Daekyo Co., Ltd Investment Conference. May 2004

Transcription

1 Daekyo Co., Ltd Investment Conference May 2004

2 Executive Summary

3 Brief History 2000 ~ Present 1975 ~ 1989 January 1976 Founded the Korea Gongmun Math research academy Published the Noonnoppi Math December 1986 Incorporated Daekyo Co., Ltd 1990 ~ 1999 July 1991 Changed the brand name from Gongmun to Noonnoppi June 1999 Noonnoppi Math selected as a long-term hit product by the Korea Management Association The subscription members reached 2 Million July 2000 Established an Educational Internet portal site, edupia.com October 2002 Selected as the Best Coporation at the Human Resource Management Awards April 2003 Released E.nopi Math for the overseas market February 2004 Successfully listed on Korea Stock Exchange market(kse) 3

4 Highlights Dominant market leader in weekly home-tutoring market and high quality products (2003 sales, net profit of billion won and 60.9 billion won, respectively) Increasing number of stocks owned by Foreign Investors since IPO Ample cash flow on cash-based sales Growth potential of robust domestic education market growth Growth potential of diversified revenue sources by new businesses launched Trust-worthy management and Shareholders ownership structure 4

5 Highlights Dominant market leader in weekly home-tutoring market and high quality products Brand Leader Stable & high dividend policy 6 consecutive-year winner of Brand Power award by Korea Management Association(KMA) Highest market dominance Strongest brand loyalty Differentiated product [Unit: KRW] 1,350 1,250 1, bn 7.7bn 8.5bn 10.7bn Systematic program of specified level of study, designed to encourage self-study Different product portfolio from competitors Powerful R&D from independent educational research institute and its high asset value Common Stock Preferred Stock 5

6 Highlights Increasing number of stocks owned by Foreign Investors since IPO Common Stocks owned by Foreign Investors Preferred Stocks owned by Foreign Investors Shares in thousand ,000 KRW 60,000 Shares in thousand ,000 KRW 30, , % 50, % 12.19% 12.85% 50,000 40,000 30,000 20,000 10, ,900 22, % 10.53% 11.08% 25,000 20,000 15,000 10,000 5, Feb 27-Feb 31-Mar 30-Apr 6-May Feb 27-Feb 31-Mar 30-Apr 6-May 0 No. of stocks owned by FI Price No. of stocks owned by FI Price 6

7 Highlights Ample cash flow on cash-based sales Weekly home-tutoring business Subscribers : 2.38M Tutors : 14,570 Avg. Monthly fee : KRW 30,000 ~ 35,000 Pre-deposit type sales Sales network nationwide Inelastic to economic cycle Strong cash flow and healthy financials Differentiated business structure Strong cash flow *Trade receivables turnaround: 42.2 times Easier business expansion on organizational flexibility Established & stabilized earnings 7

8 Highlights Growth potential of robust domestic education market Domestic education market Market segmentation (end-2003) [unit: trillion KRW] CAGR 12.8% 17.9 trillion [Source: Daekyo] Largest portion to GDP among OECD nations 2.82% to GDP (highest portion among OECD nations), 4 year CAGR of 12.8% Growth potential of children's education and internet education 8

9 Highlights Growth potential of diversified revenue sources by new businesses s launched Sales from new business [unit: a hundred million KRW] 841 Successful new biz launch & profitability enhancement of Noonnoppi biz Sobics Einstein G-Camp Others CAGR 55.5% 629 Growth Potential Weekly educational material for preschoolers Reading materials for door to door sales Educational institution In-school programs, Soluny, etc Cash Cow Weekly home-tutoring [Noonnoppi[ Noonnoppi] Wide business network : stepping stone for new biz SOBICS Einstein G-Camp Others 9

10 Highlights Trust-worthy management and Shareholders ownership structure Enhanced management efficiency by independent committees To maximize management efficiency To secure management independence Shareholders Ownership Structure May, 2004 Others 14.6% Board of directors CEO COO Inspection Committee Investment review Committee Foreign Investors ESOP 4.7% Relatives 9.3% 12.9% Daekyo Network 58.5% Note: ESOP(Employee Stock Ownership Plan) Based on common shares outstanding 10

11 Contents 1 Business Overview 2 3 Financials & business performance Mid ~ Long term Vision

12 1. Business Overview

13 Business Structure Core business and others Core Biz New businesses Noonnoppi Sobics Einstein G- Camp Others Weekly home tutoring Math, Science, English, Korean & Chinese letters Education for infants Sobics BeBe Korean letters Sobics Orff Door-to-door to-door sales business Little Einstein Encyclopedia Baby Einstein Educational institutes G-Camp Class G-camp Academy Calritz School Biz After-school computer classes Soluny Premium Home Tutoring 742.2bn 18.3bn 23.3bn 9.3bn 9.5bn 13

14 Business Performance Leading education company with stable and sustainable growth [unit: trillion KRW] Sales (in trillion won) Sales and No. of subscribers CAGR 16.5% Subscribers (M) Financial outcome 2003 Sales: 805.4bn, Subscribers: 2.38 M Have shown considerable growth of CAGR of 16.5% during the last 10 years Social reputation Equal opportunity of employment for Man & Woman awarded by Ministry of Labor 03 Customer Satisfaction Management Award 2 consecutive-year winner awarded by KMAC 03 The Korea Management Award awarded by KMA 14

15 Weekly home-tutoring [Noonnoppi] A strong market leader in the weekly home-tutoring market Sales Breakdown Subscribers/Tutors (end-2003) 899.6bn 3.2% 4.6% 805.4bn 7.8% 9.2% 2.38M 1.19M 96.8% 95.4% 92.2% 90.8% 15, , Core Biz Others Daekyo K W J Subscribers Tutors 15

16 Weekly home-tutoring [Noonnoppi] A growing multi-studying rate & Tutor s s average income Multi-Studying Rate Average Monthly Income per Tutor [Unit:subjects studied per subscriber] 2,500 [Unit: thousand KRW] (Note: November, 2003) CAGR 3.1% 2,000 1,500 1, % increase in number of subjects per subscriber Guarantee the highest income in the industry 16

17 New Business [Sobics & Einstein] Expectation of a rapid growth in infants & kids market Education for infants Sales Trends Targeting the age group of infants 0 to 4 Providing high quality educational materials Supplying kids program only designed for kindergarten(newly starts) Door-to to-door sales business [unit: a hundred million KRW] CAGR 68.5% Customers range from infants to elementary students. Sales forces mainly built upon door to door sales and our sales forces manpower. This sales department is believed to generate the synergy with Noonnoppi and Sobics (E) Sobics Note) 2004 sales estimated by Daekyo Einstein 17

18 New Business [G-CAMP] Creating distinctive business strategy G-Camp Expectation of obtaining competitive position through providing various academic services and combining existing business with web-based education. Academy: Synthetic academy designed for 4 to 6 elementary students and middle school students Class: Specialized by each subject mainly for middle to high school students Calritz: English language school for kids Distinctive Positioning Sales Trend 200 [Unit: a hundred million KRW] Quality Class Class Academy CAGR 196.6% Size (E) Note) 2004 sales estimated by Daekyo 18

19 New Business [School Business & Soluny] Aiding public education with after-school computer classes After-school computer classes This business is very meaningful to Daekyo in terms of taking part in building the infrastructure in the public education sector. Among 10 Manifestoes to encourage the role of public education by MOE & HRD; - Running After school program to meet various needs from public schools, students and their parents. - Promoting collaboration between the Industrial sector and public education to make synergies for each other. MOE & HRD: Ministry of Education & Human Resources Development Soluny Proving high quality education & better satisfaction Premium Home Tutoring At present, we have two programs distinguished by Korean & English languages; - DokSeo Forum (Reading, Writing, Discussing from recommended Korean books) - English Forum (Reading, Writing, Listening and small group discussion) 19

20 2. Financials & business performance

21 Financials Financial Status (Unit: a hundred million KRW ) Q 2004(E) Sales 6,805 7,645 8,054 2,149 8,996 Operating Income Net Income Total Assets 3,958 4,224 5,169 6,043 6,356 Total Liabilities 1,773 2,005 2,153 2,079 2,321 Total Equity 2,185 2,219 3,016 3,964 4,035 Debt Ratio 81.2% 90.3% 71.4% 54.7% 57.5% Note) 2004 figures are estimated by Samsung Securities 21

22 1Q 2004 results Steady sales growth despite a slow domestic economic recovery Q Q Q (Unit: a hundred million KRW ) Increasing rate(%) Q Q Sales 2,149 2,051 1, Total Costs 1,902 1,950 1,897 (2.43) 0.27 Operating Income Non-operating operating Income (58.32) Ordinary Income Income Tax expenses ,209 Net Income

23 Business Performance Outstanding ROE ratio and higher in Operating Income Comparing ROE with similar companies Comparing Profit rate with similar companies 30% 15% 23.7% 20% 10% 8.2% 8.1% 10% 10.6% 13.8% 5% 4.7% 6.1% 2.5% 0% Daekyo Woongjin Iroonet CASE 0% Daekyo Woongjin Iroonet CASE 23

24 Business Performance Financial Structure Stabilization Showing healthier financial status comparing to similar companies Industry Industry Daekyo (E) Increase in Sales 9.3% 4.9% 12.4% 5.4% 10.5% Operating income rate 5.1% 7.2% 7.3% 8.8% 9.9% Debt ratio 184.0% 109.9% 90.4% 71.4% 57.5% Total equity turnaround times Note) Industry 1: Companies engaged in publication industry (D221) sourced by Korea Bank Industry 2: Average of listed manufacturing companies(except from monetary corporation) sourced by KSE(Korea Stock Exchange) 2003 & 2004 estimations provided by Samsung Securities 24

25 3. Mid ~ Long term Vision

26 Mid ~ long term Vision Learning Materials Diversifying products Diversifying sales channels Developing new markets Supporting Public Education After school program Psychology test Unique program for infants Global Educational Service Provider Cyber Education Edupia.com On-line Education Overseas Education Developing overseas market Modifying program to meet needs from specific country Value Customer Performance Change Management GWP, ERP 26

27 Mid ~ long term Vision Management goal Core Asset First Mover Brand Power 2003 Expanding period To stabilize the existing business as a cash cow To diversify business area through developing new business items 2009(E) Fruit-bearing period To become a global educational service provider through maximizing management capability National network Sales : KRW 805.4bn Sales : KRW 3,000bn Contents development capability Noonnoppi : 92% Others : 8% Noonnoppi : 50% Others : 50% Note) 2009 sales is forecasted by Daekyo 27