stock code: 3993 financial year 2009 interim results presentation
TRANSCRIPT
Stock Code: 3993
Financial Year 2009Financial Year 2009Interim Results PresentationInterim Results Presentation
Financial Year 2009Financial Year 2009Interim Results PresentationInterim Results Presentation
2
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.
© 2009 China Molybdenum Co., Ltd. All rights reserved.
Disclaimer
3
Agenda
2009 1H Accomplishments2009 1H Accomplishments1
Market ReviewMarket Review2
Business Review Business Review3
Financial ReviewFinancial Review4
OutlookOutlook5
Q&AQ&A6
2009 1H Accomplishments
5
2009 1H Accomplishments
– 1. Production Volume
– Production volume of molybdenum concentrates (including 45% Mo), scheelite concentrates (including 65% W), gold and silver is 16,949.1 tonnes, 2,826.4 tones, 404.2kg and 3,316.5kg respectively.
– 2. Turnover & Gross Profit Margin
– Turnover was RMB1,315.8 million, representing a decrease of 60.4% from RMB3,325.9 million for the same period last year.
– Operating cost was RMB1,008.4 million, representing a decrease of 25.29% from RMB1,349.7 million for the same period last year.
– Gross profit was RMB307.4 million, representing a decrease of 84.4% from RMB1,976.2 million for the same period last year.
– 3. Profit attributable to the equity holders of the Company
– Profit attributable to the equity holders of the Company was RMB196.6 million, representing a decrease of 84.2% from RMB1,242.1 million for the same period last year.
– Earnings per Share is RMB 0.040.
Market Review
77
Domestic Price Comparison
0
500
1000
1500
2000
2500
4/1/09 3/2/09 5/3/09 4/4/09 4/5/09 3/6/09
02
46
810
1214
Molybdenum ConcentratesMolybdenum OxidesFerromolybdenum
Price of Molybdenum Concentrates( RMB\Metric Tonne Unit)
Price of Ferromolybdenum( RMB\ Tonne )
2009 1H Domestic Price2009 1H Domestic Price
Domestic Price of Molybdenum Concentrates
Domestic Price of Molybdenum Concentrates
0
1000
2000
3000
4000
5000
2008 1H 2009 1H
Price of Molybdenum Concentrates( RMB\Metric Tonne Unit)
Domestic Price of Ferromolybdenum Domestic Price of Ferromolybdenum
0
5
10
15
20
25
30
35
2008 1H 2009 1H
Price of Ferromolybdenum ( RMB\Tonne)
Domestic Price of Molybdenum OxidesDomestic Price of Molybdenum Oxides
0
1000
2000
3000
4000
5000
2008 1H 2009 1H
Price of Molybdenum Oxides( RMB\Metric Tonne Unit)
8
727476788082
2/1/
08
16/1
/08
30/1
/08
13/2
/08
27/2
/08
12/3
/08
26/3
/08
9/4/
08
23/4
/08
7/5/
08
21/5
/08
4/6/
08
18/6
/08
0.0
5.0
10.0
15.0
20.0
25.0
30.0
1/1/09 1/2/09 1/3/09 1/4/09 1/5/09 1/6/09
0.0
2.0
4.0
6.0
8.0
10.0
12.0
US Ferromolybdenum Europe FerromolybdenumJapan Ferromolybdenum Molybdenum Oxides
2009 1H International Price2009 1H International Price
31.532
32.533
33.534
10/1
/08
24/1
/08
7/2/
08
21/2
/08
6/3/
08
20/3
/08
3/4/
08
17/4
/08
1/5/
08
15/5
/08
29/5
/08
12/6
/08
26/6
/08
2008 1H MB Ferromolybdenum2008 1H MB Ferromolybdenum 2008 1H MW Molybdenum Oxides2008 1H MW Molybdenum Oxides
International Price Comparison
Price of Ferromolybdenum( RMB\ Tonne )
Price of Ferromolybdenum ( US$\Kg.) Price of Molybdenum Oxides ( US$\Pound)
Price of Molybdenum Oxides( RMB\Metric Tonne Unit)
9
Industry Analysis
In the first quarter of 2009, the total production volume of the world’s top ten molybdenum manufacturing enterprises amounted to 30,356 tonnes of molybdenum, representing a decrease of 14.4% as compared with the same period last year. In the first half of the year, China’s production is estimated to account for approximately more than 40% of the global production volume. Demand in international molybdenum market continued to shrink and molybdenum consumption in Western Europe, U.S. and Japan had decreased significantly by 39.4%, 25% and 33.3% respectively to 19,500 tonnes, 13,600 tonnes and 9,100 tonnes. We estimate that China has, for the first time, replaced Western Europe as the largest molybdenum consumption region in the world.
Statistics from China Non-ferrous Metals Industry Association showed that the production of molybdenum concentrates in China in the first half of 2009 was 40,116 tonnes of molybdenum, representing a year-on-year increase of 2.87% which was virtually the same as compared with the growth of last year. Molybdenum imports amounted to 18,800 tonnes and molybdenum exports amounted to 3,703 tonnes. The apparent consumption volume arrived on such basis was 55,200 tonnes of molybdenum, representing an increase of 96% as compared with the first half of last year. However, we estimated that a relatively significant portion of molybdenum products had not been actually consumed given the impact of speculation.
Statistics from the World Steel Association showed that the accumulated production volume of crude steel in the world from January to June 2009 amounted to 549 million tones, representing a decrease of 21.3% as compared with the same period last year. Excluding the production volume of China, the total production volume of crude steel in the world decreased by 35%. In the first half of the year, benefiting from the government’s active fiscal policies, China’s production volume of crude steel and steel products increased by 1.2% and 5.7%, respectively to 266.58 million tonnes and 316.48 million tonnes.
10
Production volume of Iron and Steel
Place/Nation Production of Steel
in June
(0’000/Tonne)
Year on Year Change
Production of Steel
from Jan. to Jun.
(0’000/Tonne)
Year on Year Change
China 4942.5 6% 26658.3 1.2%
Japan 688.6 -33.6% 3669.3 -40.7%
Korea 399.1 -14.4% 2284.5 -17.3%
European Union 1116.8 -39.4% 6218.7 -43.2%
North America 647.3 -44% 1155.3 -48.5%
Commonwealth of Independent
States
779.5 -27.1% 4410.2 -32.3%
Business Review
12
Production Volume
Production of Molybdenum Concentrates
(including 45% Mo) (Tonnes)
Production of Molybdenum Concentrates
(including 45% Mo) (Tonnes)Production of Other ProductsProduction of Other Products
1
16,000
17,000
2008 1H 2009 1H
Molybdenum Concentrates* (including 45% Mo)(Tonnes)
16,753
16,949
0
2000
4000
6000
8000
10000
12000
14000
2008 1H 2009 1H
scheelite concentrates (including 65% W) *(Tonnes)Gold(Kg)Silver(Kg)sulphuric acid (92.5% concentration) (Tonnes)
872 489
1,606
12,259
2,826
404
3,317
10,474
Note: * Grade of molybdenum concentrate,
molybdenum oxide and ferromolybdenum are 45%, 51 % and 60 %
Note:* Grade of Wo03 is 65%
13
Sales and Marketing Analysis
Turnover in Domestic Market ( RMB/Million)Turnover in Domestic Market ( RMB/Million)
Turnover in International Market ( RMB/Million)Turnover in International Market ( RMB/Million)
Breakdown (Geography)Breakdown (Geography)
2008 1H
Breakdown (Customers)Breakdown (Customers)
2009 1H
Domestic, 69%
Overseas,31%
Overseas,2%
Domestic, 98%
Others,45%
Top 10,56%
2,012
1,001
67.8188.0 91.483.0 75.726 56.6
0
500
1,000
1,500
2,000
2,500
2008 1H 2009 1H
Molybdenum additive materials Tungsten concentrate (65% WO3) Processed Tungsten and Molybdenum productsGold and silverOther
772.70
22.6
244.0
0.390
200
400
600
800
1,000
2008 1H 2009 1H
Molybdenum additive materialsProcessed Tungsten and Molybdenum products
14
Domestic Acquisitions & Resources Consolidation
Henan
SanMenXia
LuoYang
NanYang
PingDingShan
JiYuanJiaoZuo
ZhengZhouKaiFeng
XinXiang
AnYangHeBi PuYang
ShangQiu
ZhouKou
XuChang
LuoHe
ZhuMaDian
XinYang
We entered into a framework agreement for co-development of molybdenum mine in Laozhuang, Zhenping County. Resource consolidation plan for this area has been reported to Government of Henan Province. Henan Department of Land and Resource will conduct inspection on the resources
We signed a letter of intent with the Chifeng government for codevelopment of molybdenum resources in Chifeng city, Inner Mongolia. The Company will conduct geological survey on the resources. In the meantime, we are preparing the consolidation plan for molybdenum resources in Luanchuan area in Henan
We set up a special team with former senior executives of large overseas mining corporations, to develop China Moly’s overseas development & acquisition strategies
15
Material Events
Pressing ahead with molybdenum deep processing project of 1,500 tonnes per year In the first half of 2009, installation of equipment for the last sub-project-molybdenum plate production line was completed.
The test is expected to be carried out for individual equipment in July followed by a trial production in August.
Proceeding with molybdenum roasting and smelting plant of 40,000 tonnes (Phase I) In the first half of 2009, the ferromolybdenum workshop had completed its construction and commenced trial operation. For
Phase I of molybdenum oxides workshop with an annual processing capacity of 20,000 tonnes of molybdenum concentrate, auxiliary facilities such as acid plant are under installation. The whole project is expected to be completed and put into operation at the end of this August.
Further implementation of open-pit mine standards and auxiliary projects In the first half of 2009, construction of all other sub-projects had been completed. No. 4 crushing station is under
construction and expected to be completed by the end of February 2010.
Proceeding with Yongning 80,000-tonne-per-year gold, lead and silver smelting plant project In the first half of 2009, civil work and equipment installation were basically completed. The test is expected to be
carried out for individual equipment in August followed by a joint commissioning in September.
Construction of tailing storage of No. 1 Ore Processing Branch Preliminary works are progressing for the project, including preparation of feasibility study report.
16
Material Events
Chairman Mr. Duan Yuxian was honoured the 5th “Yuan Baohua Corporate Management Gold Award”
On 17 May 2009, our Chairman Mr. Duan Yuxian was honoured the 5th “Yuan Baohua Corporate Management Gold Award” by China Foundation of Corporate Management Science (中國企業管理科學基金會) . This is the top award in Chinese field of corporate management science, whichwas granted to an entrepreneur in Henan for the first time.
Honours of the Group including “Key Export Enterprise” and “Eminent Foreign funded Enterprise” granted by provincial and municipal governments
On 12 February 2009, the Group is accredited by the People’s Government of Henan Province as“Key Export Enterprise in Henan 2009”, successfully entering into the 2009 key importer and exporter list in Henan. The Group was further entitled “Champion in Actual Use of Foreign Direct Investment in Henan 2008” by Henan Provincial Department of Commerce, being the only enterprise winning the honour in Henan. Meanwhile, the Group was named “Eminent Foreign funded Enterprise in Luoyang 2008” and “Leading Foreign Trader in Luoyang 2008”.
The Group was honored as “Advanced Unit on National Soil and Water Conservation” in 2008
In July 2009, the Group was honored as “Advanced Unit on National Social and Water Conservation” in 2008 by the Ministry of Water Resources.
The Group was entitled the “Model Ecological Project of All-Round Well-off China 2009”
On 28 June 2009, “The Second China Ecological Well-off Forum” jointly hosted by the Ministry of Environmental Protection, State Forestry Administration and Qiushi magazine ( 《求是》雜誌社 ) was held in Luoyang Mudu-Lee Royal International Hotel, with the theme of advocating ecological civilization and scientific growth. At the meeting, the Group was entitled the “Model Ecological Project of All-Round Well-off China 2009”.
Financial Review
18
Net Margin & Net Profit2Net Margin & Net Profit2
Revenue & Profit Margins
Sales RevenueSales Revenue Gross Profit & Gross MarginGross Profit & Gross Margin
EBITDA Margin & EBITDA1 EBITDA Margin & EBITDA1
(RMB m)
3,326.9
1,315.8
0
500
1,000
1,5002,000
2,500
3,000
3,500
2008 1H 2009 1H
307.3
1,976.1
23.40%
59.40%
0
500
1,000
1,500
2,000
2,500
2008 1H 2009 1H
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
342
1,952
26.0%
58.7%
0
500
1,000
1,500
2,000
2,500
2008 1H 2009 1H
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
196
1,24214.94%
37.30%
0
200
400
600
800
1,000
1,200
1,400
2008 1H 2009 1H
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
Notes: 1. EBITDA = Gross profit – SG&A + Restructuring charge + D&A 2. Net profit attributable to equity holders only
19
Analysis on Gross Margins by Product
Gross Margins (RMB m)Gross Margins (RMB m)
Domestic Market 2009 1 H
15.50.52.4
15.9
265.2
2.6%
20.5%
0.9%
23.5%
26.5%
0
50
100
150
200
250
300
Molybdunumadditive
materials
Tungstenconcentrate(65% WO3)
ProcessedTungsten andMolybdenum
products
Gold and silver other
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
Gross Profit Gross Profit Margin
International Market 2009 1 H
0.01
7.90 1.1%
35.0%
0
50
100
150
200
250
300
Molybdenum additivematerials
Processed Tungsten andMolybdenum products
0%
5%
10%
15%
20%
25%
30%
35%
40%
Gross Profit Gross Profit Margin
20
Domestic & Overseas Gross Margin Analysis
Domestic & Overseas Gross Profit and Gross Profit MarginsDomestic & Overseas Gross Profit and Gross Profit Margins
522.8
7.9
1453.4
62.9%
51.4%
23.2%
34.3%
0
400
800
1,200
1,600
2,000
2,400
2,800
Domestic Overseas Domestic Overseas
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
Gross Profit Gross Profit Margin
2009 1 H 2008 1 H
21
Success in Cost Control
Operating Cost (RMB m)Operating Cost (RMB m)
1,350
1,008
0
200
400
600
800
1,000
1,200
1,400
1,600
2008 1H 2009 1H
- 25.3%
Selling and Distribution Expenses (RMB m)
Selling and Distribution Expenses (RMB m)
Administrative Expenses (RMB m)
Administrative Expenses (RMB m)
19
6
0
5
10
15
20
25
2008 1H 2009 1H
- 67.4% 11999
0
20
40
6080
100
120
140
2008 1H 2009 1H
- 16.9%
Source: Company Data
22
-9.99%
-63.40%-70.00%
-60.00%
-50.00%
-40.00%
-30.00%
-20.00%
-10.00%
0.00%
2009 H1 2008 H2
Balance Sheet
Net Debt1 / Total AssetsNet Debt1 / Total Assets Net Debt / Equity2Net Debt / Equity2
Notes :1. Debt = LT debt + ST debt - Bank balances and cash - Held-for-trading investments - Available-for-sale investments (ST+LT) - Investments in
debt securities2. Shareholders’ equity excluding minority interests
-7.69%
-47.00%
-50.00%
-45.00%
-40.00%
-35.00%
-30.00%
-25.00%
-20.00%
-15.00%
-10.00%
-5.00%
0.00%
2009 H1 2008 H2
Outlook
24
Market Outlook
In 2009, China has continued the macroeconomic control and the refining of import & export and other policies. With effect from 1 July 2009, Chinese export tariffs for molybdenum chemical products and certain molybdenum products were reduced from 10% or 15% to 5%, which will favour the export of certain molybdenum products of China.
The higher export rebates for certain iron and steel products from 1 June 2009 and the lower export tariffs for certain iron and steel products (including steel with molybdenum content) from 1 July 2009 are expected to stimulate consumption of domestic molybdenum products. As the global economy continues to recover, more niche for consumption will be created in domestic raw materials market of molybdenum, thanks to the rebounding international molybdenum prices and less impact from imported molybdenum materials. The decreased export tariffs for China’s molybdenum chemicals and certain molybdenum products are conducive to further expand the market of China’s molybdenum exports, thus alleviating the pressure on domestic supply of molybdenum and supporting their domestic prices.
On the tungsten market, China has taken various measures to address the punches, such as volunteer production cutback by enterprises, tungsten hoard of local governments, cutting down Chinese export tariff for major tungsten products from 10% to 5% since 1 July, etc. All these have played an active role in stabilising tungsten price.
25
Business Outlook Product Volume:
the production volume of major products will remain virtually the same as that in the first half of 2009
Key Project Development:
In the second half of 2009, the molybdenum roasting and smelting plant with a capacity of 40,000 tonnes per year will commence pilot production by the end of August 2009.
The molybdenum plate project comprising molybdenum deep processing production lines of 1,500 tonnes per year will commence pilot production in August 2009, with other sub-projects fully completed and put into operation.
The gold-lead-silver smelting plant project of 80,000 tonnes per year in Yongning will take a joint commissioning by the end of September 2009.
Production and Management:
In the second half of 2009, in view of the continued consolidation of molybdenum resources in Henan province and the favorable Chinese new tariff policies, the management of the Company will seize the market opportunities from molybdenum market recovery, further enhancing production and operation to meet the targets set for the year. In addition, the Company will expedite the construction of key projects to ensure their completion as scheduled.
Resource Merger and Acquisition
By aggressively boosting resource consolidation and overseas acquisitions in strict adherence to our corporate development strategies, we expect to enhance our comprehensive strengths and profitability for better returns to shareholders.
26
Our Strategies & Visions
A leading global specialty and precious metal producer
1. Further consolidate our leading position in molybdenum industry 1. 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