China Resources Beer (holdings) Co. Ltd. · HKEX:291
China Resources Beer (holdings) — China Resources Enterprise — H1 2015 Earnings Presentation
31 slides from China Resources Beer (holdings)'s earnings presentation, Aug 21, 2015
Slide 1: Financial and operational review H1 2015
Financial and operational review H1 2015 I Investor t presentation t ti 21 August 2015 1
Slide 2: Indicative timetable of the transactions
Indicative timetable of the transactions September End of October Expected completion of Expected payment of capital reduction special dividend (HK$12.30 per share) 3A Augustt Early November Approval from shareholders (over 98% Dispatch of composite document of Partial Offer votes cast) in EGM for c
Slide 3: Results Summary
H1 2015 H1 2014 change h Results Summary HK$m HK$m Turnover 94,660 83,506 +13% EBITDA* (292) 4 721 4,721 -106% 106% Earnings* (4,327) 929 -566% Underlying net profit* (4,406) 668 -760% EPS (HK¢) – Basic (179) 39 -559% DPS (HK¢) ** - 11 -100% ROE (%) (based on earnings) (9 8) (9.8) 18 1.8 -644% 644%
Slide 4: Turnover Breakdown - by Divisions
Turnover Breakdown - by Divisions H1 2015 Prop H1 2014 Prop change HK$m HK$m Continuing operations Beer 19,609 21% 18,475 22% +6% Discontinued operations Retail 61,146 64% 52,589 63% +16% Food 8,480 9% 8,035 10% +6% Beverage 6,307 7% 5,057 6% +25% Less: inter-co transactions (786) (1%) (600) (1%) 75
Slide 5: Underlying Net Profit Breakdown - by Divisions
Underlying Net Profit Breakdown - by Divisions H1 2015 Prop H1 2014 Prop change HK$m HK$m Continuing operations Beer# 544 12% 417 63% +30% Net corporate int. & expenses (16) - (11) (2%) 528 12% 406 61% +30% Discontinued operations Retail (2,847) (65%) 439 66% -749% Food ((15)) - ((72)) (11%) +79% Be
Slide 6: CAPEX
CAPEX Beer 20 2.0 K$bn 1.0 HK 1.3 1.0 - H1 2015 H1 2014 # CRH will provide shareholder's loan(s) of up to HK$10.0bn for not more than 3 years at prevailing market rate obtained by / available to CRH to support beer business development. "Embrace the future" 6
Slide 7: Beer (No.1 brand by volume in the world since 2008)
Beer (No.1 brand by volume in the world since 2008) Growth through: Solidifying market leader position and upgrade of product mix H1 2015 H1 2014 change HK$m HK$m Sales volume (million kl) 6.25 6.30 -1% ASP (in RMB/kl) 2,480 2,322 +7% Turnover 19,609 18,475 +6% 6% EBITDA 2,615 2,291 +14% Earnings
Slide 8: Beer: improvement on operating efficiency
Beer (No.1 brand by volume in the world since 2008) Growth through: Solidifying market leader position and upgrade of product mix Improvement on operating efficiency: EBITDA margin and EBITDA/kl (in HK$) EBIT margin and EBIT/kl (in HK$) 13.3% 7.7% 12.4% 7.0% $418/kl $241/kl $364/kl +15% $205 /kl +
Slide 9: Beer: geographical distribution of the breweries
Beer (No.1 brand by volume in the world since 2008) Growth through: Solidifying market leader position and upgrade of product mix Geographical distribution of the breweries 5(1.1mkl) [-] Heilongjiang gj g Having presence in 25 out of 34 regions/cities (incl (incl., autonomous regions regions, muni
Slide 10: China beer market competitive landscape by volume
Beer (No.1 brand by volume in the world since 2008) Growth through: Solidifying market leader position and upgrade of product mix China beer market competitive landscape by volume 2005 Top five market share = 47.3% 2014 Top five market share = 70.9% Tsingtao Brewery CR S Snow 13.4% 23.2% Others 29
Slide 11: Beer: turnover and UNP with Kingway integration
Beer (No.1 brand by volume in the world since 2008) Growth through: Solidifying market leader position and upgrade of product mix UNP Turnover In HK$’m In HK$’m 40,000 1,000 800 30,000 600 20,000 400 Integration with Kingway, 10,000 one of the largest deals in terms of production capacity 200 in C
Slide 12: Evolution of the China Beer Market Over the Past 3 Decades
Beer (No.1 brand by volume in the world since 2008) Evolution of the China Beer Market Over the Past 3 Decades CR Snow has been at the forefront of evolution, effectively positioning itself to capture outsized growth First Stage Second Stage Third Stage Regional Expansion Market Consolidation Prem
Slide 13: New CRE: Pure beer business
Beer (No.1 brand by volume in the world since 2008) New CRE: Pure beer business The Undisputed Leader in World’s Most Attractive Beer Market 1 • China is the largest1 and most attractive beer market globally valued at US$79bn in 2014 with expected next 5 year CAGR of 10% • CRE is the #1 brewer in
Slide 14: Differentiated sales channel strategy
Beer (No.1 brand by volume in the world since 2008) Differentiated sales channel strategy with unique on-the-ground capabilities Distribution strategy focused on professionalism, exclusivity and flatness of network Urban markets Regional markets1 Specific sales force to target on-trade customers
Slide 15: Diverse product portfolio and innovation across brands
Beer (No.1 brand by volume in the world since 2008) Diverse product portfolio and innovation across brands and price points addressing premiumization trend Developed mainstream, mid and high-end products across different retail price points ranging from RMB3 to RMB25 per bottle to cater for a fu
Slide 16: Future growth strategy
Beer (No.1 brand by volume in the world since 2008) Future growth strategy Further penetrate the high-end on-trade and modern retail channels well suited for premium Our 1 vision going forward is to continue to capture market share and improve efficiency brands Focus on premiumization to drive s
Slide 17: Appendix I – Global beer consumption summary
Appendix I – Global beer consumption summary Huge long term potential on volume growth (32% of Germany only) 2014 Top ten beer markets per capita volume consumption 150 125 114 3.1x 100 100 Liters per capiita 77 74 75 69 63 60 48 50 37 37 25 0 Germany Vietnam m Poland d Brazzil Russia a Mexico o Jap
Slide 18: Appendix II – Historical major M&As in beer business
Appendix II – Historical major M&As in beer business Strong bargaining power and lower acquisition cost on M&A US$/kl Shenzhen Tsingtao acquired 39% AB InBev Carlsberg acquired 12.25% ABInbev Carlsberg AB InBev acquired Chongqing 2,500 Brewery Jingyalong stake in Yantai Beer sold 7% stake in Chongqi
Slide 19: Appendix III – Retail operation
Appendix III – Retail operation Growth through: Multi-format with operational balance and efficiency H1 2015 H1 2014 change HK$ HK$m HK$ HK$m Turnover 61,146 52,589 +16% Underlying EBITDA # (1,445) 1,894 -176% Underl ing net profit # Underlying (2 847) (2,847) 439 -749% 749% Underlying EBITDA marg
Slide 20: Appendix III – Retail network distribution
Notation: Retail shop no. (no. of hypermarket) [addition in past 12 months] Region Northern areas Appendix III New region 4 (4) [-] Inner Mongolia Growth through: Multi-format with operational balance and efficiency 3 (3) [-1] Jilin Geographical distribution of retail network Northern west areas 1
Slide 21: Appendix III – Retail operation
Appendix III – Retail operation 30 Jun 15 31 Dec 14 30 Jun 14 App. Average Major % of average Self- Self- Self- Format brands areas turnover GP operated Franchised operated Franchised operated Franchised (sq.m) margin Over I. Hypermarket 6,000 6 000 App.81% 21% 710 13 711 13 693 13 II. Standard supe
Slide 22: Appendix III – Food operation
Appendix III – Food operation Growth through: Quality premium products H1 2015 H1 2014 change HK$ HK$m HK$ HK$m Turnover 8,480 8,035 +6% Underlying EBITDA# 207 167 +24% Underlying net profit# (15) (72) +79% Underlying EBITDA margin (%) 2.4 2.1 +14% Underlying net margin (%) (0.2) (0.9) +78% The di
Slide 23: Appendix III – Food operation
Appendix III – Food operation Growth through: Quality premium products Supply base distribution Heilongjiang Having presence in 14 out of 34 regions/cities (incl. autonomous regions, municipalities and SAR) in China Liaoning Shaanxi Henan Sichuan Jiangsu Hubei Guangxi Sh Shanghai h i Zhejiang Jian
Slide 24: Appendix III – Beverage operation
Appendix III – Beverage operation Growth through: strong partnership with Kirin H1 2015 H1 2014 change HK$ HK$m HK$ HK$m Sales volume (million KL) 3.98 3.22 +24% Turnover 6,307 5,057 +25% EBITDA 548 212 +158% Earnings (#) 324 111 +192% EBITDA margin (%) 8.7 4.2 +107% Net margin (%) (#) 51 5.1 22 2
Slide 25: Appendix III – Beverage operation
Appendix III – Beverage operation Growth through: strong partnership with Kirin Geographical g p distribution 1* Helongjiang Having presence in 18 out of 34 regions/cities (incl. autonomous regions, municipalities and SAR) in China 1* Beijing Number of beverage plant: 42 (9 own factories; 33 OEM f
Slide 26: Appendix IV – CRE awards
A Appendix di IV – CRE awards d Highlights of accolades received Since 2002 Produced quarterly financial and operational review on a voluntary basis. First conglomerate company among the constituent stocks in the Hang Seng Index to initiate such a move 2005-2014 Named one of outstanding enterprise
Slide 27: Appendix IV – CRE awards (Cont'd)
A Appendix di IV – CRE awards d (Cont'd) (C t'd) Highlights of accolades received 2010-2014 Received awards for cover photo/design; printing and production; non-traditional in the categories of food distributors, distributors processors & wholesalers, wholesalers manufacturing & Distributing Distr
Slide 28: Appendix IV – CRE awards (Cont'd)
A Appendix di IV – CRE awards d (Cont'd) (C t'd) Highlights of accolades received 2011-2014 Awarded as one of the companies receiving the commendation in Corporate Social R Responsibility ibilit Award A d by b CAPITAL and d CAPITAL Weekly W kl 2011-2015 Ranked number 39/46/37/40/38 in Fortune Chin
Slide 29: Appendix IV – CRE awards (Cont'd)
A Appendix di IV – CRE awards d (Cont'd) (C t'd) Highlights of accolades received 2010-2014 Selected as one of the companies receiving "Global Chinese Business 1000 – Outstanding Performance Award" by Yazhou Zhoukan 2013/2014 Frank Lai was selected as Asian Company Secretary of the Year by Corpora
Slide 30: Responsibility Statement and Disclaimer
Responsibility Statement and Disclaimer This document has been prepared by China Resources Enterprise, Limited (“CRE”) for information purposes only. The reproduction of this document, in whole or in part, or disclosure of any of its contents, without prior consent of CRE, is prohibited. This docume
Slide 31: Notice to US Holders of Company Shares
Notice to US Holders of Company Shares The revised partial offer is being made for the securities of a Hong Kong company and is subject to Hong Kong disclosure requirements, which are different from those of the United States. The financial information included in this document has been prepared in
China Resources Enterprise — H1 2015 Earnings Presentation on 6ix