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2Q15 results
investor and analyst update
14th August 2015
2
DISCLAIMER
The views expressed here contain information derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the information. Any forward looking information in this presentation has been prepared on the basis of a number of assumptions which may prove to be incorrect. This presentation should not be relied upon as a recommendation or forecast by Banpu Public Company Limited. Nothing in this release should be construed as either an offer to sell or a solicitation of an offer to buy or sell shares in any jurisdiction.
3
Financial summary
Power business Coal marketing
Coal operations
Focus: Banpu Power growth update
5 4 3 2 1
Looking forward 6
4
Banpu Power profile update agenda
Banpu’s power portfolio
Hongsa progress
Power assets in China
Japan solar
Banpu Power looking ahead
5
Japan solar 4 MW
Banpu Power asset portfolio
*Power capacity is derived from the capacity of power and steam combined in MW equivalent **As of 14th Aug 2015 Note : Banpu effective ownership - Hongsa (40%), BLCP (50%), Luannan and Zhengding (100%), Zouping (70%), SLG (30%), Japan solar (40-75%)
CHINA
Luannan 123 MW*
Zhengding 139 MW*
Zouping 180 MW*
Hongsa (COD 2015-16) 1,878 MW
LAOS
BLCP 1,434MW
SLG
(COD 2017)
1,200 MW
Mukawa
(COD 2016) 17 MW
All capacity presented on 100% basis
Nari Aizu
(COD 2018) 20 MW
Olympia 10 MW
Hino
(COD 2016) 3.2 MW
Awaji
(COD 2016) 8.4 MW
Project coal-fired
Operational coal-fired
Project Solar
Operational Solar
THAILAND
0.4
0.5
1.0
1.4
2.3
Power capacity (GW equity)
TECO 266 MW
COCO 103 MW
2000
Ratch 543 MW
2005
SLG 360 MW
Japan solar 37 MW
BLCP 717 MW
BIC 424 MW*
2018e (Committed) Hongsa
751 MW
BIC 327 MW*
2010 BLCP 717 MW
Hongsa 250 MW
BLCP 717 MW
2015**
BIC 388 MW*
DISCLAIMER The views, information and indications expressed here including forward looking targets and indications are illustrative only, are subject to change, may be based on incorrect assumptions, and have not
been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the views, information as indications expressed here. This slide should not be relied upon as a recommendation or forecast by Banpu Public Company Limited. Nothing in this slide should be construed as either an offer to sell or a solicitation of an offer to buy or sell shares in any jurisdiction.
6
97%
94%
100%
99.2%
99.9%
96.6%
PROGRESS*
Power plants
Ash and gypsum
handling system
Transmission line
and substations
Mining works
Infrastructure
works
Social
development
0%
0%
0%
0%
0%
0%
Hongsa: 97.8% complete*
*As of June 2015
Power plants
Transmission line and substations
7
97%
94%
100%
99.2%
99.9%
96.6%
PROGRESS*
Power plants
Ash and gypsum
handling system
Transmission line
and substations
Mining works
Infrastructure
works
Social
development
0%
0%
0%
0%
0%
0%
Hongsa: 97.8% complete* (continued)
*As of June 2015
Conveyor line Coal/soil crusher Stock yard Stacker
Main road from country border Nam Ken Dam
Ban Homexai Ban Homesawang
Mining works
Infrastructure works
Social development
8
Hongsa: mine in operation
Coal/soil crusher
East
overburden zone
Nam Ken Dam
Nam Louk Dam
West
overburden
zone East lake
Main pit
Overburden Conveyor line
Overburden crusher
Coal crusher
Coal stockyard
Stock yard
Area: 272,000 m2
Max. stock: 0.75 mt reserved for 15 days
Coal stacker Conveyor line
Overburden flow Coal flow
9
Hongsa: performance and reliability testing
Comments
Extensive testing process conducted by Hongsa and 3rd parties (e.g. EGAT) to ensure reliability
Capex lower than budget so far
Unit 1 is now in operation
Passed all tests on PPA, performance and reliability
Unit 2 and Unit 3 are on schedule
NOV 14 Acid clean
DEC 14 Steam blow
FEB 15 Start-up with oil
FEB 15 1st network synchronization
MAR 15 Start up with coal & PPA test
MAY 15 Performance test start
MAY 15 Reliability and trial run test start
JUL 15 Reliability test complete
FEB 15 Start-up with oil
JUN 15 COD
Alkaline clean
Unit 1
OCT 14
10
Hongsa: experienced EPC and equipment partners
CNEEC
Experience in international EPC services, engineering design and project management
Completed >100 power projects and >1,000 other projects
Other experience EPC experience
HARBIN GROUP
Equipment provider of Luannan
Projects in >20 countries, with total installed capacity of c. 30,000MW
Exported products to >50 countries. Its main markets include Southeast Asia, South America and Africa.
Other experience
Coal-fired experience
Indramayu (Indonesia, 2011) 2x330 MW
Awar-awar (Indonesia, 2012) 2x350 MW
Sumsel 5 (Indonesia, 2015) 2x150 MW
Banjarsari (Indonesia, 2012) 2x110 MW
Paiton (Indonesia, 2007) 1x660 MW
Tuas (Singapore, 1998) 2x600 MW
Qitaihe (Helongjiang, 2001) 2x350 MW
Shunde Desheng (Guangdong, 2008) 2x300 MW
Cao Ngan (Vietnam, 2004) 2x50 MW
Mariveles (Philippines, 2013) 2x300 MW
Kureyka (Russia, 2010) 1x600 MW
Jharsuguda (India, 2012) 4x600 MW
Dengfeng (Henan, 1994) 2x50 MW
Hancheng No2 (Shanxi, 2005) 2x600 MW
Tuoketuo (IM, 2005) 2x600 MW
Mahan (India, 2007) 2x600 MW
Salaya (India, 2007) 2x600 MW
Tavazon (Iran, 2000) 2x55 MW
Seyitomer (Turkey, 2010) 2x600 MW
Morupule B (Botswana, 2013-14) 4x150 MW
11
Hongsa: social development
ECONOMIC DEVELOPMENT
Currently >3,000 families employed
Increased resettlers’ income to 150% over baseline in most areas
COMPENSATION
New houses in residential area (450 sq. m./household)
Cash compensation and household account training
New farms (2 ha/settler), with provision of budget for preparation
LIVELIHOOD IMPROVEMENT
Utilities: farm access road, piped water supply & irrigation, shared electricity, bus station and police box
Capacity building: learning center, cooperatives & market place, training courses
Health and education: schools, hospital & medical equipment and health check with database management
PHYSICAL
RELOCATION
Relocated 450 households of 5 villages to resettlement areas
Arranged health check before relocation
INCOME RESTORATION
Capacity building
Provided budget for plantation
COMMUNITY DEVELOPMENT
Constructed public facilities and infrastructure
Built primary and secondary schools
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Road to farmland Pipeline installation
Primary school Secondary school
Chili cultivation Market place
12
20.1 15.9
9.4
18.8
26.1 27.0
593
745 804 682
566 471
2009 2010 2011 2012 2013 2014
Banpu Power assets in China
Zhengding expansion completed, including additional chilled water unit to boost revenue during summer time
Luannan and Zouping have expansion potential as local demand continues to grow
Special niche in CHP market which can secure higher power dispatch due to:
- being the only heat source that supplies both industrial and residential heat demand
- generating both power and steam at the same time, therefore obtains
priority dispatch from the grid company
- obtaining strong local government support and recognition
With a strong local team and local experience, Banpu is able to maintain a consistent track record
Comments
Henan
Shaanxi
Liaoning
Jiangsu
Yellow sea
Luannan 100 MW 128 tph
Zouping 100 MW 450 tph
Beijing
Zhengding 73 MW
370 tph 35 MW
Hebei
Shandong
30%
Shanxi Lu Guang 1,200 MW
70%
(+25)
(+173)
(+35)
Equity capacity 603 MW
813 tph
Operational
Project
Steam
Power
Chilled water
BIC’S NET INCOME (U$ M) VERSUS COAL PRICE
BIC’s average
coal price
(RMB/t)
BIC’s
net income
(U$ M)
35 MW Capacity presented on a 100% basis
13
The Chinese power market compared
No wholesale market
No retail competition
Price/dispatch regulated but also reflect supply/demand and cost (coal-power tariff linkage policy)
No wholesale market
No retail competition
Regulated
Predictable rate of return
Investment through PPA
Mostly private
Power sold through power exchanges
Retail market are competitive
Limited intervention
Price/return driven by supply/demand and marginal cost
Buyer Seller Buyer Seller Seller Buyer
CHINESE MARKET APPROVAL-ORIENTED
“SINGLE BUYER MARKET”
e.g. Thai IPP and Japan solar
MERCHANT INVESTMENT
“MARKET – DRIVEN”
e.g. Australia and Europe
Fuel risks Demand risks Finance risks Operational risks
14
BIC strategy and performance
Higher power dispatch from heat determined power policy as a result of being the only heat source in the area
With heat load, CHP* average efficiency is higher than pure power plants
Integrated into local community as essential utility unit (heat source)
BIC’s competitive advantages
0
100
200
300
400
500
600
700
800
0.32
0.34
0.36
0.38
0.40
0.42
2006 2007 2008 2009 2010 2011 2012 2013 2014
Tariff (RMB/kwh)
(LHS)
Coal price (RMB/t)
(RHS)
Coal price versus tariff rate – Zhengding
China’s average utilization hour
ZD
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2010 2011 2012 2013 2014
BIC’s utilization versus industry
ZP (1)
LN
Hour
*Combined Heat and Power (1) ZP utilization hour dropped in 2013 was due to short term lower steam load
Source: China Electricity Council, nationwide coal-fired operating hour/year
15
Shanxi Lu Guang update
*Development and Reform Commission
**State-owned enterprises
Power plant Finance Project approval
2013
2014
2015
2016
2017
Other approvals: water, land and EIA
Preliminary
approval
by Shanxi
Provincial
DRC*
Final
approval
by Shanxi
Provincial
DRC*
JV formed
Weather monitoring for air cooling
COD 1st unit
Construction and commissioning
Design and procurement
COD 2nd unit
Comments
SLG has competitive fuel cost (nearby coal mines e.g. Gaohe), high efficiency, and partnerships with strong SOEs **
17 out of 20 approvals obtained
Remaining approvals: EIA report, Social Stabilization Risk Assessment, and final approval from Shanxi Provincial Development and Reform Committee (DRC). Grid connection will be obtained after final project approval.
1st equity injection of RMB 50 m (RMB 15 m by Banpu) in Mar 2015.
2nd capital injection of RMB 150 m (RMB 59 m by Banpu)
Preparations are underway to begin construction.
Equity drawdown
Debt drawdown
30% Equity
70% Debt
Banpu’s contribution c.US$ 74 M
DISCLAIMER The views, information and indications expressed here including forward looking targets and indications are illustrative only, are subject to change, may be based on incorrect assumptions, and have not
been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the views, information as indications expressed here. This slide should not be relied upon as a recommendation or forecast by Banpu Public Company Limited. Nothing in this slide should be construed as either an offer to sell or a solicitation of an offer to buy or sell shares in any jurisdiction.
16
Japan solar: first step
*Banpu effective ownership is between 40-75%
Hino
(COD 2016)
3.2 MW
Awaji
(COD 2016)
8.4 MW
Mukawa
(COD 2017)
17 MW
Nari Aizu
(COD 2018)
20 MW
Olympia
10 MW Tokyo
Japan solar portfolio
58.6 MW (100%) 36.9 MW equity*
20-year PPA, ¥36-40/kwh tariff (c.¢29-32/kwh)
Average capex of c.US$ 3.5m/MW
In process of adding additional capacity
Construction phase
Operation phase
Development phase
Hokkaido
Honshu
Shikoku Kyushu
17
Japan solar: investment rationale S
TR
AT
EG
IC F
IT
RE
GU
LA
TIO
NS
R
ISK
S
FIN
AN
CIN
G
EC
ON
OM
ICS
Shorter development time and less time to first cash flow generation, which complements coal-fired projects with longer development time
Banpu’s project development and financing skills add value to the project
Transparent regulatory framework
Clear feed-in tariff and PPA life framework
Developed technology
Experienced EPC
Low country risks
Non-recourse project finance
Well supported by Thai and Japanese banks
Economic return
Shorter payback period
18
Banpu Power: looking ahead
Note: Banpu effective ownership - Hongsa (40%), BLCP (50%), BIC (100%), SLG (30%), Japan solar (40-75%)
SLG
1,200 MW
Hongsa
1,878 MW
BLCP
1,434 MW
BIC
273 MW
948 tph
Luannan and
Zouping
expansion
Operation
Japan solar
59 MW
Capacity presented on a 100% basis
Considerations : Strategy fit Regulations Risks Financing Economics T
hailan
d
Oth
er
AS
EA
N
Oth
er
Asi
a-P
ac
Gre
ate
r
Me
ko
ng
Philippines
Indonesia
India
China
China
India
Biomass
Wind
Solar
Myanmar
Laos
Vietnam
Cambodia Laos
DISCLAIMER The views, information and indications expressed here including forward looking targets and indications are illustrative only, are subject to change, may be based on incorrect assumptions, and have not
been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the views, information as indications expressed here. This slide should not be relied upon as a recommendation or forecast by Banpu Public Company Limited. Nothing in this slide should be construed as either an offer to sell or a solicitation of an offer to buy or sell shares in any jurisdiction.