,000 # 340, , , ,000 tonnes # Additional production capacity of 150,000 tonnes in 1H

34 Our Capacity & Utilisation Rates Sweeteners 1HFY05 1HFY06 Facility / Location Region Served Production Capacity/ Output (tonnes) Utilisation Rate Production Capacity/ Output (tonnes) Utilisation Rate Fushun, Liaoning Northeast of PRC 80,000 (46,887) 58.6% 80,000 (53,933) 67.4% Yishui, Shandong Shandong, Hebei, Anhui, Guangdong, Zhejiang 95,000 (89,170) 93.9% 95,000 (78,532) 82.7% Xingping, Shaanxi Shaanxi, Shanxi, Gansu, Chongqing, Sichuan, Inner Mongolia 80,000 (42,513) 53.1% 80,000 (45,821) 57.3% Xiping, Henan* Henan, Hubei, Hunan, Anhui, Jiangxi ,000 (43,040) 61.5% Total Capacity 320,000 tonnes 55.9% 325,000 tonnes 68.1% *Commence production in Jan

35 Growth Strategies Expand Range of Higher Value Products R&D of new, innovative and higher value add products Acquire production lines for new products Produce glutamic acid in Shaanxi Plant Ingredient for MSG & other industries Bio-degradable plastics in Shandong Plant Develop special feed products from by - products to maximise returns Improve Operating Efficiencies Install additional thermoelectricity generators in production facilities Reduce operating costs and boost production capabilities

36 Summary KEY INDUSTRY DATA Operating in an industry with vast growth potential Corn sweeteners an increasingly attractive alternative to cane sugar Potential for greater market penetration Established market leader in the PRC sweetener market Approx 25% 30% domestic market share & approx 40% of PRC s export market Strong R&D capabilities Established customer base Sound business strategy Focus on shift in product mix to higher value products 36

37 LUZHOU BIO-CHEM TECHNOLOGY LIMITED Thank You