1H2013 Results Baoshan Iron & Steel Co.,Ltd. …or developments that Baoshan Iron & Steel...
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1H2013 Results Baoshan Iron & Steel Co.,Ltd. August 2013
Transcript of 1H2013 Results Baoshan Iron & Steel Co.,Ltd. …or developments that Baoshan Iron & Steel...
1H2013 Results
Baoshan Iron & Steel Co.,Ltd.
August 2013
Disclaimer
The following presentation distributed herewith includes forward-looking statements. All statements, other than statements of historical facts, that address activities, events
or developments that Baoshan Iron & Steel Co.,Ltd.(Baosteel) expects or anticipates will or may occur in the future are forward-looking statements.
Baosteel’s actual results or developments may differ materially from those indicated by these forward-looking statements as a result of various factors and uncertainties, including but not limited to price fluctuations, actual demand, exchange rate fluctuations, competition and other risks and factors beyond our control.
I. Operation Results
II. Industry Dynamics
III.Company Strategy
� Production and Sales
unit：：：：million tons 1H2012 2H2012 1H2013 HoH YoY
Crude steel output 11.79 11.21 11.41 1.8% -3.2%
Sales of finished products 11.86 11.71 11.08 -5.4% -6.6%
including：：：：domestic 10.78 10.45 10.10 -3.3% -6.3%
export 1.08 1.26 0.98 -22.2% -9.3%
� Sales Volumn Breakdown of Finished Products
Note：BNA included，unit：million tons
Sales
Volumn%
HRC 3.23 29%
Plate 0.60 5%
CRC 5.67 50%
Tube 0.82 7%
Others 0.95 8%
Total 11.27 100%
unit：：：：million tons
billion Yuan
Sales
VolumnRevenue YoY Cost YoY
Gross
marginYoY
CRC 4.73 25.9 -5.3% 22.3 -8.9% 14.0% ↑↑↑↑ 3.4 ppts
HRC 3.98 16.0 2.7% 13.6 -2.5% 14.8% ↑↑↑↑ 4.6 ppts
Plate 0.60 2.6 -45.5% 2.6 -49.3% -2.1% ↑↑↑↑ 8.0 ppts
Tube 0.82 5.2 2.8% 4.8 6.2% 8.0% ↓↓↓↓ 3.1 ppts
Others 0.95 4.0 -10.6% 3.9 -15.2% 1.3% ↑↑↑↑ 5.4 ppts
Total 11.08 53.7 -18.0% 47.3 -22.9% 11.9% ↑↑↑↑ 5.5 ppts
� Gross Profit--By Product
� Income Statement Summary
unit：：：：billion Yuan 1H2012 2H2012 1H2013 HoH YoY
Revenue 98.1 93.4 96.3 3.1% -1.9%
Cost 95.8 93.3 91.5 -2.0% -4.6%
Gross profit 7.73 6.64 8.88
Gross margin％％％％ 7.87 7.11 9.22 ↑↑↑↑2.11 ppts ↑↑↑↑1.35 ppts
Operating profit 2.72 0.88 5.13
Operating margin％％％％ 2.77 0.94 5.33 ↑↑↑↑4.39 ppts ↑↑↑↑2.56 ppts
Net profit 9.61 0.78 3.81
Net profit margin％％％％ 9.80 0.83 3.96 ↑↑↑↑3.13 ppts ↓↓↓↓5.84 ppts
Note：9.1 billion Yuan revenue from stainless and special steel assets sale in 1H2012;
2.65 billion Yuan impairment loss of Luojing remaining assets in 2H2012.
unit：：：：Yuan 1H2012 2H2012 1H2013 HoH YoY
EPS0.55
0.14 [Note]0.05 0.22 340.0%
-60.0%
57.1%
Net CFO per share 0.57 0.73 0.40 -45.2% -29.8%
� Financial Highlights
Note：EPS is 0.14 excluding non-recurring gains and losses in 1H2012.
unit：：：：Yuan2012-
12-31
2013-
6-30Chang
BVPS 6.51 6.59 1.2%
Gross margin% 7.46 9.19 ↑↑↑↑ 1.73 ppts
ROE (weighted)% 9.52 3.35 ↓↓↓↓ 6.17 ppts
Note：9.1 billion Yuan revenue from stainless and special steel assets sale in 1H2012.
Financial index unit 2012-12-31 2013-6-30 Change
Solvency
Total debts/
total assets％％％％ 45.7 48.1 ↑↑↑↑2.4 ppts
Current ratio 0.83 0.76 -8.4%
Quick ratio 0.48 0.45 -6.2%
Financial index unit 2012 1H2013 Change
Liquidity
Days of receivables day 19.0 19.1 0.5%
Days of inventories day 70.8 64.6 -8.8%
Cash conversion
cycleday 51.6 42.4 -17.8%
� Solvency and Liquidity
� CAPEX
• Company CAPEX was 3.83 billion Yuan in 1H.
• Oriented silicon steel 2nd phase project was finished.
• Now the total capacity of oriented silicon steel is 0.3 million tons.
CAPEX
13.9
18.2
22.5
28.7
17.8
14.0
16.6
10.4 10.9
0
5
10
15
20
25
30
35
2005 2006 2007 2008 2009 2010 2011 2012 2013E
billion Yuan
1H1H：：：：：：：：3.83.8
� 1H Operational Highlights
2013 Plan 1H2013 %
Iron (million tons) 21.49 11.10 51%
Steel (million tons) 22.56 11.41 51%
Sales (million tons) 22.26 11.08 50%
Revenue (billion Yuan) 17.15 9.63 56%
Cost (billion Yuan) 15.59 8.73 56%
• No.2 in total profit and No.1 in unit profit in the industry
both at home and abroad in 2012.
� Company Competitiveness
Baosteel
POSCO
JFEWuhan Steel
Anshan Steel
NIPPON &
SUMITOMO
Arcelor Mittal
• No.1 in ROE in 2010 and 2012.
� Company Competitiveness(Cont.)
Arcelor Mittal
NIPPON &
SUMITOMO
Anshan Steel
Wuhan Steel
JFE
POSCO
Baosteel
Arcelor Mittal
NIPPON &
SUMITOMO
Anshan SteelWuhan Steel
POSCO
NIPPON &
SUMITOMO
Baosteel
Stock Buyback
• Stock buyback started on 21st September, ended on 21st May, 2013.
• 5 billion Yuan was used, with stock buyback price ranging from 4.51 to
5.00 Yuan/share.
Dividend Policy Change
• Yearly cash dividend is changed to at least 50% from 40% of the net profit,
approved by the 2012 General Shareholders’ Meeting.
� Investors’ Returns
unit: billion shares Before Repurchased SharesRepurchased Shares After
Shares % SharesShares Shares %
Total Capital 17.51 100% -1.04-1.04 16.47 100%
Baosteel Group 13.13 75% 13.13 79.7%
Public Shares 4.38 25% -1.04-1.04 3.34 20.3%
%%
-5.9-5.9
-23.7-23.7
I. Operation Results
II. Industry Dynamics
III.Company Strategy
� Macro Economy
• GDP up 7.5% YoY in Q2, slight decrease
continued in growth rate.
• GDP growth was stable under economic
restructuring in 1H.
Data source: National Bureau of Statistics
• CPI growth was flat MoM and up 2.7%
YoY in July.
• CPI growth rate was 2.4% YoY in Jan-
Jul, within the target of the government.
• Government will maintain stable
monetary policy in 2H.
GDP growth, YoY(%)
7.5681012
1Q2008 4Q2008 3Q2009 2Q2010 1Q2011 4Q2011 3Q2012 2Q2013
CPI growth, YoY(%)
4.5
3.2
3.63.4
3.0
2.2
1.82.0 1.9
1.72.0
2.5
2.0
3.2
2.12.42.1
2.7 2.7
1.0
2.0
3.0
4.0
5.0
Jan,
201
2Fe
bM
arAp
rM
ay Jun Jul
AugSe
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ovD
ecJa
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013Fe
bM
arAp
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ay Jun Jul
� Demand and Supply Analysis--Supply(Crude Steel)
• Crude steel output was 390 million tons in 1H, unexpectedly high growth rate.
• Daily output peaked at 2.15 million tons and slightly decreased to 2.08 million tons in late July.
• Net export grew fast in 1H due to less import and more export.
Data source: CISA，Customs statistics
Unit: million tons 1H2012 2H2012 1H2013 HoH YoY
Output 357 359 390 8.6% 9.2%
Net export 21 23 25 8.7% 19.0%
Apparent
Consumption 336 336 365 8.6% 8.6%
� Demand and Supply Analysis--Import & Export
• Import 6.8 million tons, down 2% YoY and export 30.7 million tons, up
13% YoY in 1H.
• Steel export and net export slightly decreased in July.
Data source: Wind
Monthly net export
1.5 1.5
3.4 3.43.5
3.13.2
2.8 2.9
2.6
3.0
2.5
2.8
2.2
3.8
3.5
3.9
4.1
3.13.0
4.03.8
4.1
3.8 3.8
3.3
4.1
4.34.2 4.2
4.0
1
2
3
4
5
Jan-11 Jun-11 Nov-11 Apr-12 Sep-12 Feb-13 Jul-13
million tons ..
� Demand and Supply Analysis--Demand(Infrastructure)
• FAI 22 trillion Yuan in Jan-Jul, up 20.1% YoY, continued to slow down.
• Railway FAI grew 21% YoY in Jan-Jul, remained high growth.
• The new type urbanization will drive the FAI growth and steel consumption.
Data source: wind
FAIFAIFAIFAI
27.2
24.3
25.826.6
30.4
24.5
20.620.1
23.8
0
5000
10000
15000
20000
25000
30000
35000
40000
2005 2006 2007 2008 2009 2010 2011 2012 Jan-Jul,2013
billion yuan
10
15
20
25
30
35
Year YoY(%)
� Demand and Supply Analysis--Demand(Real Estate)
• Investment up 20.5% YoY in Jan-Jul, maintained a high growth rate.
• New start and sales picked up.
• The Political Bureau set the tone of “stable development in real estate” in the
end of July, regulation of the real estate was not mentioned.
Data source: wind
Investment (billion Yuan, left)
Growth Ytd, YoY (%, right)
200
300
400
500
600
700
800
900
1000
Dec-10 May-11 Sep-11 Feb-12 Jun-12 Oct-12 Mar-13 Jul-13
10
15
20
25
30
35
0.00
0.05
0.10
0.15
0.20
0.25
Dec-10 May-11 Sep-11 Feb-12 Jun-12 Oct-12 Mar-13 Jul-13
New start area (billion square meters)
Sales area (billion square meters)
� Demand and Supply Analysis—Demand(Automobile)
• Auto output and sales were 12.34 and 12.30 million, up 12.5% and 12.0%
YoY respectively in Jan-Jul.
• Strong recovery in the sector.
Data source: wind
Output
14.112.6
27.3
22.0
5.2
48.3
32.4
0.8
4.6
12.5
0
5
10
15
20
2004 2007 2010 Jan-Jul
2013
million
0
10
20
30
40
50
output YoY%
Sales
15.513.5
25.1
21.8
6.7
46.2
32.4
2.54.3
12.0
0
5
10
15
20
2004 2007 2010 Jan-Jul
2013
million
0
10
20
30
40
50
sales YoY%
� Demand and Supply Analysis--Demand(Home Appliances)
• Home appliances picked up in 1H.
• The sector benefited from the recovery of real estate.
• Energy saving subsidy policy expired in May. New stimulus policy was
still suspended.
Data source: wind
Home Appliances Output
4.1%
15.9%
6.1%
25.4%
7.0%
0.1%
18.5%
5.2%
-15%
-5%
5%
15%
25%
TV washing machine refrigerator air-conditioner
Jun,YoY Jan-Jun,YoY
� Demand and Supply Analysis--Demand(Machinery)
• Growth rate of General Equipment, Special Equipment, Electrical
Equipment and Transportation Equipment was 9.9%, 7.6%, 8.1%
and -0.8% respectively in June.
• Industry still struggled to recover.
Data source: National Bureau of Statistics
Machinery Industrial Value Added Growth,YoY
-5%
0%
5%
10%
15%
20%
25%
30%
2011 Apr Jun Aug Oct Dec Mar May Jul Sep Nov 2013 Apr Jun
General Equipment
Special Equipment
Electrical equipment
Transportation Equipment
� Demand and Supply Analysis--Demand(Ship Building)
• Completion, new order and carrying order were :20.6, 22.9 and 110
million tonnages, down 36%, up 113% and down 13% YoY respectively
in 1H.
• Although new order rebounded from the bottom, the world economy and
shipping market was weak, recovery of the shipping sector still can’t be
expected.
Data source: CANSI
Ship-building Completion
5.69
3.764.33
3.41 3.41
0
2
4
6
8
10
12
14
16
Jan-Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
million tonnage
2010 2011 2012 2013
� Demand and Supply Analysis--Expectation
Data source: CISA，Customs statistics, Company Expectation
Unit: million tons 2011 2012 YoY 2013E YoY
Output 683 717 4.9% 763 6.5%
Net export 35 44 26.6% 47 6.1%
Apparent
Consumption 648 672 3.7% 716 6.5%
� Steel Inventory
• Steel social inventory peaked over 22 million tons in Q1, destocking
started since the end of March.
• Inventory was at a low level compared with the same period of the
past 3 years, supporting the steel price rebound.
Unit:
million tons
4 Jan
2013
12 Jul
2013
16 Aug
2013 MoM,% Ytd,%
Rebar 5.86 7.03 6.23 -11.4 6.3
Wire 1.39 1.76 1.37 -22.2 -1.4
HRC 3.43 4.30 4.17 -3.0 21.6
CRC 1.55 1.62 1.60 -1.2 3.2
Plate 1.40 1.44 1.46 1.4 4.3
Long product 7.25 8.79 7.60 -13.5 4.8
Flat product 6.38 7.35 7.24 -1.5 13.5
Total 13.63 16.15 14.84 -8.1 8.9Data source: Mysteel
� Iron Ore Inventory
• Downward trend in iron ore port inventory since beginning of the year
and slightly rebounded since May, 71.48 million tons by 16 Aug.
Data source: Mysteel
Iron ore port inventory
1
5
9
13
17
21
25
29
33
37
41
Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Nov-12 Feb-13 May-13 Aug-13
million tons
Australian Brazil India
� Raw Material Cost
Data source: Mysteel
62%粉矿62%粉矿62%粉矿62%粉矿PlattsPlattsPlattsPlatts指数价格走势指数价格走势指数价格走势指数价格走势（（（（CFR,CFR,CFR,CFR,美元/干吨美元/干吨美元/干吨美元/干吨））））
2010-7-16, 116
2010-4-20, 186
2011-10-28, 116.75
2011-9-7, 183
2011-2-16，，，，193
2011-3-15, 165
133.5
2012-4-11,151.25
9-6, 88.5
146.9
169.5
129.9
2013-5-31, 109.75
80
100
120
140
160
180
200
1
月
2
月
3
月
4
月
5
月
6
月7
月8
月9
月1
0
月1
1月
12
月2010年2011年2012年2010年指数年均价2011年指数年均价2012年指数年均价2013年
焦炭价格焦炭价格焦炭价格焦炭价格1000
1200
1400
1600
1800
2000
2200
Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Platts(62%Fe)
2010
2011
2012
2010 average
2011 average
2012 average
2013
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Coke price
废钢价格废钢价格废钢价格废钢价格2200
2600
3000
3400
3800
4200
Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13Scrap price
• Iron ore price rebounded in Jan-Feb and climbed to 160 USD, average price was
154.8 USD in Feb.
• Iron ore price decreased since the end of Feb due to depressed steel price,
average price in June was 115 USD.
• Iron ore price rebounded again since July, 138 USD by 16 Aug.
• Coal industry was deeply depressed at bottom level in the past 5 years.
� Steel Price
Unit:
Yuan/ton17 Aug,2012 12 Jul,2013 16 Aug,2013 MoM YoY
HRC 3700 3680 3730 1.4% 0.8%
CRC 4630 4500 4540 0.9% -1.9%
Plate 3580 3650 3680 0.8% 2.8%
Wire 3646 3433 3582 4.3% -1.8%
Rebar 3650 3440 3580 4.1% -1.9%
Data source: Mysteel
• Steel price decreased since March. The sector lost money for the first time this year
in June.
• Operating margin of large-median size steel mills was only 0.13% in 1H, with profit of
2.3 billion Yuan, up 2.7% YoY. 40.7% of steel mills lost money.
• Steel price rebounded from the bottom since June. Except auto, recovery of
downstream sectors are weaker than expectation, the price rebound
is limited and expected to fluctuate in 2H.
� Market Trend
Data source: Mysteel
2500
2900
3300
3700
4100
4500
4900
5300
5700
6100
6500
Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13热轧3.0冷轧1.0螺纹20Ⅲ级HR3.0
CR1.0
Rebar20III 300040005000600070008000900010000
Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13冷轧1.0 镀锌1.0彩涂0.476 硅钢600CR1.0
Prepainted
0.476
Galvanized1.0
Silicon600
I. Operation Results
II. Industry Dynamics
III.Company Strategy
• Differential competition strategy and high-end product mix.
• Manufacturing capability of premier quality products.
• Advanced sales network and customer service.
• High caliber management and working staff.
• Business model innovation: from steel to materials, from products to services.
� Company Advantage
To be the worldTo be the world’’s most competitive steel company s most competitive steel company
and the most valuable listed company and the most valuable listed company
Globalization【【【【Overseas Marketing,
Overseas Steel
Production】】】】
Strategic
Target
Development
Strategy
New Business【【【【E-Commerce; Information;
Resources】】】】【【【【New Material】】】】 Meishan
Steel
Shanghai
Base
Zhanjiang
Steel
Auto Sheet Silicon Steel Tin Plate
Oil and Energy Non Auto High
End SheetShipping & Ocean
Engineering
� Development Plan
Project Progress
• 1#Blast Furnace construction began on 17 May,
indicating Zhanjiang Project entered the overall
construction phase.
• 2250MM HR mill contract was signed on 27 June.
• 2150MM continuous casting facility contract was signed on 12 July.
• 2030MM CR mill contract was signed on 15 July.
• Project will be put into operation in 2016.
� Zhanjiang Project
Capital Injection
• Approved by the Board of Directors, the Company
plans to inject additional 12 billion Yuan in Zhanjiang
Company.
• Capital injection will be in 2 phases. 6 billion Yuan by
Q4, and remaining 6 billion Yuan by 30 August, 2014.
Zhanjiang Company total capital:
20 billion Yuan
Baosteel, 90%
� New Business--E-CommerceFollow the trend of internet economy development.
Explore E-Commerce business on the basis of supporting the optimization and
transformation of the Company’s procurement and sales service mode.
� Bulid a low cost, high efficiency and
influential E-Commerce trading platform.
� Provide leading whole process, one stop
E-Commerce Solutions.
� Integrated development with the
Company’s marketing, logistics, processing
and technical service network.
� Provide related financial service.
� New Business--E-Commerce(Cont.)
Shanghai Steel Trading Center
• Established on May 2013.
• E-Commerce service platform for core customers.
• E-Commerce trading platform for steel market.
• Build a leading third party B2B online steel market.
Target
I. The most influential steel
E-Commerce platform
I. The most influential steel
E-Commerce platform
II. The most competitive
B2B procurement platform
in Chinese Manufacturing
Industry
II. The most competitive
B2B procurement platform
in Chinese Manufacturing
Industry
III. The most active B2B
financial E-Commerce
platform
III. The most active B2B
financial E-Commerce
platform
IV. Leading E-Commerce
solutions service provider
based on cloud business
IV. Leading E-Commerce
solutions service provider
based on cloud business
•• Brand Influence Brand Influence
•• E-Commerce Experience E-Commerce Experience
•• Packaged Financial Service Packaged Financial Service
•• Logistics and Distribution Network Logistics and Distribution Network
StrengthSteel Steel
Trading Trading
CenterCenter
Industrial Industrial
Products Products
Trading Trading
CenterCenter
Financial Financial
Service Service
PlatformPlatform
Cloud Cloud
Business Business
PlatformPlatform
� New Business--E-Commerce(Cont.)
New Starting Point、、、、New Height、、、、New Journey！！！！
