Gome Retail Holdings Limited · HKEX:493
Gome Retail — H1 2006 Earnings Presentation
26 slides from Gome Retail's earnings presentation, Aug 17, 2006
Slide 1: 1H2006 Results Announcement
1H2006 Results Announcement 17 August 2006 Strictly Strictly private private and and confidential confidential
Slide 2: 1. Summary Performance
ME A aes 1. Summary Performance
Slide 3: Network Coverage
Network Coverage Listco Number of traditional stores Parent Group Number of traditional stores 400 250 350 300 + 1 mega 259 334 200 + 3 digital 176 217 250 3 digital 150 200 144 100 150 56 79 100 47 50 32 24 50 11 14 0 0 2001 2002 2003 2004 2005 1H06 2001 2002 2003 2004 2005 1H06 Listco – City c
Slide 4: Growth in Sales Area – Listco
Growth in Sales Area – Listco Total sales area at period end Weighted sales area during period 1,400,000 1,200,000 1,200,000 1,000,000 1,000,000 800,000 800,000 S qm Sqm 600,000 600,000 400,000 400,000 200,000 200,000 0 0 2001 2002 2003 2004 2005 1H06 2001 2002 2003 2004 2005 1H06 1.33 million sqm 1
Slide 5: Summary Financial Results
Summary Financial Results (RMB mm) 1H05 1H06 Change 1H06* Revenue 8,281 12,168 é 46.9% 12,168 Gross Profit 715 1,156 é 61.7% 1,156 Operating Profit 394 433 é 9.8% 433 Net Profit (before MI) 371 467 é 25.9% 413 Net Profit (after MI) 238 345 é 45.0% 290 Basic EPS (fen) 14 19 é 35.7% 16 * Excluding a r
Slide 6: Summary Financial Results (Margins)
Summary Financial Results 1H05 1H06 Change 1H06* Gross Margin 8.63% 9.50% é 0.87pt 9.50% Other Operating Income Margin 4.03% 4.01% ê 0.02pt 4.01% Operating Margin 4.76% 3.56% ê 1.20pt 3.56% Net Margin (before MI) 4.48% 3.84% ê 0.64pt 3.39% Net Margin (after MI) 2.87% 2.83% ê 0.04pt 2.39% * Excluding
Slide 7: Store Network by Region at the end of 1H06
Store Network by Region at the end of 1H06 Region Traditional Digital Region Traditional Digital Beijing 42 0 Fuzhou 18 0 Tianjin 23 0 Nanjing 11 0 Chengdu 25 0 Tangshan 5 0 Chongqing 19 0 Suzhou 4 0 SHENYANG Xian 11 0 Hefei BEIJING 4 BENXI 0 Shenyang 16 0 Changzhou LANGFANG TIANJIN 4 0 Qingdao 11 1
Slide 8: Progress of Store Rollout
Progress of Store Rollout Beijing 9 Hef ei 2 Tianjian 2 Suzhou 2 Sales Area Chengdu 5 Changzhou 3 Chungqing 4 Lanzhou 3 Sheny ang 3 Xuzhou 3 Jun 30, 2005 Jun 30, 2006 Qingdao 2 Jinan 2 Guangzhou 11 Shenzhen 6 Period end Period end Wuhan 5 Kunming 2 617,300 sqm 1,334,000 sqm Fuzhou 3 Nanjing 3 Quanzh
Slide 9: 2. Revenue and Gross Profit Analysis
2. Revenue and Gross Profit Analysis
Slide 10: Revenue Composition Analysis
Revenue Composition Analysis By Products (Unaudited) 1H05 1H06 Small Electrical Digital Small Electrical Digital Appliances 6% 6% Appliances 10% Audio 9% Audio Computer Visual Computer Visual 4% 29% 4% 29% Telecommuni Telecommuni cations cations 16% Refrigerators 16% Refrigerators Air Air & Washin
Slide 11: Revenue Growth Breakdown
Revenue Growth Breakdown (Unaudited, RMB mm) Change 1H05 1H06 (YoY) Audio Visual 2,427 3,579 é 47.5% Air Conditioners 1,375 1,894 é 37.8% Refrigerators & Washing Machines 1,499 2,264 é 51.1% Telecom. 1,336 2,039 é 52.6% Small Electrical Appliances 784 1,100 é 40.3% IT Products 329 481 é 46.3% Digita
Slide 12: Revenue Breakdown Analysis
Revenue Breakdown Analysis By Region (Unaudited) 1H05 1H06 Beijing Beijing 16% Others 22% 31% Others Tianjin Tianjin 41% 9% 11% Chengdu Shenzhen Chengdu 7% 12% 9% Chongqing Chongqing 5% Guangzhou Shenzhen 6% Guangzhou 9% 12% 10% Total: RMB8,276 million Total: RMB12,168 million HK000JDC Confidential
Slide 13: Sales Efficiency
Sales Efficiency SSS 1H05 1H06 RMB6,256 RMB6,178 110 stores million million 1.24% % of total revenue 75.5% 50.8% Sales (RMB mm) 8,276 12,168 Weighted average sales area (sqm) 536,300 1,194,000 Annualized sales/sqm (RMB) 30,900 20,400 34% HK000JDC Confidential 13
Slide 14: 3. Margin and Expense Analysis
3. Margin and Expense Analysis
Slide 15: Gross Profit Margin (By product category)
Gross Profit Margin (By product category) 16.00% +1.30% +1.05% +1.97% +0.32% +0.11% 1.03% +0.00% +0.92% 14.00% 13.02% 13.13% 1H05 1H06 12.00% 10.24% 10.46% 10.00% 9.50% 8.94% 8.85% 9.09% 9.10% 8.49% 8.59% 8.00% 7.79% 7.23% 6.92% 6.00% 5.09% 4.06% 4.00% 2.00% 0.00% AV Products Airconditioners Refig
Slide 16: Other Income Assessment
Other Income Assessment Other Income 1H06 Composition Other Income/ Other Income Total Revenue Management & (RMB mm) (%) Purchasing Service 500 5.0% Fee from Parent 21% 4.03% 4.01% 400 4.0% Others Promotion 6% Income 42% Product 300 3.0% Listing Fee 6% Display Space 200 2.0% 333 487 Leasing Fee Air
Slide 17: Operating Expenses Breakdown
Operating Expenses Breakdown (RMB’000) Selling & Distribution Administrative Other 1,400,000 9.96% 1,200,000 0.49% 1.72% 1,000,000 800,000 7.90% 600,000 0.49% 1.34% 7.75% 400,000 6.07% 200,000 0 1H05 1H06 17 HK000JDC Confidential
Slide 18: Selling & Distribution Expenses Analysis
Selling & Distribution Expenses Analysis (RMB’000) 1,000,000 7.75% 900,000 Others 1.00% 800,000 0.77% Utilities 700,000 1.12% 600,000 Advertising & 6.07% 0.40% Promotion 500,000 0.76% 1.46% Distribution 400,000 0.59% 1.17% 300,000 Salaries 0.39% 200,000 1.12% 3.00% Rent 100,000 2.04% 0 Confidential
Slide 19: Administrative Expenses Analysis
Administrative Expenses Analysis (RMB000) 250,000 1.72% 200,000 150,000 Others 1.07% 1.34% Salaries 100,000 0.76% 50,000 0.65% 0.58% 0 1H05 1H06 HK000JDC Confidential 19
Slide 20: Other Operating Expenses Analysis
Other Operating Expenses Analysis (RMB000) 60,000 0.49% 0.07% 50,000 Others 0.49% 0.13% 40,000 Business Tax 0.17% 30,000 20,000 Bank Charges 0.15% 0.29% 10,000 0.17% 0 Confidential 1H05 1H06 20 HK000JDC
Slide 21: Overview of Financial Position
Overview of Financial Position (RMB mm) Cash Pledged deposit 1,954 4,055 Inventory Inventory Turnover 2,741 45 days Accounts Payable Accounts Payable Days 1,948 31 days Bills Payable Bills Payable Days 6,408 93 days HK000JDC Confidential 21
Slide 22: 4. Outlook and Prospect
4. Outlook and Prospect
Slide 23: Recent Corporate Developments
Recent Corporate Developments l Strategic alliance with and investment by Warburg Pincus in February 2006 § Sharing of same strategic vision § Vote of confidence § Aspirations of best management and corporate practices l Acquisition of 35% minority interest announced in March and completed in May 20
Slide 24: Key Market Challenges
Key Market Challenges Revenue growth Mitigate competitive pressure and accelerate growth Reverse downward trend in SSS and moderate Sale efficiency decline in sales/sqm Implement tight cost control and improve sales Cost ratio performance Management Differentiate GOME from competition through initia
Slide 25: Looking forward to 2H2006 and Beyond
Looking forward to 2H2006 and Beyond l Store level control and management Focus on l Dedicated resources to improve retail experience operations l Attention to details l Monitor new mega store format and finetune business model l Continue to build infrastructure and alliances for Repair and Managem
Slide 26: Commitment and Confidence
Commitment and Confidence Total commitment to management initiatives and improvement steps Store competitiveness Differentiation Brand loyalty Customer satisfaction …strengthening of market leadership HK000JDC Confidential 26