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TPCC
Disclaimer
The forward-looking statements contained in this presentation are
subject to risks and uncertainties and actual results may differ
materially from those expressed or implied in these forward-looking
statements.
Taiwan Prosperity Chemical Corporation makes no representation or
warranty as to the accuracy or completeness of these forward-looking
statements and nor does Taiwan Prosperity Chemical Corporation
undertake any obligation to update any forward-looking statements,
whether as a result of new information or future events.
TPCC
Agenda
• Company Snapshot
• 2Q/2014 Financial Results
• Business Overview
• Capital Expenditure
• 2H/2014 Business Outlook
3
TPCC 4
Taiwan Prosperity Chemical Corp.
Established: May, 1991
Headquarter: Taipei, Taiwan
IPO in TWSE: October, 2007
Paid in Capital: NT$ 2,920 million
Market Cap:
(as of Aug/5/2014 , NTD 26.85 per share) NTD 7,840 million
(USD/NTD=29.995) ( USD 261 million )
Production facility: Lin Yuan, Kaohsiung, Taiwan
Employees: 221
(as of Jun/30/2014)
TPCC
Production Facility
Kaohsiung
(TPCC)
Beijing
Shanghai
1.Cumene
(460 KTA)
2.Phenol/Acetone
(360 KTA/221 KTA)
3.Bisphenol-A
(107 KTA)
4.Anone
(150 KTA)
5.MAN
(40 KTA)
6.H2-I
(7K Nm3/hr)
H2-II
(8.1K Nm3/hr)
TPCC
Agenda
6
• Company Snapshot
• 2Q/2014 Financial Results
• Business Overview
• Capital Expenditure
• 2H/2014 Business Outlook
TPCC 7
2Q/2014 Statement of Comprehensive Income
(In NT millions except otherwise noted) 2Q/14 1Q/14 2Q/13 QoQ % YoY %
Net Sales 6,497 6,116 5,922 6.2 9.7
COGS (6,415) (6,044) (5,882) (6.1) (9.1)
Gross Profit 82 72 40 13.9 105.0
Gross Margin 1.3% 1.2% 0.7% 0.1 0.6
Operating Expense (127) (115) (144) (10.4) 11.8
Operating Income (45) (43) (104) (4.7) 57
Operating Margin -0.7% -0.7% -1.8% 0 1.1
Non-operating Income/(Expense) (45) (18) (13) (150.0) (246.2)
Income before Tax (90) (61) (117) (47.5) 23.1
Income Tax Benefit/(Expense) 15 10 12 50.0 25.0
Net Income (75) (51) (105) (47.1) 28.6
Net Margin -1.2% -0.8% -1.8% (0.4) 0.6
TPCC
2Q/2014 Statement of Comprehensive Income
8
(In NT millions except otherwise noted) 2Q/14 1Q/14 2Q/13 QoQ % YoY %
Net Income (75) (51) (105) (47.1) 28.6
Other Comprehensive Income(Loss) 90 (51) 38 276.5 136.8
Total Comprehensive Income(Loss) 15 (102) (67) 114.7 122.4
Basic EPS (NT$) (0.26) (0.17) (0.36) (52.9) 27.8
ROE (%) -4.0% -3.2% -4.7% (0.8) 0.7
ROA (%) -0.3% 0.0% -2.1% (0.3) 1.8
Free Cash Flow(1) 478 (315) 27 251.7 1,670.4
(1) Free Cash Flow = Operating Cash Flow - CAPEX - L/T Investment
TPCC
1H/2014 Statement of Comprehensive Income
9
(In NT millions except otherwise noted) 1H /2014 1H /2013 YoY %
Net Sales 12,613 11,232 12.3
COGS (12,459) (11,132) (11.9)
Gross Profit 154 100 54.0
Gross Margin 1.2% 0.9% 0.3
Operating Expense (242) (256) 5
Operating Income (88) (156) 43.6
Operating Margin -0.7% -1.4% 0.7
Non-operating Income/(Expense) (63) (26) (142.3)
Income before Tax (151) (182) 17.0
Income Tax Benefit/(Expense) 25 23 8.7
Net Income (126) (159) 20.8
Net Margin -1.0% -1.4% 0.4
TPCC
1H/2014 Statement of Comprehensive Income
10
(In NT millions except otherwise noted) 1H /2014 1H /2013 YoY %
Net Income (126) (159) 20.8
Other Comprehensive Income(Loss) 39 90 (56.7)
Total Comprehensive Income(Loss) (87) (69) (26.1)
Basic EPS (NT$) (0.43) (0.54) 20.4
ROE (%) -4.0% -4.7% 0.7
ROA (%) -0.3% -2.1% 1.8
Free Cash Flow(1) 163 (578) 128.2
(1) Free Cash Flow = Operating Cash Flow - CAPEX - L/T Investment
TPCC
Sales/ GM & PAT
11
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14
Sales 6,238 6,464 6,489 6,235 5,310 5,922 5,588 5,759 6,116 6,498
PAT 194 -51 -124 -118 -53 -105 -233 -262 -51 -75
GM 6.0% 1.5% 0.1% 0.3% 1.1% 0.7% -2.7% -2.7% 1.2% 1.3%
-5%
0%
5%
10%
15%
20%
25%
-1,000
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000 GM NT$,M
TPCC
2Q/2014 Statement of Cash Flow
12
(In NT millions except otherwise noted)2Q / 14 1Q / 14 2Q / 13
Cash Flows From Operating Activities
Net income (90) (61) (117)
Adjustments to reconcile income
to net cash provided by operating activities235 (172) (130)
Net cash generated from operating activities 145 (233) (247)
Cash Flows From Investing Activities (54) (75) (97)
Cash Flows From Financing Activities (232) 450 216
Net Increase In Cash And Cash Equivalents (141) 142 (128)
Cash And Cash Equivalents, Begining Of Period 990 848 399
Cash And Cash Equivalents, End Of Period 849 990 271
TPCC
1H/2014 Statement of Cash Flow
13
(In NT millions except otherwise noted) 1H / 14 1H / 13
Cash Flows From Operating Activities
Net income (151) (182)
Adjustments to reconcile income
to net cash provided by operating activities63 (594)
Net cash generated from operating activities (88) (776)
Cash Flows From Investing Activities (129) (149)
Cash Flows From Financing Activities 218 755
Net Increase In Cash And Cash Equivalents 1 (170)
Cash And Cash Equivalents, Begining Of Period 848 441
Cash And Cash Equivalents, End Of Period 849 271
TPCC
Solid Financial Structure
28 26 24
19 27
33
0
5
10
15
20
25
30
35
2007Y 2008Y 2009Y 2010Y 2011Y 1H/12
2.26
1.02
1.72 1.99
2.08
1.28
0.00
0.50
1.00
1.50
2.00
2.50
2007Y 2008Y 2009Y 2010Y 2011Y 1H/12
34% 43%
51% 45%
38%
52%
0%
10%
20%
30%
40%
50%
60%
2007Y 2008Y 2009Y 2010Y 2011Y 1H/12
24.8
17.1 19.5
31.1 29.8
24.1
10.0
15.0
20.0
25.0
30.0
35.0
40.0
2007Y 2008Y 2009Y 2010Y 2011Y 1H/12
Current Ratio
Debt Ratio (L/A)
Book Value per share
1.99
2.08 1.07
1.25
1.36
0.00
0.50
1.00
1.50
2.00
2.50
2010 2011 2012 2013 1H/2014
45% 38%
45%
58%
59%
0%
20%
40%
60%
80%
2010 2011 2012 2013 1H/2014
31.1 29.8 23.5 21.6
21.3 15
20
25
30
35
2010 2011 2012 2013 1H/2014
14
58.5%
-1.2%
2.5%
30.6% 29.0%
35.2% 36.1% 29.6%
26.3% 25.5%
23.6%
25.9%
-20%
0%
20%
40%
60%
80%
2009 2010 2011 2012 2013 1H 2014
Net Debt/ Equity Debt/ Asset
Leverage Ratios
(%)
TPCC
Agenda
• Company Snapshot
• 2Q/2014 Financial Results
• Business Overview
• Capital Expenditure
• 2H/2014 Business Outlook
15
TPCC 16
700
800
900
1,000
1,100
1,200
1,300
1,400
1,500
1,600
1,700
1 2 3 4 5 6 7 8 9
10
11
12 1 2 3 4 5 6 7 8 9
10
11
12 1 2 3 4 5 6 7 8 9
10
11
12 1 2 3 4 5 6 7 8 9
10
11
12 1 2 3 4 5 6
2010 2011 2012 2013 2014
Year - Month
CPC Propylene/Benzene (USD/MT)
Propylene
Benzene
TPCC 17
1,000
1,100
1,200
1,300
1,400
1,500
1,600
1,700
1,800
1,900
2,000
2,100
2,200
2,300
2,400
2,5001 2 3 4 5 6 7 8 9
10
11
12 1 2 3 4 5 6 7 8 9
10
11
12 1 2 3 4 5 6 7 8 9
10
11
12 1 2 3 4 5 6 7 8 9
10
11
12 1 2 3 4 5 6
2010 2011 2012 2013 2014
Year、Month
BPA
Phenol
Anone
Phenol/BPA/Anone monthly average Price (USD/MT)
TPCC
Globel Phenol Capacity & Demand Outlook
18
Unit:KT/YR2012
(A)
2013
(A)
2014
(F)
2015
(F)
Phenol Capacity 10,828 11,496 12,101 12,914
Bisphenol A 4,142 4,076 4,269 4,471
Phenolic Resins 2,698 2,739 2,832 2,966
Anone 958 996 1,029 1,117
Others 1,154 1,088 1,122 1,140
Phenol Demand 8,952 8,899 9,252 9,694
Capacity - Demand 1,876 2,597 2,849 3,220
Utilization Rate, % 83% 77% 76% 75%
TPCC
China Phenol Capacity & Demand
Source: TPCC
Capacity Annual Growth Rate: 23.3% Demand Annual Growth Rate: 6.55%
19
(Unit : MT)
0
500
1,000
1,500
2,000
2,500
3,000
2012 2013 2014 2015
Capacity Demand
TPCC
TPCC Sales Volume in Recent 5Years
20
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
2009 2010 2011 2012 2013 1H/2014
2009 2010 2011 2012 2013 1H/2014
486,148 587,477 601,101 624,090 527,039 289,791
(Unit : MT)
TPCC
Sales Destination of 1H/2014 vs 1H/2013
21
0%
10%
20%
30%
40%
50%
60%
Taiwan India NEA China SEA USA M-East others
1H/2014
1H/2013
Taiwan India NEA China SEA USA M-East others
1H/2014 51% 15% 12% 7% 6% 5% 2% 1%
1H/2013 54% 18% 8% 8% 4% 2% 4% 1%
TPCC
MAn Series Production Capacity
2014* 2012 20XX*
80 KTA 40 KTA
BDO eq. Expansion
68 KTA 34 KTA
MAn Expansion
*: TPCC estimation
22
TPCC
Agenda
• Company Snapshot
• 2Q/2014 Financial Results
• Business Overview
• Capital Expenditure
• 2H/2014 Business Outlook
23
TPCC
Capital Expenditures NT$ M
3,065
539 539
586
30 49
0
500
1,000
1,500
2,000
2,500
2009 2010 2011 2012 2013 2014E
24
TPCC
Agenda
• Company Snapshot
• 2Q/2014 Financial Results
• Business Overview
• Capital Expenditure
• 2H/2014 Business Outlook
25
TPCC
2H/2014 Business Outlook-1
• Benzene
1. Supply from Asia will be increased in 2H/2014 due to 2 million tons new capacity put in service.
2. Benzene price in 2H/2014 shall be lower gradually due to benzene surplus in Asia.
• Propylene
1. The supply will be improved since Aug,2014, due to CPC completed turn around for new Naphtha Cracker and RFCC.
2. TPCC will reduce import quantity of propylene in 2014 compared to 2013.
3. New process Propane DeHydrogen unit in China shall produce propylene from Q3/2014 to stabilize propylene price.
26
TPCC
2H/2014 Business Outlook-2
27
• Phenol Chain Market – U.S. and Europe economics recover, and China remained stable.Demand will be picked up gradually in 2014 compared to last year. There will be one new plant to be on stream in Q4 2014 in Asia, one existing plant will be permanent shutdown in Q3 2014, the impact for 2014 will not be so much, capacity utilization will maintain around the same level as 2013.
• Corporate strategy – To cope with threats in raw material and market trends, heavy attention will be paid to achievement of best possible margin rather than highest production. Reduce operation cost by flexible operation lines.
• Business strategy – Our strategy is to increase our sales to different countries/areas to reduce the dependence on China market. Utilized equipment leasing strategies to maintain revenue growth and acquired major new series of products (BDO/THF/GBL).