Indorama Ventures Public Company Limited (“IVL”) · This presentation has been prepared by...

Indorama Ventures Public

Company Limited (“IVL”)

“Metamorphosis”

Analyst Presentation

Thailand Opportunity Day

The Stock Exchange of Thailand

Bangkok, March 4, 2010

Synonyms: alteration, change,

evolution [Webster's]

Disclaimer

This presentation has been prepared by Indorama Ventures Public Company Limited (“IVL” or the

“Company”) solely for use at a presentation to potential investors. By attending the meeting where the

presentation is made, or by reading the presentation slides, you agree to the following limitations and

notifications and represent that you are a person who is permitted under applicable law and regulation to

receive information of the kind contained in this presentation. This presentation does not constitute or purport

to be an offer of shares under the laws of Thailand, as the transactions described herein are subject to

numerous conditions precedent, contingencies and approvals.

This presentation is strictly confidential to the recipient, may not be reproduced, retransmitted or further

distributed to the press or any other person, may not be reproduced in any form and may not be published, in

whole or in part, for any purpose. This presentation is not directed to, or intended for distribution to or use by,

any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction

where such distribution, transmission, publication, availability or use would be contrary to law or regulation or

which would require any registration or licensing within such jurisdiction. Neither this presentation nor any

copy of it may be taken, published, transmitted or distributed, directly or indirectly, in or into the United States

of America (the “United States”), Australia, Canada or Japan. Failure to comply with this restriction may

constitute a violation of applicable securities laws.

This presentation is for informational purposes only, is not intended for potential investors and does not

constitute, or form part of, and should not be construed as, an offer to sell or issue, or invitation to purchase or

subscribe for or the solicitation of an offer to buy, acquire or subscribe for, any securities of the Company or

any of its subsidiaries, joint ventures or affiliates in any jurisdiction or an inducement to enter into investment

activity. No part of this presentation, nor the fact of its presentation or distribution, should form the basis of, or

be relied on in connection with, any offer, contract, commitment or investment decision whatsoever and it

does not constitute a recommendation regarding the securities of the Company.

No reliance may be placed for any purposes whatsoever on the information contained in this presentation, or

any other material discussed at the presentation, or on the completeness, accuracy or fairness thereof. The

provision of the information in this document should not be treated as giving investment advice. The

information in this presentation is subject to verification, completion and change. Accordingly, no

representation or warranty, express or implied, is made or given as to, and no reliance should be placed on

the completeness, accuracy or fairness of the information or opinions contained herein. Neither the Company

nor any of its affiliates, members, directors, officers or employees nor any other person accepts any liability

whatsoever for any loss howsoever arising, directly or indirectly, from any use of this presentation or its

contents or otherwise arising in connection therewith.

Neither the presentation nor any part or copy of it may be taken, published, transmitted or distributed, directly

or indirectly, in or into the United States, its territories or possessions or to any “U.S. person” as such terms

are defined in Rule 902 of Regulation S under the United States Securities Act of 1933, as amended (the

“Securities Act”), except to “Qualified Institutional Buyers” as defined in Rule 144A under the Securities Act.

Any failure to comply with this restriction may constitute a violation of United States securities laws. No

securities of the Company may be offered or sold in the United States absent registration or an exemption

from registration or in a transaction not subject to, the registration requirements under the Securities Act. The

Company has not registered and does not intend to register any portion of the Offering or shares offered

thereby under the Securities Act or the securities law of any state in the United States or to conduct a public

offering of securities in the United States. By attending the meeting where the presentation is made, or by

reading the presentation slides, you represent and warrant that you are either (1) a qualified institutional buyer

or (2) a non-U.S. person located outside the United States and to the extent you purchase any Securities in

the Offering you will be doing so pursuant to Rule 144A or Regulation S under the Securities Act.

This presentation contains “forward-looking statements”, which are based on current expectations and

projections about future events, and include all statements other than statements of historical facts, including,

without limitation, any statements preceded by, followed by or that include the words “targets”, “believes”,

“expects”, “aims”, “intends”, “will”, “may”, “anticipates”, “would”, “plans”, “could”, “should”, “predicts”, “projects”,

“estimates”, “foresees” or similar expressions or the negative thereof, as well as predictions, projections and

forecasts of the economy or economic trends of the markets, which are not necessarily indicative of the future or

likely performance of the Company. Such forward-looking statements, as well as those included in any other

material discussed at the presentation, concern future circumstances and results and involve known and

unknown risks, uncertainties and other important factors beyond the Company‟s control that could cause the

actual results, performance or achievements of the Company to be materially different from future results,

performance or achievements expressed or implied by such forward-looking statements. Such forward-looking

statements are based on numerous assumptions and estimates regarding the Company and its subsidiaries‟

present and future business strategies and the environment in which the Company will operate in the future.

Forward-looking statements are not guarantees of future performance. These forward-looking statements speak

only as at the date of this presentation, and none of the Company, nor any of its agents, employees or advisors

intends or has any duty or obligation to supplement, amend, update or revise any such forward-looking

statements to reflect any change in the Company‟s expectations with regard thereto or any change in events,

conditions or circumstances on which any such statements are based or whether in the light of new information,

future events or otherwise. Given the aforementioned risks, uncertainties and assumptions, you should not

place undue reliance on these forward-looking statements as a prediction of actual results or otherwise.

The results of operations for the periods reflected herein are not necessarily indicative of results that may be

achieved for future periods, and the Company‟s actual results may differ materially from those discussed in the

forward-looking statements as a result of various factors, including but not limited, to those discussed in the

offering memorandum and any supplement thereto.

This presentation should not be treated as advice relating to legal, taxation, financial, accounting or investment

matters. By attending this presentation you (i) acknowledge that you will be solely responsible for your own

assessment of the market and the market position of the Company and of the risks and merits of any investment

in the Shares, and that you will conduct your own analysis and be solely responsible for forming your own view

of the potential future performance of the Company‟s business and (ii) agree to be bound by the foregoing terms

and to keep this presentation and the information contained herein confidential.

2

Agenda

3

Section 1 Achieved “Transformation”

Section 2 Our Markets

Section 3 Our Feedstocks

Section 4 Our Business Prospects

Section 5 Our Performance

Section 6 Our Financial Position

Section 7 Our Growth Strategy

Section 8 Conclusions

Achieved “Transformation”

IVL 23rd largest listed company by market cap on SET

IVL 16th largest non-bank listed company by market cap on SET

Free float enlarged 3 times, 29% of free float of IVL is equal to around Baht 16,340 MM

Products resilient to recession, positive demand growth in the Polyester value chain

Reduce volatility through seamless integration in the Polyester Value Chain

Increase in gross margin through integration and optimized allocation of fixed overheads over larger revenue

Lower effective tax, benefit from integration

Stronger financial position to enable future consolidation

Larger cashflow from operations to enable future integrated projects of economic sizes

41. Based on closing price of Baht 13.00 per share on Tuesday, 2 March 2010

Indorama Ventures Public Company Ltd “IVL”

5

1. Major shareholder and after exercise of over-allotment option for 60 million shares equivalent to 1.4%

2. Based on closing price of Baht 13.00 per share on Tuesday, 2 March 2010

Issued and paid-up capital

Pre-IPO THB 3,351.5 MM

Post-IPO THB 4,334.3 MM

Par value THB 1 per share

Increase in issued and paid-up capital consists of :

IPO THB 400.0 MM

Exchange offer IRP minorities THB 582.8 MM

IPO Price

IPO price THB 10.20 per share

IPO funds raised in cash THB 4,080 MM

International and domestic placement to institutional investors and individuals

Market capitalization on IPO price THB 44,210 MM

Use of Proceeds

Repay existing indebtedness

Acquisition of assets

Working capital and general corporate purposes

Shareholding Structure

(1)

Listing & Trading

Stock Exchange of Thailand “SET”

Sector “Petrochemicals”

Free float around 29.6%

First day trading on February 5, 2010

Top 20 listed company‟s on SET by market capitalization

Market capitalization THB 56,345 MM(2)

Market Capitalization

(THB Bn)

Agenda

6









The Polyester Chain

Global Polyester Chain Industry Overview 2009E (2010F)

Source: SBA-CCI (February 2010)

Demand(Million tonnes)

Growth(%)

Global Capacity Utilization(%)

PX 26.3 (28.9) 7.1% (10.0%) 81% (79%)

PTA 38.5 (42.2) 5.4% (9.6%) 84% (86%)

Polyester

Fiber32.5 (35.7) 7.7% (10.0%) 64% (67%)

PET Resin 15.1 (16.1) 2.2% (6.8%) 79% (78%)

7

Polyester Fiber Consumer Demand by Region

44.2Mt

1. Real GDP, US$-based, Constant 1998 Prices. Source: IMF

2. SBA-CCI (February 2010)

31.9Mt

North

America

Asia

European

Union

Central

Europe

South

America

Middle

East &

Africa

2009

North

America

Asia

European

Union

Central

Europe

South

America

Middle

East &

Africa

2013F

Spectacular Polyester Fiber Demand GrowthA global demand CAGR of 8.5% from 2009-2013, well above GDP

8

PET Resin Demand by Region

20.5Mt

1. Real GDP, US$-based, Constant 1998 Prices. Source: IMF

2. SBA-CCI (February 2010)

15.3Mt

North

America

Asia

European

Union

Central

Europe

South

America

Middle

East &

Africa

2009 2013F

North

America

Asia

European

Union

Central

Europe

South

America

Middle

East &

Africa

Spectacular PET Demand Growth A global demand CAGR of 7.6% from 2009-2013, well above GDP

9

PTA expected to become tighter Driven by strong polyester demand and limited capacity additions

Global/Asia PTA Structural Surplus/Deficit


Surplus (deficit) at 96% capacity utilization less demand

Surplus (Deficit) MMt Capacity Utilization (%)

10Global Asia

Polyester MarginsIndustry Monthly Integrated PTA/PET and PTA/DTY spreads

Integrated PTA/PET Margins (2004 – 2009) Integrated PTA/DTY Margins (2007-2009)

Source: SBA-CCI

Spread definitions:

PTA Spread = China Spot PTA CFR

PET Spread = China Export FOB PET

DTY Spread = China dom. 150 den

US$/tonne US$/tonne

11

Agenda

12









PX as well as MEG are expected to remain longLarge supply additions, putting pressure on utilization rates

PX Structural Surplus/Deficit MEG Structural Surplus/Deficit


MMt Utilization (%) MMt Utilization (%)

13

Energy Prices ForecastCrude Oil and Natural Gas Quarterly Price Forecast

Crude Oil Q/Q Price Forecast Natural Gas Q/Q Price ForecastWTI, US$ per barrel U.S. Gulf Coast Natural Gas Burner Tip, US$ per Million Btu

Source: CMAI (February, 2010)

*Current Month-to-Date Average Price 14

Agenda

15









Polyester Industry DriversNear Term & Short Term

2010 20112009 2012

PX Tightness

Delays in PTA/PET project start-ups

Long PX/MEG supply position

Continued capacity rationalization

Robust Polyester & PTA demand growth

PTA Inventory Rebuilding

16

PTA /PET and PX/MEG run counter-cyclesPotential upside in margins for PTA/PET

Polyester Chain Margin Distribution

(Q/Q, Asia example)

PTA/PET Downtrend –

PX/MEG Uptrend

PTA/PET

Uptrend –

PX/MEG

Downtrend

Source: SBA-CCI and IVL Analysis

MEG spread = MEG CFR China less Asia Spot Ethylene CFR x 0.6

PX spread = ACP less Naphtha price

PTA spread = PTA CFR China less ACP x 0.66

PET spread = PET China Average Price less (MEG CFR China x 0.345 + PTA CFR China x 0.87)

PTA/PET Uptrend –

PX/MEG Downtrend

17

Agenda

18









Higher returns to shareholders

19

Return on equity

Achieve higher returns on a larger equity and capital base in year 2009

*Earnings per ShareReturn on capital employed

*Earnings per share based on issued and paid-up capital at the end of year Baht 3,352 million

Improved margins

20

Gross Margin Net Profit Margin

Margin improvement from upward integration with PTA in year 2009

Operating EBITDA Margin

21

Increase in volumes and utilization rateProducts resilient to recession and global distribution platform

(„000 tpa)

Volume Growth (2008-2009) PTA/PET Capacity Utilization (2008-2009)

(%)

Achieve Higher Revenues and Operating EBITDA

2008 - Revenues

2008 – *Operating EBITDA

2009 - Revenues

2009 – *Operating EBITDA

EBITDA Margin

9.5% 6.2% 7.0% 7.2% 11.6% 14.9% 12.8% 13.3%

(THB Bn) (THB Bn)

(THB Bn) (THB Bn)

22*Based on pro-rata allocation of EBITDA of PTA business calculated on intra-group sales to PET and Polyester fibers

Agenda

23









Capital structure

24

IVL Net Financial Debt as at 31-Dec-09 IVL Balance Sheet as at 31-Dec-09

(THB Bn) (THB Bn)

*ST Debt includes short term loans, bank overdrafts and Baht 4.7 Bn in current portion of long term loans

Stronger financial position

25

Long-Term Loans by Currency Repayment Schedule for Long Term Loans

*Net Operating Debt/EBITDA (x) Net Gearing

*Net operating debt includes net debt less project debt not generating revenues and earnings

Higher cash flow from operations

26

Notes:

1. After change in working capital, net financial expenses and income tax

2. Includes consolidation on acquisition of Indorama Petrochem, TPT Petrochemicals and Indorama Polyester Industries

2008 2009

Positive free cash flow in year 2009 and limited on-going capex requirement

Funded from

project loans and

capital increase

Repayment

of debt

(1) (1)

(THB Bn) (THB Bn)

(2)

4,106

2,642

687

3,785

712

430

62

4,856

0

1,000

2,000

3,000

4,000

5,000

2008 2009

No project execution risk

27

Capex in Progress

AlphaPet Line 2 project completion

Capacity expansion in Petform

Capacity debottlenecking in Indorama

Polyester

Annual maintenance capex of around

US$ 15 million

Major capex and investment projects undertaken in year 2008-9 completed

Capital Expenditure by Business Segment

(THB MM)

4.7%9.1%% of Sales

Agenda

28









Committed revenue growth in 2010

29

Around 20% growth in consolidated revenue from external sales

(„000 tpa)(„000 tpa)

Year 2009 Available for sale in Year 2010

IPI

Rayong facility has

switched one line

with capacity

108,000 tpa to produce PET resins

(1)

Notes:

1. Captive sales to PET resins and Polyester fibers

1,593 1,600

(1)

Expand gross margin

Increase PTA integration

Captive consumption

Virtual integration - strategic alliance with

suppliers (AlphaPet located next door to

BP Chemicals PTA plant)

Lower conversion cost

Optimize fixed overheads, scale

from revenue growth

30

PTA Sourcing

Our financial condition will be healthier

31

Prepare to enter next phase of growth through acquisitions and brownfield/greenfield expansions

Net gearing

Target level

Net gearing to fall below 50% through:

Cash from IPO proceeds received in

February, 2010

Increase investment in IRP from

69.3% to 99.1%

Higher cashflow from operations

Repayment of loans

Agenda

32









Conclusions

33

+

+

+

+

+

+

=

+ Larger market cap and liquidity

High growth industry provides significant room for expansion

Secured PTA feedstock through integration

Favorable PX and MEG supply scenario

Potential upside in margins for the polyester value chain

Stronger financial position

Committed top-line growth, Q1 2010 in line with our expectations

Promising 2010 outlook

34

Thank you

Q&A

Indorama Ventures Public Company Limited (“IVL”) · This presentation has been prepared by...

Documents

Transcript of Indorama Ventures Public Company Limited (“IVL”) · This presentation has been prepared by...