INTERIM RESULTS PRESENTATION. August 2017, Hong Kong

Transcription

1 2017 INTERIM RESULTS PRESENTATION August 2017, Hong Kong

2 Disclaimer THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER OR INVITATION TO PURCHASE OR SUBSCRIBE FOR ANY SECURITIES AND NO PART OF IT SHALL FORM THE BASIS OF OR BE RELIED UPON IN CONNECTION WITH ANY CONTRACT, COMMITMENT OR INVESTMENT DECISION IN RELATION THERETO. THIS PRESENTATION MAY CONTAIN FORWARD-LOOKING STATEMENTS. ANY SUCH FORWARD-LOOKING STATEMENTS ARE BASED ON A NUMBER OF ASSUMPTIONS ABOUT THE OPERATIONS OF THE COMPANY AND FACTORS BEYOND THE COMPANY S CONTROL AND ARE SUBJECT TO SIGNIFICANT RISKS AND UNCERTAINTIES, AND ACCORDINGLY, ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THESE FORWARD-LOOKING STATEMENTS. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE THESE FORWARD-LOOKING STATEMENTS FOR EVENTS OR CIRCUMSTANCES THAT OCCUR SUBSEQUENT TO SUCH DATES. THE INFORMATION IN THIS PRESENTATION HAS NOT BEEN INDEPENDENTLY VERIFIED. NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, IS MADE AS TO, AND NO RELIANCE SHOULD BE PLACE ON, THE FAIRNESS, ACCURACY, COMPLETENESS OR CORRECTNESS OF ANY INFORMATION OR OPINION CONTAINED HEREIN. NONE OF THE COMPANY, OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR ADVISERS SHALL BE IN ANY WAY RESPONSIBLE FOR THE CONTENTS HEREOF, OR SHALL BE LIABLE WHATSOEVER (IN NEGLIGENCE OR OTHERWISE) FOR ANY LOSS OR DAMAGE WHATSOEVER ARISING FROM USE OF THE INFORMATION CONTAINED IN THIS PRESENTATION OR OTHERWISE ARISING IN CONNECTION THEREWITH AND NONE OF THEM SHALL OWE YOU ANY FIDUCIARY DUTY IN RELATION TO THIS PRESENTATION. 2

3 Agenda Results Highlights Section 1 Financial Overview Section 2 Business Review Section 3 Future Developments Section 4 3

4 Section1 RESULTS HIGHLIGHTS 4

5 Results highlights For the 6 months ended 30 Jun 2017 (RMB'000) 2016 (RMB'000) Change (%) Revenue 599, , % Gross Profit 216, , % Profit before taxation 110,269 91, % EBITDA 134, , % Profit for the period 73,798 61, % Basic and diluted EPS (RMB) 15 cents 13 cents 15.4% Gross Profit Margin 36.0% 36.0% - EBITDA Margin 22.5% 18.4% 4.1ppt Net Profit Margin 12.3% 9.8% 2.5ppt Return on equity 9.8% 9.1% 0.7ppt 5

6 Section 2 FINANCIAL OVERVIEW

7 Revenue by Product Type For the 6 months ended 30 Jun 2017 (RMB'000) % of revenue 2016 (RMB'000) % of revenue Change (%) Apparel Men s trousers 329, % 348, % -5.3% Accessories, 3,060 Fabrics, 10,078 Men s tops 257, % 265, % -3.2% Accessories 3, % 3, % -8.8% Fabrics 10, % 13, % -24.6% Men's tops, 257,201 Men's trousers, 329,578 Total 599, % 630, % -4.9% Men's trousers Men's tops Accessories Fabrics 7

8 Revenue by Product Style For the 6 months ended 30 Jun 2017 (RMB'000) % of revenue 2016 (RMB'000) % of revenue Change (%) Apparel Casual, 170,844 Accessories, 3,060 Fabrics, 10,078 Business Casual 315, % 356, % -11.3% Business Formal 100, % 184, % -45.8% Casual 170, % 72, % 134.3% Business Formal, 100,109 Business Casual Casual Fabrics Business Casual, 315,826 Business Formal Accessories Accessories 3, % 3, % -8.8% Fabrics 10, % 13, % -24.6% Total 599, % 630, % -4.9% 8

9 Revenue analysis (RMB m) 2,000 1,800 1,600 1,400 1,200 1, ,672 1,874 Revenue 1, H2016 1H2017 Decrease in revenues mainly due to: - distributors cautious market expect of the apparel retail industry - continue the consolidation strategy on the retail network - decrease in wholesale orders due to termination of some of the distribution relationship (m units) (RMB/Unit) Total Sales Volume H2016 1H2017 Average Unit Wholesales Selling Price H2016 1H2017 9

10 Profit & Margin GP and GP Margin EBITDA 1 and EBITDA Margin NP and NP Margin (RMB m) % 36.1% 35.6% 36.0% 36.0% (RMB m) % 24.8% 20.6% 18.4% (RMB m) 22.5% % % 11.1% 9.8% 12.3% H2016 1H H2016 1H H2016 1H2017 YoY decrease in 1H2017 GP was in line with the decrease in revenue. 1H2017 GP margin was the same as the same period last year.. YoY increase in EBITDA margin was in line with the increase in net profit. YoY NP margin increase in 1H2017 was mainly due to decrease in administrative and other operating expenses outweighed the decrease in revenue. Source: Company information 1. EBITDA = Profit from operations + interest expense + income tax + depreciation + amortization of lease prepayments + intangible assets 10

11 Cost Structure Administrative Expenses and Selling & Distribution Expenses ( RMB 000 ) 140,000 21% 16% % of Revenue 120, ,000 54,293 Provsion of bad and doubbtful Debt 80,000 27,866 Advertisng & Promotion, Decoration Fee 60,000 40,000 20,000-29,193 19,162 8,617 8,735 28,003 30,482 12,574 9,839 1H2016 1H2017 Research & Development Costs Other Adminstrative Expenses Other Selling & Distribution Expenses 11

12 Operational Cycle Inventory Turnover Days 1 Trade and Bills Receivables Turnover Days 2 Trade Payables Turnover Days 3 Days Days Days H2016 1H H2016 1H H2016 1H2017 Increase in Inventory Turnover Days in 1H2017 was mainly due to termination with some distributors with slow repayment history which had already placed orders in 2017 spring/summer sales fairs. YoY decrease in 1H2017 was due to lower average trade and bills receivables We normally have 30 to 60 days credit period. 1. Inventory Turnover days = Average Inventory / Cost of Sales x Number of days during the period 2. Trade and Bills Receivables Turnover Days = Average Trade Receivable / Revenue (including value-added tax) x Number of days during the period 3. Trade Payables Turnover Days = Average Trade Payable / Cost of Sales x Number of days during the period 12

13 Cash Flow Statement ( RMB 000 ) Cash and Cash Equivalents 1,200,000 1,000, , ,872 (6,540) (130,440) 821, , , , , Cash and cash equivalents at Net cash generated from Net cash used in investing Net cash used in financing Cash and cash equivalents at (1) 1 Jan 2017 operating activities activities activities (1) 30 Jun Excluded fixed deposits held at banks with original maturity over 3 months and bank deposits pledged as security for bank loans 13

14 Use of Proceeds Purpose of net proceeds Percentage of net proceeds (%) Amount of net proceeds (HK$ m) Used (HK$ m) Amount not yet utilized (HK$ m) Brand promotion and marketing 27% (89.4) 33.4 Research, design and product development 20% 90.9 (26.3) 64.6 Repayment of a portion of bank borrowings 20% 90.9 (90.9) - Distribution network expansion and storefront decoration 13% 59.1 (59.1) - ERP system installation 10% 45.5 (12.8) 32.7 Working capital and other general corporate purposes 10% 45.5 (45.5) - Total 100% (324.0)

15 Section3 BUSINESS REVIEW

16 Distribution Network No. of stores: 1,273 NETWORK DISTRIBUTION IN CHINA 7.8% 1st Tier 33.3% 21.7% 2nd Tier 3rd Tier 37.2% 4nd Tier RETAIL OUTLET IN CHINA 21.5% Stand-alone store 78.5% Located in Department Store and Shopping Mall 16

17 Distribution Channel Management - Comprise 64 distributors and 168 sub-distributors - 13 distributors had relationship with us for >8 years - inviting distributors with deep industry experience, stable working capital and managerial expertise to join our distribution network - A management team is assigned to each region in order to: - solicit, select potential distributor candidates - supervise and communicate with distributor - monitor and conduct on-site inspections of retail outlets - Continue to provide training for our distributors and their management team 17

18 Multi-Channel Marketing Strategy We endeavor to enhance the brand awareness and reinforce our brand image Advertisements Online advertising channel Upgrade of retail stores Presentation events for new products Sponsoring a marathon held in Xiamen The posters, advertising materials and the credit list for events and movie with the Group s logo internet products software value-added services Decorated 19 new stores Renovated 51 existing stores Improvement of in-store design and layout 18

19 Section 4 FUTURE DEVELOPMENTS

20 Future Developments We focus on strengthening our position in the menswear industry and achieving sustainable growth and profitability. Strengthen our design and product development capabilities. Enhance control over the distributors and sub-distributors Continue the retail store consolidation strategy targeting under-performing shops increase the number of its direct retail outlets and strengthen our foothold in Beijing by Beijing retail outlet 20

21 THANK YOU Contact: 21

22 Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended 30 June 2017 (RMB'000) 2016 (RMB'000) Change (%) Revenue 599, , % Cost of sales (383,736) (403,273) -4.8% Gross profit 216, , % Other income 2,911 7, % Selling and distribution expenses (29,001) (41,767) -30.6% Administrative and other operating expenses (67,083) (90,913) -26.2% Profit from operations 123, , % Share loss of an associate (2,000) - N/A Finance costs (10,739) (10,542) 1.9% Profit before taxation 110,269 91, % Income tax (36,471) (29,757) 22.6% Profit for the period 73,798 61, % Other comprehensive income for the period Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of financial statements of subsidiaries outside the Mainland of PRC 3,473 (4,497) 177.2% Total comprehensive income for the period 77,271 57, % Earnings per share (RMB cents) - Basic - Diluted % 15.4%

23 Consolidated Statement of Financial Position As at 30 June 2017 (RMB'000) As at 31 December 2016 (RMB'000) Non-current assets Property, plant and equipment 255, ,929 Construction in progress 306, ,727 Investment properties 24,336 24,930 Lease prepayments 263, ,347 Intangible assets 2,811 2,978 Investment in an associate - - Deposit for acquisition of intangible assets 12,917 9,045 Deferred tax assets 35,939 29, , ,776 Current assets Inventories 95,647 58,169 Trade and other receivables 473, ,068 Pledged bank deposits 62,043 58,200 Fixed deposits held at bank with original maturity over three months - 52,200 Cash and cash equivalents 821, ,872 1,452,852 1,449,509 Current Liabilities Trade, bills and other payables 278, ,782 Bank borrowings 482, ,499 Current tax liabilities 23,086 22,624 Amount due to controlling shareholders 31, , ,905 Net current assets 636, ,604 Total assets less current liabilities 1,538,800 1,457,380 Non-current liabilities Deferred tax liabilities 40,340 36,440 Net assets 1,498,460 1,420,940

24 Consolidated Statement of Financial Position As at 30 June 2017 (RMB'000) As at 31 December 2016 (RMB'000) Capital and reserves Share capital 3,819 3,819 Reserves 1,494,641 1,417,121 Total equity 1,498,460 1,420,940