China Shenhua Energy Board Secretary Mr Huang Qing. Making Progress Maintaining Stability

Transcription

1 China Shenhua Energy Board Secretary Mr Huang Qing Making Progress Maintaining Stability 1

2 Disclaimer This document is prepared by China Shenhua Energy Company Limited ( China Shenhua or the Company ) only for presentation use by the Company. Copying it or forwarding it to any other persons is strictly prohibited. As the dissemination of this document within the jurisdiction of any countries may be subject to the local laws and regulations of that jurisdiction, any person who will obtain this document should clearly understand and comply with those laws and regulations. The information contained herein has not been verified independently. No express or implied representations or warranties are made as to whether the information or views contained herein are fair, accurate, complete or correct. The purpose of this document is not to provide a complete or comprehensive analysis of the information on the Company s financial or trading position or prospects. For this reason, any person who will obtain this document should understand that he/she should not rely solely on the contents of this document. The information and advice provided herein as at the date of this presentation may be subject to changes in future without notice. The Company or its associates, consultants or representatives shall not be liable (whether it is due to negligence or other reasons) for any loss arising from the use of this document or its contents or otherwise. 2

3 Contents 1. Review on Operating Results for Q Operation Results and Highlights for Strategic Vision of the Company and Focus for Appendix 1: Overview of Business Segments ---- Appendix 2: Industry Environment Outlook 3

4 1. Review on Operating Results for Q

5 Production of 1Q2012 operations 1Q2012 1Q2011 Change % Commercial coal production (million tonnes) Coal sales (million tonnes) Seaborne coal (million tonnes) Coal-loaded volume at self-owned ports (million tonnes) Turnover of self-owned railway transportation (billion tonne km) Shipping volume (million tonnes) Total power output dispatch (billion kwh)

6 Steady Growth in Operating Efficiency Financial Data 2012.Q Q1 (restated) Change% Revenues (RMB million) 59,526 47, Profit attributable to equity shareholders of the Company for the year (RMB million) 11,742 11, Basic earnings per share (RMB/share) Change% Total assets (RMB million) , Equity attributable to equity shareholders of the Company (RMB million) 237, , Net assets per share (RMB/share)

7 The Breakdown of Coal Sales Price and Volume Sales Volume and Price of Coal Sales volume Million tonnes 2012.Q Q1(restated) Propotion to total sales Price Sales volume % RMB/tonne Million tonnes Propotion to total sales Price Change in price % RMB/tonne % Domestic sales Long-term contract sales Mine mouth Direct arrival (along railway line) Seaborne Spot sales Mine mouth Direct arrival (along railway line) Seaborne Export sales Total sales volume/weighted average price

8 Unit production cost for 2012 Q1 (RMB/tonne) Cash Cost Raw materials, fuel and power Personnel expenses Unit Production Cost Q1 2012Q1 2011Q1 2012Q1 2011Q1 2012Q1 Depreciation and Amortisation Repairs and maintenance Others 2011Q Q Q1 2012Q1 2011Q1 2012Q1 2011Q1 2012Q1 8

9 Major Indicator for 2012 Q1 Return on net asset Effective income tax rate (%) (%) 0.7 pts Q1 2012Q Q1 Proportion of Domestic Spot Sales to Total Sales (%) 12 3pts (RMB/tonne) ASP for coal sales 5.8% Q1 2011Q1 2010Q1 2011Q1 9

10 2. Operation Results and Highlights for

11 Production and Operation of operations 2011 (Restated) Change % Commercial coal production (million tonnes) Coal sales (million tonnes) Seaborne coal (million tonnes) Of which:seaborne coal at self-owned ports (million tonnes) Turnover of self-owned railway transportation (billion tonne km) Shipping volume (million tonnes) Total power output dispatch (billion kwh) Notes: The shipping volume in 2010 was calculated for the period from July to December

12 Steady Growth in Operating Efficiency Financial Data (restated) Change% Revenues (RMB million) 208, , Profit attributable to equity shareholders of the Company for the year (RMB million) 45,677 38, Basic earnings per share (RMB/share) Net cash from operating activities 70,665 58, (RMB million) (restated) Change% Total assets (RMB million) 401, , Equity attributable to equity shareholders of the Company (RMB million) 225, , Net assets per share (RMB/share)

13 ⅠOutperforming Annual Business Target (million tonnes) Production Volume of Commercial Coal (million tonnes) Sales Volume of Commercial Coal % % 387 target actual result target actual result Power Output Dispatch Shipment Volume (billion kwh) % 168 (million tonnes) % 81 target actual result target actual result 13

14 ⅡProduction Safety Outshines the Peers in the Industry Target of Production Safety: Seriously Preventing work-related accidents and leading safety indicators nationwide The fatality rate per million tonnes of raw coal production of China Shenhua was in 2011 此位置输入文本 此位置输入文本 The average fatality rate per million tonnes of raw coal production for coal mines across the country was in

15 Ⅲ Remarkable Achievement in Curbing Rising Cost of Self-produced Coal (RMB/tonne) Unit Production Cost 90.2 Cash Cost Raw materials, fuel and power Personnel expenses (restated) H H Depreciation and Amortisation 2010 (restated) 2011 Others 2010 (restated) 2011 Repairs and maintenance (restated) H H (restated) H H 2010 (restated) (restated) 2011 Note: other costs consist of 1) expenses directly related to production, accounting for 58%; (2) auxiliary production expenses, accounting for 7%; (3) land claiming and surface subsidence compensation, environmental protection expenses, local levy expenses, etc., accounting for 35%. 15

16 Ⅳ Mega-sales strategy of coal recorded achievement Sales Volume and Price of Coal Sales volume Million tonnes (restated) Propotion to total sales Price Sales volume % RMB/tonne Million tonnes Propotion to total sales Price Change in price % RMB/tonne % Domestic sales Long-term contract sales (6.7) Mine mouth (0.4) Direct arrival (along railway line) (4.5) Seaborne (2.6) Spot sales Mine mouth Direct arrival (along railway line) Seaborne Export sales Total sales volume/weighted average price

17 Ⅴ Substantial Increase in Results of the Third Round of Asset Injection Production Volume of Commercial Coal (million tonnes) % 30.2 Sales Volume of Commercial Coal (million tonnes) % 19.8% Power Output Dispatch (100 million kwh) 1,635.7% 48.6 ( 百万元 ) (RMB 100 million) Net Profit 66.8%

18 Ⅴ Substantial Increase in Results of the Third Round of Asset Injection (cont d) Return on net assets Profit per capita 0f 118 NO.1 Of 118 Total profit NO.2 Of 118 NO.7 Operating Results of Shenhua Finance Company for 2011 Note: According to the statistics of the 2011 Operating Data of 118 Finance Companies in the PRC prepared by the China National Association of Finance Companies 18

19 Ⅵ Significant Progress on Mergers and Acquisitions in the Power Segment Acquired Power Plant Mengjin Power Shenwan Energy Company Bashu Power Regional Grid Central China Power Grid East China Power Grid Sichuan Power Grid Location Unit:MW Newly Installed Capacity Henan 1,200 Anhui 2,440 Sichuan 1,380 Total 5,020 19

20 Ⅶ Smooth Progress of Construction of Railway Network 20

21 Ⅷ Shipping Segment Developed Rapidly Unit (7-12) Shipping volume million tonnes Shipment turnover billion tonne nautical miles Financial data Unit (7-12) Operating revenue Profit from operations RMB million 5,099 1,561 RMB million Notes: The shipping volume in 2010 was calculated for the period from July to December

22 Ⅸ Remarkable Achievements in Capital Management Interest expense (capitalized interest included) (RMB 100 million) 12.2% Short-term loans balance Note (RMB 100 million) 7.0% (restated) 2011 As at 31 December 2010(restated) As at 31 December 2011 Long-term loans balance Note Cash and cash equivalents (RMB 100 million) % (RMB 100 million) % As at 31 December 2010 (restated) As at 31 December 2011 Note: including long-term loans due within one year As at 31 December 2010(restated) As at 31 December

23 3. Strategic Vision of the Company and Focus for

24 Strategic Vision Pursuing Scientific Development and Rebuilding Shenhua Coal Boost production, enhance quality, brand marketing Power Scientific layout, rapid development Railway Raise up speed and capacity, strategic expansion Port Expand handling capacity, Timely expand capacity Shipping Increase Fleet size, expand shipping capacity 24

25 Building Stronger Coal Segment Stable while maintain high output of existing coal mines Capacity expansion and upgrade and newly-built mines Realize continuous growth of coal output 25

26 To Promote Power Business for Quality and Rapid Development By fully capitalizing on the competitive edges of the integration of supply, transportation and the construction of coal storage base By adopting the strategies of g self-construction in tandem with mergers and acquisitions, and the integration of coal and power Self-constructed power plants Dominated by largecapacity environmentallyfriendly generating units Mine mouth, port and highload centre Comprehensive utility power plant Mergers and acquisitions Seize the opportunities of merging and acquiring coal-fire power generating businesses developed, high-load and hightariff regions Speed up project development 26

27 To Enhance Transport Capacity through Optimizing Transportation Networks Railway Port Shipping Construction of Xin- Ba-Zhun, Zhunchi and Ganquan Railways Expansion of Shuohuang Railway s capacity to 350 million tonnes Construction and investment of other railways Increased acquisition of trains Construction of Huanghua Port, Tianjin Coal Dock and Zhuhai Gaolan Port The ports throughput capacity will increase from current 120 million toinnes to 270 million tonnes by 2015 Self-construction and cooperation The fleet size will reach 3 million dwt by

28 Leverage on the Advantage of Integration to Speed Up the Development and to Seize the Opportunities Seize the opportunities Strategic co-operations Construction of coal storage bases Development of power segment Development of transportation system Industrial optimization and improvement Development of quality power sources Construction of coal storage bases Increase in points of sales and development of coal market Expansion of transportation services scope, and increase in transportation capacity Enhance the efficiency of integrated operation 28

29 To Advance the Strategies of Mega-Sales and Mega-Material Integrate internal sales businesses of the Company and leverage on its overall advantages Expand procurement at home and abroad and enlarge its market share Expand the markets of Yangtze River, Pearl River, coastal regions and Central China by leveraging on the advantage of integration Improve the mega-logistics system by constructing coal storage and transshipment bases Enhance the management on material supplying system 29

30 The Fifth Round of Asset Injection Date of Resolution by Board Scope of Proposed Asset Injection Certain members of Shenhua Group Corporation related to the equity interests in or assets of China Shenhua Coal Liquefaction and Chemical Co Ltd and Shaanxi Shenyan Coal Co Ltd. Size of Proposed Asset Injection According to preliminary calculation(unaudited), as at 30 December 2011 the equity interest attributable to the owners of the Parent in relation to the equity in the proposed acquisition held by Shenhua Group Corporation and its subsidiaries (excluding the Group) accounted for less than 7% of the equity interest attributable to the shareholders of the Company stated in the consolidated financial statements. The net profit attributable to the owners of the Parent 2011 in relation to the aforesaid equity represented lest than 4% of the net profit attributable to the shareholders of the Company stated in the consolidated financial statements for the first half of Nature of the Acquisition Source of Funds for the Acquisition Principle of Asset Injection The asset injection will constitute a related party transaction under the Rules Governing the Listing of Stocks on Shanghai Stock Exchange and a connected transaction under the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited The acquisition will be funded by proceeds from the initial public offering of the A share of the Company; in case not enough, the rest will be funded by its own capital Promoting the listing of the whole group in steps and initiating asset injection once the project comes to maturity 30

31 To Actively Promote the Internationalization Bidding for TT projects in Mongolia Negotiation is in progress 1.2 billion tonnes of coking coal, and 1/3 coking coal and fat coal resources The long-term design capacity of Ganquan Railway is 60 million tonnes Watermark Coal Project in Australia Thermal coal resources is expected to exceed 1 billion tonnes Construction is expected to commence in 2012, and it will start to make output contribution during the Twelfth Five- Year Plan period Note: The map is for illustration only Sumutra Project in Indonesia An open-cut mine with annual production capacity of 1.5 million tonnes and two coal-fired generating units of 150 MW Construction of the mine has been completed. No. 1 and 2 of the generating units have been put into commercial operation 31

32 Business Target in 2012 Output of commercial coal (million tonnes) % Sales volume of coal (million tonnes) % Power output dispatch (100 million kwh) 19.1% 2010 (restated) 2011 Target of (restated) 2011 Target of

33 Major Endeavors in 2012 To realize its operating targets, fully achieve annual endeavors and maximize returns to the shareholders To continuously maintain production safety To persist in maintaining effective cost control To embrace standard of being a world-class enterprise by revealing insufficiencies, proceeding with rectification and facilitating improvements To step up efforts in the domestic and overseas development by steadily proceeding with new projects 33

34 34

35 Appendix 1: Overview of Business Segments 35 35

36 Coal Segment Commercial coal sales volume (million tones) % Coal sales structure - by contract (million tones) Long-term Spot contract trading % 56.7% Spot trading Long-term contract % 45.7% 2010 (restated) (restated) 2011 Coal sales structure - by source (million tones) Gross margin of coal business (%) 3.1pts 34.6% 31.5% 77.0% 72.9% 23.0% 27.1% 2010(restated)

37 Coal Segment Average selling price of coal (RMB/tonne) % 436 Domestic selling price - by contract (RMB/tonne) 2010 (restated) (restated) (restated) 2011 Long-term contract Spot trading Profit from operations Coal resources reserve Note RMB million 39, % 46, million tonnes (restated) 2011 Recoverable reserve Marketable reserve Resource reserve Note: the recoverable reserve and resources of coal is based on the PRC standard, the marketable reserve is based on the JORC standard. 37

38 Power Segment Power output dispatch Profit from operations (100million kwh) 1, % 1,676 (RMB million) 8, % 10, (restated) (restated) 2011 (RMB/mwh) Tariff of coal-fired power generators 2.1% Average cost of power output dispatch (RMB/mwh) 4.0% ( (restated) 重述 ) (restated)

39 Power Segment Total installed capacity & equity installed capacity (mwh) 37, ,426 23,478 Installed capacity of coal-fired generators (mwh) Total capacity 27,837 Equity capacity 17,790 Total capacity 36,257 Equity capacity 22,842 As at 31 December 2010(restated) As at 31 December 2011 As at 31 December 2010(restated) As at 31 December 2011 Average utilization hours of coal-fired generators (hours) Standard coal consumption for power output dispatch of coal-fired generators (g/kwh) 362hours 3g/kwh 5,552 5,914 5, National average National average 2010(restated) ( (restated) 重述 )

40 Railway Segment Revenue of railway segment (RMB million) 7.6% 21,306 22,926 (RMB million) Profit from operations 2.1% 9,690 9, (restated) ((restated) 重述 ) 2011 Turnover of self-owned railway (billion tonne km) 8.0% Percentage of turnover of selfowned railway to total turnover (%) 1.7pts ( (restated) 重述 ) ((restated) 重述 )

41 Port Segment Revenue of port segment Profit from operations (RMB million) 2, % 2,820 (RMB million) 42.4% ( (Restated) 重述 ) (restated) 2011 Seaborne coal Self-owned seaborne coal (million tonnes) % (million tonnes) Huanghua Port 87.2 Shenhua Tianjin Coal Dock 22.5 Huanghua Port 95.7 Shenhua Tianjin Coal Dock (restated) (restated) ( 重述 )

42 Shipping Segment Operating data Unit (7-12) Shipping volume Shipment turnover million tonnes billion tonne nautical miles Financial data Unit (7-12) Operating revenue Profit from operations RMB million 5,099 1,561 RMB million

43 Appendix 2: Industry Environment Outlook 43 43

44 (million tonnes) Coal Industry in China Remained Stable in General in Q Coal output grew steadily in 2011 Net import of coal showed an upward trend, leading to effective replenishment (10 thousand tonnes) % % 12.00% 10.00% 10.70% 8.80% 8.60% 7.60% 8.00% 6.90% 6.20% % 6.00% 4.10% 4.00% 2.00% 0.00% Q1 Raw coal output Year-on-year increase 2,500 2,000 1,500 1, Major coal consumption industries achieved rapid development Coal price fluctuated at high levels, with seasonal characteristics becoming less evident (100 million tonnes) Coal-fired power generation Crude iron Cement Synthetic ammonia /01 11/03 11/05 11/07 11/09 11/11 Source: 1, 2 & 4: National Statistics Bureau of China and China Electricity Council; 3: Research of the Company FOB price of Qinhuangdao 5,500 kcal thermal coal Spot price of BJ thermal coal

45 Domestic Coal Industry Will Show Steady Development in 2012 China s economy will achieve the target of making progress while maintaining stability 1 The focus of supply side and production will gradually shift westward 2 Region Shanxi Inner Mongolia Shaanxi Province Guizhou Province Shandong Province Hebei Province Q1 08Q2 08Q3 08Q4 09Q1 09Q2 09Q3 09Q4 10Q1 10Q2 10Q3 10Q4 11Q1 11Q2 Integration of coal mines will ensure a steady growth in coal industry 2 Sources: 1. Government working report; 2. National Bureau of Statistics and China Coal Market Network; 3. Research of the Company; 11Q E Integration goals and relevant progress of different places Preliminary consolidation has completed. Continuous efforts will be made to develop the Company into a larger group during the Twelfth Five-Year Plan period During the Twelfth Five-Year Plan period, the number of coal enterprises will be reduced from 353 to around 80 to 100 The scale of mines established in state-planned mining areas must exceed 1.2 million tonnes, with the total number of coal mines in the province limited to 600 One 50-million tonnes and two 30-million tonnes of mines will be built during the Twelfth Five-Year Plan period Efforts will be focused on integrating municipal (county) mines, with 163 mines reduced to 60 after consolidation 340 coal mines will be reduced to fewer than 50 after consolidation during the Twelfth Five-Year Plan period Coal consumption of downstream industry will slow down, but will still maintain steady growth 3 Industry Estimated growth in 2012 Estimated growth in coal consumption Power 9-11% 150 million tonnes Iron and steel 6-8% 35 million tonnes Construction materials 11-13% 35 million tonnes Chemical 7-9% 15 million tonnes Total 45% % 49% % 47% % Three western provinces % 63% 60% 50% 40% 30% 20% 10% 0% Proportion of output in three western provinces 240 million tonnes (100 million tonnes) 45

46 Coal Supply and Demand Will Maintain an Overall Balance during the Twelfth Five-Year Plan Period, and the Price Level of Coal Remaining Stable with a Slightly Upward Trend National economy will maintain steady development 1 The average annual growth rate of GDP will be 7% With the deepening of industrialisation, urbanisation and liberalisation, the growth rate of energy consumption in Western and Central China is expected to exceed that of Eastern China Increase in industry concentration with reduced fluctuation in supply 2 (100 million tonnes) Top ten coal enterprises 1.72 tonnes 2.12 billion tonnes Others 2.12 billion tonnes 650million tonnes, 940 million, tonnes 1.88 billion tonnes, 47% 27% 31% 27% 31% Output in 2006 Output in 2009 Planned output in 2015 The growth rate of coal output hampered by the industrial policies 3 To promote the adjustment of industrial structure by controlling the total coal consumption To control both the total energy consumption and the total power consumption across the country. The target of total national energy consumption will be limited to around 410 million tonnes of standard coal in 2015 Forecast of coal production capacity in Twelfth Five-Year Plan (100 million tonnes) Large-sized mines 25.5 Small to medium-sized mines with annual production capacity of 300,000 tonnes or above 9 Small to medium-sized mines with annual production capacity of 300,000 tonnes or below 6 Sources: 1. National Energy Administration; 2. China Coal Market Network; 3. National Energy Administration; 4. Discussion papers of the Twelfth Five-Year Plan regarding the coal industry Total

47 Changing Landscape of Regional Supply and Consumption Will Co-exist with Bottleneck of Railway Transportation Four provinces in Western China have become the key sources of growth in coal output 1 (100 million tonnes) Raw coal output in Shanxi, Shaanxi, Inner Mongolia and Ningxia Provinces The proportion of investment in freight railway will be at low level 2 Investment in fixed assets in railway transportation industry: accumulated cost Investment in fixed assets in railway transportation industry: year-onyear accumulated cost 100 million tonnes (RMB100 million) Coal demand in Central China will grow 3 The growth rate of effective coal supply will be lower than that of production capacity 4 With the rise of Central China, coal demand in Central China has increased. In the long run, the coal supply landscape will show a gradual westward relocation. As the coal demand in Eastern China will maintain steady growth, the shortage will be replenished by imported coal. Change in regional supply and demand landscape will aggravate the difficulty of logistic operation of coal and relevant coordination. The conflict between coal supply and transportation will not be settled in the short term. Source:1,China Coal Market Network;2,Ministry of Railways, 3,Research of the Company;4,Research of the Company 100 million tonnes E 2011E 2012E 2015E Northern Daqin Line Shenshuohuang Line Fengshada Line Jingyuan Line Zhunge er Caofeidian The construction is scheduled to commence and complete in 2011 and 2014 Jitong Line 0.35 Zhangjiakou - Tangshan A new line with estimated capacity of 120 million tonnes in 2013, and long-term goal of 200 million tonnes Mengji Line Central Shitai Line Hanchang Line Xing County Rizhao Port The construction commenced in 2009 and will complete in 2014 Southern Taijiao Line Houyue Line Longhai Line A new line with estimated transportation capacity of 400 million tonnes in 2015 Xikang Line 0.5 Ningxi Line 0.7 Passageway of Central and Shanxi Luliang City Rizhao Port. Construction has started and Southern parts of Shanxi will complete in September 2014 Total

48 Supply and Demand of Power Maintained an Overall Balance in 2011 Steady growth in power (100 million kwh) generation 1 Power generation across the country Month-on-month increase 50% 40% 30% 20% 10% 0% -10% -20% (Hours) Growth in utilization hours of coal-fired power generation 2 Utilisation hours 火电利用小时数 of coal-fired power generation in 2010 Utilisation hours of hydropower in 2011 Utilisation hours of coal-fired power generation in Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec (%) Lower profit margin, with less desire of coal-fired power generation 3 Net profit margin of total assets Gross profit margin (GW) % Sources: 1, 2 & 4: National Statistics Bureau of China and China Electricity Council ; 3: WIND Slowdown in growth of coal-fired equipment 4 Total Coal-fired power generation Growth rate of coal-fired generator 28% 65% -10% -19% -8% % 100% 80% 60% 40% 20% -3% -4% 0% -20% -40% 48

49 Supply and Demand of Power Will Be Balanced or the Supply May Be Slightly Tight in 2012 Lower growth target with the implementation of tariff reform 1 GDP of China will grow by 7.5% in 2012 Introduction of tariff reform, including the implementation of reform program of escalating pricing scale of tariff to residents, aims to gradually rationalize the relationship between coal prices and power tariff Adjustment on power consumption pattern 2 Four high energy consumption industries Non-high energy consumption industries Residential power consumption Coal industry Tertiary sector Difference in growth rate of power consumption between Eastern and Western China has become increasingly evident 3 Xinjiang Inner Mongolia Ningxia Jiangxi Yunnan Qinghai Fujian Chongqing Shaanxi Gansu Sichuan Guizhou Hainan Guangxi Jiangsu Anhui Power consumption over last three quarters Henan Shanxi Hubei Source: 1. Research of the Company; 2, 3 & 4. China Electricity Council Zhejiang Jilin Shandong Hebei Liaoning Hunan Guangdong Heilongjiang Tianjin Shanghai Beijing 30% 25% 20% 15% 10% 5% 0% Growth rate of power consumption Power supply will remain tight due to various restrictions 4 Frequent occurrence of extreme climate in recent years It is initially estimated that the water supply across the country in general in 2012 will be better than that in The growth of coal-fired equipment across the country will continue to slow down in

50 During the Twelfth Five-Year Plan Period, Efforts Will Be Put in Developing Power Generation with New Energy and Optimizing Development of Coal-generated Power Development principles of power generation during the Twelfth Five-Year Plan period 1 To prioritise the development of hydropower To optimise the development of coal power To step up greater development of nuclear power To actively promote power generation with new energy (100 million kw) Planned installed capacity of billion KW as at the end of Twelfth Five-Year Plan period Installed capacity in % 31% Hydropower Coal power Wind power Nuclear power Gas-fired power 0.55 Others Power demand will slow down steadily 3 Features of power supply and demand during the Twelfth Five-Year Plan period 4 It is estimated that the annual average increase of power consumption across the country will be approximately 8.5% during the Twelfth Five-Year Plan period In 2015, the power consumption across the country will reach 6,270 billion kwh Sources:1,2,3 & 4: China Electricity Council Power supply and demand across the country will be balanced in general Insufficient growth in effective supply capacity of power generation Downward trend of utilisation hours of power generators Regional and occasional imbalance of supply and demand will become usual 50