Post on 13-Oct-2020
2010 Results Announcement2010 Results Announcement
WINSWAY COKING COAL HOLDINGS LIMITED
1
7th March 2011
� This document has been prepared by Winsway Coking Coal Holdings Ltd (“Winsway”). By accepting this document, you agree to maintain absolute confidentiality regarding the information disclosed in this document. It is prohibited to modify, copy, distribute, transmit, display, publish, sell, license, create derivative works or use any content for any other purpose than that of this document
� While Winsway uses reasonable efforts to include accurate and up-to-date information in this document, errors or omissions sometimes occur. Winsway expressly disclaims any liability, whether in contract, tort, strict liability or otherwise, for any direct, indirect, incidental, consequential, punitive
DisclaimerDisclaimer
2
in contract, tort, strict liability or otherwise, for any direct, indirect, incidental, consequential, punitive or special damages arising out of or in any way connected with your access to our use of this presentation
� All information in this document, including but not limited to graphics, text and links to other communication means, is provided “as is” and is subject to change without prior notice. Such information is provided, to the fullest extent permissible pursuant to applicable law, without warranty of any kind express or implied, including but not limited to implied warranties of merchantability, fitness for a particular purpose, non-infringement from disabling devices. Winsway does not warrant the adequacy, accuracy or completeness of any information in this document and expressly disclaim any liability for errors or omissions therein. Users are responsible for evaluating the accuracy, completeness or usefulness of any information or other content available in this document
I. Company OverviewI. Company Overview
3
� An integrated supplier of imported coking coal into China, owning infrastructures at strategic Sino-Mongolian and Sino-Russian border crossings and Chinese sea ports
� A pioneer in the large-scale transportation of Mongolian coking coal into China, and one of the few companies with infrastructures to supply Mongolian coking coal to coastal areas of China profitably in a large-scale
� One of the leading suppliers in China of imported coking coal. Imported 6.5 mt of Mongolian coal and 2.9 mt of seaborne coal in 2010
Integrated Coking Coal Supplier with Excellent Integrated Coking Coal Supplier with Excellent Growth Track RecordGrowth Track Record
Winsway OverviewWinsway Overview Integrated Business Model Across the Value ChainIntegrated Business Model Across the Value Chain
Winsway’s Mongolian Coal Business
Winsway’s Seaborne Coal Business
Mining Companies and Operators / Our Own Resources
Mining Companies and Operators / Our Own Resources
Steel Makers / Coke Plants
Steel Makers / Coke Plants
Coal Processing
Railway
Border Crossing
and Transportation
in Mongolia
4
2010
� Listed on HKEx on 11 Oct 2010 (HK.1733) with a market capitalization of US$2.1 billion as of 7 February 2011
Strong Growth in Procurement VolumeStrong Growth in Procurement Volume Solid Financial PerformanceSolid Financial Performance
1,143
5,283
9,272
507 961
2,118
281 515 929
0
2,000
4,000
6,000
8,000
10,000
2008 2009 2010
(HK
D m
m)
Revenue Gross profit Net income
[Subject to changes in KPMG report]
PortCoal
Processing
1.3
3.8
6.5
3.4
3.1
1.3
7.2
9.6
0
2
4
6
8
10
2008 2009 2010
(mt)
Mongolian coal Seaborne coal
Connecting Global Coking Coal Resources to Connecting Global Coking Coal Resources to ChinaChina
Manzhouli
(in planning)
MinusinskIirkutsk
Kuzbass
Kansk-Achinsk
Baikal
Bureya
Zeya
Apsat
Kuznetsk
South Yokutia
Vanino
R U S S I A
Capital
Winsway's border-crossing facilities
Winsway's docking facilities
Winsway's coal processing plants
coal loading stationsWinsway's logistics centres and
Winsway
Legend
5
Jinan
Ceke
Gants Mod
Mandula
Erlianhaote
Zhu'engadabuqiSuifenhe
(in planning)
(in planning)
(in planning)(in planning)
Shivee Khuren
Gashuun Sukhait
(in planning)
(in planning)
(in planning)
(in planning)
Zamyn-Üüd
Takeshiken
Bayuquan
Yangkou Port
Longkou Port
Urad Zhongqi
Jining
Nariin Sukhait
UkhaakhudagTavan Tolgoi
Alag TogooShivee Ovoo
Ovoot Tolgoi
Baruun Naran
Primorsky
BeijingQinhuangdao
Tongliao
Jilin
Datong
Shijiazhuang
Jiayuguan
Xining
Ulaanbaatar
Baotou
Jiuquan
Anshan
Lanzhou
Linhe
Daqing
Hami
Yinchuan
UrumqiXilinhaote
Zhangjiakou
VostochnyVladiyostok
Caofeidian
MONGOLIA
CHINA
4 5
6
79
8
10
1 2
3
114
2
3
1
5
6
7
8
Jiayuguan-Ceke line
Xixiaozhao-Gants Mod line
Bayan Ula-Zhu'engadabuqi line
Baotou-Mandula line
Jining-Erlianhaote line
Beijing-Baotou line
Datong-Qinhuangdao line
Linhe-Ceke line
Capital
City
Coal mine / coal basin
Major steel production centers
Road
Railway (in operation)
Railway (in planning)
National boundary
9
10
Baotou-Lanzhou line
Jining-Tongliao line
Coal deposits
National boundary (China)
Coking coal deposits
Jinin-Zhangjiakou-Caofeidian line11
Major Events in 2010Major Events in 2010
April 2010Winsway closed pre-IPO financing with Hopu, China Minmetals, Silver Grant and Itochu, raising USD120 million in total
June 2010Winsway and Peabody Energy entered into a 50-50 joint venture which holds over 50 coal licenses in Mongolia
July 2010Winsway entered into strategic alliance agreement with Marubeni
December 2010Winsway entered into 5 year strategic alliance agreement with South Gobi
6
April 2010Winsway signed 3 year strategic alliance agreement with an unidentified Mongolian coking coal supplier
April 2010Winsway signed 10 year strategic alliance agreement with Tavan TologoiCorporation
July 2010Annual processing capacity of Winsway’s Urad Zhongqidense-medium coal processing plant increased to approximately 6 million tonnes
October 2010Winsway successfully listed on the main board of Hong Kong Stock Exchange
2010 2011
Unidentified Mongolian Supplier
II. Business ModelII. Business Model
7
Overview of Overview of Winsway’sWinsway’s Integrated Business Integrated Business ModelModel
Mining Companies and
Operators / Our Own Resources
Mining Companies and
Operators / Our Own Resources
Steel Makers / Coke Plants
Steel Makers / Coke Plants
Winsway’s Mongolian Coal Business
�Significant coal processing capacity at strategic locations along transportation route and
�Joint ventures with Hohhot and Harbin Railway Bureaus to develop and operate
�Strategic infrastructures at key Sino-Mongolian and Sino-Russian border crossings
Coal Processing Railway
Border Crossingand Transportation in
Mongolia
1 5
2 3 4
8
Winsway’s Seaborne Coal Business�Long-term
agreements and purchase contracts with key Mongolian suppliers
�Long-term agreements and spot contracts with seaborne suppliers
�50% interest in Peabody-Winsway JV
�Established relationship with high-quality customers at major steel production centres
�8 out of the top 12 steel mills in China are Winsway's customers
transportation route and at seaports
�Total capacity to exceed 20mtpa by end of 2011
develop and operate logistics centres at key railway hubs (51% owned by Winsway)
�Joint venture with Hohhot Railway Bureau to invest in rolling stocks
�5% investment in Gants Mod - Xixiaozhao railway
crossings�Long-term contract with
transportation partner to transport coal from mine mouth to border crossings
�Seaborne business broadens our product offering and diversifies our sources supply
�Coal processing plants at Bayuquan and Longkou near ly completed
�Logistics facilities at Bayuquan under constructio
Port Coal Processing
6
1 Long Term Agreements and Purchase Long Term Agreements and Purchase Contracts with Key Suppliers Ensure a Stable Contracts with Key Suppliers Ensure a Stable Source of Coking Coal SupplySource of Coking Coal Supply
Unidentified Mongolian Supplier
Long term agreement
3 years
Unidentified Mongolian Supplier
Long term agreement
3 years
Long term agreement
5 years
Long term agreement
5 years
Long term agreement
10 years
Long term agreement
10 years
MongolianCoal
Suppliers
MongolianCoal
Suppliers
Long term agreementLong term agreement Purchase contractPurchase contract
Others
9
Up to 2.0mt/year
Up to 2.0mt/year
Min. 2.0mt/year
20113.2mt/year
Min. 2.0mt/year
20113.2mt/year
5.0mt/year or
50% output
5.0mt/year or
50% output
SuppliersSuppliers
Seaborne Coal
Suppliers
Seaborne Coal
Suppliers
A combination of long-term agreements and spot contractsA combination of long-term agreements and spot contracts
Others
1.0mt/year1.0mt/year 0.2mt (Q4 2010)
0.2mt (Q4 2010)
The Joint Venture AcquisitionThe Joint Venture Acquisition
� On 29 June 2010, we acquired 50% interest in Peabody-Winsway JV from Polo Resources with a total consideration of
US$15mm in cash
US$20mm in Winsway shares upon IPO
1% royalty based on revenue of coal sold at the mine-mouth price
Coal ResourcesCoal Resources
� The JV mainly has 3 coal projects: Central projects North West projects South Gobi projects
� Central and North West projects contain mostly thermal coal and are at a relatively advanced stage of exploration
� South Gobi projects are at a preliminary stage of exploration and contain both thermal and coking coal
Sustainable Supply of Coking CoalSustainable Supply of Coking CoalUpstream InvestmentUpstream Investment
1
10
Locations of JV’s Coal Resources and LicensesLocations of JV’s Coal Resources and Licenses
� The JV holds approx. 50 coal-related mineral licens es in Mongolia with a total area of approx. 7,210 sqkm
exploration and contain both thermal and coking coal deposits located in South Gobi Coal Basin known for its rich coking coal resources
Union
(5)
Union
(5)
Khashaat
(1)
Khashaat
(1)
Ereen
(4)
Ereen
(4)
Erds
(4)
Erds
(4)
South Gobi
Central
South Gobi
Central
South Gobi East
South Gobi East
South Gobi West
South Gobi West
Central Projects
(14)
Central Projects
(14)
North West
Projects
(3)
North West
Projects
(3)
South Gobi
Projects
(25)
South Gobi
Projects
(25)
Other Projects
(9)
Other Projects
(9)
Overview of License Areas in Mongolia (# of License s Held)
6 Tier-1 Sino-Mongolian Border Crossings
Winsway’s infrastructure
Gants Mod √
Ceke √
Erlianhaote Under construction
Zhu’engadabuqi Under construction
Mandula Under construction
2 Invested in Infrastructure and Transportation Invested in Infrastructure and Transportation at Key Sinoat Key Sino--Mongolian and SinoMongolian and Sino--Russian Russian Border CrossingsBorder Crossings
11
2 Tier-1 Sino-RussiaBorder Crossings
Takeshiken Under construction
Winsway’s infrastructure
Manzhouli Under construction
Suifenhe Under construction
Ceke Border CrossingCeke Border Crossing Gants Mod Border CrossingGants Mod Border Crossing
Closest coal deposit being Ovoot Tolgoi, Nariin Sukhait (40km) serviced by trucking company Moveday with 950 trucks dedicated excluding for our use
Closest coal deposit being Tavan Tolgoi (270km) serviced by trucking company Moveday with 950 trucks dedicated excluding for our use
Commencement of Construction &Land Area
Commencement of Construction &Land Area
Commenced : 2008 Area: 679,100 sqm
Major Facilities in the Logistics Park
Major Facilities in the Logistics Park
Transportation arrangement from mine mouth
Transportation arrangement from mine mouth
Loading facilities, stockpile area, and a coal processing plant
Loading facilities, stockpile area, coal testing centre, wind shield, and a designated access road connecting our logistics park to Chinese customs
Commenced : 2007Area: 666,600 sqm
Significant Coal Processing Capacity at Significant Coal Processing Capacity at Strategic Locations WellStrategic Locations Well--Positioned to Meet Positioned to Meet Future DemandFuture Demand
Main Raw Coal Source
Main Raw Coal Source
Russia seaborne , Australia seaborne coal and other
Coastal regions of China
Mongolia
Inner Mongolia, Hebei, and Shandong Provinces
Target Markets Target Markets
Serving Different Target MarketsServing Different Target MarketsStrategic Locations of Coal Processing PlantsStrategic Locations of Coal Processing Plants
Ceke, Urad Zhongqi and
Jining
Ceke, Urad Zhongqi and
Jining
Bayuquan and Longkou
Bayuquan and Longkou
3
12
coal and other origins
China
Coal Processing CapacityCoal Processing Capacity
LongkouLongkou
2.0 6.010.0 10.01.2
1.21.2 1.24.0 4.04.0 4.04.0 4.0
5.0
5.0
2.0 3.27.2
23.2
33.2
0
5
10
15
20
25
30
35
2008A 2009A 2010A 2011E 2012E(m
tpa)
UradZhongqi
Ceke Jining Bayuquan
Longkou Suifenhe Manzhouli
Joint Ventures with Railway Bureaus to Joint Ventures with Railway Bureaus to Ensure Sufficient Railway Transportation Ensure Sufficient Railway Transportation Capacity Capacity
4
Logistics CentresLogistics Centres
JVs with Hohhot and Harbin Railway BureausJVs with Hohhot and Harbin Railway Bureaus
Rolling stocksRolling stocks
哈哈哈哈 尔尔尔尔 滨滨滨滨 铁铁铁铁 路路路路 局局局局Harbin Railway Bureau
Hohhot Railway Bureau
13
Huayuan Logistics� Hohhot Railway Bureau is Huayuan’s largest shareholder.
Winsway is the second largest shareholder with 9% ownership
� Huayuan to invest in 3,300 rolling stocks
� Winsway’s railway transportation capacity will increase approximately by 1.2 million tons per year
Winsway – Hohhot Railway Bureau JV� Jointly develop and operate railway logistics centers at border
crossings including Ceke, Gants Mod, Mandula, Erlianhaote, Zhu’engadabuqi and inland logistics centers at Jinin and Urad Zhongqi
� Coal loading stations within the railway logistics centers
� Winsway owns 51% in the joint venture
Winsway – Harbin Railway Bureau JV� Jointly develop and operate railway logistics centers at
Manzhouli
� Coal loading stations within the railway logistics centers
� Winsway owns 51% in the joint venture
Logistics CentresLogistics Centres
Railway InvestmentsRailway Investments
Rolling stocksRolling stocks
� “Registered user” status for railways administrated by the Hohhot Railway Bureau
� Invested in 5% of the Gants Mod – Xixiaozhao railway
Wide-ranging cooperation with Railway Bureaus built on 15 years of mutually beneficial working relatio nshipWide-ranging cooperation with Railway Bureaus built on 15 years of mutually beneficial working relatio nship
Established Relationship with HighEstablished Relationship with High--Quality Quality Customers at Major Steel Production Customers at Major Steel Production CentresCentres
China’s Top Steel Producer (2010)China’s Top Steel Producer (2010)Winsway’s Major CustomersWinsway’s Major Customers
Steel producerProduction volume (mt)
Winsway’scustomer?
Hebei Steel 52.9 √
Baosteel 44.5 √
Ansteel 40.3 √
Wuhan Iron and Steel 36.6 √
Shasteel 30.1 √
Shougang 25.8 √
Shandong Steel 23.2
Xiwuan Steel 18.6
5
14
We have built a network of premium clients through consistent delivery of high quality products and va lue-added services We have built a network of premium clients through consistent delivery of high quality products and va lue-added services
Winsway’s Long Term Partnership with CustomersWinsway’s Long Term Partnership with Customers
Name Type Location Comments
Steel ProducerBaosteelBaosteel Shanghai � Strategic partnership to supply up to 2.6mtpa of coking coal
WugangWugang Steel Producer Wuhan � 10 years long term strategic cooperation agreement to supply 1.2 mtpa coking coal
Jiujiang CokeJiujiang Coke Coke Plant Hebei � 30 years long term strategic cooperation agreement
Tangshan JiahuaTangshan Jiahua Coke Plant Hebei � 30 years long term strategic cooperation agreement
Note: Colored areas denote six main markets for Winsway: Hebei and Beijing, Northeast of China, Inner Mongolia, Shanxi, Shandong and Central, Eastern and Southern regions of ChinaNote: Colored areas denote six main markets for Winsway: Hebei and Beijing, Northeast of China, Inner Mongolia, Shanxi, Shandong and Central, Eastern and Southern regions of China
Xiwuan Steel 18.6
Bohai Steel 17.4
Magang 15.4
Hunan Valin 15.1 √
Baotou Steel 10.1 √
Source: mysteel.com
Seaborne Coal Business Broadens Our Seaborne Coal Business Broadens Our Product Offering as well as Diversifies Our Product Offering as well as Diversifies Our Sources of Coal SupplySources of Coal Supply
Offshore Onshore
CoalProcessing
Mining Companies/Operators
Mining Companies/Operators Ports
Steel Makers/Coke Plants
6
15
� Coal procured from Australia, the US, Canada, Russia, etc.
� A combination of long-term offtake agreements and spot contracts
� Procured 3.4 Mt seaborne coal in 2009 and 2.9 Mt in 2010
� Delivered to Jingtang, Rizhao or Caofeidian ports currently
� Plan to construct logistics parks around port facilities
� Docking facilities in Longkou and Yangkouports under construction
� Coal processing facilities at Bayuquanand Longkou ports nearly completed
� Bayuquan and Longkouports to primarily serve the Northeast China and Shandong markets
Significant processing capacity at seaports improve s our flexibility in terms of procurement and abili ty for coal upgradeSignificant processing capacity at seaports improve s our flexibility in terms of procurement and abili ty for coal upgrade
III. Financial OverviewIII. Financial Overview
16
Our Scale and GrowthOur Scale and Growth
Total sales volumeTotal sales volume Total revenueTotal revenue
1.02.1
4.72.9
3.0
1.0
5.1
7.8
0
2
4
6
8
10
(mt)
1,114
5,283
9,272
0
2,000
4,000
6,000
8,000
10,000
(HK
D in
mill
ions
)
17
Gross profitGross profit Net profitNet profit
1.00
2008 2009 2010
Mongolian coal Seaborne coal
0
2008 2009 2010
494
961
2,118
0
500
1,000
1,500
2,000
2,500
2008 2009 2010
(HK
D in
mill
ions
)
273515
929
190
273
515
1,119
0
200
400
600
800
1,000
1,200
2008 2009 2010
(HK
D in
mill
ions
)
Net prof it One-of f expenses (a)
Net IncomeNet Income
Forecast vs actual net incomeForecast vs actual net income
878764
929
808
0
200
400
600
800
1,000
(in m
illio
ns)
18
Net profit per ton (RMB vs. HKD)Net profit per ton (RMB vs. HKD) Net profit per ton (GAAP vs. Non-GAAP)Net profit per ton (GAAP vs. Non-GAAP)
273
101 119
24
273
101
143
0
50
100
150
200
250
300
2008 2009 2010
(HK
D)
GAAP basis Non GAAP basis
273
101119
242
89 104
0
50
100
150
200
250
300
2008 2009 2010
HKD RMB
0
HKD forecast RMB forecast HKD actual RMB actual
Earnings Per ShareEarnings Per Share
EPS (HKD vs. RMB)EPS (HKD vs. RMB) EPS (GAAP vs. Non-GAAP)EPS (GAAP vs. Non-GAAP)
0.35
0.30
0.26
0.23
0.3
0.4
(in H
KD
)
0.06
0.04
0.36
0.26
0.3
0.4
(in R
MB
)
19
0.0
0.1
0.2
HKD RMB HKD RMB
(in H
KD
)
Weighted average shares number
Year-endshares number
0.30
0.22
0.0
0.1
0.2
Weighted average shares Year-end shares(in
RM
B)
GAAP Non-GAAP
Balance SheetBalance Sheet
Total assetTotal asset
9,123
8,000
10,000
Total equityTotal equity Cash balanceCash balance
6,545
5,000
6,000
7,000 2,894
2,500
3,000
20
1,598
4,498
0
2,000
4,000
6,000
2008 2009 2010
(HK
D in
mill
ions
)
606
1,144
0
1,000
2,000
3,000
4,000
2008 2009 2010
(HK
D in
mill
ions
)
112
277
0
500
1,000
1,500
2,000
2008 2009 2010
(HK
D in
mill
ions
)
Cash FlowCash Flow
Operating cash flow Operating cash flow
141
47
0
50
100
150
Financing cash flow Financing cash flow Investing cash flow Investing cash flow
3,569
3,000
3,500
4,000
(200)
0
21
(353)(400)
(350)
(300)
(250)
(200)
(150)
(100)
(50)
2008 2009 2010
(HK
D in
mill
ions
)
511
1,165
0
500
1,000
1,500
2,000
2,500
2008 2009 2010
(HK
D in
mill
ions
)
(585)(647)
(1,056)
(1,200)
(1,000)
(800)
(600)
(400)
2008 2009 2010
(HK
D in
mill
ions
)
Coal ProcurementCoal Procurement
Mongolian coal volume (mt)Mongolian coal volume (mt) Seaborne procurement volume (mt)Seaborne procurement volume (mt)
6.5
5
6
7
3.4
3.1
3.0
3.5
4.0
22
1.3
3.8
0
1
2
3
4
2008 2009 2010
(mt)
0.00.0
0.5
1.0
1.5
2.0
2.5
2008 2009 2010
(mt)
Diversified Customer Base Reduces Diversified Customer Base Reduces Winsway’sWinsway’sCustomer ConcentrationCustomer Concentration
Five Largest TotalFive Largest Total 2010 Five Largest2010 Five Largest
Top Customer Revenue ContributionTop Customer Revenue Contribution
Five Largest Total
13.1%
(% of Total Revenue)
91.1%
23
13.1%
5.9%5.3% 5.2%
4.3%
Baosteel Wuhan I&S BaotouSteel
Hebei I&S Qian'anJiujiangCoke
33.0% 33.9%
2008 2009 2010
Strong Working Capital ManagementStrong Working Capital Management
A/P Turnover DaysA/P Turnover DaysA/R Turnover DaysA/R Turnover Days
38
2833 58
31 30
24
164
6680
2008 2009 2010
Inventory Turnover DaysInventory Turnover Days
2008 2009 2010 2008 2009 2010
1.3x
2.0x2.3x
Total debt/EBITDATotal debt/EBITDA EBITDA/interest EBITDA/interest
Healthy Credit RatiosHealthy Credit Ratios
14.3x
88.4x
15.4x
25
2008 2009 2010
Total debt/equityTotal debt/equity Current ratioCurrent ratio
2008 2009 2010
16.4%
108.0%132.0%
2008 2009 2010
3.2x
1.2x 1.2x
2008 2009 2010
IV. 2011 OutlookIV. 2011 Outlook
26
2011 2011 WinswayWinsway DevelopmentDevelopment
� Increase coking coal procurement volume from existi ng Mongolian suppliers
� Secure coking coal contracts from new suppliers com ing online
� Potentially expand into iron ore logistical service s in Mongolia
� Finish construction of the phase-1 Manzhouli coal loa ding station to facilitate the import of Russian coal and iron ore through land route
� Start construction of Suifenhe/Hunchun border crossi ng near the Pacific coast
Increase procurement volume from Mongolian
suppliers
Increase procurement volume from Mongolian
suppliers
Develop Russian land borne coal business
Develop Russian land borne coal business
27
� Bayuquan and Longkou will bring 8 mtpa of washing capa city online before the middle of the year
� Processing will be the core of our sea-born busines s with trading as a compliment
� Continue to cooperate with MoR at all levels and tak e advantage of recent regulatory changes to purchase rolling stocks to in crease our railway capacity and consequently our business volume
� Continue exploration work with our JV partner Peabo dy Energy in Mongolia to plan for in-house coking coal production in Mong olia in the near future
� Opportunistically acquire upstream coking coal asse ts to further ensure upstream supply and to take advantage of the increa sing value of coking coal
Diversify seaborne coal strategy
Diversify seaborne coal strategy
Increase railway transportation allocation
Increase railway transportation allocation
Upstream StrategyUpstream Strategy
V. Q&A SessionV. Q&A Session
28