RAFFLES INFRASTRUCTURE HOLDINGS LIMITED - CORPORATE PRESENTATION - GEM COMM
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RAFFLES INFRASTRUCTURE
HOLDINGS LIMITED
CORPORATE PRESENTATION
1 Executive Summary & Strategy
01 Executive Summary & Strategy
02 Projects & Pipeline
03 Financial Highlights
Building World
Connections
04 Management
05 Investment Merits
1.1 About Us
Better Infrastructure
Greater Life
• Mainboard-Listed in Singapore Exchange (SGX) – (Stock code: LUY)
• Principally engaged in infrastructure investment in Asia
Improving standards of • Successfully secured large-scale roadway and railway projects and
living with engineering established close working relationships with numerous SOEs and
and technology government bodies
innovation
3
1.2 Strategy
KEY INVESTMENT CRITERIA WORK WITH REPUTABLE PARTNERS (SOE
& GOVERNMENT)
Project participation by state-owned Congregation of financial, HR and
enterprises, public-listed companies or technology resources
high-tech companies As a Singapore-listed company, RI is being
Project is in line with local national policy enabled for more intensive fund raising,
directives regional development experience and
reputable international branding.
Potential for long term sustainable
development
Working with local authorities
4
1.3 Target Business Segments
Energy Construction Environmental Transport Mail &
Including: Including: Water Infrastructure Telecommunications
electricity, gas, hospitals, public Conservancy Including: Including:
natural gas, new housing, office Including: reservoirs, aviation, railway, telecommunications,
energy, etc. buildings, hotels, dams, sewage shipping, communications,
schools, treatment, air highways; bridges, information networks,
industrial parks, purification, etc. tunnels, subways, etc.
etc. light rail elevated,
public
transportation,
parking lots, etc.
To strengthen the city infrastructure, industrial technology transformation
and the development of tertiary industry
5
1.4 The Public-Private Partnership (PPP) Model
Public-Private Partnership (“PPP”)
• Cooperative agreement between the public and
private sectors
• A common business model to fund infrastructure
projects Common
Public Private
• As of September 2018, 3,812 projects have been signed Interest
in China. with an investment of 6.1 trillion RMB
(Source : Xinhuanet)
" The Belt and Road Initiative" emphasizes
“Communicating, Building and Sharing“
and building a community with
integration of interests.
6
1.4.1 Working Together as One
Local Government/
Experienced
Operators
Identify
Infrastructure need Operation
PPP
Local Resource Capital Investment
Government Congregation & Fund Raising
Propose Solution
Construction
Resource Established
Congregation Construction
Companies 7
1.4.2 PPP Earns both Construction and Investment Profit
Public-Private
Partnerships (PPP)
Investor
Investment
Profit Infrastructure Projects
Infrastructure
Projects
Construction
Profit
Total Return
Contractor Construction
Investment Profit
Profit
Getting both the Construction and
Investment Profit
8
1.5 Partnership - Transport Infrastructure
Strategic Alliance
China Railway 23rd. Bureau Group Co., Ltd. Tianfu Railtech Valley
China Railway International Group
Affiliated to China Railway Construction Co., Ltd. Technological and innovative enterprises, mainly
focusing on the core technology of the rail transit
industry.
It brings together the world's top scientists and
consultants, and has strong independent R&D
capabilities.
9
1.5.1 Tripartite Agreement to Form Consortium
Consortium with: Objective: Planning to bid two tourist
railway projects namely:
o China Railway 23rd. Congregation of financial o BASHAN RAILWAY (巴山
Bureau Group Co., Ltd. resources, operational, 大峡谷) – Contract
(中国铁建-23局) design and construction Value S$56m
expertise to increase global o MEISHAN RAILWAY (眉山)
o Tianfu Railtech Valley
competitiveness – Contract Value
(天府轨谷)
S$120m
*Converted by 1 SGD = 5 RMB
• Ranked 58th in 2017 Fortune Global 500 • Technology company incorporated in
• Ranked 14th in 2017 China 500 Chengdu
• 3rd in 2015 ENR’s Top 250 Global • Principal business activities include
Contractors R&D on new technologies to reduce
• Largest engineering contractor in China tourist-related transportation pollution
101.5.2 Potential Partnership- Water Conservancy
Beijing Capital Group Co., Ltd. is a large
state-owned enterprise directly under the
supervision of the State-Owned Assets
Supervision and Administration Commission
of People’s Government of Beijing
Municipality (Beijing SASAC)
Beijing Capital Group has established its
core business in the four fields:
o Environmental protection;
o Infrastructure;
o Real estate; and
BEIJING CAPITAL GROUP CO., LTD. o Financial services
With core competitive edges in capital
operation, industry collaboration,
innovation and R&D.
112 Projects & Pipeline
01 Executive Summary & Strategy
02 Projects & Pipeline
03 Financial Highlights
Building World
Connections
04 Management
05 Investment Merits
122.1.1 Project: Xingwen County Roadway
About Reconstruction of provincial, county, township and
other roads, with a total length of about 220 km
Construction Period Project is expected to continue to contribute to the
Group’s profitability in FY2020
Chengdu Customer Xingwen County government
Project Value SGD 110m* (Est Construction Cost)
Raffles Infrastructure’s 90.91%
Chongqing Stake
Financing Structure Equity (est 30%) and Debt Financing (est 70%)
Xingwen County
Project Est Return Cost of construction + 8.8% return/year on
construction cost amortised over 10 years
(Recognised Upon Delivery Of Land Parcels)
Status Construction Progress 60-70%
5 out of 26 parcels delivered
(Est 23% of revenue has been recognised so far)
Contributed to FY2019’s Payment Terms Xingwen County government will make
progressive payment within the next 10 years upon
strong earnings turnaround completion of each road parcel
(The Group has already started receiving payment from
the Xingwen County government)
*Converted by 1 SGD = 5 RMB 132.1.2 Project: Xingwen County Roadway
State-owned wholly owned 90.91%
construction company
• Share capital of RMB 500m
Construction
• Highest and second
Yibin Highway 3.18% 5.91% Local
highest level of Government
construction qualification & Bridge
To provide related
for national road Construction
construction
Bo Dao Road Construction companies
construction and Co., Ltd
capabilities
engineering construction Co., Ltd
respectively2.1.3 Project: Xingwen County Roadway
Xingwen County Revenue
Recognition
Government
Cost of construction +
8.8% return/year on construction cost
amortised over 10 years
Guaranteed Profit
*Cost of construction and return is
Costs underwritten by Xingwen County
Government, the local authority
• Interest costs
Bo Dao Road • Sub-contractor In the event of a construction cost
Construction Co., Ltd costs overrun (above the budgeted
S$110m), it shall be borne by Yibin
Highway & Bridge Construction Co.
152.2 Project: Dengfeng City Railway
Insufficient investment in tourism
infrastructure
Underdeveloped and outdated transportation
system
Reduced accessibility to Inability to cater to surge in
tourist attractions visitors demand during
holidays and weekends
Traffic congestion and breakdown of
transport system
162.2.1 Project: Dengfeng City Railway
70 km tourist railway network
to be completed in 4 phases
connecting famous historic
Description
attractions like Zhongyue
Temple, Songshan Study
Courtyard and Shaolin Temple
Value SGD 1.2 billion*
Expected completion end of
Construction
2026
Working with govt on project
Status route design
(We have already found investors for
the project)
Tourist board of the People’s
Client
Government of Dengfeng
*Converted by 1 SGD = 5 RMB 172.2.2 Project: Dengfeng City Railway
To complete the building To complete the building To complete the To complete the
of tourist railway of tourist railway building of tourist building of tourist
between Songshan between Songshan railway between railway between Safari
Tourist Centre (嵩山游客 Tourist Centre (嵩山游客集 Zhongyue Temple Zoological Park (野生动
集散中心) to Shaolin 散中心) to Songshan Study (中岳庙) to Luya 物园) and
Temple Tourist Area (少 Courtyard (嵩山书院) and Waterfall (卢崖瀑布) Chaoyanggou Opera
林景区) Zhongyue Temple and Safari Zoological Town
(中岳庙) Park (野生动物园) (朝阳沟戏曲小镇)
PHASE 1: PHASE 2: PHASE 3: PHASE 4:
(2018 – 2020) (2020 to 2022) (2022 - 2024) (2024 - 2026)
Estimated distance: Estimated distance: Estimated distance: Estimated distance:
15 km 15 km 20 km 20 km
Estimated contract value: Estimated contract value: Estimated contract value: Estimated contract value:
SGD 260 million* SGD 260 million* SGD 340 million* SGD 340 million*
*Converted by 1 SGD = 5 RMB 183 Financial Highlights
01 Executive Summary & Strategy
02 Projects & Pipeline
03 Financial Highlights
Building World
Connections
04 Management
05 Investment Merits
193.1 Financial Highlights
Deconsolidated Fabrics operations since 3QFY19
Infrastructure segment started to contribute
S$ m only from 4QFY19
50
42 Strong turnaround in profitability with
40 contributions from infrastructure segment –
Xingwen County Project
30
• 5 out of 26 parcels delivered
20 • Est 23% of revenue has been recognised
7 from the project so far
10 5
• The Group is expected to recognise the
0 rest of the revenue from the Xingwen
-1 FY2018 FY2019 County project in FY20, setting up for a
-10
potentially very strong FY20
Adjusted Net profit to owners Sales
Adjusted FY2019 net profit to owners of S$6.6m
translates to a PE of only 4.5x
• Adjusted for Extraordinary gain from
acquisition of BoDao Infrastructure
*Adjusted Net profit to owners- excluding extraordinary gain
segment and one off impairment to
*Converted by 1 SGD = 5 RMB Fabric operations
203.2 Financial Highlights
Key Highlights (S$ m) FY2019 As at 2 Sep 19
Revenue 41.8 Price S$0.435
Net profit 7.9 Market cap (SGD m) 29.6
Net Profit to owners 6.5 YE 6/2019
Adjusted Net Profit to owners* 6.6 52 wk high/low (S$) 0.550/0.190
P/E 4.5 YTD % change +35.9%
P/B 0.7
Free Float % 16.1%
Return on equity 20.0%
Net D/E -52.6%
Est Dividend yield N/A
*Adjusted for other expenses and extraordinary gain
Converted by 1 SGD = 5 RMB
214 Management
01 Executive Summary & Strategy
02 Projects & Pipeline
03 Financial Highlights
Building World
Connections
04 Management
05 Investment Merits
224.1 Management Team
MR CHOO HAN KIAT, ERIC
Executive Director & Chief Executive Officer
o More then two decades of experience in the
finance field with previous positions for global
MNCs like Hewlett Packard and Apple Inc.
o Since 2007, Eric has been involved in the
management of many cross-industry and
multi-disciplinary financial management,
mergers and acquisitions and corporate
investment and financing projects in Asia.
Management experience in
international MNCs and strategic o Successfully provided billions worth of
relationships with government financial services for central and state-
agencies owned enterprises as well as government
related agencies, setting the groundwork for
Conduce in overseeing and future strategic partnerships.
securing of new projects
234.2 Management Team
MR YANG ZHI
Chief Operating Officer
o Asian-Pacific Region Deputy General Manager at China
Railway Construction Corporation International Ltd
o General Manager role of CRCCI (Bangladesh) Ltd., from
2015 to 2018
o Head of Overseas Department of the China Railway 23th
Bureau Co., Ltd. from 2001 to 2014
Experience and strategic
o Head of Technology Department of the Zhuzhou Bridge relationships with major
Factory from 1988 to 2000. construction companies –
Bachelors degree awarded by the Faculty of Electronic Help in overseeing construction and
Engineering from Changsha Railway College, specialising in forming of strategic key partnerships
auto control.
244.3 Management Team
MR ALLAN POH-CHYE TAN
Special Advisor
o Principal Lawyer, Allan Tan Law Practice, and practices in
the field of corporate finance, regulatory and compliance
laws.
o Admitted to the Singapore Bar in 1994.
o Lead independent director of Nico Steel Holdings Limited
which is listed on the Mainboard of the SGX-ST,
independent director of CNMC Goldmine Holdings Limited,
listed on Catalist of the SGX-ST.
o Bachelor of Laws (Honors) degree from the University of
Buckingham (United Kingdom) and a Master’s degree in
Comparative Business Laws from the London-Guild
University.
Legal Experience – Help in legal
advisory of project deals o Called to the English Bar as a Barrister-at-law by the
Honorable Society of Gray’s Inn
255 Investment Merits
01 Executive Summary & Strategy
02 Projects & Pipeline
03 Financial Highlights
Building World
Connections
04 Management
05 Investment Merits
265.1 Investment Merits
Positioning Valuation Xingwen County Project
Strong Pipeline of Current market cap
≈ money raised in Trading at Stable cashflow
Projects
recent share attractive PE of contribution for the
Current projects placement only 4.5x next 10 years
• Xingwen County Roadway From progressive payment by
• Dengfeng City Railway Xingwen county government
In Sep 18, Raffles Infrastructure Based on FY19 adjusted net profit
successfully raised about S$30m
Currently Bidding for • Xingwen County project which
from a share placement at
• Bashan Railway formed nearly 100% of FY19 net
S$0.60/share, including strategic
• Meishan Railway Project
major shareholder, state owned
profit, only started to contribute “Guaranteed” Profit
• Monorail in Songkhla, from 4QFY19.
enterprise, China Capital Group
• Light Rapid Transit System • In the event of a construction
• Currently, only 23% of sales from
Project in Bangladesh Current investors will be cost overrun, it shall be borne
the project was recognized, with
investing at a steep discount to by Yibin Highway & Bridge
the remaining sales expected to
strategic investor Construction Co.
be recognized in FY20.
• Providing strong earnings
Establishing Track visibility for FY20.
Record
RI’s involvement in reputable
mega projects such as Low customer
Dengfeng City railway is credit risk
expected to raise the profile
of the Group, strengthening For Xingwen county project-
its track record for future project payment is underwritten
projects bidding. by Xingwen County Government,
the local authority
27For investor relations enquiries:
Raffles Infrastructure Chan Hui Si
admin@rafflesinfrastructure.com huisi@gem-comm.com
286 Appendix—Industry Research
Shortage of quality Infrastructure in Asian Developing Countries
According to the Asian Development Bank (ADB)report, infrastructure needs in developing countries
in Asia will exceed US$22.6 trillion through 2030, or US$1.5 trillion per year, if the region is to maintain
growth momentum, according to a new flagship.
Infrastructure in developing countries in Asia remains far from adequate. More than 400 million
Asians still lack electricity; roughly 300 million have no access to safe drinking water and 1.5 billion
lack basic sanitation. In many countries, power outages constrain economic growth.
Between 2016 and 2030, the region needs to invest US$14.7 trillion for power, US$8.4 trillion for
transport, US$2.3 trillion for telecommunications, and US$800 billion for water and sanitation
improvements. In the transport sector, shifts from more carbon-intensive modes of travel (private
cars) to less carbon-intensive modes (public transit and railways) will require investments.
Source: Asian Development Bank
296.1 Belt and Road 一带一路
What is Belt and Road Initiative (B&R)?
Introduced in 2013, a global development strategy
spearheaded by China to improve trade and economic
一 带 一 路 integration across Asia, Europe, and Africa
ONE BELT ONE ROAD
How it will be implemented?
• Uses free-trade agreements and infrastructure
projects – including roads, ports and railways – to
create a modern Silk Road spanning some 65
countries
• Expected to link more than 60 countries,
accounting for over 30% of global GDP, 62% of
population and 75% of known energy reserves
At maturity, investment in the Belt and Road Initiative is
expected to reach US$4 trillion.
Source: worldbank, enterprisesg.gov.sg
306.1 Belt and Road 一带一路
How will it be financed?
• China established the US$40b Silk Road Fund in early
2014 to fund the scheme’s infrastructure projects
一 带 一 路 • Chinese financial institutions and multilaterals such
as Asian Infrastructure Investment Bank (AIIB), the
ONE BELT ONE ROAD
China-backed global bank and the New
Development Bank (NDB), a Shanghai-based bank for
the BRICS (Brazil, Russia, India, China, South Africa)
countries
• Public-Private Partnership (“PPP”) – funding from
private companies, with suitable incentives and
safeguards
China has invested US$90b in projects while banks
have provided upwards of US$300b in loans,
according to Reuters citing Chinese officials
Source: worldbank, enterprisesg.gov.sg
316.1 Singapore’s Criteria Role in Belt and Road
In Apr 2019, Singapore and China signed the Implementation
Framework for enhancing Singapore-China Third-Party Market
Cooperation, the highlighted sectors for collaboration under the B&R:
• Logistics
• e-commerce
• infrastructure
• professional services such as financial and legal services
Singapore is China’s largest foreign In Sep 2017, China’s President Xi and Singapore’s PM Lee reaffirmed
investor since 2013, and one of the three platforms of collaboration under the B&R
China’s top trading partners in ASEAN
• Infrastructural connectivity
• Accounts for 83% of inbound • Financial connectivity and
investments to China from Belt • Third-country collaboration, such as joint training for officials
and Road Countries, and from B&R countries.
• 25% of China’s outbound
investments to these partner
countries
326.2 Singapore’s Role in Bangladesh Infrastructure
During the visit, a slew of agreements were signed, forging
more business opportunities between Singapore and
Bangladesh.
International Enterprise Singapore signed a pact with Bangladesh's
Public Private Partnership Authority to help Singapore companies
participate directly in PPP infrastructure projects in Bangladesh.
Bangladesh government announced a 38% increase in the 2019
budget for transport and 44% increase for power.
Source: The Straits Times
Demand for Bangladesh infrastructure solutions has surged,
In March 2019, PM Sheikh Hasina
especially in:
visited Singapore.
• Power
• Energy
• Transport
• Logistics
• Ports
336.3 Cooperation between Singapore and Vietnam
Singapore established Strategic Partnership with Vietnam in 2013.
Vietnam-Singapore Cooperation Centre plans to widen the type of
aid Singapore offers to Asean neighbours, such as
• Vietnam
• Cambodia
• Laos
• Myanmar
They also agreed to step up cooperation in
Source: 联合早报 • Technology and innovation
• Food and agriculture trade
In March 2019, DPM Teo Chee Hean • Air and maritime connectivity
visited Vietnam and opened • Facilitation of trade and investment
Vietnam-Singapore Cooperation
Centre in Hanoi.
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