Lungyen Life Service Corporation The best life service provider in the Global Chinese Market

Transcription

1 Lungyen Life Service Corporation The best life service provider in the Global Chinese Market

2 Top and Only of Lungyen Top-one life service brand in Taiwan Top-one market share in pre-need contract market The first one to set up trust fund for pre-need contract The only life service group with vertical integration The only designed-cemetery from Tadao Ando in Taiwan The only listed life service company in Taiwan Top-one market capitalization in the Global Chinese Market Lungyen keeps creating Top and Only 2

3 Table of content Profile 3

4 Company Profile Stock Code: 5530 TT / 5530.TWO Market cap: US$ 1.2 bn Outstanding shares: mn Rank 1 2 Name SERVICE CORP INT HILLENBRAND INC Ticker SCI US HI US MktCap (US$MN) $4,059 $1,559 Free Float: 35.0% 3 DIGNITY PLC DTY LN $1,231 Founded in 1992/02, No. of employee: 409, including 205 funeral directors LUNG YEN LIFE SERVICE CORP INVOCARE LTD STEWART ENTERP-A 5530 TT IVC AU STEI US $1,195 $1,176 $1,122 Group Structure: 7 MATTHEWS INTL-A MATW US $1,086 Life Service Industry 9 STONERMOR PARTNER STON US $486 Lungyen Group 8 10 CARRIAGE SERVICE FUNESPANA SA CSV US FUN SM $339 $ HEIAN CEREMONY 2344 JP $102 Funeral Service Columbarium Cemetery 12 SAN HOLDINGS Source: Bloomberg (2013/08/13) 9628 JP $83 4

5 Table of content Business & Industry Analysis 5

6 Funeral Service Major products The funeral service of Lungyen includes 12 standard steps, directed by professional funeral directors and funeral team. Funeral Service : (1) Directly funeral service (2) Pre-need contract (3) Funeral upgrade (4) Others Lungyen has 10 assembly halls and 14 service centers in overall Taiwan for funeral service. Death care Remains transfer Assembly Hall Coffined Funeral coordination Funeral preparation Continuing care Burial Set up memorial tablet Cremation Departure Funeral 6

7 Overview of Taiwan Population & Funeral Spending Market Overview Spot market in Taiwan: Average mortality is around 150 thousand person. DGBAS estimates the average cost of a funeral is NTD331K in 2010, which means the market size in Taiwan is around NTD50bn per year. NTDmn 120, ,000 80,000 60,000 40,000 46,242 Total sales revenue of Taiwan Life service providers 50,312 60, ,752 Future market in Taiwan: the penetration rate of pre-need contract is only 3% in Taiwan. Assumed the price of the contract is NTD200K, the market size will be estimatedup to NTD1,380bn when the penetration rate reaches 30% 20, Source:Nanhua University, Taiwan Penetration rate of pre-need contract A portion of the 50+ population (23%) have prepaid funeral expenses in the United States of America.. (source: 2007 Funeral and Burial Survey by AARP) 30% 25% 20% 15% 23% Non-Lungyen 27.33% Lungyen 72.67% 10% 5% 3% 0% USA Taiwan Market share in Taiwan Source:2007 Funeral and Burial Planners Survey by AARP 7

8 Columbarium and Cemetery Major High-end products True Dragon Tower Outdoor cemetery SRC structure, the length is 350m, the width is 100m, the height of main building is 103m, 20 floors, total floor area is around 18,000 pings. The Centurial cemetery designed by Tadao Ando Total capacity around 300 thousand units - Columbarium Tower Available to sell around 64 thousand units - Outdoor cemetery Estimated revenue of unsold niches: around NTD 40bn Columbarium True dragon tower Columbarium and cemetery for pets Average-class products Futan Columbarium Tower (around 130,000 units) Chiayun Columbarium Tower (around 100,000 units) 8

9 Acquisition in Nov. 2011: Expanded the market from Northern to Southern Taiwan: Average Class Product - Available Capacity to sell: Taipei County (Wanli Dist.): -Futan Tower: around 130,000 units => Occupied around 10,000 units - Outdoor Cemetery: around 82,000 pins Taoyuan Futan Northern Northern Taiwan Taiwan Taoyuan County: - Land Size: around 17,000 pins Taichung City: - Bousan Tower: around 19,000 units - Outdoor Cemetery: around 8,000 pins Taichung Central Taiwan Chiayun Central Taiwan Chiayi County: - Chiayun Tower: around 100,000 units => Occupied around 25,000 units - Outdoor Cemetery: around 6,000 pins Southern Southern Taiwan Taiwan ( Note: 1 ping = m2, 1 ping = ft²) ( Note: 1 ha = 10,000 m2 =100 a = 3,025 pings) 9

10 Growth Driver Global Chinese Market Business Opportunity: -The robust growth in life service industry - Low penetration rate of Pre-need contract in Taiwan Target: - Increased the market share & profit margin Strategy: -Innovation of Product - Developed the sales distribution channels -M&A in the domestic market -Enhanced the Price Negotiation Power Life Service Market In Taiwan 10

11 Expanded to Global Chinese Market: Global Chinese Market Taiwan Wenzhou City, Zhejiang Province Singapore 11

12 Table of content Financials 12

13 Sales Breakdown 2012H1 (Consolidated) NTD Mn Construction Others 3% Rental 4% 2013H1 (Consolidated) NTD Mn Others 3% Construction 1% Rental 6% Sales revenue 2,356 Columbarium & cemetery 1,554 Funeral service 586 Rental Construction Others Funeral Service 25% Columbarium & Cemetery 66% Sales revenue 2,039 Columbarium & cemetery 1,178 Funeral service 654 Rental Construction Others Funeral Service 3 Columbarium & Cemetery 57% 2011 (Consolidated) NTD Mn Sales revenue 4,455 Columbarium & cemetery 2,590 Funeral service 1,146 Rental Construction Others Others 1% Funeral Service 26% Construction 11% Columbarium & Cemetery 58% Rental 4% Note: Sold the land for NT$400mn in May (Consolidated) NTD Mn Sales revenue 4,837 Columbarium & cemetery 3,203 Funeral service 1,215 Rental Construction Others Others Funeral Service 25% Construction Rental 5% Columbarium & Cemetery 66% 13

14 Funeral Services & Pre-need Contract NTD Mn Recognized Revenue Gross Margin 1, % 1, ,032 1,146 1, % 30.0% 34.3% 35.3% 35.7% % % % H1 0.0% H1 14

15 Columbarium & Cemetery NTD Mn 4,000 Recognized Revenue Gross Margin 3,200 2,400 2,590 3, % 75.0% 81.5% 83.9% 89.3% 89.6% 92.5% 1,600 1,582 1, % % H1 0.0% H1 15

16 Growing Unrealized Revenue NTD Mn Unrealized Revenue 9,350 9,350 40,000 32,893 35,128 34,831 33,675 33,992 30,000 8,173 7,905 20,000 10,000 25,501 25,481 26, H1 Note: The Unrealized Revenue contains (1) the advance receipts of the columbarium & cemetery, and pre-need contract (2) installment account receivable 17

17 Asset Allocation Intangible & Others 9% Deferred Exp. 2 Portfolio Asset 69% Inventory (Columbarium & Cemetery) Leased 26% Asset Leased Assets 28% 28% Self-Owned Asset 18% Inventory (Columbarium & Cemetery) 31% Inventory (Property) 15% Cash & ST Investment 7% LT Investment 1% Leased asset Leased area Book value Ping NTD Mn Lungyen Dunbei 3,571 1,968 Taipei Financial Tower 1,905 1,827 Asset to be developed Land area Book value Ping NTD Mn Nangang station 1,727 2,161 Others Dan-shui Student Residence Hall 10,738 1,380 Daya Tower 2,724 1,212 Pacific Commercial Building 1, Kaohsiung 3, Taoyuan 1, Others Lungyen Dunbei Taipei Financial Tower Daya Tower 18

18 Balance Sheet NTD Mn % % % Current Assets 24,858 64% 23, ,648 6 Cash and Cash Equivalents % 489 1% Current Financial Assets at Fair Value through Profit or Loss 1,008 3% Inventory 12,305 31% 12,033 31% 12,385 33% Prepayments 8, , ,409 2 Other Financial Assets 1,807 5% 1,833 5% 1,439 4% Non-current Assets 14,415 36% 14,676 38% 14,530 38% Property, Plant and Equipment 4, , ,506 1 Investment Property, Net 7,541 19% 7,579 20% 7,557 20% Total Assets 39, % 38, % 38, % Current Liabilities 31,159 80% 29,607 78% 30,719 79% S-T Loan 1,788 5% 2,140 6% 1,700 4% Advance Receipts 27,136 70% 26,481 70% 26,862 70% Total Liabilities 31,159 80% 29,607 78% 30,719 79% Equity Attributable to Owners of Parent 7,165 18% 7,670 20% 6,618 19% Capital 3,991 10% 3,991 10% 3,991 11% Non-controlling Interest Total Equity 8,019 20% 8, ,371 21% Book Value per share Note 1:Lungyen operates without interest-bearing debt. The main liabilities is the receipts in advance. 19

19 Income Statement NTD Mn 2013H1 % 2012H1 % Operating Revenue 2, % 2, % Operating Cost % % Operating Gross Profit 1,464 7 Operating Expenses % Operating Income Non-Operating Income and Expenses 176 9% Income Before Tax 1,017 51% Less: Tax Expenses 165 8% 1, , , % 26% 48% 4% 5 7% Net Income % 1,069 45% Other Comprehensive Income Total Comprehensive Income % 1,067 45% Net Income, attributable to: Attributable to owners of parent: % 1,027 43% Attributable to non-controlling interests: EPS - after tax

20 Investment Insight Total Solution of Life Service High Profit Margin Market Leader Brand Awareness Strong Cash Flow High Entry Barrier 21

21 Q&A 22