AVIC International Investments Limited - listed...

AVIC International

Investments

Limited

4Q/FP2011

Corporate Presentation

22 February 2012

Disclaimer

• The presentation is prepared by AVIC International Investments Limited (the “Company”). The information

contained in this presentation is subject to change without notice, its accuracy is not guaranteed and it

may not contain all material information concerning the Company. Neither the Company nor any of its

affiliates, advisors or representatives make any representation regarding, and assumes no responsibility or

liability whatsoever (in negligence or otherwise) for, the accuracy or completeness of, or any errors or

omissions in, any information contained herein nor for any loss howsoever arising from any use of these

materials.

• The information contained in these materials has not been independently verified. No representation or

warranty, expressed or implied, is made as to, and no reliance should be placed on the fairness, accuracy,

completeness or correctness of, the information or opinions contained herein. It is not the intention to

provide, and you may not rely on these materials as providing, a complete or comprehensive analysis of

the Company's financial or trading position or prospects. The information and opinions contained in these

materials are provided as at the date of this presentation and are subject to change without notice.

• In addition, the information contains projections and forward-looking statements that reflect the

Company's current views with respect to future events and financial performance. These views are based

on a number of estimates and current assumptions which are subject to business, economic and

competitive uncertainties and contingencies as well as various risks and these may change over time and

in many cases are outside the control of the Company and its directors. No assurance can be given that

future events will occur, that projections will be achieved, or that the Company's assumptions are correct.

Actual results may differ materially from those forecast and projected.

2

Presentation Outline

3

1 Corporate Profile

2 Financial Highlights

3 Industry Outlook

4 Strategies and Future Plans

5 Key Investment Merits

Corporate Profile

Our business

5

We provide shipbuilding project management and consultancy (“M&C”) services,

including ship-design which is out-sourced, procurement, new building management

and marine finance arrangement

We work with established shipyards in the PRC as co-sellers, whereby the shipyard

constructs the vessels and we are responsible for the non-construction aspects

We are the shipbuilding management arm of AVIC International Beijing,

which is a member of the PRC Central Government-owned AVIC Group -

ranked 310 amongst international Fortune 500 companies in 2011

(“AVIC Group”)

• AVIC International Beijing began to provide

M&C Services, when a Middle Eastern

shipowner ordered five 21,000 DWT

multipurpose (“MPP”) ships

• Paved the way for the Chinese shipbuilding

industry to begin exporting vessels using

Export Credit financing arrangements

• Set up a new division, AVIC Shipbuilding

Management Business, to focus on M&C

Services

• Secured contracts for two 27,000 DWT bulk

carriers, two 35,000 DWT bulk carriers and two

51,000 DWT bulk carriers, when the industry was

experiencing a downturn

Our corporate milestones

6

2000 2003 - 2008

• Secured contracts for 39 vessels with an aggregate value

of US$1.35 billion, before the global financial crisis

• Expanded to engineering ships, such as dredgers, tug

boats and offshore vessels, since 2008

1994 2011

• Restructuring of

Division to become

AVIC Singapore

• Listed on SGX-ST in

September 2011

7

Strong support

from the

AVIC Group

An experienced and

driven management

team with in-depth

industry knowledge

Strong backing

from financial

institutions

As a member of the AVIC Group, we are well-positioned to capitalise

on AVIC Group’s excellent business relationships, overseas network

and strong fundamentals to expand our business

Competitive strengths

Most of the members of our senior management team have extensive

experience in the shipbuilding industry and some have been with the

AVIC Group for over 10 years

We have strong support from major PRC financial institutions and are able

to assist the shipyards that we have worked with in obtaining loans and/or

procuring the issuance of refund guarantees by banks and the shipowners in

obtaining financing, when required

Financial Highlights

Revenue

9

RMB’m CAGR : 32.9%

↑ : 30.2%

Revenue comprises:

(i) service fee income derived from the services we provided in relation to shipbuilding contracts

(ii) commission income relating to marketing services we provided to a related company in securing shipbuilding contracts

(iii) management service fee income relating to marketing and consultancy services we provided to a shipyard

^ Pro Forma

↑ : 32.0%

41.5

54.9

76.5

99.5

Service Fee Income Commission Income Management Service Fee Income

*For the financial period from the Company’s date of incorporation on 11 November 2010 to 31 December 2011. However, the

Group did not record any business activities from 11 November 2010 to 31 December 2010.

Revenue by geographical segments / regions

10

70.7%

50.9% 50.3% 49.0%

29.3%

49.1%

16.3%11.6%

33.4%

100.0%

39.4%

100.0%

0%

20%

40%

60%

80%

100%

FY2008^ FY2009^ FY2010^ FP2011* 4Q2010^ 4Q2011

Asia

Europe

Middle East

Note: The pro forma financial information represents the income and expenses of the Shipbuilding Management Division

of AVIC Beijing. Following the restructuring exercise, AVIC Beijing and our Company entered into a Management

Agreement which aims to ensure a smooth completion of outstanding projects. As a result, our service fee income from

the provision of project management and consultancy services (“M&C Services”) for 19 vessels in FP2011 was derived

from AVIC Beijing, i.e. Asia, instead of the customers’ country of origin.

^ Pro Forma



Net profit

11

RMB’m

Excluding one-off listing expenses, 4Q2011 and FP2011 net profit would have been approximately RMB34.2 million and RMB60.8

million, respectively.

Other operating income, comprising mainly interest income, decreased mainly due to faster payments to shipyards during the

period. Following the global financial crisis, ship-owners have generally requested to make lesser and fewer upfront and progress

payments, and at the same time shipyards have sought faster payments from us.

Employee benefits and office expenses grew in line with higher headcount. Travelling and entertainment expenses increased in

tandem with higher business activities. Other operating expenses, comprising mainly advertising, promotion and exhibition

costs, as well as import and export related expenses, increased in line with the growth in revenue.

^ Pro Forma # Year-on-year growth rate excluding listing expenses Listing Expenses

60.8

34.2

↑ : 8.3%# ↑ : 11.1%#



12

Cash flow

Cash Flow (RMB’m) 4Q2011 FP2011*

Net cash from operating activities 44.5 67.1

Net cash used in investing activity (0.2) (4.6)

Net cash from financing activity 65.9 83.6

Cash and cash equivalents at the end of the period 145.2 145.2

Note: The unaudited pro forma statements of cash flow for the financial year ended 31 December 2010 were not

prepared as the Shipbuilding Management Division of AVIC Beijing did not maintain a divisional bank account or have

divisional assets or liabilities.



Key financial indicators

Profitability Ratios 4Q2011 FP20111

Earnings Per Share2 (RMB cents)

Weighted average number of shares

9.56

282,081,913

36.36

118,710,424

Profitability Ratios As at 31 Dec 2011

Net Asset Value Per Share3 (RMB cents)

Number of ordinary shares in issue

49.8

285,576,000

Liquidity Ratios As at 31 Dec 2011

Current Ratio3 (times)(Defined as current assets / current liabilities)

4.5

Debt to Equity3 Ratio (%)(Defined as total debt / total equity)

28.1

13

1 For the financial period from the Company’s date of incorporation on 11 November 2010 to 31 December 2011. However, the Group

did not record any business activities from 11 November 2010 to 31 December 2010.

2 The Company was incorporated on 11 November 2010. As at 31 December 2010, the share capital of the Company comprised 1

ordinary share. The Group did not record any business activities from 11 November 2010 to 31 December 2010. Therefore, earnings per

ordinary share of the Group for the financial year ended 31 December 2010 was not prepared.3 The unaudited pro forma statement of financial position of the Group as at 31 December 2010 was not prepared as the Shipbuilding

Management Division of AVIC Beijing did not maintain a divisional bank account or have divisional assets or liabilities, and the Group

did not record any business activities from 11 November 2010 to 31 December 2010.

Delivery plan1 of order book at a glance

14

Type of Vessel Number of Vessels 2011 2012 2013

92,500 DWT bulk carrier 4 Delivered

118,000 DWT bulk carrier 2 Delivered

28,000 DWT MPP Ship 1 Delivered

92,500 DWT bulk carrier 1

28,000 DWT MPP Ship 6

12,000 CBM LPG vessel 1

82,000 DWT bulk carrier 2

Cutter Suction Dredger CSD600 4 12

Tugboat 1 12

Landing craft vessel 1 12

Multi-craft workboat 6 12

Barge 4 12

Backhoe Dredger 2

Cutter Suction Dredger CSD1700 1 12

28,000 DWT MPP Ship 2 Suspended

1 Delivery plan of order book is subject to changes upon mutual agreement between the customer and the sellers 2 Number of vessels which commenced steel cutting as at 31 December 2011

Industry Outlook

The PRC aims to become the largest shipbuilding

nation in the world

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The PRC government’s supportive policies

• In June 2009, the State Council released a

stimulus plan which outlined measures to support

the PRC shipbuilding industry.

• The Ministry of Transport has been reported to

be planning to introduce a series of favourable

policies, such as tax rebate or tax reduction,

together with incentive subsidies.

• The PRC enjoys low costs of labour, plentiful

resources, good infrastructure for development

and a huge market with a fast-growing economy.

The recent global financial crisis has also helped

to eliminate smaller unqualified businesses.

Positive factors amidst challenging

macro-environment

17

Offshore and LNG sectors continue to be healthy,

propped by robust demand due to rising oil prices. We

will increase R&D efforts in technologically-advanced

vessels such as higher efficiency LNG carriers, LPG

carriers, chemical tankers and offshore vessels, to tap

this buoyant market.

Emerging markets like Asia, Africa and South America still

present healthy growth opportunities. We will continue

to leverage the AVIC Group's existing overseas network,

especially offices in emerging countries, to expand our

presence in these economies.

European banks have adopted a more selective lending

policy in view of the Euro-zone crisis. Chinese banks,

with abundant liquidity and access to US dollar funding,

are well positioned to enter the maritime financing

market and fill the lending gap.

As part of the state-owned AVIC Group, we have strong

support from the PRC domestic financial institutions

and are able to assist the shipyards to secure new

shipbuilding contracts through obtaining loans and/or

procuring the issuance of refund guarantees by banks, as

well as assist the ship-owners in obtaining financing,

when required.

Strategies and Future Plans

Establish and improve our shipbuilding

capabilities and efficiencies

Establish our own shipbuilding capabilities by acquiring reputable

shipyards in China and overseas, when suitable opportunities arise

Expansion into shipbuilding and improvements on the manufacturing

processes will complement our existing businesses and broaden our

revenue streams

Intend to position our Group as an investment-holding vehicle in the

ship-trading and shipbuilding industry � intention is to make long-

term strategic investments and acquisitions in this industry globally

through our Group

Intend to acquire shipbuilding and related businesses from AVIC

International and its subsidiaries, including AVIC International Beijing

in the near future, subject to relevant governmental and regulatory

approvals

19

Establish our research and design capabilities

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Maximise the potential of

our shipbuilding strategies

and further develop our

Group’s shipbuilding

business

Develop new, better and

environmentally-friendly

products for customers,

and to enable us to own

proprietary rights in our

future ship designs

We intend to expand our products/services and value chains in the next few years,

including establishing and building up on our capability in ship design.

Acquire or form strategic

alliances with ship design

houses and other

business partners

Improve on our business model

21

Provide greater

variety of financing

arrangements &

value-added services

Expand our global reach and build our overseas

network

AVIC International has over 60 overseas offices

across the world, with its business covering over

180 countries and regions.

We plan to leverage on AVIC International’s

existing network in order to expand our business

activities globally.

22

Develop more sophisticated and higher value-

added vessels

We intend to enhance and develop our design and manufacturing capabilities

in order to be able to build higher value-added vessels.

23

LPG carriersLNG carriers

Offshore vessels

Chemical tankers

Key Investment Merits

Key investment merits

25

We are a member of the AVIC Group, one of the largest

industrial groups owned by the PRC Central

Government

We have an experienced and driven management team

with in-depth industry knowledge

As a member of the AVIC Group, we have strong

backing from major PRC financial institutions

The PRC remains one of the world’s largest

shipbuilding countries

Thank you

AVIC International Investments Limited - listed...

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