CGPC — Interim / Quarterly Report 2018

Aug 22, 2018

		華夏海灣塑膠股份有限公司 China General Plastics Corp. Investor Conference8/22/2018 議 程 Itinerary 報告人 Reporter 貴賓報到 VIP Registration 2018年H1回顧及H2展望 2018 H1 Review & H2 Outlook 胡吉宏 副總經理 Otto Hu, VP 公司2018年H1財務資訊 2018 H1 Finance Information 郭建洲 經理 C C Kuo, Manager Q & A 林漢福 總經理 H F Lin, President	華夏海灣塑膠股份有限公司 China General Plastics Corp. Investor Conference8/22/2018 議 程 Itinerary 報告人 Reporter 貴賓報到 VIP Registration 2018年H1回顧及H2展望 2018 H1 Review & H2 Outlook 胡吉宏 副總經理 Otto Hu, VP 公司2018年H1財務資訊 2018 H1 Finance Information 郭建洲 經理 C C Kuo, Manager Q & A 林漢福 總經理 H F Lin, President	華夏海灣塑膠股份有限公司 China General Plastics Corp. Investor Conference8/22/2018 議 程 Itinerary 報告人 Reporter 貴賓報到 VIP Registration 2018年H1回顧及H2展望 2018 H1 Review & H2 Outlook 胡吉宏 副總經理 Otto Hu, VP 公司2018年H1財務資訊 2018 H1 Finance Information 郭建洲 經理 C C Kuo, Manager Q & A 林漢福 總經理 H F Lin, President
	時間 Time	議 程 Itinerary	報告人 Reporter
	14:00〜 14:30	貴賓報到 VIP Registration
	14:30〜 15:00	2018年H1回顧及H2展望 2018 H1 Review & H2 Outlook	胡吉宏 副總經理 Otto Hu, VP
		公司2018年H1財務資訊 2018 H1 Finance Information	郭建洲 經理 C C Kuo, Manager
	15:00〜 15:30	Q & A	林漢福 總經理 H F Lin, President

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China General Plastics Corp. 2018 H1 Review & H2 Outlook

Reported by: Otto Hu August 22, 2018

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2018 H1 Review (1/7)

 The consolidated net revenue was NT$7.82B, which increased by NT$508M (↑7%) YoY .  Sales quantity (KT):

產 品	2018 H1	2017 H1	Growth
VCM	27	27	0
PVC	185	161	24
PVC Products	33	33	0
Alkaline	31	28	3
Total	276	249	27

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2018 H1 Review (2/7)

 PVC sales quantity hit record high in 2018 H1, which increased by 14% YoY.

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2018 H1 Review (3/7)

 The increase of sales quantity for alkaline products in 2018 H1 was 7% of increase YoY.

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2018 年 H1 回顧 (4/7)

 The sales quantity for building products of 8.6 Kmt performed well in H1. The YoY increases were shown as below.

 Pipe: ↑14 %

 Door-panel: ↑17 %

 Sewer: ↑22%

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2018 H1 Review (5/7)

 In corporate governance evaluation CGPC was scored at 84.54 in 2017, which was ranking in 6~20% of the listed company. The performance was better than 81.56 scored in 2016 ranked in the 21~35% of the listed company.

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2018 H1Review (6/7)

• CGPC was recognized on June 19, 2018 as one

of top 100 high salary corporates by Taiwan Stock Index Corporation.

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2018 H1 Review (7/7)

 The CSR Report for CGPC 2017 has been published in June and posted in the websites both in CGPC and Taiwan Stock Exchange Corporation.

 The CSR report also got the certificate from BSI (British Standards Institution) on July 19, 2018.

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Crude Oil & Ethylene Monthly Ave. Prices

Unit:$/bbl WTI

Unit: US$/MT CFR NEA (Platts)

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PVC/VCM/EDC Monthly Avg. Prices (Platts)

Unit: US$/MT CFR CMP(Platts)

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Total PVC Monthly Sales

Unit:KMT

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2018 H2 Outlook: Ethylene

 Ethylene price has been standing high. Most of users have to reduce the operating rate except the SM producers. The spot deep sea cargos may have room for price down, but the T/A scheduled in August ~ November and the new SM capacity support the price stably. Even though China will not immediately impose higher duty on US ethylene, the ethylene price trend in H2 is expected to stay at high level.

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2018 H2 Outlook: EDC

 China had cancelled the each import permit for EDC, which helps solvent users import more DEC at higher prices. Braskem have bought EDC in Q1 from US to cover their production problem. Chinese producers have been cutting O/R due to the lower caustic soda price. The overall conditions support the EDC price moving up. China has imposed extra 25% tariff on US EDC, which is another factor to keep the market price no more cheap.

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• 2018 H2 Outlook: PVC (1/4)

• China

 Due to the environment inspection to limit the production, high costs in materials and transportation, the Chinese domestic PVC prices have been moving up since Q3.

 The PVC major in NEA have been raising PVC prices since July, the import PVC price in China is in line going up.

 China may impose another 25% tariff on US PVC. Some PVC users are planning to shift the purchasing in Asia.

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2018 H2 Outlook: PVC (2/4)

 India

 The import PVC in Q2 is 436Kmt. It seems the LoU and LoC terminated by Indian banks have not much impact on the import business.

 Indian PVC demand is more or less impacted by the monsoon. However, the PVC price still has been raised by US$40~50/MT in July and August. The sufficient rain this year can improve earning for farmers and demand more pipes and PVC.

 The 2018 India GDP is forecasted better at 7.4%. PVC consumptions for agriculture, housing and infrastructure are expected better.

2018 H2 Outlook: PVC (3/4)

 Bangladesh

 The PVC import of 238 Kmt in 2017 was 8% increase than in 2016. The 53% of import PVC came from Taiwan and the biggest portion came from CGPC.  The import PVC had much increased in 2018 H1 due to the strong economics. CGPC exported 50 Kmt of PVC to Bangladesh in H1, which was 70% increase YoY. PVC demand is expected improving after monsoon. The total PVC demand in Bangladesh for 2018 is expected to increase by 10%.

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2018 H2 Outlook: PVC (4/4)

 USA

 US PVC supply in H1 was tight due to cold weather and turn around. However, the sales was quite good especially export quantity of 1,252 Kmt with 17% increase YoY. The PVC inventory in end July is till low according to ACC (American Chemistry Council). Despite the weak demand in some markets, the US PVC production and sales are expected balance in Q3.

 Next to Turkey, China are willing to announce extra tariff of 25% on US PVC. The situation will change the global PVC trade flow. What will be the influence on Asian suppliers?

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2018 H2 Outlook :Alkaline

 The slow demand and low price influenced by Middle Eastern cargo made caustic soda hit $350~360 FOB NEA in July. However, the US cargo for export is still at US$600 FOB because of tight supply. The price in NEA is rebounding, and the trend is expected to go up steadily.  The domestic price of caustic soda was the first time to lower in August in past three quarters. Looking to the good profit margin in Q3, CGPC will keep full running for caustic soda, acid and hypo.

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2018 H2 Outlook : PVC Converted Products

• Taiwan domestic public construction and housing

are expected good enough in H2. CGPC is expanding the capacity and manpower for the production of construction products.

 Both PVC and plasticizer are expected stable in H2. The distributers and end users are building up the inventory. The depreciation of NT Dollars will also help for the export business.

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China General Plastics Corporation and Subsidiaries Finance information

Reporter : C.C.Kuo Manager Date : Aug. 22, 2018

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2018 Sales by product (NT$million)

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China General Plastics Corporation and Subsidiaries Consolidated Statements of Income (In millions of NTD, except per share data)

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2018 2017 2017 2016 2015
YoY%
HY1 HY1 FY FY FY
Sales 7,823 7,315 6.9% 14,702 14,157 13,842
Cost of goods sold 6,053 5,860 3.3% 11,925 11,217 11,894
Gross profit 1,770 1,455 21.6% 2,777 2,940 1,948
gross profit ratio 23% 20% 19% 21% 14%
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			2018 HY1	2017 HY1	YoY%	2017 FY	2016 FY	2015 FY
	Sales Cost of goods sold		7,823 6,053	7,315 5,860	6.9% 3.3%	14,702 11,925	14,157 11,217	13,842 11,894
	Gross profit gross profit ratio		1,770 23%	1,455 20%	21.6%	2,777 19%	2,940 21%	1,948 14%
	Operating expenses		590	565	4.5%	1,126	1,066	1,032
	Operating income		1,179	890	32.5%	1,651	1,874	916
	operating income ratio		15%	12%		11%	13%	7%
	Non-operating income(loss) *		41	**(55) **	-174.6%	(37)	(52)	7
	Income before income taxes		1,220	835	46.1%	1,614	1,823	923
	Income taxes		218	157	39.0%	275	280	111
	Net income		1,002	678	47.8%	1,339	1,543	812
	net income ratio		13%	9%		9%	11%	6%
	Net income attributable to
	- China General Plastics Corporation		924	630	46.7%	1,270	1,443	768
	- noncontrolling interest		78	45	73.3%	69	100	45
	Earnings per share		1.82	1.28	42.4%	2.58	3.02	1.64
		adjusted		1.24		2.51	2.93	1.60

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

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China General Plastics Corporation and Subsidiaries Financial ratio analysis	China General Plastics Corporation and Subsidiaries Financial ratio analysis	China General Plastics Corporation and Subsidiaries Financial ratio analysis	China General Plastics Corporation and Subsidiaries Financial ratio analysis	China General Plastics Corporation and Subsidiaries Financial ratio analysis	China General Plastics Corporation and Subsidiaries Financial ratio analysis
2018 2017 2017 2016 2015 HY1 HY1 FY FY FY Operating income margin(%) 15.1 12.2 11.2 13.2 6.6 Net income margin(%) 12.8 9.3 9.1 10.9 5.9 Debt ratio(%) 36 42 35 42 45 Current ratio(%) 269 239 336 290 245 Quick ratio(%) 199 151 229 218 172 Accounts receivable turnover 38 36 39 36 35 Inventory turnover days 53 63 55 58 60
	2018 HY1	2017 HY1	2017 FY	2016 FY	2015 FY
Operating income margin(%)	15.1	12.2	11.2	13.2	6.6
Net income margin(%)	12.8	9.3	9.1	10.9	5.9
Debt ratio(%)	36	42	35	42	45
Current ratio(%)	269	239	336	290	245
Quick ratio(%)	199	151	229	218	172
Accounts receivable turnover	38	36	39	36	35
Inventory turnover days	53	63	55	58	60

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 This presentation includes the Company’s current information and any development or adjustments thereof will be published according to laws, regulations or rulings. The Company is not obligated to update or revise this presentation.

 The information in this presentation is not for investment advices.

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Thank You

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Q & A
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