Public Expose 2017 Presentation

Table of Contents
1. Company Overview
2. Key Credit Highlights
3. Growth Plans
4. Financial Highlights & Projections
5. Petrochemical Industry Outlook

1.

Company Overview

Chandra Asri Petrochemical at a Glance
Market leadership in highly attractive Indonesia and SE Asia petrochemical market
̶
c. 35% market share of Indonesia’s olefins and polymers production capacity
Long-standing relationships with diverse customer base:
̶
No single customer accounts for more than 7% of consolidated revenue
̶
In 2016, 74% of products by revenue were sold to domestic market
Integration from upstream cracker to downstream polyolefin products

̶
Strategically located near key customers
Low production cost base and operating efficiencies
̶
Benefit from scale of feedstock sourcing and stable supplier relationships
̶
Naphtha cracker utilization rate of 98% in 1H2017
Transformed in 2016 following the 4Q2015 Naphtha Cracker expansion, resulting in
Adjusted EBITDA increase, reinforced balance sheet, and a more diversified product mix
̶
2015 – 2016 Adjusted EBITDA growth of +229%
̶
Reduced debt and Debt / Adjusted EBITDA at 0.8x
Captive distribution network provides significant cost efficiencies
̶
Key customers integrated with CAP production facilities via CAP’s pipelines
̶
Provides significant cost efficiencies to key customers
New projects fueling strategic growth
̶

Projects include partnership with Michelin to expand downstream products, new
polyethylene plants, debottlenecking, and other efficiency improvements
̶
Evaluation of a second petrochemical complex underway
Strong and experienced management team

CAP’s main integrated manufacturing complex

2015 Revenue

US$
1,378m

2016 Revenue

US$
1,930m

Support from Barito Pacific Group and Siam Cement Group
Vital National Object status


We are the largest integrated petrochemical producer in Indonesia, and own the only naphtha
cracker, styrene monomer and butadiene plants in Indonesia
3

25 Year Track Record of Successful Growth
CAP

510m

2015


155m

(US$)

2.1bn

134m


Adjusted
EBITDA

Appointed Toyo Eng. Corp for
construction of SBR Plant
2011
 Refinanced US$150m loan
 Merger of CA and TPI
with lower cost US$94.98m
effective from 1 Jan 2011
7-year term loan
 Completed debottlenecking in Apr 2011
to raise polypropylene
capacity to 480 KT/A


1.9bn

1.9bn


Total
assets
2014

2015

2010
2007



 Added extra furnace,
increasing ethylene
Product
production by 80
expansion
KT/A
through
 Acquisition of 100%

selling of
shares of SMI
Mixed C4

2004
1995

CA



Commercial
production
begins at CAP
with initial
cracker
capacity of 520
KT/A

2004

1992

TPI

1992


1995

1993
1993


Started
commercial
production of
polypropylene
comprising
annual capacity
of 160 KT/A




Increased
capacity of
polypropylene
plant to 240
KT/A

Increased
capacity of
polypropylene
plant to 360
KT/A



SCG acquired 30% of CAP
from Barito Pacific and
Apleton Investments

Limited

2015

2013
2011

2009

2013


Formed JV with
Michelin (SRI) in June
2013 for construction of
SBR Plant



Commenced operation

of Butadiene plant in
Sept 2013



Secured funding for
cracker expansion:

2009


1995

Issued
inaugural
5-year
US$230m
Bond

2010

2007

2017

2016

2016



Completed cracker expansion
project in Dec 2015 to raise
capacity to 860 KT/A

Increased
capacity of
polypropylene
plant to 480
KT/A

2016


Public offering of CAP
I Bonds 2016



Received upgraded
corporate rating from
Moody’s from B2 to
B1 and revised rating
outlook from S&P
from Stable to
Positive B+. Received
idA+ rating from
Pefindo

2017


Received
upgraded
corporate rating
from Moody’s
from B1 to Ba3



US$378m rights
issue in Sep 2017

− US$128m rights
issue in November
2013
− US$265m TermLoan facility

Track record of achieving operational and structured growth
4

Vision and Business Strategy
Vision to be Indonesia’s Leading and Preferred Petrochemical Company
1

Increase capacity and build on leading market position

2

Expand product offerings and further optimize integration along the
petrochemical value chain

3

Develop feedstock advantage to improve cost competitiveness

4

Develop and nurture human capital

5

Continue to strengthen and leverage the Company’s advantage to maintain
premium relationship with stakeholders

6

Maintain and further improve best-in-class operating standards, cost efficiency,
and safety, health and environment
5

Integrated Production of Diverse Products
Capacity (KT/A)
Capacity
(KT/A)

Polyethylene (336)

Naphtha
Ethylene (860)


Naphtha
consumption of
2,450 KT/A at full
capacity

Use of Goods (examples)

Styrene
Monomer (340)
Merchant
market (430)
Polypropylene (480)

Propylene (470)

Pyrolysis
Gasoline (400)

Mixed C4 (315)

Support
facilities

Co-generation
plants

Butadiene (100)

Utilities &
facilities

Water
facilities

Jetty
facilities

(

CAP’s products encompass a wide range across the consumer products value-chain, and its
leading position and strategic location enhances its competitiveness

6

2.

Key Credit Highlights

Key Credit Highlights

Attractive industry outlook

1

Well-positioned to benefit from attractive Indonesian growth
fundamentals

2

3
4

High degree of operational integration

5

Diversified customer base and strategically located to supply
key customers

6
7
8

Indonesia’s leading petrochemical producer with a diverse
product portfolio

Diverse and secured sources of feedstock and raw materials
Strong shareholder support

Highly experienced management team with proven track record of
managing and expanding operations

8

1

Attractive Industry Fundamentals Providing Tailwinds
for Petrochemicals Demand Growth in SEA
Polyolefins Demand in SEA Expected to Outpace Global
Market Growth…
Polyethylene consumption growth (2017 – 2023E CAGR)

(US$/t)

850
800

4,4%

3,9%

3,4%

Polyolefin Spreads Expected to Remain Resilient

750

700
Global

SEA

Indonesia

650
600

Polypropylene consumption growth (2017 – 2023E CAGR)

500

4,7%

4,2%

3,6%

550

450
400

Global

SEA

350

Indonesia

2009

…while Asian Naphtha Prices Remain Below Historical
Average
(US$/t, real prices)

2011

900

2015 2017F 2019F 2021F 2023F

LDPE - Naphtha
HDPE - Naphtha
(US$/t)

1200

2013

LLDPE - Naphtha
PP - Naphtha

Last 5 Years Average

Next 5 Years Average

LDPE – Naphtha

662

754

LLDPE – Naphtha

631

705

HDPE – Naphtha

630

689

PP – Naphtha

582

583

Past 5-year average price: US$713/t

600
300

2009

2011

2013

2015

2017F

2019F

2021F

2023F

Average spreads of key products will be continue to be resilient
Source: Nexant

9

Well-Positioned to Benefit from Attractive Indonesian
Macroeconomic Growth and Consumption Trends
GDP Growth CAGR (2017 – 2020F)

Polyolefins Consumption per Capita(1)(2)(3)
10%

6,8%

6,2% 6,0%

5,6%
4,8%

Germany

1,6% 1,3%

UK

2,0%

US

2,5%

Singapore

Thailand

Malysia

Indonesia

China

Philippines

Vietnam

3,1%

Projected CAGR 2017-2023F

7,8%

India

2

Foreign Direct Investment in Indonesia (2012 – 2016)

Bubble size indicates
demand in 2016, million tons

8%

India 9

6%
4%

Brazil

4

China

Indonesia 3
4 8
FSU
SEA

46

2
CE/WE

28

2%

Japan

5

19

US

24

0%
0

10

20

30

40

50

60

70

Consumption per capita (2016) kilogram per capita

(US$bn)

29,3
28,6

28,5

Domestic trends
29,0

Rising Population

Quality of Life

Product Substitution

Consumer Spending

Urbanization

Manufacturing

24,5

2012

2013

2014

2015

2016

(1) SEA excludes Indonesia
(2) Polyolefins include HDPE, LLDPE, LDPE and PP
(3) FSU means Former Soviet Union, CE means Central Europe, WE means Western Europe
Source: Nexant, IMF, BKPM

10

2

Strong Demand Growth for Petrochemical Products in
Indonesia
End Markets

Total Demand Growth (1)
(2017F – 2023F CAGR)






Plastic films
Containers
Bottles
Plastic bags

PE

Polypropylene







Packaging
Films and sheets
Fibers and filaments
Toys
Automotive parts

PP

Styrene Monomer






Drinks cups
Food containers
Car interiors
Helmet padding

SM

Butadiene





Vehicle tires
Synthetic rubber
Gloves and footwear

Polyethylene

BD

4,4%
3,4%

4,7%
3,6%

10,5%
1,6%

17,7%
2,4%
Indonesia

Global

Petrochemical products are fundamental to the production of a wide variety of consumer and
industrial products, such as packaging, containers, automotive and construction materials
(1)
By volume
Source: Nexant

11

2 Petrochemical Market in Indonesia will Continue to See an

Increasing Gap Between Supply and Demand
Ethylene

Propylene
2,357(1)

(KT/A)

Polyethylene

(KT/A)

(KT/A)

1,900(1)
1.384

1.078

2016

(748)
2020

(KT/A)

765

2016

1.231

179

2020

2023

1.231

(484)

(394)

2016

2020

Butadiene

Styrene Monomer

(KT/A)

(KT/A)

845

137

100

165

178
137

(1.049)

(1.282)

2020

2023

(593)
2023

Capacity

365

347

255

64

2016

366

341
185

36
(748)

1.824

1.625

833

202

2016

1.317

899

2.127

1.894
845

267

(758)
2023

Polypropylene

1.513

1.078
876

811

(457)(1)
(524)

1.078

900

890

860

1.658

1.638

156
(28)

(41)

2020

2023

Consumption

111

2016

2020

18
2023

Gap

Indonesia is expected to remain in deficit and dependent on imports
(1)
Includes unsanctioned capacity of 1MT
Source: Nexant

12

CAP is the Indonesian Market Leader
1

Largest Petrochemical Company in Indonesia(1)

Olefin Top 10 South East Asia Producers(3)
('000 tons per year)

Styrene Monomer

Pertamina

Sumitomo

Chandra Asri

PCG

IRPC

5.000
4.000
3.000
2.000
1.000
0

Total Supply: 0.3M tons

HD

LL

LD

PP

Chevron Phillips

JG Summit

6
PCG

CAP
100%

Import
53%

Total Supply: 1.6M tons

Shell/QPI

('000 tons per year)

IRPC

CAP
29%

Polyolefin Top 10 South East Asia Producers(3)

Chandra Asri

Polypropylene

Total Supply: 1.4M tons

Propylene
Propylene Capacity Addition

TPC

Total Supply: 2.6M tons

Ethylene
Ethylene Capacity Addition

Lotte Chemical
Titan

Import
45%

SCG

7

Lotte Chemical
Titan

Import
24%

Polytama
15%
Pertamina
3%

CAP
24%

PTTGC

LCT(2)
31%

PTTGC

CAP
52%

5.000
4.000
3.000
2.000
1.000
0
ExxonMobil

Pertamina
24%

Polyethylene

SCG

Olefin

ExxonMobil

3

Polyolefins Capacity Addition

CAP is a market leader in Indonesia across all of its products, and a leading player in the region
(1)
By production excluding fertilizer producers
(2)
Refers to Lotte Chemical Titan
(3)
Chandra Asri capacity is inclusive of SCG’s equity in Chandra Asri
Source: Nexant

13

3

CAP is Indonesia’s Largest Petrochemical Producer
Capacities of Petrochemical Producers in Indonesia (March 2017)
Capacity
Polytama

('000 tons per year)
Ethylene

860

Propylene

470

LLDPE

200

200

HDPE

136

250

Polypropylene

480

Others

Total
860

608

1,078
400
386

45

240

765

Ethylene Dichloride

644

370

1,014

Vinyl Chloride Monomer

734

130

864

Polyvinyl Chloride

507

95

202

804

Ethylene Oxide

240

240

Ethylene Glycol

220

220

Acrylic Acid

140

140

Butanol

20

20

Ethylhexanol

140

140

Py-Gas

400

400

Crude C4

315

315

Butadiene

100

100

Benzene
Para-Xylene
Styrene
Total

125

400

298

540

525
838

340
3,301

340
450

1,076

240

1,885

595

940

962

9,449

CAP offers the most diverse product range and is a dominant producer with c. 35% market
share of Indonesia’s olefins and polymers production capacities
Source: Nexant

14

4

Highly Integrated Production Process with Operational
Flexibility
Naphtha
Cracker

Cogen
51.56MW GTG
& 31.25MW STG

Fuel Gas

Ethylene

HDPE & LLDPE
Train 1
HDPE Train 2
Steam & Electricity

SM Plant 1

2 emergency
generators

Naphtha cracker, polyethylene and butadiene plants
source approximately half of the power from PLN and
the remaining half from the GTG, with the STG being used
as backup
 Polypropylene, styrene monomer and butadiene plant
source power primarily from PLN. Two emergency
generators provides part of the power required for the
styrene monomer plants




One of our polyethylene plants is a swing plant that
allows production to be switched between LLDPE and
HDPE based on market demand



Integrated production system allows improvement of
feedstock yields and lower unit cost



Specialised software considers variables such as
product prices, freight, product yield of naphtha and
naphtha prices to determine the optimum ratio of
naphtha grades required



Modular set-up allows units to operate independently,
thus minimizing production disruptions

SM Plant 2

PP Train 1
Propylene

PP Train 2
PP Train 3
Pyrolysis
Gasoline

Mixed C4

BD Plant

Intermediate product
Process plant in Cilegon
Process plant in Serang

Integration allows us to take advantage of operational savings and synergies, and provides
flexibility to respond to changes of key products
15

5 Strategically Located to Supply Key Customers
CAP’s Integrated Petrochemical Complexes

Sulfindo Adi.
EDC, VCM

Santa Fe

Rhone Poulenc SBL
Sulfindo Adiusaha
NAOH, CL2

Sulfindo Adi. PVC
Showa Esterindo

PuloampelSerang
Merak

Integrated Complex


Main Plant Capacity (KT/A)

Styrene Monomer
Redeco
Polychem
Plant
Cont Carbon CB
Trans Bakrie Capacity 340 KT/A
Sintetikajaya
Risjad Brasali
Indochlor
EPS, SAN
Multisidia
Golden Key ABS

Buana Sulfindo
Statomer PVC

− Ethylene: 860

N

Prointail
Unggul Indah AB
PIPI PS and SBL
Mitsubishi Kasei

− Propylene: 470
− Py-Gas: 400
− Mixed C4: 315
− Polyethylene: 336

TITAN PE

− Polypropylene: 480


Butadiene Plant: 100 KT/A



On-Site Power

Amoco Mitsui
Cabot

UAP
Dow Chemical
Siemens KS
Air Liquide

Indonesia

Hoechst
ARCO PPG
Polyprima PTA
Polypet PET
Asahimas
Lautan Otsuka
Dongjin

Cilegon
Cilegon

NSI

Sriwie

Jakarta

Anyer

Integrated Complex
Jetty

Toll Road

CAP Pipeline

Road

Customers with pipeline access

Location proximity to key customers and reliability of supply leading to premium pricing, with
integration of facilities creating high barriers to entry
16

5

Diversified Client Base of Industry Leaders
Sales & Marketing Strategy

Top 10 Customers (2016)
% of
Revenue

Customer
Since

Customer 1

Polyethylene,
polypropylene

7.4%

1995

Indonesia

Customer 2

Ethylene, propylene
and styrene monomer

5.1%

2002

Japan

Customer 3

Styrene monomer and
butadiene

5.1%

2004

Indonesia

Customer 4

Polyethylene,
polypropylene

4.6%

1995

Indonesia

Customer 5
Customer 6

Ethylene
Ethylene

4.5%
4.1%

1995
2007

Indonesia
Indonesia

Strong marketing and distribution platform with nation-wide network

Customer 7

Butadiene, raffinate,
styrene monomer, C4

3.9%

2002

Singapore



Short delivery times result in premium pricing over benchmarks



Onground technical support

Customer 8
Customer 9
Customer 10

Pygas
Propylene
Ethylene

3.7%
2.8%
2.5%

2011
2011
2006

Thailand
Indonesia
Indonesia



Long term relationships with key customers



Connected to production facilities via CAP’s pipeline (ethylene and
propylene customers)



Network of 300+ customers, with diversified clientele

Customer



Top 10 customers account for only 43.6% of revenues in 2016



Majority of top 10 customers have been with CAP for >10 years

Trademarked brand names






“Asrene” for polyethylene products, “Trilene” for polypropylene
products, “Grene” for environmental friendly PE resin products

Products

Top 10 Customers % of Revenue

Location

43.6%

Sales Breakdown (2014 – 2016)
(US$m)

Domestic

514
41%

171
51%

610

1.303
2%

2014

49%

2015

4%

98%

96%

2016

419

256

289

35%

26%

31%

2014

2015
Polyolefin

2016

219

81%
65%

58%

Olefins & by-products(1)
(1)

885

2%

42%
98%

59%

869

Export

2014

74%

2015

82%

139

2016

2.455

1.374

1.923

23%

17%

26%

77%

83%

74%

2014

2015

2016

80%

69%

Styrene Monomer & byproducts

Includes ethylene, propylene, and by-products such as pygas and mixed C4
- Propylene: Majority used as feedstock for polypropylene production internally
- Mixed C4: Majority used as feedstock for butadiene production internally
- Pygas: Primarily sold to SCG

78

19%

18%

20%

2014

2015

2016

Butadiene & by-products

Total

17

6

Stable and Flexible Feedstock Supply
Feedstock Procurement Overview

Main Raw Materials (2016)



Long-standing stable supplier relationships



No material feedstock supply disruption historically



Flexibility in feedstock purchasing (spot vs. contract)
− Avoids single supplier dependence
− 76% of naphtha under contract with major oil trading companies
in 2016



Procurement synergies with SCG



Substantial naphtha storage capacity to support 27 days of
operations

Naphtha Supply (2016)
30%

70%

2014

Naphtha/
Condensate

100%

Benzene

100%

Propylene

40%

60%

Ethylene

100%

C4

100%
Externally Sourced

Internally Sourced

Suppliers of Naphtha (2016)
24%

30%

76%

70%

2015
Contract Purchase

2016
Spot Purchase

Supplier

US$m

%

Vitol Asia Pte Ltd

304.2

35.6%

Marubeni Petroleum C Ltd

237.5

27.8%

SCG Chemicals Co. Ltd

81.8

9.6%

Chevron U.S.A. Inc

78.4

9.2%

Shell International Eastern Trading

69.4

8.1%

Shell MDS (Malaysia) Sendirian
Konsorsium PT. Titis Sampurna
PT Surya Mandala SaKTi
PT Sadikun Chemical Indonesia
Others
Total

26.2
22.0
3.2
0.5
31.6
854.9

3.1%
2.6%
0.4%
0.1%
3.7%
100.0%

Customer-centric approach has resulted in long-standing relationships
18

7

Strong Commitment from Shareholders
Shareholder Structure
Barito Pacific Group

Prajogo
Pangestu
46.26%

(1)

14.82%

Public
(2)

Barito Pacific
Indonesia based conglomerate with business interests in property,
timber, plantation, power generation and petrochemicals



30.57%

Key benefits of partnership


Barito Pacific is committed to the growth and development of CAP
− Available land for expansion
− Financial commitment (e.g. full subscription to 2013 rights offering)

Siam Cement Group

Key benefits of partnership

Thailand’s largest industrial conglomerate and Asia’s leading
chemicals producer
 Invested 30% in CAP in 2011
 Second largest olefins and polyolefins producer in South East Asia





8.35%

Production know-how and sharing of best operational practices
Raw material procurement savings
 Sales and marketing collaboration
 Access to Thai financial institutions
 Accelerate CAP’s expansion plans


Strong backing from long term marquee strategic regional investors committed to the
development of the business
(1)
(2)

Including 4.75% shares of Marigold Resources Pte. Ltd.
Owns 69.23% of PT Barito Pacific Tbk

19

8

Strong Management Team with Substantial Industry
Experience
Board of Commissioners

DJOKO SUYANTO

TAN EK KIA

HO HON CHEONG

President Commissioner
Independent
Commissioner

VP Commissioner
Independent
Commissioner

Commissioner,
Independent
Commissioner

2 years in Industry
2 year with CAP

44 years in Industry
6 years with CAP

2 years in Industry
2 years with CAP

AGUS SALIM
PANGESTU

LOEKI SUNDJAJA
PUTERA

CHAOVALIT
EKABUT(1)

CHOLANAT
YANARANOP(1)

Commissioner

Commissioner

Commissioner

Commissioner

11 years in Industry
11 years with CAP

15 years in Industry
15 years with CAP

11 years in Industry
5 years with CAP

30 years in Industry
5 years with CAP

Board of Directors

ERWIN CIPUTRA
President Director

KULACHET
DHARACHANDRA(1)
VP Director of Operations

BARITONO
PRAJOGO
PANGESTU

LIM CHONG THIAN

SURYANDI

Director of Finance

Director of Human
Resource and Corp.
Administration,
Independent Director

VP Director of Polymer
Commercial

13 years in Industry
13 years with CAP

(1)

Representative of SCG

23 years in Industry
1 year with CAP

12 years in Industry
12 years with CAP

37 years in Industry
12 years with CAP

27 years in Industry
27 years with CAP

PIBOON
FRANSISKUS RULY
SIRINANTANAKUL(1)
ARYAWAN
Director of
Manufacturing
24 years in Industry
1 year with CAP

Director of Monomer
Commercial
15 years in Industry
15 years with CAP

20

Strong Track Record of Delivering Operational
Excellence and Performance
Naphtha Cracker Utilization(1)

92%

100%

97%

98%

97%

98%

TAM/ Expansion tie-ins: Q4/2015
Ramp-up of new capacity: Q1/2016

97%
82%

79%

74%

92%

98%

103% 100%

97%

76%
66%

65%

Unscheduled repair
91%

86%

93%

Q2-17

Q1-17

Q2-16

YTD June
2017

YTD June
2016

Q2-17

YTD
June
2017

2Q2017

4Q2016

3Q2016

2Q2016

1Q2017
116%

116%

100%
88%

80%

Q1-17

YTD
June
2016

1Q2016

89%

74%

Q2-16 Q1-17 Q2-17

103%

Q2-17

91%

96%

117%

107%

Q1-17

92%

97%

100%

Butadiene Plant Utilization

Q2-16

99%

100%

4Q2015

3Q2015

Styrene Monomer Plant Utilization

YTD
June
2016
YTD
June
2017

Polypropylene Plant Utilization

YTD
June
2016
YTD
June
2017

Polyethylene Plant Utilization

2Q2015

YTD
June
2017

1Q2015

YTD
June
2016

4Q2014

Q2-17

3Q2014

Q1-17

1Q2014

Q2-16

2Q2014

11%

Q2-16

8

Plant utilization has remained high due to our operational process optimization initiatives
(1)

In September to December 2015, we conducted a scheduled TAM and expansion tie-in-works in conjunction with our cracker expansion project, which resulted in the
shutdown of our cracker facility for 85 days and limited our production capacity for 2015. 2016 utilisation was reduced due to ramp-up in 1Q 2016

21

8

Strong Success of Both Vertical and Horizontal
Expansion
(KT/A)

Cracker
expansion &
Acquisiton
of SMI

Merger with
TPI &
Increase PE
Capacity

BD Plant
operation



Successfully acquired and integrated SMI and TPI



Expanded naphtha cracker in 2015 to achieve
economies of scale and take advantage of significant
ethylene shortage in Indonesia

Cracker
expansion

3.301

3.301

− Mechanical completion on 9 Dec 2015, on time and
within budget (c. US$380m)

625
2.576
496

2.080

1.510

570

2.676
100
BD: ∆100KT

C3: ∆150KT

− Total actual project cost in line with budget (c.
US$380m)

Pygas:∆120KT
C4:∆95KT

PE: ∆16KT
PP:

C2: ∆260KT

∆480KT(1)

C2: ∆80KT

− Achieved high utilization rates

C3: ∆50KT
Pygas:∆60KT
C4:∆40KT

SM: ∆340KT

2005

2007



2011

2013

2016

Currently undertaking next stage of expansions and
growth

2016

Expansion of production capacity and product range has enabled us to maintain our market
leading position
(1)

Represents addition to capacity due to merger with TPI that had installed propylene capacity of 480 KT/A at the time of merger

22

3.

Growth Plans

23

Strategic Growth Plan (Excluding Second Petrochemical
Complex)

(KT/A)

SSBR
operation, BD
expansion

PE
expansion, &
PP
Debotlenecking

3.968
3.301

3.458
157
SSBR: ∆120KT
BD: ∆37KT

2016

2018

Furnace
revamping,
MTBE and
Butene-1

4.201

4.201

233

510

C2: ∆40KT

PE: ∆400KT

C3: ∆20KT

PP: ∆110KT

MTBE: ∆130KT

2019

2020

B1: ∆43KT

2020

24

Increase Production Capacity
Butadiene Plant Expansion

New Polyethylene Plant



Increase BD capacity by 100 KT/A to 137
KT/A



New facility of total 400 KT/A to produce
LLDPE, HDPE and Metallocene LLDPE



Rationale:



Further vertical integration

− Add value to incremental C4 post 2015
cracker expansion



− Avoid opportunity loss of exporting
excess C4
− Enjoy BD domestic premium and fulfill
SRI’s BD requirement

Increase cracker capacity by modifying heat
internals to increase ethylene capacity from
860 KT/A to 900 KT/A and propylene
capacity from 470 KT/A to 490 KT/A

Rationale:



Estimated cost: US$45m

− Further vertical integration;



Funding structure: 100% internal cash

− Protect and grow leading polymer
market position in Indonesia



Commenced revamp project in March 2017



Proposed start-up: 1Q2020

License: UNIPOL Polyethylene Process
from Univation Technologies, LLC

Funding structure: 100% internal cash



Estimated cost US$350m

Awarded EPC work to Toyo Engineering
Korea Limited (January 2017); EPC start in
January 2017



Funding structure: Debt and Equity



Awarded Toyo Engineering for EPC work
(Sept 17)



Proposed start-up: 4Q2019

Estimated cost: US$42m












Proposed start-up: 2Q2018

Furnace Revamp

25

Expand Product Offering by Moving Downstream
Synthetic Rubber Project (through SRI Joint Venture)


Part of downstream integration strategy and efforts to produce higher-value added products



Partnership with leading global player Michelin (ownership 55:45%)



Production capacity: 120 KT/A



Estimated total project cost: US$570m



Funding structure: US$120m internal cash and the remaining in debt, with debt fully funded by
Michelin



Construction began in November 2015



Proposed start-up: 1Q2018



Completion progress 93.5% per Sept-2017

Process System

Utility System

SRI Plant Site

Tank Farm

26

Additional Expansion and Product Offering Initiatives
PP Debottlenecking


Debottleneck PP plant to increase capacity
by 110 KT/A from 480 KT/A to 590 KT/A



Rationale:

MTBE and Butene – 1 Plant


Production of 130 KT/A and 43 KT/A of
MTBE and Butene-1, respectively



Rationale:

− Demand and supply gap for PP expected
to widen in Indonesia

− Secure supply of MTBE and Butene-1
which are used in the production of
Polyethylene

− Opportunity to increase PP sales


Estimated cost: US$40m



Funding structure: 100% internal cash



Proposed start-up: 3Q2019

Second Petrochemical Complex


Expected to conduct feasibility study for the
construction and operation of second
integrated petrochemical complex



Complex expected to comprise:
− 1,000 KT/A ethylene cracker

− Excess demand for MTBE in Indonesia


Estimated cost: US$87m



Funding structure: 100% internal cash



Proposed start-up: 3Q2020

− Various downstream derivative products


Project expected to cost US$4 – 5bn



Set up new company (PT Chandra Asri
Perkasa) to undertake new project



Shareholding structure yet to be finalized
and CAP is in discussion with various third
parties



There is land available adjacent to main
petrochemical complex which would be
available for future acquisition as necessary

27

4.

Financial Highlights & Projections

Prudent Financial Policies

Foreign Exchange



Maintain natural economic hedge as underlying sales and majority of costs and borrowings are
denominated in US$



Treasury risk management on Rupiah currency risks:
− Sales are hedged via pricing to customers and forward swaps with reputable banks
− Minimum Rupiah cash holdings of up to 10 – 15% of idle cash to meet operational needs



Maximum total debt to capitalization of 40% on sustainable basis



Maximum Net Debt / Adjusted EBITDA of 3.0x



Minimum Interest Service cover of 1.75x



Minimum Adjusted EBITDA / Interest cover of 3.0x

Liquidity



Seek to maintain minimum cash of US$100m at all times

Return on Capital



Seek minimum 15% IRR for new investments



Payout in the amount of c. 40% of consolidated net profit subject to:

Leverage

Coverage

Dividend Policy

− Liquidity, leverage and reserves
− Financial performance / sustainability
− Projected operational and capital expenditure

29

Credit Ratings

Ba3 / Stable
B+ / Developing;
BB- (SACP)
idA+

Outstanding Bonds:


CAP I 2016 Series A: IDR 361,4bn, coupon 10.8% pa., rating idA+, due date 22 Dec 2019



CAP I 2016 Series B: IDR 138,6bn, coupon 11.3% pa., rating idA+, due date 22 Dec 2021
30

Resilient Revenue Driven by Increase in Sales Volume
Revenue by Product Segments

Sales Volume

(US$m)

(KT)

1.116
1.195
936

5
147

101

882
633
523
4
41
71
239

4
88
107

563

239

217

1
60
110

168

196

175

Q2-16

Q1-17

Q2-17

5
64
131

217

456
432

250

370

YTD Jun 2016 YTD Jun 2017

Note:

138
176

131
529

555

560

59
68
116

68
82
114
77
5
70
14
125

70
93
111
70
0
60
45
111

76
6
63
31
110

Q2-16
Q1-17
Ethylene
Mixed C4
Styrene Monomer

Q2-17
Propylene
Polyethylene
Butadiene

225
225
144
8
116
50
161

147
5
130
59

236

YTD Jun 2016 YTD Jun 2017
Py-gas
Polypropylene

TAM in 2015 and ramp-up in 2016.

31

Financial Highlights
Strong financials further enhanced by economies of scale (in US$m)
Gross Profit

EBITDA
292

295

218
156

224

176

Q2-16

Q1-17

Q2-17

172

154

116

123

YTD Jun 2016 YTD Jun 2017
Q2-16

Net Profit
Net Profit
18%
Margin

Q1-17

Q2-17

YTD Jun 2016 YTD Jun 2017

Cash flow from Operations, Capex
17%

12%

15%

CFO

15%

Capex

198
180

174
132
96

125

108
88
66

4
Q2-16

Q1-17

Q2-17

65

55

YTD Jun 2016 YTD Jun 2017

Q2-16

47

37

18
Q1-17

Q2-17

YTD Jun 2016 YTD Jun 2017

32

Average Realized Prices
Olefins

Polyolefins

Others

2.183

1.358
1.201
1.030

1.028
926

983

1.057
975

972

736

710

376

404

406

442

Q1
2016

Q2
2016

Q3
2016

Q4
2016

729
644

551

2015

Ethylene
Naphtha

1.270 1.318

1.226 1.213 1.232 1.200

1.230 1.225 1.201 1.265 1.200

1.249
1.018

963
805

1.270

1.095
957

746
551

466

Q2
2017

Propylene

2015

507

406

442

Q1
Q2
Q3
20162 20162 2016

Q4
2016

376

Q1
2017

1.183

980

941

721
507

1.062 1.033 1.074
1.008

1.284

404

Polyethylene

Q1
2017

551
466

Q2
2017

Polypropylene

2015

376

404

406

442

Q1
2016

Q2
2016

Q3
2016

Q4
2016

SM

Butadiene

507

Q1
2017

466

Q2
2017

Naphtha

Naphtha

33

Gross Product Margins
Olefins

Polyolefins

27,2%

28,7%

32,2%

32,0%

29,9%

28,2%

15,8%
2,0%

2014

7,0%
(0,9%)
2015

2016

1H2016

1H2017

Styrene Monomer and by-products

2014

2015

2016

1H2016

1H2017

Butadiene and by-products
16,9%

8,7%
7,1%

11,1%

6,1%

8,1%

5,0%

2,9%

1,7%
(5,1%)
2014

2015

2016

1H2016

1H2017

2014

2015

2016

1H2016

1H2017

Improving product margins due to higher utilization rates

34

Strong Balance Sheet Supported by Recent
Financial Profile Strengthening
Cash Balance

Debt and Net Debt

(US$m)

(US$m)

463
278

384

212

373

307

156
161
106

Q2-16

Q1-17

Q2-17

Q2-16

Adjusted EBITDA / Interest(a)

Q1-17

Q2-17

Leverage Ratios(b)

(x)

16,0x

16,0x

16,3x

3,6x

3,2x
0,8x

6,9x

Min
3.0x

4,2x

2014

2015

2016

1H2016

1H2017

2,1x
36%

2014

1,6x

0,6x

2,6x
36%

0,2x
27%

2015

2016

Debt to capital

1,1x
32%

1H2016

0,3x
24%

Max
50%

1H2017

Debt to Adjusted EBITDA

Net debt to Adjusted EBITDA

(a) Adjusted EBITDA / Interest calculated as Adjusted EBITDA divided by finance costs. For 1H2017 calculated as LTM Adjusted EBITDA divided by LTM finance costs.
(b) Debt to capital calculated as total debt divided by (total debt + equity). Debt to Adjusted EBITDA calculated as total debt divided by Adjusted EBITDA. Net Debt to Adjusted
EBITDA calculated as Net Debt divided by Adjusted EBITDA. Debt to Adjusted EBITDA and Net Debt to Adjusted EBITDA for 1H2017 calculated as total debt divided by
35
LTM Adjusted EBITDA and Net Debt divided by LTM Adjusted EBITDA respectively.

Capital Expenditure Plan to Pursue Value-Accretive
Growth
Capex Plans Breakdown by Year 2017 – 2019 (US$m)

Sources of Funding


Internal generated cash flows



Proceeds from Rights Issue



Debt drawdown

534

398
303
154
253
81
9
62
12
8

39
45
24
16

30
42
10
11

98

137

19

23

2017F

2018F

2019F

63

BD expansion
PP expansion
Others/TAM
New cracker initial spend

PE expansion
Furnace Revamp
MTBE & Butene-1

Estimated US$1.2b over next 3 years, mainly for Expansion and Debottlenecking
36

5.

Petrochemical Industry Outlook

Ethylene World Supply Growth and Capacity
Ethylene World Supply Growth
(million tons)

(Operating rates)

Actual

250

Forecast

100%

200
90%

150
100

80%

50
70%

0
2009

2011

2013

2015

2017

2019

Ethylene Consumption

Total Capacity (with Unsactioned Capacity)

Operating Rates (with Unsactioned Capacity)

Operating Rates (with No Unsactioned Capacity)

Ethylene Production Capacity: 218MT in 2023
CTO/MTO and
Others
Shale Gas
5%
6%

-

Global ethylene demand
forecasted to grow at c.3.2%
CAGR between 2017 – 2023
As many as 20-26 new ethylene
plants expected to be build
7 – 8 years required from
planning to startup

2021

2023

Total Capacity (with No Unsactioned Capacity)

New Capacity by Region: 25MT (2017 – 2023)

SEA
9%

Asia Pacific (exc.
SEA and China)
1%

Americas
34%

Middle East/Africa
17%

Naphtha
NGLs Cracking
44%

Naphtha/Liquids
Cracking
45%

Europe
19%
China
20%

38

The Petrochemical Industry is in a Long Term Cyclical
Phase
Ethylene Spreads Over Naphtha
Gap over naphtha (US$/t)

% Utilisation

700

100%

600

Average 2013-2016: US$567

Average 2017-2019: US$568
90%

500
Average 2020-2023: US$424
400

80%

Average 2009-2012: US$306
300
200

70%

100
0

60%
2009

2010

2011

2012

2013

2014

2015

Ethylene Delta Over Net Raw Material Cost

2016

2017F

2018F

2019F

2020F

2021F

2022F

2023F

Global Operating Rates with Unsanctioned Capacity

Global Operating Rates with no Unsanctioned Capacity

Petrochemical industry profitability to continue on path of sustainable recovery post 2012 as a
result of improving demand and lower capacity addition
Note: Forecast price is based on Brent Crude at US$55 (2017), US$65 (2018), US$70 (2019 – 2025) per barrel (constant 2016 dollars)
Source: Nexant

39

Strong Demand Growth for Petrochemicals in Indonesia
Ethylene (CAGR ’17 – ’23)

Propylene (CAGR ’17 – ’23)

3,2%

Butadiene (CAGR ’17 – ’23)

5,4%

3,1%

17,7%

2,4%
3,4%
1,7%

5,5%
2,4%

Global

SEA

Indonesia

Polyethylene (CAGR ’17 – ’23)

3,4%

3,9%

Global

SEA

Indonesia

Polypropylene (CAGR ’17 – ’23)
4,4%

4,2%

Global

SEA

Indonesia

Styrene Monomer (CAGR ’17 – ’23)

4,7%

10,5%

3,6%

1,6%
Global

SEA

Indonesia

Global

SEA

Indonesia

Global

2,3%

SEA

Indonesia

Petrochemical demand in Indonesia expected to outpace other regions
Source: Nexant

40

Q&A