CGPC — Annual Report 2016

Apr 6, 2017

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Time Itinerary Reporter 〜 15:00 VIP Registration 15:30 Otto Hu 2016 Operation Review/2017 Outlook VP 〜 15:30 C C Kuo Finance Information 16:30 Manager H F Lin Q & A President

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2016 Operation Review & 2017 Outlook

Reporter: Otto Hu, Vice president Date: March 31, 2017

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Operating Review in 2016
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 2016 consolidated sales revenue was NT$14,157M, which increased by NT$315M.

Sales volume(thousand MT)

	2016	2015	Inc./(Dec.)
VCM	66	96	(30)
PVC resin	315	262	53
PVCproducts	76	79	(3)
Alkaline	56	58	(2)
Total	512	495	17

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Operating Review in 2016
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Raw Materials:

 Crude oil hit bottom then went up in early 2016 and had been staying stably most of year.  In 1H EDC price was stable in US and middle East. C2 contract price supplied by Taiwan CPC was reasonable.  In 2H VCM supply was tighter due to shorter supply from China and SEA. EDC price had been stable and low due to caustic soda production up. C2 was also stable.

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Operating Review in 2016
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 In H1 the raw materials, VCM and PVC had been increasing.  In Q3 the monsoon in India and Ramadan holidays impacted PVC demand. However, China government decreased the coal output and limited the production for carbide PVC because of G20. The overall PVC supply became tight and pushed PVC price up worldwide.  In Q4 the monetization issue in India caused Indian and Asian PVC price going down.

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2016/1〜2017/2 WTI
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70
Unit : US$/bbl
65
60 speculation on
1.Demand up OPEC cut
2.Inventory
55
drop
50 Output cut
proposal
45 raised 1.Nagiria oil pipe
was attacked
40 2.Earthquake in
1.Brexit worry Cushing US
35
2.Dig account 3.US Dollar
up depreciates
30 1.Over supply
after election
2.Warm winter
25 3.Iran export
worry
20
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Unit : US$/bbl

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2016/1〜2017/2 Ethylene
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CFR NEA Unit : US$/MT
1500
1400
T/A in NEA, S/D in
Asia
1300
T/A in
NEA Crude oil
1200
up
1100
1000
NEA T/A
finished
900 T/A close
800
700
600
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EDC、VCM、PVC price trend
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Unit : US$/MT

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1100
EDC CFR FEA VCM CFR FEA PVC CFR FEA
1000
900
800
700
600
500
400
300
200
100
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Operating Review in 2016
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 The integration of Vinyl Chain in CGPC made a good performance in 2016:  VCM output at 423 KT (↑3%)  PVC output at 357 KT (↑11%) ，  PVC sold at 364 KT (↑17%) export (↑25%)  The demand of caustic soda and acid had been getting better since Q2 2016. The sales volume achieved 96%.  The demand of PVC film and leather dropped a little in 2016. Owing to the good product mix and new development support, we still kept good profit.

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PVC Sales Mix
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2015 年

2016 年

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PVC Export by Market
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2015 年

2016 年

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VCM Output
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Unit: KT

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PVC Output
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Unit: KT

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PVC Sales Volume
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Unit: KT

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Operating Review in 2016
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Non-operating Investment:

• VCM output of 423 KT was record high in 2016, which contributed profit at NT$782M.

 The PVC output at 194KT and sales at 197KT were also the records high, which contributed profit at NT$270M.

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PVC Outlook in 2017
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 The mix of oil cuts from OPEC/Non-OPEC and shale oil increase in USA, the WTI oil price is forecasted at $45~$60 per barrel.  In Q1 the C2 price had been high due to the T/A of cracker in Taiwan CPC and other crackers in Asia. EDC price has been going up due to supply tight from Middle East and USA.

 The 2016 PVC import in Indian 1,500KT. The monetization issue is over gradually, the peak season of farm irrigation is coming . The PVC demand for Q1 and Q2 of 2017 is expected strong.

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PVC Outlook in 2017
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 The domestic PVC price in China started raising since this early January. It also pushed the PVC market improving in Asia.

• The 5% of PVC import duty was announced to remove since this February. This is a great benefit for Taiwanese PVC.

• Brazil did have a good change since early this year. The PVC demand is improving especially in infrastructure. As local PVC supply is not sufficient, the import PVC is strongly required again.

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PVC Outlook in 2017
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 The import PVC demand in Middle East, South America and Turkey has been improving recently because the limited supplies from USA and Europe. The situation led PVC price in Asia especially India going up.  China carbide PVC supply is expected limited due to material cost, transportation cost and environment regulation.

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Operating Highlights in 2017
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 VCM & PVC output new targets:  VCM : 450 KT  PVC : 400 KT

• A new extrusion facility for PVC rigid foam will be ready for running in Q2.

 A new calander facility for tape film will be ready for running by end 2017, which will shorten lead time and win more business.

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Operating Highlight in 2017
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 FORBID of SRT leather is hot sales in US, New Zealand and Australia. It will also apply the SRT to Non-PVC leather.

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Operating Highlights in 2017
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 Environmental friendly plastics:  Treadmill – TPU

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Operating Highlights in 2017
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 Environmental friendly plastics:  Overshadow leather - PU/TPU

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Operating Highlights in 2017
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 Environmental friendly plastics:  Seats for marine - TPO

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Finance information

Reporter :  C.C.Kuo Manager
Date  : 2017, Mar. 31

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China General Plastics Corporation and Subsidiaries 2016 Sales by product

(In millions of NTD, except per share data)

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Alkaline
478
3%
VCM
1,344
10%
PVC products
4,065
29%
PVC resin
8,268
58%
25
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China General Plastics Corporation and Subsidiaries Consolidated Statements of Income

(In millions of NTD, except per share data)

	2016	2015	YoY%	2014	2013	2012
Sales Cost of goods sold	14,157 11,217	13,842 11,894	2.3% -5.7%	14,560 13,423	14,191 12,228	14,166 12,105
Gross profit gross profit ratio	2,940 21%	1,948 14%	50.9%	1,137 8%	1,963 14%	2,061 15%
Operating expenses	1,066	1,032	3.3%	1,041	1,053	1,073
Operating income operating income ratio	1,874 13%	916 7%	104.6%	96 1%	910 6%	988 7%
Non-operating income(loss) *	(52)	7	-819.6%	32	75	23
Income before income taxes	1,823	923	97.4%	128	986	1,011
Income taxes	280	111	152.4%	6	171	64
Net income net income ratio	1,543 11%	812 6%	89.9%	122 1%	815 6%	948 7%
Net income attributable to - China General Plastics Co -noncontrolling interest	r 1,443 100	768 45	88.0% 122.9%	119 3	753 62	834 114
Earnings per share	3.02	1.60	88.8%	0.25	1.67	1.96

*note:Non-operating income(loss) included discontinued operations income(loss) 26

China General Plastics Corporation and Subsidiaries Financial ratio analysis

	2016	2015	2014	2013	2012
Operating income margin(%)	13.2	6.6	0.7	6.4	7.0
Net income margin(%)	10.9	5.9	0.8	5.7	6.7
Debt ratio(%)	42	45	47	45	49
Current ratio(%)	290	245	213	261	222
Quick ratio(%)	218	172	124	175	161
Accounts receivable turnover days	36	35	34	35	38
Inventory turnover days	58	60	51	45	44

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EPS vs DPS
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Thank you