#1CHT 中國航運股份有限公司 Chinese Maritime Transport Ltd. Stock Code: 2612 TT Investor Presentation by James Tarng, Vice President 15th August 2019#2Summary of Presentation ➤ Outlook and Strategies World Economic and Shipping Market Trends The Company Overview ➤ Appendices CHT 中國航運股份有限公司 Chinese Maritime Transport Ltd. 2019 Investor Presentation 1#3Outlook and Strategies CHT 中國航運股份有限公司 СМТ Chinese Maritime Transport Ltd. CMA CON T & LINES CMA COM#4Outlook and Strategies Vale Resumes Brucute Mine Production Vale gradually resumes production of suspended mines to positively impact iron ore seaborne trade PRC Demand for Raw Materials PRC's thirst for iron ore and coal remains to be the main driving force for capesize market 2020 Sulphur Cap IMO bunker sulphur content regulation will come into force on 1st January 2020 creating uncertainty for market Tonnage Supply Tightens Installation of scrubbers will positively impact supply/demand balance Flexible Chartering Strategies We continue to forge strong relationships with major miners and operators to have a mixture of long and short period charters in order to prevail in a cyclical market CHT 中國航運股份有限公司 Chinese Maritime Transport Ltd. 2019 Investor Presentation 3#5Shipping Market Outlook Demand Market Mechanism Supply Iron Ore- Brazilian exports decrease due to dam collapsing incident while PRC demand remains stable with -2% y-o-y drop Coal- PRC domestic production increases while market expects drop in steam coal imports but coking coal imports to remain stable NBs to be PRC Jan-Jun 91 cape 2019 import -6% y-o-y PRC Jan-Jun 2019 import +6% y-o-y delivered in 2019 23 Vessels scrapped between Jan-Jun 2019 Newbuildings- newbuilding deliveries remain high with 31 ships joining fleet in 1H 2019; fleet to grow by 2% this year Tonnage Supply- Vintage VLOCs' scrapping and slow-steaming will be key to market' s supply-demand balance Source: Clarksons Platou CHT 中國航運股份有限公司 Chinese Maritime Transport Ltd. 2019 Investor Presentation 4#6World Economy and Shipping Market Trends RCIT 中国航運股份有限公司 Chinese Maritime Transport Ltd. CMA CON T & LINES CMA COM#7Source: IMF World Economy Decelerates ◉ Global GDP to grow by 3.3% in 2019 Uncertainties: USA/PRC trade wars, tension in PG and fluctuation in oil prices USA 2.3% EU 1.6% Japan 1.0% China India 6.3% 7.3% Africa 3.6% Brazil 2.1% Australia 2.1% CT 中國航運股份有限公司 Chinese Maritime Transport Ltd. 2019 Investor Presentation 9#839% Dry Bulk Seaborne Trade Expects to Grow by 1.1% in 2019 ■ Dry bulk seaborne trade has been stable in last three years but likely to decline due to Vale tail dam incident this year ■Major Driving Force: PRC' s demand for iron ore and coal together with demand for minor bulk from other markets % of Dry Bulk Cargoes 28% 24% 9% -YOY Growth 7% 6% 5% ■Iron Ore 4% ■ Coal 3% ■Grain 2% ■ Minor Bulk 1% 0% 2013 2014 2015 2016 2017 2018 2019(f) Source: Clarksons Platou CHT 中國航運股份有限公司 Chinese Maritime Transport Ltd. 2019 Investor Presentation 7#9Global Iron Ore/Coal Exports Vale tail dam disaster negatively impacts Brazilian export volume by -21 million tons or - 5.4% Clarksons Platou forecasts global iron ore export to reduce by 1.5% while coal exports to increase by 0.6% in 2019 Iron Ore Coal Million Tons 1600 1473 1400 Million Tons 1400 1476 1454 1200 1263 1271 1205 1200 1000 1000 828 836 844 800 800 600 600 422 380 388 365386 380 435 380 367 400 400 200 200 83 100 91 0 0 2017 2018 2019(f) 2017 2018 2019(f) ■Brazil Australia Total ■Australia Indonesia USA Total Source: Clarksons Platou CHT 中國航運股份有限公司 Chinese Maritime Transport Ltd. 2019 Investor Presentation 80#10140 120 100 80 60 860 40 20 Iron Ore/Coal Prices ■ Iron ore (62% Fe Content) price averaged $91/ton in 1H 2019; price surged to $126/ton in July 2019 Jun-19, 72.49 ◉ Australian steam coal prices averaged $88/ton in 1H 2019 as prices softens due to import restrictions in PRC 0 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 140 120 100 80 60 40 Jan-16, 49.02 220 20 0 62% FE, US$/mt Nov-16, 103.43 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 May-18 Sep-18 Jan-19 May-19 Australian Steam Coal, US$/mt Source: GFI Iron Ore & Steel CHT 中國航運股份有限公司 Chinese Maritime Transport Ltd. 2019 Investor Presentation 6#11Chinese Crude Steel Production and Electricity Consumption Jan-Jun 2019 accumulated growth rate in production:10.1% Jan-Jun 2019 accumulated growth rate in consumption: 9.4% China Crude Steel Production China Electricity Consumption MILLION TONS GROWTH % TWH GROWTH % 1000 16% 8000 9% 900 14% 8% 7000 800 12% 7% 6000 700 10% 6% 5000 600 8% 5% 500 6% 4000 4% 400 4% 3000 3% 300 2% 2000 2% 200 0% 1000 1% 100 -2% 0 0% 0 -4% 2012 2013 2014 2015 2016 2017 2018 2012 2013 2014 2015 2016 2017 2018 Source: World Steel Association & CHT 中國航運股份有限公司 Chinese Maritime Transport Ltd. 2019 Investor Presentation 10#12Chinese Iron Ore/Coal Imports Slow Down PRC's demand for iron ore is estimated to decrease by 2% in 2019 to 1.026 billion tons PRC's demand of coal imports is projected to decrease by 6% to 221 million tons PRC invests in bauxite mines in West Africa to meet domestic demand; imports will grow by 8% to 93 million tons in 2019 MILLION TONS 1200 MILLION TONS 73% 300 25% 72% 1000 250 20% 71% 800 70% 200 15% 69% 600 150 68% 10% 400 67% 100 66% 5% 200 50 65% 0 64% 0 0% 2013 2014 2015 2016 2017 2018 2019(f) % Chinese Iron Ore % of global imports Chinese Coal 2013 2014 2015 2016 2017 2018 2019(f) % of global imports % Source: Clarksons Platou CHT 中國航運股份有限公司 Chinese Maritime Transport Ltd. 2019 Investor Presentation 11#13Capesize Newbuilding Orders Capesize Orderbook for delivery % of Fleet (Dwt) No. 120 100 80 60 40 20 20 100% 87% 81% 80% 60% 38% 40% 20% 0% Actual 2H2019 2019 2020 2021 delivery 1H2019 Source: Clarksons Platou 91% Dry Bulk New Ship Ordering 62% 37% 24% 21% 17% 18% 13% 15% 16% 15% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Jun Capesize Ordering (100,000 + dwt) Total Bulk Fleet Ordering ORDERBOOK AS % AVERAGE AGE OVER 20 YEARS OLD OF EXISTING FLEET 1H19 SCRAPPING AS % OF EXISTING FLEET (ANNUALIZED) Handysize 5% 11.3 13% 0.30% (10,000 40,000 dwt) Handymax (incl. Supramax & Ultramax) 8% 9.3 7% 0.20% (40,000 - 65,000 dwt) Panamax (incl, Kamsarmax) 11% 9.7 7% 0.09% (65,000 100,000 dwt) Capesize 15% 8.5 5% 1.06% (100,000+ dwt) Total Dry Bulk > 10,000 dwt 11% 9.9 7% 0.53% CHT 中國航運股份有限公司 Chinese Maritime Transport Ltd. 2019 Investor Presentation 12 112#14Capesize Fleet Supply Between January-June 2019, global fleet' s net growth is 1.25% M. Dwt Capesize Supply Development 25 20 15 10 5 0 5 10 15 20 25 2014 2015 2016 Scrapping New Deliveries Source: Clarksons Platou CHT 中國航運股份有限公司 Chinese Maritime Transport Ltd. 2017 6.00% 14.3 4.00% 3.43% 7.8 2.00% 1.25% 0.00% 3.10 3.60 -2.00% -4.00% -6.00% 2018 2019 Jun Net Fleet Growth 2019 Investor Presentation 13#15Newbuilding/Secondhand Sale Prices Market softens in 1H 2019 but 2nd hand transactions pick up in recent months Prices (US$ Million) 2017 At End of Year 2018 Jun-19 180,000 dwt NB 44.0 50.0 51.0 180,000 dwt Resale 46.5 52.0 52.0 180,000 dwt 5-yr 33.0 33.5 30.0 180,000 dwt 10-yr 20.5 24.0 23.5 170,000 dwt 15-yr 13.0 15.0 14.0 Source: Clarksons Platou CHT 中國航運股份有限公司 Chinese Maritime Transport Ltd. 2019 Investor Presentation 14#164500 4000 3500 3000 2500 2000 1500 1000 500 Capesize Freight Gradually Recovers in 2H 2019 Baltic Exchange Capesize Index 22/Jul/2019 BCI Max. 4,438 12/Dec/2017 BCI Max. 4,293 6/Aug/2018 BCI Max. 3,654 0 Jan Feb Mar Apr May Jun 2017 Jul 2018 Aug Sep Oct Nov Dec 2019 Jul Source: Clarksons Platou CHT 中國航運股份有限公司 Chinese Maritime Transport Ltd. BCI average 1,112 between January and June 2019; the average was 1,768 in same period last year 5TC average $10,028 between January and June 2019; the average was $13,954 in same period last year 2019 Investor Presentation 15#17Dry Bulk Freight Gradually Recovers in 2H 2019 Baltic Exchange Dry Index 22/Jul/2019 BDI Max. 2,191 2400 2200 2000 12/Dec/2017 BDI Max. 1,743 1800 1600 1400 24/Jul/2018 BDI Max. 1,774 1200 1000 800 600 400 200 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2017 2018 2019 Jul Source: Clarksons Platou CHT 中國航運股份有限公司 Chinese Maritime Transport Ltd. ■ BDI average 887 between January and June 2019; the average was 1,217 in the same period last year 2019 Investor Presentation 16#18Stringent Maritime Regulations - - IMO: Low Sulphur Fuel Oil Requirement Sulphur content will be capped at 0.5% m/m (versus 3.5% m/m now) from 1st January 2020 Presently no plans to install scrubbers; CMT Fleet to burn low sulphur fuels IMO: Ballast Water Management Convention - Enter into force on 8th September 2019 - CMT fleet' s BWTS retrofitting to be completed by 2021 Photo: IMO CHT 中國航運股份有限公司 Chinese Maritime Transport Ltd. 2019 Investor Presentation 17#19The Company Overview CHT 中國航運股份有限公司 СМТ Chinese Maritime Transport Ltd. CMA CON T & LINES CMA COM#204 Operating Philosophies •⚫ Prioritize risk diversification and strengthen earnings • Commit to CSR and foster a sustainable corporate environment CHT 中國航運股份有限公司 Chinese Maritime Transport Ltd. Diversification Core Values Diligence Discipline • Small yet refined; to leverage against main competition Compliance of domestic and foreign regulations 2019 Investor Presentation 19#2147% Major Operating Entities % of Total Revenue in 2019 1H Inland Trucking, Terminal and Logistics CHT 中國航運股份有限公司 Chinese Maritime Transport Ltd. 51% Shipping Agency and Travel 2% 2019 Investor Presentation 20 20#22CMT Capesize Fleet 船名 年份 船籍 船級 噸載重位 吃水(米) 中華和平 China Peace 2005 香港 ABS 174,413 18.10 中華富進 China Progress 2006 香港 ABS 174,322 18.10 中華榮耀 China Pride 2009 香港 ABS 177,856 18.10 China Triumph 2010 香港 ABS 203,028 18.10 China Prosperity 2011 香港 ABS 203,028 18.10 China Pioneer 2012 香港 ABS 206,079 18.49 中華偉運 China Fortune 2013 新加坡 ABS 206,061 18.49 中華和諧 China Harmony 2016 香港 ABS 179,505 18.10 China Enterprise 2017 新加坡 ABS 207,984 18.50 中華名望 China Honour 2017 香港 ABS 179,562 18.10 Fleet Size: 10 Capesize Bulk Carriers ■ Total DWT: 1.91 Million Tons Average Age: 7.4 Years RCIT 中国航運股份有限公司 Chinese Maritime Transport Ltd. 2019 Investor Presentation 21 21#23● 長順 241-KP Inland Trucking 788 695-AT <-0707 ATL Associated Transport Inc., is one of Taiwan' s largest intermodal container trucking operators, providing inland container drayage and related services CHT 中國航運股份有限公司 Chinese Maritime Transport Ltd. CMT stresses safe, punctual, efficient service and is fully responsive to customers' requirement of transporting empty/laden containers to designated depots and locations Currently owns 266 modern tractors and over 488 semi- tractors 2019 Investor Presentation 22 22#24Terminal and Logistics VOL 中 航 物 流 g ■ CMT Logistics Co., Ltd. is located in Yangmei, Taoyuan County in northern Taiwan ■Inland container terminal with area coverage of 33,429.19 square meters, providing services of consolidation, repairs, warehousing, logistics, and distribution centers for major shipping lines ■ Except for obtaining ISO9002QA certification and Taiwan Customs Bureau' s authorization to operate independently 48 2-46 CHT 中國航運股份有限公司 Chinese Maritime Transport Ltd. 2019 Investor Presentation 23 23#25CMT Air Cargo Department SAUDIA SCARGO CMT Air Cargo Department is the General Sales Agent (GSA) of Saudi Arabian Airlines (Saudia). Saudia is the flag carrier of the Kingdom of Saudi Arabia and a member of the SkyTeam Alliance Saudia has a complete modern fleet a total of 222 aircrafts, including Boeing-777, 787,747F; Airbus-A330, A320. It reaches 109 destinations in KSA and worldwide Image Source: https://www.arabianbusiness.com/transport/398084-saudia-offers-free-whatsapp-data-package-on-domestic-international-flights https://www.flickr.com/photos/canvaswings/15739042055 RCIT 中国航運股份有限公司 Chinese Maritime Transport Ltd. 2019 Investor Presentation 24 24#26Major Investment and Joint Venture Effective Ownership Holding Name of Company Since Interest as of 30th June 2019 Main Operating Activities Taiwan Navigation, Co., Ltd. 50,000-80,000 DWT 2006 10.41% Bulk Carriers Global Energy Maritime 2011 12.00% Co., Ltd. IR DE GEMCO CHT 中國航運股份有限公司 Chinese Maritime Transport Ltd. Crude and Product Tankers including VLCCs 2019 Investor Presentation 25 25#272014-2019 1H Finance Highlights Expressed in thousands of New Taiwan Dollars Year 2014 2015 2016 2017 2018 2019 1H Revenue 3,491,281 3,361,457 3,294,834 3,218,366 3,820,224 1,913,623 Net Profit/(Loss) 332,714 332,787 47,941 98,052 513,711 189,912 EPS 1.30 1.30 0.21 0.5 2.6 0.96 Cash on hand 4,610,003 4,506,458 3,685,514 2,939,548 3,345,205 3,527,249 ROE % 3.19% 3.04% 0.45% 0.99% 5.24% 3.73% ROA % 2.27% 2.08% 0.89% 1.30% 3.48% 1.81% Liability % 50% 48% 52% 53% 50% 51% CHT 中國航運股份有限公司 Chinese Maritime Transport Ltd. 2019 Investor Presentation 26#28Year Cash dividends/ Capital Reduction (NT$) EPS (NT$) 250% 200% 150% 100% Dividends Distribution 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 * 6.00 3.20 2.00 1.00 1.50 1.30 2.50 0.50 0.50 1.6 11.20 7.53 3.92 2.23 1.55 1.30 1.30 0.21 0.50 2.6 54% 51% 50% 42% 45% 0% * 193% 238% 97% 100% 100% 62% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 CHT 中國航運股份有限公司 Chinese Maritime Transport Ltd. ■Dividend Payout Ratio *Cash dividend NT$ 0.20 plus capital reduction NT$2.30 = NT$2.50 2019 Investor Presentation 27 27#29Assets Appendix 1: Condensed Balance Sheet Current assets Property, plant and equipment Intangible assets Other non current assets Total assets Millions of New Taiwan Dollars Dec 31,2018 Jun 30,2018 Jun 30,2019 4,107.046 3,856.622 4,314.985 14,439.746 14,746.688 14,239.537 12.655 14.096 1,863.870 1,761.443 12.245 2,376.370 20,423.317 20,378.849 20,943.137 Liabilities and Equity Current liabilities 2,338.599 2,137.320 3,355.185 Non Current liabilities 7,897.903 8,470.890 7,398.176 Total liabilities 10,236.502 10,608.210 10,753.361 Equity attributable to owners of parent Common stock 1,974.846 1,974.846 1,974.846 Capital surplus Retained earnings Other equity interest Non-controlling interests Total equity Total liabilities and equity CT 中國航運股份有限公司 Chinese Maritime Transport Ltd. 53.411 8,437.441 53.411 8,111.898 53.411 8,311.378 (278.883) (369.525) (149.859) 0 9 0 10,186.815 20,423.317 9,770.639 20,378.849 10,189.776 20,943.137 2019 Investor Presentation 28#30Appendix 2: Condensed Statement of Comprehensive Income Thousands of New Taiwan Dollars 2018 2018 1H 2019 1H Operating Revenues Operating costs Gross profit Operating expenses 3,820,224 1,795,233 1,913,623 2,850,536 1,373,175 1,464,150 969,688 422,058 449,473 362,829 175,249 183,083 Net operating income 606,859 246,809 266,390 Non operating income and expenses (47,626) (35,602) (45,664) Profit before tax 559,233 211,207 220,726 Less: tax expense 45,522 23,018 30,814 Profit (attributable to owners of parent) 513,711 188,189 189,912 Other comprehensive income, net 337,780 247,117 129,024 Comprehensive income 851,491 435,306 318,936 (attributable to owners of parent) Earnings per share CT 中國航運股份有限公司 Chinese Maritime Transport Ltd. 2.60 0.95 0.96 2019 Investor Presentation 29 29#31Appendix 3: Corporate Bonds Issuance Tranche 2016-1 2016-2 2017 Tenor 5 Years 5 Years 5 Years Due Date 03-16-21 03-16-21 Interest Rate 0.88% 1.00% 04-10-22 1.13% Amount (NT$ 100M) 9 14 8 Interest Payment Annually Annually Annually Guarantee Bank Bank of Taiwan Mega Bank Shanghai Commercial Bank CHT 中國航運股份有限公司 Chinese Maritime Transport Ltd. 2019 Investor Presentation 30#32Disclaimer The information and opinions in this report were prepared by CMT. Though the information herein is believed to be reliable and has been obtained from market sources believed to be reliable, CMT makes no representation as to its accuracy or completeness. The material and the information contained herein are provided for general information purposes, and may not be reproduced without the written permission of CMT. CMT shall not be liable to the recipient or any third party for any loss, liability or damage, cost or expense including without limitation, direct, indirect, consequential loss or damage, any loss of profit, loss of use, loss of or interruption in business, loss of goodwill, loss of data arising out of, or in connection with, the use of and the reliance on the information whether in contract, tort, negligence, bailment, breach of statutory duty or otherwise, even if foreseeable. This disclaimer shall be governed by and construed in accordance with Laws of Taiwan, R.O.C. We undertake no obligation to publicly update or revise any forward looking statement contained in this presentation, whether as a result of new information, future events or otherwise, except as required by law. In light of the risks, uncertainties and assumptions, the forward looking events discussed in this presentation might not occur, and our actual results could differ materially from those anticipated in these forward-looking statements. Contact Information Web Site: www.cmt.tw Head Office: 15 Jinan Road Sect 1 Taipei Taiwan R.O.C. Tel:+886(0)2 2396 3282 Fax:+886(0)2 2391 6165 Investor Relations: Spokesperson: Ms. Man-Hung Yeh Tel: +886(0)2 2357 5898 Fax: +886(0)2 2351 3082 Email: [email protected] CHT 中國航運股份有限公司 Chinese Maritime Transport Ltd. 2019 Investor Presentation 31#33CWT Thank You! CMT