20082008 H1 2008 H1 Results Presentationchinamoly.com/en/06invest/doc/Jasminesun NDR... · 2,559 0...
Transcript of 20082008 H1 2008 H1 Results Presentationchinamoly.com/en/06invest/doc/Jasminesun NDR... · 2,559 0...
Stock Code: 3993
2008 H1Results Presentation
20082008 H1H1Results PresentationResults Presentation
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This presentation may contain forward-looking statements. Any such forward-looking statements are based on a number of assumptions about the operations of the China Molybdenum Co., Ltd. (the “Company”) and factors beyond the Company's control and are subject to significant risks and uncertainties, and accordingly, actual results may differ materially from these forward-looking statements. The Company undertakes no obligation to update these forward-looking statements for events or circumstances that occur subsequent to such dates. The information in this presentation should be considered in the context of the circumstances prevailing at the time of its presentation and has not been, and will not be, updated to reflect material developments which may occur after the date of this presentation. The slides forming part of this presentation have been prepared solely as a support for oral discussion about background information about the Company. This presentation also contains information and statistics relating to the China and molybdenum industry. The Company has derived such information and data from unofficial sources, without independent verification. The Company cannot ensure that these sources have compiled such data and information on the same basis or with the same degree of accuracy or completeness as are found in other industries. You should not place undue reliance on statements in this presentation regarding the molybdenum industry. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of any information or opinion contained herein. It should not be regarded by recipients as a substitute for the exercise of their own judgment. Information and opinion contained in this presentation may be based on or derived from the judgment and opinion of the management of the Company. Such information is not always capable of verification or validation. None of the Company or financial adviser of the Company, or any of their respective directors, officers, employees, agents or advisers shall be in any way responsible for the contents hereof, or shall be liable for any loss arising from use of the information contained in this presentation or otherwise arising in connection therewith. This presentation does not take into consideration the investment objectives, financial situation or particular needs of any particular investor. It shall not to be construed as a solicitation or an offer or invitation to buy or sell any securities or related financial instruments. No part of it shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. This presentation may not be copied or otherwise reproduced.
© 2008 China Molybdenum Co., Ltd. All rights reserved.
Disclaimer
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Agenda
2008 H1 Accomplishments2008 H1 Accomplishments1
Business ReviewBusiness Review2
Market ReviewMarket Review3
Financial ReviewFinancial Review4
OutlookOutlook5
Q&AQ&A6
2008 H1 Accomplishments
5
2008 H1 Accomplishments
1. Strong Growth in Production Volume– Molybdenum concentrate production was 16,754 tons, up 16.6 %,
molybdenum oxide production was 13,022 tons, up 28.0% , while ferromolybdenum production was 7,869 tons, up 20.0% yoy
2. Strong Growth in Revenue & Profit– Revenue grew by 15.4% yoy to RMB3,326m, while net profit grew by
12.5% yoy to RMB1,242m – EPS is RMB 0.26
3. Stable ASP and Operating Cash Cost– ASP for molybdenum concentrate was RMB165,901/t, up 6% yoy, ASP
for molybdenum oxide was RMB241,850/t, up 16% yoy, ASP for ferromolybdenum was RMB 238,850/t, down 2% yoy
– Operating cash cost (excluding tax) for molybdenum concentrate was RMB30,937/t, equals US$4.41/lb
Business Review
7
Strong Growth in Production Volume
Production of molybdenum products (ton)
Production of molybdenum products (ton)
Note:1. Grade of molybdenum concentrate, molybdenum
oxide and ferromolybdenum are 45%, 51% and 60%
Production of other products (ton)Production of other products (ton)
1
Note:1. Grade of Wo03 is 65%
16,754
30,753
14,37213,022
10,173
21,035
13,309
6,5587,869
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2007 2007H1 2008H1Mo Conc Mo Oxide FerroMo
1,606
9,746
872 4940
2,000
4,000
6,000
8,000
10,000
12,000
2008H1
Scheelite(ton) Gold(kg)Silver(kg) Sulphur(ton)
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Sales and Marketing Analysis
Sales (ton)Sales (ton)
Realized ASP (RMB/ton)Realized ASP (RMB/ton)
Breakdown (geography)Breakdown (geography)
2008H1
Breakdown (customers)Breakdown (customers)
1,4294,483
2,533 3,061
13,134
6,609 7,5685,362
2,559
02,0004,0006,0008,000
10,00012,00014,000
2007 2007H1 2008H1Mo Conc Mo Oxide FerroMo
156,458 165,901
195,943 196,137
245,475236,428
310,773
210,055234,657
276,960
2007H1 Domestic Sales
2007H1Exports
2008H1Domestic Sales
2008H1Exports
Mo Conc Mo Oxide FerroMo
Domestic69%
Overseas31%
Top 477%
Top 5-1018%
Others5%
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♦ As of June 30, 2008, Luoning Gold Mine project has achieved 15,947 meter drilling, 40 medium-length holes and 6,580-meter tunnel engineering. The exploration is in smooth progress and is satisfactory. Meanwhile, Company had started construction of Qiliping gold/silver processing plant with a capacity of 250 tonnes/day, and construction of 80,000 tonnes per year gold lead silver smelting plant project
♦ Construction of the 40,000 ton molybdenum roasting and smelting plant started on March 20, 2008, as scheduled. Currently, construction of the main building and experiment building structures has completed, 30% of the overall construction work has achieved and 70% of equipment procurement has been done.
Progress of New Projects♦ The scheelite project, with a capacity of 6000 tons/day,
began commercial production in June 2008 after a 4-month trial. While recovering scheelite, this project is also able to recover molybdenum concentrates and sulphurconcentrates.
♦ The other scheelite project, with a capacity of 9000 tons/day, is currently commissioning equipment. As sulphurconcentrates and molybdenum concentrates recovery facilities are added to this project, trial production is expected to start in September.
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Domestic Acquisitions & Resources Consolidation
Henan
SanMenXia
LuoYang
NanYang
PingDingShan
JiYuanJiaoZuo
ZhengZhouKaiFeng
XinXiang
AnYangHeBi PuYang
ShangQiu
ZhouKou
XuChang
LuoHeZhuMaDian
XinYang
♦ China Moly will actively assist local government to push forward consolidations which is currently in plan by Henan and Luoyang governments
♦ Initiated a consolidation trial project with local Zhenping county government
♦ Reached minerals exploration & development agreement with Henan Provincial Non-Ferrous Metals Bureau
♦ Takeover of nearby 3,000 ton/day plant to process China Moly’s low-grade ores mined
♦ Evaluated and discussed acquisitions of several molybdenum and specialty and precious metals cooperation projects within Henan province and in Inner Mongolia, Xinjiang, Northeastern China and Hunan regions
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Overseas Acquisitions
♦ Our company set up a special team with former senior executives of large overseas mining corporations, to develop China Moly’s overseas development & acquisition strategies
♦ Our targeted regions are mature and politically stable, including Canada, USA and Australia
♦ Our targets are large and medium-sized high-quality projects of specialty or precious metals
♦ We will focus on projects in the production and development stages, and explorations projects with great potential
♦ Overseas-work team has inspected, evaluated and held discussion on several projects
Australia
North America
Market Review
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Molybdenum Price – Strength remained
Domestic PricesDomestic Prices International PricesInternational Prices
20
22
24
26
28
30
32
34
36
Jan-08 Feb-08Mar-08 Apr-08May-08Jun-08M
o C
onc/
Mo
Oxi
de P
rices
(US$
/lb)
40
45
50
55
60
65
70
75
80
85
FerroMo Prices(U
S$/kg)
Mo Oxide FerroMo
2,000
2,500
3,000
3,500
4,000
4,500
Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08
Mo
Con
c/M
o O
xide
P
rices
(RM
B/to
n)
100
150
200
250
300
350
FerroMo P
rices(RM
B '000/ton)
Mo Conc Mo Oxide FerroMo
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Comparison - Domestic and International Prices
Notes:1. Average price for MW US 57% and MB EU 57%2. Average price for MB Rotterdam spot 60% ferromolybdenum,
MB EU 65% ferromolybdenum and MB US prices
Molybdenum OxideMolybdenum Oxide
FerromolybdenumFerromolybdenum
Mo Oxide
Domestic (RMB/mtu)
Equivalent to (US$/lb)
MW US (US$/lb)
Difference (%)
2008H1 4,382.00 28.12 33.11 -15% 2007H2 4,479.90 27.13 32.00 -15%
Ferro Mo
Domestic (RMB’0,000/t)
Equivalent to(US$/kg)
Rotterdam (US$/kg)
Difference (%)
2008H1 28.16 66.41 78.22 -15%2007H2 28.79 63.99 72.21 -11%
15
3047
66
31 39
186 186200
101 102
0
50
100
150
200
250
2005 2006 2007 2007H1 2008H1
1000
tons
, Mo
China World
Molybdenum Supply in China & World
♦ China’s molybdenum concentrate produced in 2008 H1 can recover 39,000 tons of molybdenum Mo, up 26% yoy
♦ Molybdenum supply is 225m lb in the world in 2008 H1, up about 1.1% yoy
Molybdenum SupplyMolybdenum Supply
26,300 tonsChina molybdenum announced exports quota in 2008 (Mo metal)
33,929 tonsChina molybdenum exports in 2007 (Mo metal)
16
191202
103
2918 22
34
0
50
100
150
200
250
2006 2007 2007H1 E urope US A China Others
19
2326
41
16
28
0
5
10
15
20
25
30
35
40
45
2004 2005 2006 2007 2007H1 2008H1
Molybdenum Consumption in China & World
China Domestic ConsumptionChina Domestic ConsumptionUnit: Kt, Mo
World Consumption World Consumption
CAGR:148.2%
Unit: Kt, Mo
2008H1
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2008 H1 Global Production2008 H1 Global Production
Large Potential Demand from China
10,000 T 2007H1 2008H1 Growth%China Stainless Steel 251 243 -3.3%
KT 2007H1 2008H1 Growth%EU 108,376 108,468 0.10%US 48,478 50,755 4.70%
Japan 59419 61,897 4.20%China 240,123 263,195 9.60%Total 658,217 696,055 5.70%
Steel Products
KT 2007Q1 2008Q1 Growth%EU/Africa 2,546 2,426 -4.70%
Other Europe 101 96 -5.40%America 749 702 -6.30%
Asia 4,188 4,139 -1.20%Total 7,584 7,363 -2.90%
Stainless Steel
Financial Review
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Robust Revenue Growth & Stable Profit Margins
Sales RevenueSales Revenue Gross Profit & Gross MarginGross Profit & Gross Margin
EBITDA1 & EBITDA MarginEBITDA1 & EBITDA Margin Net Profit2 & Net MarginNet Profit2 & Net Margin
Notes: 1. EBITDA = Gross profit – SG&A + Restructuring charge + D&A2. Net profit attributable to equity holders only
(RMB m)
5,898
2,882 3,326
0
2,000
4,000
6,000
8,000
2007 2007H1 2008H1
GR: 15.4%
3,620
1,809 1,976
62.8%61.4% 59.4%
0
2,000
4,000
6,000
2007 2007H1 2008H10%
20%
40%
60%
1,104 1,242
2,241 38.3% 37.3%
38.0%
0500
1,0001,5002,0002,500
2007 2007H1 2008H120%
25%
30%
35%
40%3,574
1,755 1,952
60.9% 58.7%
60.6%
0
1,000
2,000
3,000
4,000
2007 2007H1 2008H130%
40%
50%
60%
70%
20
1,770 1,875
7834
72.2%
12.9%18.1%
68.8%
0200400600800
1,0001,2001,4001,6001,8002,000
Self-producedMoly products
Processingmolybdenum &
tungsten
Self-producedMoly products
Processingmolybdenum &
tungsten
0%
10%
20%
30%
40%
50%
60%
70%
80%
Gross profit Gross margin
Analysis on Gross Margins by Product
Gross Margins (RMB m)Gross Margins (RMB m)
Gross margins for self-produced Molyproducts remain between 68-72%
Gross margins for self-produced Molyproducts remain between 68-72%
Gross M
argins
2008H12007H1
21
1,161
3
1,391
1
74.9%
3.0% 2.4%
71.2%
0
200
400
600
800
1,000
1,200
1,400
1,600
Self-produced
Externally-sourced
Self-produced
Externally-sourced
2007H1 2008H1
0%
10%
20%
30%
40%
50%
60%
70%
80%
Self-production & External-sourcing Gross Margin and Domestic & Overseas Gross Margin Analysis
Self-production & External-sourcing Gross Margins
Self-production & External-sourcing Gross Margins
(RMB m)
Gross margin of domestic sales remains stable
Gross margin of exports decreases due to export
taxes
Gross margin for self-produced Mo
products remained stable
1,164
608
1,392
485
70.8%
67.6%
69.2%
62.7%
0
200
400
600
800
1,000
1,200
1,400
1,600
Domestic Overseas Domestic Overseas
2007H1 2008H1
58%
60%
62%
64%
66%
68%
70%
72%
Domestic & Overseas Gross Margins
Domestic & Overseas Gross Margins
22
Cash Production Costs Control
Source: Company DataNote: 1. Only include ore mining and flotation costs, does not include depreciation or tax
Molybdenum Concentrate Cash Production Costs (RMB/t) 1
Molybdenum Concentrate Cash Production Costs (RMB/t) 1
The Company has effectively controlled its costs and maintained sustainable development, despite larger expenditure on environmental
protection, raw materials, energy and labor costs, etc.
Molybdenum Concentrate Cash Production Costs (US$/lb) 1
Molybdenum Concentrate Cash Production Costs (US$/lb) 1
31,363 30,937
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2007 2008H1
4.164.41
0.00.51.01.52.02.53.03.54.04.55.0
2007 2008H1R
MB
/US
$ FX changes
23
Solid Balance Sheet
Net Debt1 / Total AssetsNet Debt1 / Total Assets Net Debt / Equity2Net Debt / Equity2
Notes:1. Debt = LT debt + ST debt – Bank balances and cash2. Shareholders’ equity excluding minority interests
-46.6%
-57.3%-63.4%-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
2007 2007H1 2008H1
-53.3%
-69.1%
-47.0%
-80%
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
2007 2007H1 2008H1
Outlook
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16,754
H1
17,000
H2
13,022
H1
12,000
H2
7,869
H1
7,200
H2
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
2007 20082007 2008
30,753
21,035
13,309
33,754
25,022
15,069
2008 H2 Production Forecast
2007 Actual vs 2008 Production Forecast (ton)2007 Actual vs 2008 Production Forecast (ton)
Note: Grades of molybdenum concentrate, molybdenum oxide and ferromolybdenum are 45%, 51% and 60%.
10,2604,1883961,5002008H2 Forecast
9,7461,6064948722008H1
Sulphur (ton)Silver (kg)Gold (kg)Scheelite (ton)
Mo Conc Mo Oxide FerroMo
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Project Development
♦ 40,000-ton/year molybdenum roasting and smelting project (Phase 1: 20,000-ton/year)– the No 2. ferromolybdenum part is projected to start equipment installment on Sept 1 2008
and trial production to commence by end of December– The roasting and smelting part will be ready for trial at the end of November, and the
sulphur facility will commence trial production by the end of March 2009– Construction of the entire first phase (20,000-ton/year) project is expected to complete on
May 1, 2009
♦ Tungsten– The 9,000tpd scheelite recovery project will start trial production in Sep 2008
♦ Luoning Gold Mine project is expected to achieve 30,100-meter drilling and 10,090-meter tunnel engineering during 2008 H2, and plans to submit the gold resources evaluation proposal by the year-end
♦ Construction of Qiliping project is expected to complete at mid-Sep 2008 and commence commercial production; the construction of 80,000tpa gold-lead-silver smelting plant is on schedule
♦ To start the application procedure for the exploration rights of the deeper resources
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Molybdenum Market Outlook
♦ In 2008 H2, there will be uncertainties on the world economy, but we believe China and other emerging and developing economies will maintain high economic growth. At the same time, wealth from oil will stimulate local economies to grow further in oil-exporting countries and Middle East countries
♦ According to estimates from International Iron & Steel Institute, the consumption of steel products in 2008 will reach 1,279mt globally, up 6.8% from 2007. Out of the total, stainless steel production will reach 30.43mt in 2008, up 6.2% yoy. Besides, Chinese steel products are rapidly transforming from low-end to high-end, which will boost the development of special steel industry
♦ Based on this, we believe the stainless steel industry is experiencing a recovery and the growth of special steel and catalyze sectors will remain strong, which will increase the demand for molybdenum. Molybdenum supply tends to remain tight, since there are no new large molybdenum projects coming into operation internationally and the production growth in domestic Chinese market is offset by its strong demand. China’s exports quotas policy on molybdenum products will help to stabilize both Chinese and overseas markets
♦ Taking into consideration the supply and demand situations in the first half, we estimate that there will be a shortage of about 2,000 tons in molybdenum supply, which will make its price linger at high levels
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Our Strategies & Visions
A leading global specialty and precious metal producer
1. Further consolidate our leading position in molybdenum industry1. Further consolidate our leading position in molybdenum industry
2. Take full advantage of tungsten reserves
3. Explore acquisition opportunities,expand product portfolio
3. Explore acquisition opportunities,expand product portfolio
4. Upgrade production technologies & operation efficiency
5. Enhance and expand customer relationships & profitability
5. Enhance and expand customer relationships & profitability
6. Enhance production safety & environmental protection
Q & A
Reference
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es re
set t
o 10
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2008 H1 Stock Price Performance
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es a
re re
set t
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Gold Copper Nickel Molybdenum Silver Tungsten
2008 H1 Metal Prices