June Woongjin Coway

Transcription

1 June 2006 Woongjin Coway 0

2 Disclaimer This presentation contains historical information of the Company which should not be regarded as an indication of future performance or results. This presentation also contains forwardlooking statements that are, by their nature, subject to significant risks and uncertainties. These forward-looking statements reflect our current views with respect to future events and are not a guarantee of future performance or results. Actual results may differ materially from information contained in the forward-looking statements as a result of a number of factors beyond our control. 1

3 Today s agenda Company overview Investment highlights Financial update

4 Our history First air cleaner production and sales Listed on KRX Merged with Woongjin Coway Development Founded 1989 Started bidet rental service Launched system kitchen brand Entered water purifier business Launched water purifier rental service Started air cleaner rental service Started food waste processor rental service Woongjin Coway is an integrated product and rental service provider focusing on high-end health and environmental products 3

5 Current ownership structure and subsidiaries Current ownership* Major shareholders and related parties Stake % Seok Keum Yoon 27% Seok Keum Yoon 27.2% Woongjin ThinkBig 5.2% Direct Family Members 2.6% Management 1.9% Others 62% Other related parties 1% Woongjin ThinkBig 5% Family Members Mgmt. 3% 2% Other related parties 1.3% Subsidiaries Woongjin Coway (Thailand) Co., Ltd. Woongjin Japan Stake % Description 100% Thailand sales subsidiary 50.0% Japan sales subsidiary Source: Public filings as of June 23, 2006 Note: Foreign ownership of Woongjin Coway is 34.6% as of June 30, 2006 Based on total shares outstanding of 74,263,122 Subsidiaries sources as of June 30, 2006 Woongjin Ho-wi Home Appliance Co., Ltd. Woongjin Coway (M) SDN. BHD 91.9% Chinese subsidiary 100% Malaysia subsidiary 4

6 Today s agenda Company overview Investment highlights Financial update

7 Key investment highlights Robust demand for well-being living products Established rental business model Extensive CODY network covering broad customer base Dominant leadership with strong brand power and focus on R&D Focus on enhancing shareholder value 6

8 Demand of well-being living products is robust with significant room for growth Woongjin Coway s products Product Market Share Korean Penetration Expected Saturation Rate Growth Rate (Q1 05->Q1 06) Water purifier 46% 25% 55%~60% 18.0% Air purifier 42% 9.5% 45%~50% 17.9% Bidet Japan 47% 10% 50%~60% 29.2% Source: National Statistics Office, Korean Water Purifier Producers Commission, Japanese industry press 7

9 Strong revenue stream with the solid income structure Rental program Lump sum monthly rental charge payments 1 ( ) / 60 2 Membership fees 3 Product Member-ship service 1 Rental program 2 Outright sale with lump sum payment : % of total revenues 3 Membership program 82.4% 83.7% 4.5% 3.5% 7.2% = + 7.7% 05 Q1 06 Monthly service fee : Approx. W21, Q1 06 ASP for water purifier : Approx. W1,590, Q1 06 Monthly membership fee : Approx. W13,000 Note: 5.8% of 2005 and 5.1% of Q1 06 revenues derived from other sources, including small electrical home appliances prior to discontinuation(only for 2005) following the merger, system kitchen, and overseas sales 8

10 Illustrative cash flow structure of rental business Hypothetical cash flow structure of rental business (standard water purifier model : CP-01) [unit : KRW] 1,200,000 40,000 1,000,000 20, , , ,000 mth1 mth2 mth3 mth4 mth5 mth6 400,000-40, ,000-60, ,000 at sale yr1 yr2 yr3 yr4 yr5-80, ,000 Cash flow Cash flow in accounting perspective Source: Company ¹ Rental fee with VAT excluded 9

11 Distribution platform supported by an extended network of CODYs Unparalleled sales network CODY Number of Cody agents 11,168 Unique network marketing with a direct and personalized sales agent program CODY (COway lady) 7,745 8,561 9,434 Leverage allowing the company penetrating into new businesses Gaining instant market leadership through constant on-site customer coverage 1,487 3,085 4,828 '00 '01 '02 '03 '04 '05 May '06 Net increase in Bidet rental subscribers '00 '01 '02 '03 '04 '05 Q1'06 Woongjin Coway s unique CODY agent system enables the company to maintain its dominant leadership in the rental service markets in Korea 10

12 Broad customer base Subscribers(Rental + Membership) account by products (thousands unit) 2,664 Water purifier Air cleaner Water softener Bidet Subscriber CAGR: 19.2% ( 03 06) 3,246 3,775 3,899 [Cancellation trend] 1.10% 1.09% 1.00% Q1 05 Q4 05 Q Q With a more diversified product portfolio targeting the same customers, there are plenty of cross selling opportunities to fuel our future growth as 80% of our customers use only one rental product 11

13 Woongjin Coway enjoys a dominant market position due to unparalleled brand recognition No.1 brand recognition in Korea Product Top of mind brand Jan 2005 Jan 2005 Grand prize, Grand prize, 2005 First Brand 2005 First Brand Award by Korea Award by Korea Customers Customers Forum Forum Mar 2005 Mar st prize, Korea 1st prize, Korea Brand Power Brand Power Index (K-BPI) Index (K-BPI) Jun 2005 Jun 2005 Korea Best Korea Best Brand Award by Brand Award by Hankyung Hankyung Economic Daily Economic Daily Sep 2005 Sep st prize, Korean 1st prize, Korean Customer Customer Satisfaction Satisfaction Index by Korea Index by Korea Management Management Association Association Consulting Consulting Water purifier 94.3% Air purifier 62.7% Bidet 90.5% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Top position as a health and environment company [unit : %] Apr Apr st 1st prize, prize, Global Global Brand Brand Award Award by by Japan Japan Management Management Association Association Apr Apr Korea Korea Marketing Marketing Award Award by by Korea Korea Management Management Association Association Consulting Consulting Oct Oct st 1st prize, prize, Customer Customer Wellbeing Wellbeing Brand Brand Award Award by by Korea Korea Standard Standard Association Association Nov2005 Nov2005 Gold Gold prize, prize, Korea Korea Customer Customer Satisfaction Satisfaction Award Award Company P WJ Coway Company S Company L Company C Source: Gallup research as of Dec

14 Focus on enhancing shareholder value Dividend payout policy Woongjin Coway s DPS 1 (KRW) Strong cashflow generation Woongjin Coway s EBITDA 2 (KRWbn) Share buyback & cancellation Share buybacks and cancellations 2003: 1 million share buyback 2004: 5 million share buyback 2005: 3 million shares cancelled Focus on enhancing shareholder value Increase company transparency Merger with Woongjin Coway Development eliminates complex related-party transactions 1 Figures of Woongjin Coway Development and 2004 figures of pre-merger Woongjin Coway Development 13

15 Today s agenda Company overview Investment highlights Financial update

16 Sales & profit trend Sales trend (KRW billions) EBITDA (KRW billions) Woongjin Coway (before merger) Woongjin Coway Development Woongjin Coway (post-merger) EBIT (KRW billions) 1, , Q E EPS (KRW) Q E Woongjin Coway (before merger) Woongjin Coway Development Woongjin Coway (post-merger) Q E 1,439 1, E The combined company will benefit from the stellar financial performance of Woongjin Coway Development with higher top line and bottom line growth 15

17 Other financial information Total debt and cash (KRW billions) Total debt Cash Net debt Q Rental asset and capital expenditure (KRW billions) Rental Asset Capital expenditure E 16

18 Appendix Income Statement Balance Sheet 17

19 Income statement (KRW billions) Sales ,008.1 Growth 0.1% 21.8% COGS % of sales 32.1% 36.7% 36.1% Gross profit Gross profit margin 67.9% 63.3% 63.9% Selling and administrative expenses Operating income Operating income margin 10.5% 13.5% 9.6% Non-operating income (expenses) (4.7) (10.9) (10.9) Ordinary income Ordinary income margin 9.9% 12.2% 8.5% Income tax Net income Net income margin 7.0% 8.6% 6.0% Note: 2003 and 2004 figures are for Woongjin Coway Development 18

20 Balance sheet (KRW billions) Cash Short-term financial instruments, investment securities and loans Trade, accounting and other receivables Inventories Other current assets Total current assets PPE, net Intangibles, net Other non-current assets Total assets Trade payables ST borrowings Accounts payable-other Other current liabilities Total current liabilities Debentures Other non-current liabilities Total liabilities Total shareholders' equity Total liabilities and shareholders' equity Note: 2003 and 2004 figures are for Woongjin Coway Development 19