MAN WAH HOLDINGS LIMITED (1999.HK)

Transcription

1 MAN WAH HOLDINGS LIMITED (1999.HK) FY2018 RESULTS CORPORATE PRESENTATION MAY 2018 CHINA MARKET REMAINS STRONG GROWTH OVERSEAS MARKETS RECOVER STEADILY 1

2 DISCLAIMER AND FORWARD-LOOKING STATEMENTS This presentation was prepared by Man Wah Holdings Limited (the Company ) for reference only. This presentation may not be reproduced or redistributed to any persons without explicit authorization from the Company. Neither the Company nor any of its respective subsidiaries, directors, employees or advisors, directly or indirectly, gives any representation or warranty as to the completeness and accuracy of all the information contained in this presentation (including all forward-looking statements). The information contained in this presentation should be considered in the context of the circumstances prevailing at the time of presentation and has not been, and will not be, updated to reflect material developments which may occur after the date of the presentation. This presentation contains statements that reflect the Company s beliefs and expectations about the future. These forward-looking statements are based on a number of assumptions about the Company s operations and factors which are beyond the Company s control, and accordingly, actual results may differ materially from these forward-looking statements. The Company does not undertake to revise forward-lookingstatements to reflect future events or circumstances. The Company expressly disclaims all liability (in negligence or otherwise) for any loss incurred or sustained by the participants of this presentation, their employers, entities, agents or any of their related parties as a result of using the information contained in this presentation. The materials and information in this presentation are for informational purposes only and do not constitute an offer or solicitation for the purchases or sale of any securities or financial instruments or to provide any investment service or investment advice. 2

3 PRESENTATION OUTLINE Performance Review 4 Future Plans and Strategies 23 Q&A Session 29 Appendix Appendix Comparable Companies

4 MAN WAH HOLDINGS LIMITED FY2018 RESULTS 4

5 TOTAL REVENUE ANALYSIS Region FY2018 FY2017 HK$ million % of Revenue HK$ million % of Revenue Change China Market (Mainly Branded Product Revenue, Including Hong Kong) North America Market Revenue Europe and Other Overseas Markets Revenue 4, % 3, % 39.1% 3, % 3, % 2.6% % % 2.6% Home Group Revenue* % % 330.1% Jiangsu Yulong Revenue** % Total 10, % 7, % 28.9% *Home Group was acquired by the end of December 2016 and then consolidated into the Group's financial statment. **The Group acquired Jiangsu Yulong in January 2018 and its accounts were then consolidated into the Group's financial statement. 5

6 PROFIT BEFORE INCOME TAX ANALYSIS FY2018 (HK$:Million) FY2017 (HK$:Million) The Group Business 1, ,049.0 Home Group Business Jiangsu Yulong Business Total 1, ,

7 THE EFFECTIVE TAX RATE ANALYSIS FY2014 FY2015 FY2016 FY2017 FY2018 The Effective Tax rate 14.5% 13.9% 10.1% 14.3% 19.2% 7

8 FINANCIAL HIGHLIGHTS (HK$ million) FY2018 FY2017 Change Revenue 10, , % Gross Profit 3, , % Gross Profit Margin (%) 37.3% 41.9% -4.6pts SG&A / Revenue (%) 21.3% 19.8% +1.5pts EBITDA Margin (%) 21.5% 28.8% -7.3pts Net Profit Attributable to Owners of the Company 1, , % Net Profit Margin (%) 15.3% 22.5% -7.2pts Basic EPS (HK cents, restated) % Diluted EPS (HK cents, restated) % Dividend Payout Ratio (%) 62.1% 61.3% +0.8% 8

9 CHINA MARKET REVENUE (Mainly Branded Product Revenue, Including HK) HK$(Million) HK$ million Amount FY2018 % of Total Amount FY2017 % of Total Change Amount FY2016 % of Total Amount FY2015 % of Total Revenue 4, % 3, % 43.7% 2, % 2, % 9

10 SUCCESSFULLY EXPANDED 424 STORES IN CHINA Branded Retail Stores Above Stores include Cheers Leather Sofa Stores, Cheers Fabric Sofa Stores, Cheers Urban Sofa Stores, Fleming Sofa Stores, Cheers Five-Star Mattress Stores, Cheers Smart Bedding Stores, Cheer Regal Chair Stores and Cheer office Chair Stores. As of March 2018, there are 3,219 counties and county-level above cities in China. Source: April 2017 PR China administrative county code issued by Ministry of Civil Affairs URL: 10

11 CHINA MARKET CONTRIBUTION FY2018 Revenue * HG:Home Group 11

12 SOFA PRODUCTS COST ANALYSIS Major Raw Material Average Unit Cost Compared Change in FY2018 (%) Leather -1.3% Metal 28.9% PVC -0.8% Wood 3.2% Fabric -1.7% Packing paper 34.8% Freight 19.0% Chemicals 27.3% 12

13 SOFA PRODUCTS CAPACITY VS. ACTUAL SALES VOLUME Sets of Sofa (Thousand) Annual Capacity 1,586K sets of sofa Sets of Sofa (Thousand) Year Sales Volume 1,097K sets of sofa Annual Capacity (thousand sets) Actual Sales Volume (thousand sets) FY2018 1,586 1,097 13

14 INVENTORY TURNOVER IN DAYS ANALYSIS Days FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 Inventory Turnover in Days

15 ACCOUNTS RECEIVABLE TURNOVER IN DAYS ANALYSIS Days FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 AR Turnover in Days* *AR Turnover in Days: Accounts Receivable Turnover in Days 15

16 ACCOUNTS PAYABLE TURNOVER IN DAYS ANALYSIS Days FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 AP Turnover in Days* *AP Turnover in Days: Accounts Payable Turnover in Days 16

17 FINANCIAL LEVERAGE COMPARISON FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 Gearing Ratio* 14.9% 13.0% 15.4% 4.4% 14.3% 14.2% *Gearing Ratio = (Borrowings + Convertible bonds) /Total assets 17

18 NET PROFIT ATTRIBUTABLE TO OWNERS OF THE COMPANY COMPARISON HK$ (Million) 1, , , First-half Net Profit Second-half Net Profit FY2013 (HK$ million) FY2014 (HK$ million) FY2015 (HK$ million) FY2016 (HK$ million) FY2017 (HK$ million) FY2018 (HK$ million) First-half Net Profit Second-half Net Profit Full Year Net Profit , , ,

19 BASIC EPS COMPARISON HK cents FY2013 (HK cents) FY2014 (HK cents) FY2015 (HK cents) FY2016 (HK cents) FY2016 (HK cents) FY2018 (HK cents) First-half EPS Second-half EPS Full Year EPS Note:The company has completed the bonus issue on 14 Jan 2015 and 22 Jul EPS of previous periods have been restated. (assume bonus issue has been completed in respective period) 19

20 DIVIDEND COMPARISON HK cents FY2013 (HK cents) FY2014 (HK cents) FY2015 (HK cents) FY2016 (HK cents) FY2017 (HK cents) FY2018 (HK cents) Interim Dividend Final Dividend Special Dividend Full Year Dividend Note:The company has completed the bonus issue on 14 Jan 2015 and 22 Jul EPS of previous periods have been restated. (assume bonus issue has been completed in respective period) 20

21 REWARD SHAREHOLDERS HK$ (Million) (HK$ Million) FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 Total Net Profit Owing to The Company ,075 1,327 1,752 1,536 8,766 Dividend , , ,508 Share Repurchase ,552 Payout Ratio 79% 41% 40% 44% 48% 115% 51% 61% 62% 63% Ratio of Total Reward to Shareholders 79.4% 41.2% 83.2% 75.3% 64.1% 140.4% 73.4% 80.6% 73.0% 80.5% 21

22 SHAREHOLDER STRUCTURE Company Shareholder Structure Chairman 63.95% Management 0.12% Public 35.93% As of 14 May, 2018, total issued share capital was 3,832,428,800 shares. 22

23 MAN WAH HOLDINGS LIMITED FY2018 RESULTS 23

24 CHINA MARKET EXPANSION STRATEGIES Expand the store network steadily and broaden the online sales channels Continue to increase same store sales Strengthen the leadership in reclining sofa market and increase market share in mattresses and stationary sofas Further improve supply chain, marketing and promotion in the PRC Double 11 Tmall Promotional Campaign Promotional Event Attended by Celebrities Fleming Series - Launched in March 2017 Urban Series Stationary Sofa Smart Bedding Series - Launched in March

25 SPONSORSHIP & PROMOTION Enhance popularity of CHEERS and First Class Cabin brand among consumers Increase spending on advertising, including new media, and target at high marketing returns Promote through on-line and off-line platforms such as Tmall, JD.com, VIP.com and Amazon.cn etc. Add product display channels such as famous movie or shows, high-end cinemas, shopping malls, airport VIP lounges, etc. Promotional Event Attended by Celebrities The Asia 500 Most Influential Brands Demonstration on sofa Show Room and Activities in Festivals and Celebrations Promotional Events in Furniture Malls 25

26 OVERSEAS MARKETS EXPANSION STRATEGIES North American Markets European & Other Overseas Markets Explore new customers actively Maintain and improve customer loyalty Broaden product categories, develop more new products Expand the capacity of European factories capacity Better satisfy customer demand Actively explore new customers Continue to strengthen furniture R&D and enhance core competitiveness Continue to actively participate in overseas furniture fairs 26

27 PRODUCTION FACILITIES IN CHINA Tianjin Xiangshuihe Huizhou Huizhou Launched in May 2016 Capacity: Approximately 120,000 sets of sofas per annum Target Market: Mainly support retail sales in South China Launched in November 2006 Capacity: Approximately 766,000 sets of sofas per annum Target Market: Overseas markets, such as North America, Europe and Asia Phase One: Launched in August 2014 Phase Two: Launched in September 2017 Capacity: Approximately 400,000 sets of sofas per annum Target Market: Mainly support retail sales in North China Wujiang Chongqing (Under Construction) To-be-launched in 2019 Capacity: Approximately 300,000 sets of sofas per annum Target Market: Southwest China Launched in July, 2012 Capacity: Approximately 300,000 sets of sofas per annum Target Market: Mainly support retail sales in Central and East China Note: The above calculation of the capacity is based on the production capacity of the plant. Production equipment and employees will gradually increase depend on the growth of sales order. 27

28 PRODUCTION FACILITIES IN EASTERN EUROPE Estonia Lithuania Klaipeda Lithuania Kriukai Country:Ukraine City:Klaipeda Size of Facility:12,500 M 2 Size of Land: 39,000 M 2 Country:Lithuania City: Kriukai Size of Facility:6,000 M 2 Size of Land: 26,000 M 2 Country:Estonia City:Tallinn Size of Facility:15,900 M 2 Size of Land: 27,000 M 2 Ukraine Poland Country:Poland City:Nidzica Size of Facility:19,000 M 2 Size of Land: 45,000 M 2 Country:Ukraine City:Rivne Size of Facility:190,000M 2 Size of Land: 485,000 M 2 Note: The size of production facility and land is calculated approximately. 28

29 MAN WAH HOLDINGS LIMITED FY2018 RESULTS 29

30 MAN WAH HOLDINGS LIMITED FY2018 RESULTS 30

31 MOTION RECLINER MARKET IN THE USA Man Wah Remains the 3 rd largest Motion Recliner manufacturer with 9.8% market share in 2017 (9.6% in 2016) Cheers 2011 Ranked 年芝華仕品牌在美國休閒沙發市場 the 3 rd largest Motion Recliner brand in the 佔有 U.S. 8.5% with 的市場份額 9.0% market, 排名第四 share in 2017 Company-level retail sales value market share(%) of the top 5 companies, 2017 Company Name Market share (%) 1 La-Z-Boy Inc 18.1% 2 Ashley Furniture Industries 10.9% 3 Man Wah Holdings Ltd. 9.8% 4 Jackson Furniture Industries 7.9% 5 Heritage Home Group 6.9% Source: Euromonitor International 2017 Market share is calculated by revenue. Brand-level retail sales value market share(%) of the top 10 brands, 2017 Company Name Market share (%) 1 La-Z-Boy Inc 18.1% 2 Ashley Furniture Industries 10.9% 3 Cheers(Man Wah Holdings Ltd.) 9.0% 4 Catnapper(Jackson Furniture) 7.9% 5 Franklin Corporation 6.8% 6 Klaussner Home Furnishing 6.2% 7 Lane(HHG) 5.6% 8 Best Home Furnishings 2.9% 9 Flexsteel Industries Inc 2.5% 10 Southern Motion Inc 2.4% 31

32 MOTION RECLINER MARKET IN MAINLAND CHINA Maintained the Leading Motion Recliner Manufacturer Position in Mainland China with Market share 44.8% in 2017 (37.7% in 2016) Company-level retail sales value market share (%) of the top 5 companies, 2017 Brand-level retail sales value market share (%) of the top 5 brands, 2017 Company Name Market Share (%) Company Name Market Share (%) 1 Man Wah Holdings Ltd. 44.8% 1 Cheers (Man Wah Holdings Ltd.) 44.8% 2 Kuka Home Co Ltd 9.0% 2 La-Z-Boy 9.0% 3 Chateaud AX 4.5% 3 Milano&Design 4.5% 4 Shenzhen Fuli Furniture Co Ltd 3.9% 4 Farrell 3.9% 5 Natuzzi Group 1.6% 5 Natuzzi Editions 1.5% Source:Euromonitor International

33 MOTION RECLINER MARKET SHARE Motion Recliner as percentage of total sofa market Disclaimer from Euromonitor: This information about Motion Recliners in USA and PRC contains information extracted from the commissioned report from Euromonitor International and reflects estimates of the market s size, rankings and performance from publicly available secondary sources and trade survey analysis of the opinions and perspectives of leading industry players, and is prepared primarily as a market research tool. Research by Euromonitor International should not be considered as the opinion of Euromonitor International as to the value of any security or the advisability of investing, or not investing, in the Man Wah Holdings Ltd.. Accordingly, Euromonitor International Limited does not give any representations as to the accuracy of the information set out in this Annual Report. We believe that the sources of the information are appropriate sources for such information and have taken reasonable care in extracting and reproducing such information. We have no reason to believe that such information is false or misleading or that any fact has been omitted that would render such information false or misleading in any material respect. Information provided by the USA and PRC government or official information in the annual report, or the information prepared by Euromonitor International Limited and set out in this Annual Report, has not been independently verified by us, the Group, and they do not give any representations as to its accuracy. 33

34 COMPARABLE COMPANIES Stock code Company Name Main Product Net Profit (Million HKD) P/E Ratio(TTM) Market Value(Billion HKD) HK1999 Man Wah Holdings Sofa 1, SZ Suofeiya Wardrobe 1, SH Kuka Home Sofa SZ Oppein Home Furniture 1, SZ Yotrio Group Outdoor Furniture SH Holike Wardrobe SZ Der Timber floor SH QM Furniture SH Xilinmen Furniture Bedding product SH Zhejiang UE furniture Chair HK0531 Samson Holdings Furniture Note: P/E ratio and market value were calculated by closing price and issued shares, resources from the open market on 4 May, For reference only. Above net profit is calculated in HKD according to the most recent net profit announced publicly attributable to the parent company. And above market value and net profit is calculated in the exchange rate on 4 May with 1: between RMB and HKD. 34