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Annual Results 2009

Annual Results 2009. Stock code: 2002. 0. Disclaimer.

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Annual Results 2009

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  1. Annual Results 2009 Stock code: 2002 0

  2. Disclaimer This presentation may contain forward-looking statements. Any such forward-looking statements are based on a number of assumptions about the operations of the China Sunshine Paper Holdings Company Limited (the “Company”) and factors beyond the Company's control and are subject to significant risks and uncertainties, and accordingly, actual results may differ materially from these forward-looking statements. The Company undertakes no obligation to update these forward-looking statements for events or circumstances that occur subsequent to the date of this presentation. The information contained in this presentation should be considered in the context of the circumstances prevailing at the time of its presentation and has not been, and will not be, updated to reflect material developments which may occur after the date of this presentation. The slides forming part of this presentation have been prepared solely as a support for oral discussion about background information about the Company. This presentation also contains information and statistics relating to China and the industry in which the Company operates. The Company has derived such information and data from unofficial sources, without independent verification. The Company cannot ensure that these sources have compiled such data and information on the same basis or with the same degree of accuracy or completeness as are found in other industries. You should not place undue reliance on statements in this presentation regarding such industry information. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of any information or opinion contained herein. It should not be regarded by recipients as a substitute for the exercise of their own judgment. Information and opinion contained in this presentation may be based on or derived from the judgment and opinion of the management of the Company. Such information is not always capable of verification or validation. None of the Company or any of its directors, officers, employees, agents or advisers shall be in any way responsible for the contents hereof, or shall be liable for any loss arising from use of the information contained in this presentation or otherwise arising in connection therewith. This presentation does not take into consideration the investment objectives, financial situation or particular needs of any particular investor. It shall not to be construed as a solicitation or an offer or invitation to buy or sell any securities or related financial instruments. No part of it shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. This presentation may not be copied or otherwise reproduced.

  3. Agenda 1 Financial Review 2 Business Review 3 Future Strategies 4 Open Forum

  4. FinancialReview

  5. Financial Review - FY2009 vs FY2008 • Strong recovery in 2H2009 with profit attributable to shareholders of RMB 32.0 million as compare to RMB 10.1 million in 1H2009

  6. Revenue Breakdown by Products Sales of paper products continued to be the largest component of the revenue The significant drop in the average selling price of paper products in the first half of 2009 outweighing the approximately 31.0% increase in sales volume of paper products, revenue slightly decreased by 3.8% Gross profit margin of paper products recorded an improvement from 13.0% in 2008 to 14.4% in 2009 GP Margin of Paper Products Revenue (RMB mn)

  7. Revenue Breakdown by Paper Products Revenue Breakdown by Paper Products • Sales of core board surged 57.0% to RMB357.7million, representing a 21.1% of total revenue • Sales of white top linerboard and light-coated linerboard decreased by 13.1% and 10.1% respectively

  8. Paper Products – ASP and GP Margin White Top Linerboard Light-coated Linerboard Core Board GP Margin ASP (RMB) GP Margin ASP (RMB) GP Margin ASP (RMB) • White top linerboard, lighted-coated linerboard and core board gross profit margin increased to 14.2%, 18.4% and 10.9% respectively • The overall gross profit margin of paper products increased from 13.0% in 2008 to 14.4% in 2009

  9. Cost Structure Cost of Sales Breakdown • Raw materials costs (domestic and overseas recovered paper, kraft pulp and chemicals and others) decreased by 13.0% as compared with 2008, as a result of lower purchase cost and minimization of raw materials wastage during production • Overhead costs rose by 25.9% to RMB365.7million due to the increase in the Group’s production volume

  10. Key Financial Ratios

  11. Use of IPO Proceeds Category IPO Proceeds Actual Application* Establishment of 500,000 tonnes light-coated linerboard/ white top linerboard production line (“The 7th production line”) RMB493.0m RMB435.0m RMB44.8m Expansion of recovered paper collection points RMB44.8m Research and development RMB19.6m RMB19.6m Installation of ERP system RMB4.8m RMB4.8m * Period from 12 December 2007 (Date of listing) to 31 December2009

  12. Business Review

  13. Results Highlights 1 The global financial tsunami and intense selling price pressure dampened the revenue 2 The Group has increased its gross profit margin from 12.6% in 2008 to 13.9% in 2009 3 Sale orders have restored to pre-financial tsunami level. With the vitality of China economic, the Group’s operating result has been gradually improved and the production facilities have been operated in full scale.

  14. Strategic co-operation agreements with leading consumer product manufacturers Relationships with Leading Brand Customers 13

  15. Production Capabilities Currently 6 highly efficient production lines, totaling 650,000 tonnes production capacity The 7th production line with a designedannual production capacity of 500,000 tonnes of white top linerboard and light-coated linerboard, is expected to commence production in 4Q 2010 Total production capacity will reach approximately 1,150,000 tonnes * Production line interchangeable for production of light-coated linerboard and white top linerboard

  16. Production Volume White Top Linerboard Light-coated Linerboard Core Board Tonnes Tonnes Tonnes • A gradual increase in the production volume of white top linerboard and light-coated linerboard by 4.3% and 14.6% respectively • A double increase in the production volume of core board was mainly driven by the newly set-up the 6th production line in September 2009

  17. 7-8 2-3 1 Sales Representative Offices Harbin Beijing 4-6 7-8 Qingdao Jinan/Linyi 1 2-3 4-6 Recovered Paper Collection Bases and Sales Representative Offices • Established 8 recovered paper collection bases and 21 sales representatives offices in China • Strategically located for convenient transportation to production facility in Weifang Harbin Existing recovered papercollection points: Shenyang Inner Mongolia Jingjin Hebei Yantai Zhoubian Jinan Qingdao Zhengzhou Xian Suzhou Nanjing Wuhan Shanghai Chengdu Hangzhou Ningbo Northeast China Northern China Central Plains Eastern China Southern China Undeveloped Xiamen Guangzhou Shenzhen

  18. FutureStrategies

  19. 2010 Outlook 1 The PRC Government’s continuous economic policy to boost domestic demand, which has positive influence on the Group’s major customers and hence their demand for our products 2 Chinese economy has shown various economic signs of recover at the beginning of 2010. Domestic consumption is expected to recover gradually 3 Consolidation will continue to facilitate healthy growth of paper manufacturing industry. The government will eliminate substandard manufacturers with low efficiency or production unfriendly to environment

  20. Strategies for Future Growth 1 The 7th production line with a designed annual production capacity of 500,000 tonnes to grasp market opportunities and expand market share 2 Expand new recovered paper collection bases in second-tier cities while consolidate the existing bases 3 Develop new products with high added value 4 Develop printing business – Strategic planning for vertical integration

  21. Open Forum

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