Presentation September 2010

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Park Elektrik Üretim Madencilik
Sanayi ve Ticaret A.Ş.
Turkish Growth Companies Conference
September 2010
Contents
I.
II.
III.
IV.
V.
VI.
VII.
VIII.
IX.
Introduction
Ciner Group in Brief
Operations
Planned Investments
Financial Structure
Evaluation of 1H10 Results
Recent Developments
Future Prospects
Market Data
Park Elektrik
September 2010
3
7
10
23
25
40
47
50
53
2
I.
Park Elektrik
Introduction
September 2010
3
The Company

Established in 1994.


Initially offered to public in 1997.
Changed its commercial title in 2000.


Commenced copper operations in late 2006.
Gathered electricity production license in 2008 for establishment
of a hydro electricity power plant.
Merged with ISE-listed Group company, Ceytas, in May 2009.


Currently operating a copper and an asphaltite mine and plans to
establish an HPP in the near future.
Park Elektrik
September 2010
4
Ownership Structure
Park Holding
A.S., 39.63%
Others, 32.00%
Turgay Ciner,
6.76%
Park Enerji
Ekipmanları
A.S. , 21.60%
Park Elektrik
September 2010
5
Participations, Park Termik

Park Elektrik has a 10% participation in Park Termik Elektrik San.
ve Tic. A.S., a Ciner Group company which is involved in thermal
power generation in Ankara province.

Park Termik operates Cayirhan Thermal Power Plant which has a
total production capacity of 630 MW in four units.

Cayirhan Thermal Power Plant is the first thermal power plant that
was privatized by the government. Right after the privatization, the
CUR in the plant was increased from 48% to 81%, while also the
coal production amount of the related coal fields was increased
from 500 tons to 7,000 tons level.

Park Termik paid TL1.28mn of dividends to Park Elektrik in 2010
out of its 2009 net earnings.
Park Elektrik
September 2010
6
II.
Park Elektrik
Ciner Group in Brief
September 2010
7
Ciner Group, Introduction
 Park Holding is controlled by Ciner Group, which is solely owned by
Mr. Turgay Ciner. Ciner Group’s history goes back to 1978 when it was
founded.
 Ranking among the largest Groups of Turkey, Ciner Group diversified
its operations from the energy and mining sectors to tourism, media and
broadcasting sectors.
 Ciner Group is a pioneering actor in energy and mining sector given its
new and initial steps since early 1990s. In line with accelerated
privatization efforts in 1990s, the Group successfully involved in mining
and energy sectors which are the underlying sectors of the Group’s highspeed growth.
 As of 1H10, The Group has a total asset size of US$3.2 bn,
shareholder’s equity of US$1.6 bn, consolidated revenues of US$490 mn
and consolidated EBITDA of US$133 mn with a sound EBITDA margin of
27%.
Park Elektrik
September 2010
8
Ciner Group, Main Line of Businesses
Ciner Group
Energy & Mining
Group
Media
Group
Commerce,
Industry &
Services Group
Major Companies
Park Elektrik
Park Teknik
Park Termik
Eti Soda
Silopi Elektrik
Park Enerji Ekipmanları
Major Companies
& Brands
Ciner Yayın Holding
Haberturk Newspaper
Haberturk TV, Radio,
Haberturk Web Site
Bloomberg HT, FHM,
Marie Claire, Newsweek
Major Companies
Park Construction
Park Marine
Park Aviation
Lares Park Hotels
Park Insurance
Park Foreign Trade
Denmar Logistics
Park Elektrik
September 2010
9
III.
Park Elektrik
Operations
September 2010
10
Park Elektrik’s Existing Facilities
Ciner Group
Headquarters
(Cu)
(As)
Park Elektrik
September 2010
11
Snapshot of Existing & Planned Facilities

(Cu) Siirt, Madenköy Copper Zone
Started operations in 2006. Initial reserves were 13.6 mn tons.

(As) Şırnak, Silopi Asphaltite Zone
Started operations in 2Q 2009. Total reserves at 25 mn tons of
asphaltite. Operational rights are belong to Park Elektrik by the end of
2033.

(HEPP) Diyarbakır, Şirvan Hydro Electricity Power Plant
The company’s application for HEPP establishment and electricity
production license was approved by the Energy Market Regulatory
Authority in December 2008. HEPP of 50,5 MW will be established.
Park Elektrik
September 2010
12
I) Madenköy Copper Zone




License of copper mine in Madenköy zone was acquired from Eti
Holding, a state-owned company, for YTL9.4 mn in January 2000.
The company sells concentrated copper that includes 20-24%
copper content.
The company’s concentration facility’s max. capacity is to run
100,000 tons of copper concentrate per annum.
Selling price is determined based on the spot price at the day of
transaction in London Metal Exchange.
Total Beginning Reserves in Madenköy Zone
Max. Annual Ore Extraction Capacity
1,000,000 tons of ore
Max. Annual Copper Concentrate Capacity (10% of ore)
Max. Annual Copper Content (20-24% of concentrate)
Park Elektrik
13,600,000 tons of ore
September 2010
100,000 tons of copper concentrate
20,000-24,000 tons of copper content
13
Zone Plan
Park Elektrik
September 2010
14
II) Silopi Asphaltite Zone

In 2003, Ceytaş signed a protocol for Şırnak Silopi asphaltite fields of
Turkish Coal Enterprises (TKİ) in order to operate Silopi asphaltite
zone for 20 years. Then, the protocol was extended until the end of
2033.

According to TKI reports, estimated asphaltite reserve in Silopi is
around 25 mn tones.

The company realized TL18mn of investments in the zone, which
were totally financed through shareholders’ equity.

Operations in the asphaltite zone started in June 2009. The company
provides asphaltite to Silopi Elektrik Üretim A.Ş., a group company
which is involved in electricity production in Silopi with fluidized bed
technology and a beginning capacity of 135 MW.

Total production amount in Silopi asphaltite zone is planned to be
around 400,000 tons for year 2010, of which will be totally procured
by Silopi Elektrik Üretim A.Ş. Sales price of asphaltite per ton is
determined as TL 40.5 for 2009 and 2010.
Park Elektrik
September 2010
15
Asphaltite Preparation Facility
Park Elektrik
September 2010
16
IV.
Park Elektrik
Planned Investments
September 2010
17
Tarihler HEPP

Installed capacity will be 50.5 MW.

Production license is valid for 49 years.

Estimated investment amount is US$ 60 mn.

Estimated start-up time for the investments is 2010.

The plant is estimated to be operational by the end of 2013.

Estimated IRR of the investment is around 15%.
Park Elektrik
September 2010
18
V.
Park Elektrik
Financial Structure
September 2010
19
Quarterly Copper Sales Since The Beginning (dmt)
11,272
12,805
5,708
6,217
3Q
Despite
recovering
copper
demand &
prices, sales
were hit by the
halt in
production in
2010
6,818
Commencement
of operations in
2006
6,000
2Q
10,643
10,000
8,000
12,778
13,335
12,744
12,000
14,758
4Q
14,000
Global crisis hit
commodity markets
in 2009. But
recovery started in
late 2009.
14,698
3Q
16,902
16,000
High demand and
high copper prices in
1st half 2008
17,336
First year of full
operations in 2007
17,212
18,000
17,482
20,000
2,000
3,054
4,000
0
2006/3Q
4Q
Park Elektrik
2007/1Q
2Q
3Q
4Q
2008/1Q
2Q
September 2010
2009/1Q
4Q
2010/1Q
20
2Q
Annual Copper Sales (dmt)
60,931
59,163
47,417
31,600
16,980
9,271
2006
Park Elektrik
2007
2008
2009
September 2010
1H2009
1H2010
21
Total Sales Revenues* (TL)
copper
asphaltite
110,713,833
80,040,645
8,844,275
1,858,886
8,812,529
71,556,209
2007
2008
2009
33,740,138
31,866,876
1H2009
1H2010
* Ignores other sales & discounts.
Park Elektrik
September 2010
22
Main Determinant; LME Price
Average Selling Price ($)
1,600
52%
EBITDA Margin
60%
56%
1,359
1,400
1,200
1,315
50%
1,385
41%
1,000
40%
766
800
30%
28%
600
20%
400
10%
200
0
0%
2007
Park Elektrik
2008
September 2010
2009
20101H
23
Copper Prices In Last 3 Years ($/ton)
Park Elektrik
September 2010
24
Average Product Price
Export Revenues
Sales Amount
Average Product Price*
($)
(dmt)
($)
2007
62,351,372
47,417
1,315
2008
84,359,407
60,931
1,385
2009
45,345,802
59,163
766
20101H
23,083,333
16,980
1,359
* The company sells copper concentrate which includes in average 1/5 of copper content.
Park Elektrik
September 2010
25
COGS, as of YE09
Others
10%
Direct Labor
Costs
28%
Depreciation
18%
Indirect Labor
Costs
8%
Energy
12%
Raw Materials
24%
Park Elektrik
September 2010
26
Per Unit Cash Costs (TL/dmt)
502
496
475
439
2006
Park Elektrik
2007
2008
September 2010
2009
27
Sales, EBITDA (TL mn) & EBITDA Margin
Sales Revenues
EBITDA
EBITDA Margin
120
60%
111
100
56%
52%
50%
80
41%
79
80
40%
62
60
27%
30%
28%
42
41
36
40
20%
22
17
20
10%
10
0
0%
2007
Park Elektrik
2008
2009
September 2010
20091H
20101H
28
Net Earnings (TL mn)
74.8
19.8
19.4
18.5
11.1
2007
Park Elektrik
2008
2009
September 2010
20091H
20101H
29
Margins
(TL mn)
2007
2008
2009
1H2009
1H2010
Sales
Gross Profits
Gross Margin
EBITDA
EBITDA Margin
Net Earnings
Net Margin
80
47
58%
42
52%
20
25%
111
73
66%
62
56%
75
68%
79
32
41%
22
28%
19
25%
36
15
42%
10
27%
11
31%
41
20
50%
17
41%
18
45%
Park Elektrik
September 2010
30
Margins
Gross Margin
EBITDA Margin
Net Margin
80%
70%
60%
50%
40%
30%
20%
10%
0%
2007
Park Elektrik
2008
2009
September 2010
20091H
20101H
31
Sources of Financing (TL mn)
Shareholders' Equity
Total Debt
30
17
302
320
2009
20101H
60
66
8
14
88
100
2004
2005
Park Elektrik
53
223
130
143
2006
2007
September 2010
2008
32
Working Capital (TL)
2009YE
18,451,051
18,158,623
6,859,968
Trade Receivables
Park Elektrik
Inventory
7,152,396
Trade Payables
September 2010
Net Working Capital
33
VI.
Park Elektrik
Evaluation of 1H2010 Financial
Results
September 2010
34
Evaluation of 1H10 Results






Despite lower copper concentrate sales due to strike in copper zone,
the company’s sales and margins were not deteriorated thanks to
higher copper prices in 1H10 as compared to same period of last year.
Although the company’s copper concentrate sales was decreased from
14,698 dmt in 2Q09 to 5,708 dmt in 2Q10 by 61%, sales revenues
reflected a 14% increase, y-o-y, in 1H10.
Asphaltite sales also reflected a record rise due to base term effect.
Recall that the company had initiated its asphaltite sales in June 2009.
Benefiting from higher copper prices, the company’s margins also
increased despite lower copper sales.
The company also benefited from financial income on his interest
bearing huge cash lent to parent Park Holding A.S.
The company recorded TL18.5mn of net income in 1H10, with a sound
63% increase, y-o-y.
Park Elektrik
September 2010
35
Sales Amount
2Q09
2Q10
%
Concentrated Copper (dmt)
14,698
5,708
-61%
Asphaltite (ton)
46,245
112,688 144%
Concentrated Copper (dmt)
Asphaltite (ton)
1H09
31,600
46,245
1H10
%
16,980 -46%
217,593 371%
Park Elektrik
September 2010
36
Sales Breakdown (TL) & Gross Margin by Products
1H09
Concentrated Copper Sales
1H10
%
33,740,138 31,866,876
-6%
Gross Margin Of Copper
Asphaltite Sales
43%
1,858,886
Total Sales Revenues
8,812,529 374%
33%
nm
99,830
82,391
-17%
35,698,855 40,761,797
14%
Overall Gross Margin
Park Elektrik
nm
22%
Gross Margin Of Asphaltite
Other Sales
55%
42%
September 2010
50%
nm
37
Income Statement (TL)
20091H
20101H
%
Sales
35,698,854
40,761,796
14
COGS
-20,636,540
-20,370,961
-1
15,062,314
20,390,835
35
42%
50%
-9,463,295
-8,435,911
-11
5,599,019
11,954,924
114
16%
29%
8,067,177
10,815,879
34
Tax
-2,318,512
-4,312,515
86
Net Profit
11,347,684
18,458,288
63
32%
45%
Gross Profit
Gross Margin
Operational Expenses
Operational Profit
Operating Margin
Net Fin. Income/Exp.
Net Margin
Park Elektrik
September 2010
38
Margins
20091H
20101H
Gross Profit Margin
42
50
Operational Profit Margin
16
29
EBITDA Margin
27
41
Net Profit Margin
32
45
Park Elektrik
September 2010
39
Summary Balance Sheets (TL)
YE2009
1H2010
%
235,938,117
242,632,140
3
Fixed Assets
95,825,468
94,773,396
-1
Short Term Liabilities
25,745,005
13,320,487
-48
Long Term Liabilities
4,228,132
3,836,388
-9
Shareholders Equity
301,790,448
320,248,661
6
Current Assets
Park Elektrik
September 2010
40
VII. Recent Developments
Park Elektrik
September 2010
41
Recent Developments, Corporate Governance Rating

Park Elektrik was rated with 8.65 as a
result of the Corporate Governance
study done by SAHA Kurumsal Rating
Agency. According to report done by
SAHA, the rating means that the
company performs very good in terms
of Capital Markets Board’s corporate
governance principles. It has, to varying
degrees, identified and actively
managed all significant corporate
governance risks through
comprehensive internal controls and
management systems. The company’s
performance is considered to represent
best practice, and it had almost no
deficiencies in any of the areas rated.
Park Elektrik
September 2010
42
Recent Developments, Strike & Temporary Prod. Halt

On May 15, Park Elektrik’s copper production was halted temporarily
following the dispute between the Workers’ Union in Siirt Copper
Mine and the company over salary increase issues.

The production halt lasted in September 15th, following the
agreement with the Workers Union and the company.

However, the company’s 1H10 financial results have not reflected
tremendous revenue decrease thanks to higher product prices as
compared to previous year.
Park Elektrik
September 2010
43
VIII. Future Prospects
Park Elektrik
September 2010
44
Future Prospects

In the very near future, Park Elektrik is going to start construction
of its HPP. The company will call for a tender for the construction of
the HPP in the coming months. It is estimated that HPP will become
operational by the end of 2013 or in 2014, in the worst case
scenario.

Having a pile of cash, Park Elektrik looks for new investment
opportunities. Electricity production tenders which are expected to
be opened in 2011, are among the target areas of the company.

The company keeps on consecutive drilling in Madenkoy copper
mine, targeting to increase its proven copper reserves above its
initial level of 13.6 mn tons up until the probable reserves of 23
mn tons level. These studies are estimated to increase Park
Elektrik’s life period considerably. The company also aims to
increase its tenor rate through these drillings.
Park Elektrik
September 2010
45
Future Prospects

As Silopi Elektrik’s capacity will be tripled by 2014, at the latest,
Park Elektrik’s asphaltite sales will be also tripled in the meantime.
This means that the company’s annual asphaltite sales will increase
to 1,2-1,3 mn tons level by the year 2014.
Park Elektrik
September 2010
46
IX.
Park Elektrik
Market Data
September 2010
47
Market Data
Price Performance
Price Data
Ticker
Paid In Capital (TL)
Current Price (TL, Sep. 17, 10)
52-Week Range (TL)
148,867,243
2.58
3M
YTD
US$
8%
7%
-9%
ISE Rel.
0%
-8%
-25%
2.34-3.32
MCap (US$mn)
257
Net Cash (US$mn, 1H10)
150
Shareholders’ Eq. (US$mn, 1H10)
213
3M Av. Tr. Vol. (US$mn)
3.6
Park Elektrik
1M
PRKTE.IS
September 2010
48
Source: LME
T H A N K Y O U.
Please e-mail us at [email protected] for any additional
questions you might have.
You can also visit our company’s web site www.parkelektrik.com.tr and Ciner
Group’s web site www.cinergroup.com.tr .
Park Elektrik
September 2010
49
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