Singamas Container Holdings Limited (716) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. Welcome to the 2024 interim results presentation of Singamas Container Holdings Limited. First of all, I'd like to introduce to you the representatives or the company's management, Mr. S.S Teo, Chairman and Chief Executive Officer and Winnie Siu, Executive Director and Chief Operating Officer, Ms. Rebecca Chung, Executive Director, Chief Financial Officer and Company's Secretary. We'd like to remind you that we have arranged simultaneous interpretation for everyone today in English and Mandarin if you need and [indiscernible] we have some [indiscernible] or let our colleagues know. So I'll now like to turn to Mr. Teo to present the interim results. All the financial figures in the presentation are in U.S. dollars unless otherwise stated. Mr. Teo, please.

[Interpreted] Thank you. Good afternoon. Thank you for coming today. I know it weekend soon. Thanks for bearing with us. We go to the presentation of by looking into Singamas Corporate profile, industry dynamics as well as our financial and business review. Let me first give you a brief -- brief overview of our group business. Please turn to Slide 5. As a renowned container manufacturer and logistic service providers, Singamas currently operate 5 factories in China. Our total capacity is now about 220,000 TEU of dry freight, and also specialized container and 20,000 of tanks and customized containers. So apart from that Singamas also running 8 container depots across 8 major cities in China and 1 logistics company in Xiamen. We also provide container leasing business activity in recent years. Slide 6 to 9 cover our signature product, ranging from traditional dry freight and ISO specialized containers to innovative customized container, including but not limited to Energy Storage System, Housing, Technical facilities and other Electrical systems. The core product of Singamas customized container is Energy Storage System, or we call ESS in short. ESS container facilitate efficient, electricity storage and release, [indiscernible] users by allowing electricity consumption at global prices. This container ensures stability in new energy power generation. ESS container designed to withstand extreme conditions, such as high altitude, low-temperature, condensation and sand storm featuring double-layered more insulation and robust structure for longer operation in challenging environment. And this slide to 11 introduce our Leasing business. Our professional team has over 25 years of experience in container leasing. We commit to provide flexible leasing solution for our customers and aim to help our customers to achieve effective container equipment cost management, asset management and financial management. By the end of June this year, we possessed 56,000 TEU leasing container, specializing in one-stop container leasing service. We collaborate with leading shipping lines and carrier to distribute containers of our factories to major ports around the world. Our customer also benefit from our extensive network of drop-off locations. Singamas is a major operator 8 container depos China, with over 30 years of industry experience. We maintain strong ties with key port operators in the country and foster relationship with major global shipping and leasing companies. Our Logistic Service business focused on enhancing warehouse capability, integrating multi-modal transform resources, improving digital operation capabilities for efficiency and collaborating with service provider, we expect network coverage. We now talk about industry trends and outlook for our dry freight process. In the first half of this year, the selling price of dry freight container was in a leaping trend. With low selling price in the first quarter, and sudden uplift of selling price in the second quarter. The ASP of dry freight container come down to the USD 1,918 decreased by 7.7% year-on-year. As I mentioned, very slow first quarter, but uptick in second quarter. Meanwhile, the average Bamboo cost increase by at least at a larger extent of 22.7% and the average steel cost increased by 5.4%. In other words, the steel price came down but the former price -- bamboo former price went up, yet, with the increase in market demand and in the selling price our dry freight containers in the second quarter of 2024. And thereafter, the high utilization rate of our production facility our dry freight container still achieved a better gross profit margin year-on-year. Let's move on to Slide 15. Looking forward, the world economy will recover gradually. The United Nations Conference on Trade and Development predicts that global trade volume may reach a high level of USD 32 trillion in 2024 and the World Bank has raised its global economic growth forecast in 2024 to 2.6% from the previous 2.4%. Also, some major economies have entered an inventory replenishment cycle, which is beneficial to shipping demand, which in turn will have a better container demand. However, as indicated by the SFCI Shangahi Freight Composite Index, the increasing momentum of the industry may soften in the second half of the year. On Slide 17 (sic) [ 16 ] we show the leasing rate and cash return for the leasing industry. On the Drewry, long-term lease rates are expected to rise in 2024 and adjusted gradually before 2027. Here from 2027, long-term lease hike expected to go up again. Our initial cash investment return rate will increase moderately from 2023 and up to 2028. Now let's move on to financial release section. On Slide 18, the Group's business performance was mainly driven by high demand for dry freight containers and healthy growth of our customized container and leasing business. In the account of 2024, the group revenue increased by 28% to USD 242.9 million. On Slide 19 we see that the consolidated net profit attributable to owners of the company increased by 76% to about USD 17.2 million including interest earned on bank deposit of USD 6.7 million for the period. Over the next slide, the chart shows Singamas basic earnings per share was USD 0.72 for the review period. Slide 21 shows the net asset value of Singamas, as of 30 June 2024 our net asset value per share was USD 23.32. An interim dividend of Hong Kong pre-sale per share has been declared for the 6 month ended, 30 June 2024, representing a payout ratio of 53%, which is consistent with our policy. Now please turn to the recent review section. On Slide 24 shows the performance of Singamas Manufacturing and Leasing business. Manufacturing and Leasing segment achieved revenue of USD 228.7 million, which accounted for 94.2% of our Group total revenue. Segment profit before tax and non-controlling interest was about USD 18.2 million. Slide 25 shows the breakdown of container units sold under different product category and according to the respective revenue generated. The Table on left shows that Singamas sold 91,175 TEU of dry freight container during the period. The pie chart on the right show that the sales of this dry freight container made up 73.2% of our Manufacturing revenue. For Customized Containers, a total of 5,796 units was sold during the period. Revenue contributed by this container was 20.6% of revenue, so 73.2% for Dry Freight and Customized Container 20.6%. On Slide 26, we show the performance of Singamas Logistics Services. Logistics Service segment achieved revenue of USD 14.1 million and the segment profit before tax and noncontrolling interest was about USD 4.4 million. Slide 27 talks about our operating strategies for the second half of this year. To the aggregate of volatile market conditions on one hand, Singamas is deploying contingency plans such as securing fourth quarter 2024 market orders in advance, reducing costs, avoiding risk, and most importantly, collecting market information to keep us up to date with the changes. On the other hand, Singamas will continue to apply strict cost control and caution in capital expenditure. Capital expenditure in 2024 we'll prioritize safety and environmental protection measures. The commitment to incorporating renewable green energy solution for sustainability and cost efficiency. Slide 28 to 31 of this presentation contained appendix that shows our income statement as well as our factories and depot data for your further reference. That conclude my presentation. Winnie, Rebecca and myself, we'll be happy to answer.

[Operator Instructions]

[Foreign Language]

Focus will develop of leasing business that...

[Foreign Language] leasing business. they go cash return [indiscernible] 10%, make sense as you develop leasing business [Foreign Language].

Okay. [Foreign Language] clearly unexpected. [Foreign Language] okay? [Foreign Language] leasing business growth [Foreign Language] special dividend [Foreign Language].

[Foreign Language] over financing [Foreign Language] energy transfer container [Foreign Language]

Leasing business. Some growth okay fine but the scale that have gain. [Foreign Language] strongly developed leasing business. [Foreign Language].

Okay. [Foreign Language] the balance sheet [Foreign Language].

[Foreign Language].

[Interpreted] Okay. Thank you for coming for this presentation. I was so glad to see many old friends and some new friends. Many of you have followed the company for a long time. And we have gone through a very different period before COVID and during COVID was very, very difficult. But because we stood firm and so we enjoyed a strong market in 2021 and 2022. Coming to the 2024, I'm very pleased to see that company have actually settled down, stabilized into a more steady long-term growth, and that is the two pieces we mentioned. At the same time, we are not giving up on Container -- GP container. Because that is although cyclical, you can see that our profit margin actually has improved. We do not have the scale of some of the big boys but we do have the -- to me, a very pro-business, very commercial and experienced team. That's why sometimes people come to us even though other bigger players able to offer big volume and various incentive. So that is something I see [Foreign Language]. Container demand will always be there. But more important highlight to my colleagues is that we will not manufacture a loss. As I said, we can't afford to lose big time compared to the big boys. So having this leasing is kind of a backup for us. So I think companies on the -- to me most certainly -- sorry -- mean is a sustainable growth, that's important and backed up by a strong balance sheet. I know the shareholders like to see special dividend. But we will find occasion to give it out if we can justify. At the same time to me is to see a steady sustainable growth, not the volatility that -- we see the volatility. I hope the volatility don't go down, right? And then we can return a reasonable return to the shareholder for the long-term. Okay. Thank you very much. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]