swancor (tse: 3708) company profile 2017/06completed in april 2016. formosa plastic (tse: 1301) owns...
TRANSCRIPT
Swancor (TSE: 3708)
Company Profile2017/06
Swancor Holding
Fine chemicalCarbon fiber composite
Offshore Wind Power
Business Units
Copyright © Swancor All Rights Reserved22
Anti-corrosion material
Wind turbine material
Swancor RenewableFormosa I
(128MW)
Formosa II
(300-500MW)
Formosa III
(1,900MW)
Revenue
RevenueNT$ MN
By product2016,%
6,000
8,000
10,000
12,000
Copyright © Swancor All Rights Reserved3
By Area2016,%
-
2,000
4,000
6,000
2013 2014 2015 2016 2017Q1
Anti-corrosion material
Wind turbine blade material
Others
Fine Chemical – Anti-Corrosion Material
Copyright © Swancor All Rights Reserved4
Fine Chemical – Anti-Corrosion Material
RevenueNT$ MN
• Major product is vinyl ester.
• Major applications are anti-corrosion tank and pipe for factories, desulfurization tank and pipe, and chimney for power plants.
• Broad customer base. Sales through direct sales or distribution. Produce product by order.
• Major competitors are Ashland (US) and DSM (Holland),
• Market is oligopolistic with stable gross 2,000
2,500
3,000
Copyright © Swancor All Rights Reserved5
• Market is oligopolistic with stable gross margin. Volume grows steadily every year.
• In 2016, Swancor sold 32 thousand tons. Main market was China.
• Regarding vinyl ester, Swancor sold 18 thousand tones in China. Total China market was 75 thousand tons. Swancor market shares in China was 24%
• International markets for Swancor are South-East Asia, India and Middle-East.
-
500
1,000
1,500
2013 2014 2015 2016 2017Q1
Wind Turbine Blade Material
Copyright © Swancor All Rights Reserved6
Fine Chemical – Wind Turbine Blade Material
RevenueNT$ MN
• Products are epoxy resin and hardener.
• Major customers are China wind turbine blade makers, such as Sinoma (SZE: 002080), Zhongfu Composites and TPI Composites .
• Direct sales. Entry barriers in technical and customer services are high.
• Major competitors are Hexion (US), Olin Epoxy(US), and Huntsman(US).
• Market is oligopolistic with stable gross 6,000
7,000
8,000
Copyright © Swancor All Rights Reserved7
• Market is oligopolistic with stable gross margin. Volume is highly relates to wind turbine market.
• In 2016, Swancor sold 23 thousand tons. Main market was China.
• Total quantity of China market was 115 thousand tons and global market was 250 thousand tons. Swancor market shares in China was 20%.
• International markets for Swancor are India, Middle-East, Turkey and Mexico.
-
1,000
2,000
3,000
4,000
5,000
2013 2014 2015 2016 2017Q1
China Wind Power MarketChina Wind Power New Installed Capacity
GW
China Wind Curtailment Rate%
15
20
25
30
35
10%
15%
20%
25%
30%
Copyright © Swancor All Rights Reserved8
In 2016, China wind power new installed capacity was 23GW, 49% of global 54.6GW.
According to China government 13-5 plan, annual new installed capacity will be around 18GW-20GW from 2016-2020.
In 2016Q1, wind curtailment rate was as high as 26%. Main reasons are power consumption growth rate was low and inter-China power network was not sufficient.
As China invested RMB 218BN in inter-China power network, wind curtailment rate decreased.
-
5
10
2012 2013 2014 2015 2016 2017Q1
0%
5%
2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1
Carbon Fiber Composite
Global carbon fiber composite demand
Thousand tons
Global carbon fiber composite demandBy application, %, 2016
• Swancor carbon fiber composite factory was 100
120
140
Copyright © Swancor All Rights Reserved9
• Swancor carbon fiber composite factory was completed in April 2016. Formosa Plastic (TSE: 1301) owns 18% of equity.
• Products are pre-peg, thermal plastic plate, and extrusion spar.
• Applications are automotive parts and wind turbine blade spar.
• Thermal plastic plate has manufacturing flexibility and cost advantage over traditional pre-peg and is recyclable.
• The demand of carbon fiber spar is increased as wind turbine blades getting longer.
0
20
40
60
80
2016 2017 2018 2019 2020 2021 2022
Source: JEC 2016
Offshore Wind Farms - Formosa I, II and III
• Swancor renewable is developing Formosa I, II and III, three offshore wind farms.
• Formosa I, located northwest of Taiwan, will have 128MW capacity. Phase I 8MW has been installed and is commercial ly operating. Phase II 120MW will be built in 2019. Macquarie capital, DONG energy, and Swancor owns 50%, 35%, and 15% of the
Formosa I, II
Formosa III
Copyright © Swancor All Rights Reserved10
equity respectively.
• Formosa II, located in the west and south of Formosa I, will have 300-500MW capacity . We are conducting environmental impact analysis (EIA) and geological prospecting.
• Formosa III, located in the west of Taiwan, will have 1,900MW capacity . We are conducting EIA and geological prospecting. Swancor is partnering with Macquarie for this project.
Offshore Wind Power Developer –Swancor Renewable
Taiwan government offshore wind power target
MW
• Swancor renewable energy, a fully owned subsidiary of Swancor, is a pioneer offshore wind power developer in Taiwan.
• Revenues are management fee and success fee in
Developer
SwancorRenewable
Off -shore wind farm
Formosa IDevelopment
Management fee,Success fee
Copyright © Swancor All Rights Reserved11
• Revenues are management fee and success fee in wind farm developing stage and operating and management (O&M) fee when commercial operating.
• Normally, it will take 6-7 years to develop an offshore wind farm. Major milestones are permits, planning, fund raising, construction, and commercial operating.
• Success fees might be generated after milestones be completed Success fees are related to wind farm IRR. Key factors are wind condition, feed-in-tariff (FiT), and CAPEX.
Technical, procurement, safety, project management
Finance, procurement, project management
Formosa I founder
Swancor Ind.Macquarie
CapitalDong Energy
15% 50% 35%
100%
Holding company of Swancor group
Swancor Holding
Offshore Wind Power Business Model
Copyright © Swancor All Rights Reserved12
Offshore wind farm developer
Swancor Renewable Formosa Intl. Holding
Perm
it
Fin
ancin
g
Con
struction
O&
M
Developing service
Formosa I
100%
100%
Income Statement
Copyright © Swancor All Rights Reserved1313
* ROE is annualized.
Balance Sheet and Financial Indexes
Copyright © Swancor All Rights Reserved1414
Account Receivable and Bad Debt Reserve
2,023 1,825
1,717
1,301
-
500
1,000
1,500
2,000
2,500
2016Q2 2016Q3 2016Q4 2017Q1
Account Receivable
Copyright © Swancor All Rights Reserved15
NT$
Mu
llion
66
44
-84
-1
-100
-80
-60
-40
-20
-
20
40
60
80
2016Q2 2016Q3 2016Q4 2017Q1
Bad Debt Reserve
Cash Flow
Copyright © Swancor All Rights Reserved1616
2015-2017 CAPEX
• 2015-2017 total CAPEX will be NT$ 4,800MN.
Fine Chemical Offshore Wind Power
Cash Cow
Carbon Fiber
Star Star
Copyright © Swancor All Rights Reserved17
• The investments in fine chemical are Jiangsu and Malaysia new factories. Jiangsu factory is to meet China new environmental regulations and to expand manufacturing capacity. It has been completed in May 2017. Malaysia factory is to serve South-East Asia market and lower tariff. It will be started in 2017H2 and be completed in 2018H1.
• The investment in carbon fiber composite was the factory that completed in April 2016.
• The investments in offshore wind power were phase I and infrastructure of Formosa I. Swancor plans not to make capital investment for Formosa II and III and will be pure developer.
Cash Cow Star Star
Why Swancor
Anti-corrosion resin is in line with environment protection demand, has high entry barrier, is an oligopolistic market.
Swancor has number 1 market share in China.
Wind turbine blade resin meets green energy demand, has high entry barrier, is an oligopolistic market. Swancor is top 3 in China.
Goldwind is the strategic partner.
Copyright © Swancor All Rights Reserved18
Carbon fiber composite is keeping with energy saving demand. Swancor strengths are fine chemical expertise and wind turbine
customer base. Formosa plastic is the strategic partner.
Offshore wind power meets green energy demand, has high entry barrier. Swancor is a pioneer in Taiwan and has future project
pipeline. Macquarie Capital and DONG are strategic partners.
Thank you!
Disclaimer
This document may be deemed to contain forward-looking statements. These forward-looking statements include, among other things, statements regarding future events and the future financial performance of Swancor that involve risks and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results.
Any projections in the document are based on limited internal and external
Copyright © Swancor All Rights Reserved20
Any projections in the document are based on limited internal and external information currently available to Swancor, which is subject to change. Actual events or results could differ materially and no reader of this document should assume later that the information provided today is still valid. Such information speaks only as of the date of this document.
Readers shall rely on self-judgment to makes any investment decision. Readers shall not interpret the information in this document to be investment recommendations.