中国尚舜化工控股有限公司

CHINA SUNSINE CHEMICAL HOLDINGS LTD.

1

3Q & 9M 2018RESULTS BRIEFING

7 November 2018

PRESENTATION OUTLINE

Financial Overview

Key Developments

Industry Info and Outlook

2

Financial Overview

3

P&L Highlights4

* SGD to RMB exchange rate @5.0315

RMB ’mln 3rd Quarter Ended 9 Months Ended

30 Sept 18 30 Sept 17 Change 30 Sept 18 30 Sept 17 Change

Group Revenue 775.6 634.4 22% 2,513.1 1,865.1 35%

Gross Profit 254.0 169.8 50% 876.4 496.9 76%

Gross Profit Margin 32.7% 26.8% 5.9 pts 34.9% 26.6% 8.3 pts

Profit Before Tax 172.8 103.6 67% 569.2 281.2 102%

Profit After Tax 143.4 77.6 85% 532.6 209.3 154%

EPS

(RMB cents/SGD

Cents*)

29.18/

5.80

15.79/

3.14

85% 108.34/

21.53

43.74/

8.69

148%

Revenue Growth5

RMB ’mln

619.5

797.9718.4

991.4

1,175.1

1,417.3

1,695.9

2,077.3

1,859.1

2,036.9

2,738.4

1,865.1

2,513.10

0.0

500.0

1,000.0

1,500.0

2,000.0

2,500.0

3,000.0

FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 9M17 9M18

9M18 Revenue up 35% y-o-y boosted by higher ASP and sales volume

Revenue By Quarter6

RMB ’mln

3Q18 vs 3Q17 : +22%

3Q18 vs 2Q18 : - 12%

432.1

497.3475.9

453.8445.1

491.1547.3 553.4

575656.2

634.4

873.3856.9 880.6

775.6

0

100

200

300

400

500

600

700

800

900

1000

1Q 2Q 3Q 4Q

2015 2016 2017 2018

1Q20182Q2018

3Q2018

Sales Volume7

Tons

31,036 30,787

45,42054,275

60,907

81,371

98,345

108,973114,572

135,791140,476

101,702111,529

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 9M17 9M18

9M2018 Sales volume up 10% y-o-y due mainly to more orders received as tire

makers recognize the Group’s ability to provide stable supply

Sales Volume by Products8

Tons

31,036 29,805

40,196

46,34350,148

64,252

72,71076,089 76,090

82,767 83,335

61,613 62,294

0464

3,468 4,413 7,873

10,724 11,94812,102

15,41720,031 22,283

16,27319,034

0 185 1,361 2,971 2,0615,183

12,281

19,903 21,640

31,21434,858

23,816

30,201

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 9M17 9M18

Accelerator Insoluble Sulphure Anti-oxidant and others

Sales Volume 9M18 vs 9M17

Accelerators + 1%

Insoluble Sulphur + 17%

Anti-oxidants & Others + 27%

Sales Volume By Quarter9

25,377

30,948

29,203 29,04530,051

34,483

36,797

34,46033,046

34,55834,098

38,77436,797 37,567 37,166

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

1Q 2Q 3Q 4Q

2015 2016 2017 2018

Tons1Q2018 2Q2018

3Q18 vs 3Q17 : +9%

3Q18 vs 2Q18: -1%

3Q2018

Sales Contribution (By Region)10

Rest of Asia

US

Europe

Others

PRC

61%

9M18 Sales Contribution (y-o-y)

27%

2%

8%

Region 3Q2018 9M2018 9M2017

China 59% 61% 64%

Rest of Asia 23% 25% 25%

US 3% 2% 6%

Europe 10% 9% 4%

Others 5% 2% 1%

Total 100% 100% 100%

Overall Average Selling Price (ASP)11

RMB/Ton

19.8K

25.9K

15.8K

18.3K19.3K

17.4K

17.2K

19.1K

16.2K

15.0K

19.4K

22.4K

0

5,000

10,000

15,000

20,000

25,000

30,000

FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 9M

ASP by Quarter12

RMB/Ton

17.0K16.0K 16.3K

15.6K14.8K 14.2K

14.8K16.0K

17.3K

18.9K 18.5K

22.4K23.2K 23.3K

20.7K

0

5,000

10,000

15,000

20,000

25,000

1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18

• 3Q18 ASP up 12% y-o-y due mainly to continued short supply situation in China since 2017

• 3Q18 ASP dropped 11% q-o-q due to the decrease in raw material prices and slowing demands

13

RMB/ Ton

Main Raw Materials Cost

2,000

6,000

10,000

14,000

18,000

22,000

Key Raw Materials Price Trend

Aniline

Tert-butylamine

Cyclohexylamine

Ketone

Dicyclohexylamine

Carbon Disulfide

Aniline

Gross Profit

9M18 Gross profit grew 76% y-o-y due to higher ASP and sales volume

14

125.2

226.8

160.2

224.1

293.4243.9

308.0

567.4

492.0

547.1

788.1

496.9

876.4

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

800.0

900.0

FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 9M17 9M18

RMB ’mln

Net Profit15

RMB ’mln

76.1106.7

88.3115.3

99.4

32

76.7

220.2195.2

221.7

341.3

209.3

532.6

0

100

200

300

400

500

600

FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 9M17 9M18

• Net Profit surge due to higher ASP and higher sales volume.

• Group’s main subsidiary-Shangdong Sunsine enjoys a concessionary tax rate of

15% throughout FY17, FY18 and FY19 due to its “High-tech Enterprise” status

Net Profit By Quarter16

47.4 47.155.3

45.533.6

49.0

72.866.3

57.2

74.5 77.6

132.0

149.5 191.7 143.4

0.0

50.0

100.0

150.0

200.0

250.0

1Q 2Q 3Q 4Q

2015 2016 2017 2018

3Q18 vs 3Q17: +85%

3Q18 vs 2Q18: - 25%

1Q2018

RMB ’mln

• 3Q18 Net profit jumped 85% y-o-y mainly due to higher ASP and higher sales volume

with expanded profit margin

• 3Q18 Net profit dropped 25% (excluding one-time tax credit of RMB48 mln) q-o-q due to

the decline in ASP

2Q2018

3Q2018

239.7

48

Margins Analysis17

20.2%

28.4%

22.3% 22.6%

25.0%

17.2%18.2%

27.3% 26.5% 26.9%28.8%

34.9%

12.3%13.3%

12.3% 11.6%

8.5%

2.3%4.5%

10.6% 10.5% 10.9%12.5%

21.2%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

Gross Profit Margin(GPM)

Net Profit Margin(NPM)

19.3%

--- Adjusted by taking out the one-time credit of tax expense of RMB 48 mln in FY17

Margins Analysis By Quarter18

31.7%

24.3%

26.8%

23.5%24.2%

27.3%28.2%27.2%

24.4%

28.5%26.8%

33.3%34.9%

36.7%

32.7%

11.0%9.5%

11.6%10.0%

7.5%

10.0%

13.3%11.0%

10.0%11.4%12.2%

15.1%

17.4%

27.2%

18.5%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

Gross ProfitMargin (GPM)

Net Profit Margin(NPM)

21.8%

--- Adjusted by taking out the one-time credit of tax expense of RMB 48 mln in FY17

Balance Sheet Highlight

30/09/2018 31/12/2017 31/12/2016

Current Assets (RMB’mln) * 1,932.9 1,424.6 1,050.5

Current Liabilities (RMB’mln) 443.2 385.3 280.8

Current Ratio 4.36 3.70 3.74

Shareholders’ Equity (RMB’mln) 2,212.3 1,742.4 1,361.6

D/E ratio ** 0 0 0

NAV per share (RMB cents) (equivalent to SGD cents)

450.28/

89.50

354.37/

73.23

293.42/

60.64

Net Cash per share (RMB cents)（equivalent to SGD cents)

167.4

33.3

101.6/

20.2

56.1/

11.1

19

* Including Cash RMB 822.3 mln + Notes RMB 351.0 mln

** No bank borrowing since end of FY2016

Key Developments

20

Ongoing Projects

Project Status CapEx

30,000-ton Accelerator TBBS:

Phase I of 10,000-ton capacity at

Shanxian Plant

At final stage of trial

run approvalRMB 100 mln

Insoluble Sulphur:10,000-ton production line at

Dingtao plant

At final stage of trial

run approvalRMB 50 mln

Heating Plant:Add one boiler and one electric

generator

Started to trial runRMB 100 mln

21

Annual Capacity

2007

(before IPO)FY17 FY18 FY9e

Rubber

Accelerators 32,000 87,000 87,000 97,000

Insoluble

Sulphur nil 20,000 20,000 30,000

Anti-oxidant

(TMQ & 6PPD) nil 45,000 45,000 45,000

Total 32,000 152,000 152,000 172,000

22

Industry Info and Outlook

23

China’s New Car Sales24

8.8 9.4

13.6

18.1 18.5 19.3

2223.5

24.6

28 28.9

20.5

0

5

10

15

20

25

30

35

40

45

50

0

5

10

15

20

25

30

35

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 9M18

PRC New Car Sales

sales

growth yoy

• 20.5 mln cars sold in China in the first 9 months of 2018, up 0.83% y-o-y

• China remains the largest auto market in the world. After robust growth in the past

decade, China’s new car sales expected to grow moderately on a high base

in million units %

Global Vehicle Population25

240 250 260279

295310 322

0

50

100

150

200

250

300

350

400

2012 2013 2014 2015 2016 2017 9M18

http://subscribers.wardsintelligence.com/analysis/world-vehicle-

population-rose-46-2016

PRC Motor Vehicle Population

Mln units

http://www.chyxx.com/industry/201705/521742.html

• Global vehicle population is growing, mainly driven by rising car ownership in developing countries

Riding on Rising Tire Consumption26

• Replacement tires and new car sales account for 70% and 30% respectively

• As overseas factories of Chinese tyre makers produce for export to the US and the EU, tire

production in China expected to grow moderately

443 456 470529

562 565610

653

0

100

200

300

400

500

600

700

2010 2011 2012 2013 2014 2015 2016 2017

Source: http://www.tyrefh.org/

PRC Tire Production Volume

2840 2990 31403400

3660

0

1000

2000

3000

4000

5000

2014 2015 2016 2017 2018e

Projected worldwide tire market volumefrom 2014 to 2018

in million unitsin million units

www.statista.com

•

Competitive Strengths27

Market Leadership

Products

Strong Customer Base

Environmental Protection advantage

R&D Capability

Ready Resources for Future Expansion

- World largest accelerators and China’s biggest IS producer

- Capturing 20% of global and 33% of China’s accelerators markets

- Listed in the first batch of “National Champion Manufacturing Enterprise”

- “High-tech Enterprise” Status

- Academician R&D workstation in collaboration with Tsinghua and CAS

- R&D Centre partnered with Qingdao University of Science and Technology

- Early adopter of Environmental protection initiative

- 1/3 of capex invested in environmental protection and safety

- Transformation and upgrading towards “Green, Intelligent & Miniaturized”

- Strong cash position

- Land spaces available in our production facilities

- Built-up infrastructures

- Over 1,000 customers worldwide spanning over 40 countries

- Serving 2/3 of global top 75 tire manufacturers

- 1/3 output exported

- High quality

- Stable supply

- Full range of varieties

Some Investors’ Concerns -1

Q : Are rubber chemical products commodities?

A : NO – They are products in the niche market.

Reasons:1. Rubber chemicals are not produced in a large scale

2. Renowned tire makers, which account for the bulk of the global tire production, require rubber chemicals to satisfy their special, onerous specifications. High technology and talents are required to make such rubber chemicals

3. China Sunsine has been profitable since 1998

28

Some Investors’ Concerns -2

Q : Are entry barriers high for the rubber chemical industry?

A : Yes.

Reasons:

1. Capital intensive -- land, environmental protection and safety infrastructure.

2. Know-how -- technology, talents and management skills also required to produce specialty chemicals.

3. Stringent supplier selection process by renowned tire makers, taking into account of production capabilities, capacity, quality of products & services and compliance with government’s regulations etc.

4. Rubber chemical industry currently undergoing consolidation.

5. Difficult to get approval for new capacities

29

Some Investors’ Concerns -3

Q : Will weakening car sales affect the rubber chemical industry?

A : There will be material impact only if the new car sales experience significant negative growth

Reasons:

1. New cars accounts for only 30% of tire consumption. Existing cars consume the remaining 70% as replacement for old tires. For passenger cars, every car needs to replace 1.5 piece of tires every year.

2. New car sales in developing countries expected to stay robust owing to low car ownership

30

Country US Australia Italy Japan Germany S. Korea China

Motor vehicles per

1,000 people

910 740 625 591 555 459 231

https://en.wikipedia.org/wiki/List_of_countries_by_vehicles_per_capita

Trade war tension between US and China

makes the world economy uncertain and

weakens China’s tire export to US

Turning Challenges into Opportunities31

Challenges Opportunities

Short supply situation may ease as some

affected productions resuming gradually

which could lead to the normalisation of ASP

The policy affects smaller producers more

and will lead to industry consolidation,

benefiting bigger players

Sunsine's capacity growth will result in sales

volume growth and lower unit cost. Profit will

grow in long term even if ASP normalises

Group’s sales to US are small, about 2-3%.

Wherever they are located, tire factories all

over the world need rubber chemicals

Fluctuation of raw material pricesWith “cost-plus pricing”, Sunsine is able to

maintain a reasonably good gross margin

The 3-year “Battle for a Blue Sky” initiative

affects all chemical companies in China

Listed On SGX Mainboard32

SHARE PERFORMANCE

• No rights issue and new share placement since IPO

• P/E less than 4 times (Rolling EPS for last four quarters SGD 0.27)

• P/B ratio 1.13 times (NAV per share SGD 0.895)

Dividend Payment History33

Net Profit

(in RMB ’mln)Dividend

(in SGD cents)

IPO price : SGD 39 cents

Total dividend paid : SGD 14.5 cents (for 11 consecutive years)

Dividend Policy : Payout not less than 20% of net profit for FY17 & FY18

76.1106.7 88.3

115.3

99.4

32

76.7

220.2195.2

221.7

341.3

0

0.5

1

1.5

2

2.5

3

3.5

0

50

100

150

200

250

300

350

400

FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17

Net Profit Dividend

Total SGD 3 cents

Chairman’s Message34

Mr. Xu Chengqiu

Executive Chairman

Despite a decline in ASP in this quarter, the Group was able to

maintain a reasonably good margin level due to its core competences of

stable delivery and superior quality. Stringent environmental protection

and safety requirements and frequent inspections remain key imperative

in next three years. The Group continues to place emphasis on and

invest heavily in environmental protection & safety and technology

innovation, to further strengthen its market leader position.

We can see that the ASP has stabilised in October and the Chinesetire makers have started to increase their production utilizationrate in 4Q2018. With our strong competitive advantages, we remaincautiously optimistic on the Group’s performance in the next 12 months,

and are confident of its sustainable and stable growth.

35

Q & A

MEDIA/INVESTOR CONTACT

Tong Yiping, CFO, tongyiping@ChinaSunsine.com

Jennie Liu, IR Manager, jennie@ChinaSunsine.com

112 Robinson Road #11-01

Singapore 068902

(+65) 6220-9070

www.ChinaSunsine.com