361 Degrees International Ltd. · HKEX:1361
361 Degrees International — H1 2018 Earnings Presentation
40 slides from 361 Degrees International's earnings presentation, Aug 23, 2018
Slide 1: 361 Degrees International Limited 2018 Interim Results
机密 361 Degrees International Limited (Stock Code: 1361.HK) 2018 Interim Results 0
Slide 2: Disclaimer
Disclaimer These presentation slides have been prepared by 361 Degrees International Limited (the “Company”) solely for us during its presentation held in connection with its interim results for the six months ended 30 June 2018 and may not be reproduced or redistributed. In particular, these presen
Slide 3: Contents
Contents Section 1 Development Strategies 3 Section 2 Financial Highlights 5 Section 3 Operational Highlights 17 Section 4 Outlook 31 Section 5 Appendix 34 Section 6 Q&A 39 2
Slide 4: Development Strategies
Development Strategies 3
Slide 5: Developing Strategies
Developing Strategies Internationalization Nearly 3,000 points-of-sales in over 20 countries and regions including the US, Brazil, Europe, Middle East, South America, and SE Asia Leveraging the sponsorship of the 2018 Jakarta Asian Games and capturing opportunities arising from the “Belt and Roa
Slide 6: Financial Highlights
Financial Highlights 5
Slide 7: Key Financial Highlights
Key Financial Highlights For the six months ended 30 June RMB mn 2018 2017 Change Revenue 3,016.9 2,798.1 +7.8% Gross profit 1,255.7 1,184.1 +6.0% Operating profit 630.6 629.1 +0.2% Profit attributable to equity shareholders 335.0 318.3 +5.3% Basic EPS (RMB cents) 16.2 15.4 +5.2% Profitability Ratio
Slide 8: Revenue
Revenue RMB mn Gross margin (%) 3,500 60% Revenue rose by 7.8% to RMB 3,000 50% 3,016.9 million, primarily contributed by the growth of 42.3% 41.6% 2,500 the Kids business, the E- 40% commerce, and shoe soles 2,000 business 30% GP margin slightly decreased to 1,500 3,016.9 2,798.1 41.6% 20% 1,00
Slide 9: Revenue Analysis – Revenue Mix
Revenue Analysis – Revenue Mix 1.2% 1.3% 11.0% 12.1% 1.0% 1.3% Footwear 46.8% 45.2% 2017 Apparel 2018 RMB2,798.1mn Accessories RMB3,016.9mn 361°Kids 40.0% 40.1% Others For the six months ended 30 June 1. Footwear sales increased by 4%, and its contribution to the total revenue slightly adjusted to 4
Slide 10: Revenue Analysis – by Product Type
Revenue Analysis – by Product Type Footwear Apparel RMB mn Gross margin (%) RMB mn Gross margin (%) 1,500 50% 1,500 50% 43.3% 42.0% 42.1% 42.1% 1,200 40% 1,200 40% 900 30% 900 30% 1,309.7 1,362.2 600 1,209.1 20% 600 20% 1,118.4 300 10% 300 10% 0 0% 0 0% 2017 1H 2018 1H 2017 1H 2018 1H Footwear Appar
Slide 11: Revenue Analysis – 361°Kids
Revenue Analysis – 361°Kids RMB mn Gross margin (%) 361°Kids 400 60% Sales volume and the AWP recorded a year-on-year increase of 6.4% and 50% 11.8%, respectively 320 42.3% 42.1% GP margin maintained at 42.1% 40% 240 30% 364.5 160 306.9 20% 80 10% 0 0% 2017 1H 2018 1H 10
Slide 12: Major Operating Expenses
Major Operating Expenses Selling and Distribution Costs Administrative Expenses For the six months ended 30 June For the six months ended 30 June RMB mn RMB mn 2018 2017 Change 2018 2017 Change R&D 108.5 82.2 +32.0% A&P 263.3 215.9 +22.0% Commission & other 27.5 +58.1% 43.4 service fees Salaries and
Slide 13: Operating Cash Flow
Operating Cash Flow For the six months ended 30 June RMB mn 2018 2017 Operating profit 630.6 629.1 Change in inventories (27.5) (143.4) Change in trade and bills receivables (662.2) (248.4) Change in trade and other payables 322.5 387.1 Change in deposits, prepayments and other (162.1) 9.7 receivabl
Slide 14: Working Capital Cycle
Working Capital Cycle Working Capital Turnover Days （days） 100 Turnover days As at 30 Jun As at 31 Dec Change 2018 2017 90 80 Inventories 85 82 +3 70 65 60 60 Trade and bills 149 155 -6 50 receivable 40 Trade and bills 30 169 177 -8 payable 20 10 Overall 65 60 +5 0 31 Dec 2017 30 Jun 2018 13
Slide 15: Balance Sheet Highlights
Balance Sheet Highlights RMB mn As at 30 Jun 2018 As at 31 Dec 2017 Change Current assets 10,546.3 9,748.5 +8.2% Current liabilities 3,184.4 2,744.4 +16% Net current assets 7,361.9 7,004.1 +5.1% Equity attributable to owners of the 5,992.0 5,706.5 +4.3% company Net asset value per share (RMB) 3.0 2.
Slide 16: Trade Debtors and Ageing Analysis
Trade Debtors and Ageing Analysis RMB’000 As at 30 Jun As at 31 Dec 2018 2017 Trade debtors 2,779,237 1,985,544 As at 30 June 2018, Less：Allowance for doubtful debts (56,655) (56,655) approximately 78.8% of 2,722,582 1,928,889 trade debtors are within 90 days ageing from Bills Receivable 89,408 22
Slide 17: Maintain a Strong Financial Position
Maintain a Strong Financial Position RMB’000 As at 30 Jun 2018 As at 31 Dec 2017 Pledged bank deposits 362,530 335,283 Deposits with bank with maturities > 3mths 3,500,000 3,605,691 Cash and cash equivalents 2,140,869 2,116,422 Total cash 6,003,399 6,057,396 Bank loans 112,387 12,814 Senior unsecure
Slide 18: Operational Highlights
Operational Highlights
Slide 19: Five Operational Highlights
Five Operational Highlights Internationalization Professionalization Leveraging the sponsorship Strengthening the development of Asian Games to increase of 361°core products brand exposure worldwide 361°Kids Rejuvenation New momentum for profit Adopting eSports strategy to growth embrace young group
Slide 20: 361° Increases Its Global Brand Influence with a Comprehensive Approach
361°Increases Its Global Brand Influence with a Comprehensive Approach 361°’s mission is to provide high-valued sports apparels and products to mass consumers and strives to be an internationally-respected sports brand Adhering to its internationalization strategy, 361°sponsored numerous major spo
Slide 21: 361° Remains Dedicated to Sponsoring Professional Sports Teams
361°Remains Dedicated to Sponsoring Professional Sports Teams Professional Sports Team Sponsorships 361°sponsored professional sports teams Including Chinese National Swimming team, China National Synchronized Swimming team, Chinese National Cycling team, Chinese National Mixed Handball team, China
Slide 22: 361° Selects Its Brand Ambassadors
361°Selects Its Brand Ambassadors 361°Brand Ambassadors for Domestic Market 361°has selected traditional sports athletes, modern eSports athletes, and celebrities as quality brand ambassadors. To influence consumers, Sun Yang Li Bingjie Zhang Yufei Liu Xiang especially the young generation, throug
Slide 23: First-ever Chinese Sportswear Brand to Implement eSports Strategy
361° – First-ever Chinese Sportswear Brand to Implement eSports Strategy The Group deployed the eSports strategic plan in March 2018 The eSports business rolled out in four dimensions: resource cooperation, product development, marketing, and sales operations Promoting brand rejuvenation and b
Slide 24: 361° Sales Network
361°Sales Network 361°Sales Network in Domestic Market 361°Type of Stores Northern Type of Stores No. of Stores % to Total Stores region 2,383 Street-level 4,230 75.5% Stores Western region Eastern Mall + 1,171 region Department 1,374 24.5% 1,191 Stores Total: 5,604 Southern 5,604 100.0% region 859
Slide 25: 361° Product Technologies
361°Product Technologies Accumulated 312 patents, and 582 technicians dedicated in R&D team as at 30 June 2018 Core Own Proprietary Technologies Quick Dynamic Defense SAC-air CD stretch mesh NFO 3M reflective material Archlock Fabric Quikfoam Air suspension soles and SORONA fabric
Slide 26: 361° Product Awards
361°Product Awards The functionality of 361°products is comparable to the world-leading products. February 2018 “Editors’ Pick” by “Canadian Running” 2018 Spring Shoe Guide June 2018 February 2018 The best running shoes in stability category The ISPO Global Design Award in Munich, by USA “RU
Slide 27: 361°Kids – Foster Positive, Free and True Self Characteristics
361°Kids – “Foster Positive, Free and True Self Characteristics of The Next Generation” Points-of-Sales Network Revenue（RMB mn） Northern region 711.1 651.2 677 588.9 507.5 420.4 Western 370.1 364.5 306.9 region 238.7 296 Eastern region 454 37.6 (1) (1) Total: 1,783 Southern 2010 2011 2012 2013 2014
Slide 28: 361°Kids – Cooperates with Excellent IP Resources
361°Kids – Cooperates with Excellent IP Resources Collaborated with Universal Studios to launch “361˚ X DreamWorks Animation & Jurassic World” crossover kids’ wear products. The design of the crossover product is inspired by the well-known film series including, “How to Train Your Dragon”,“Kung
Slide 29: 361° E-commerce
361°E-commerce 361°E-commerce features “All channels” product sharing and integrated membership management, developing a new business model that integrates online and offline channels. 361°collaborated with Tmall on “smart store” project and implemented “Become member once you pay” initiative, t
Slide 30: Outlook
Outlook 29
Slide 31: Numerous Positive Factors to Drive Industry Development and Enormous Growth Potential
Numerous Positive Factors to Drive Industry Development and Enormous Growth Potential 2010-2022 Market Size of China’s Sportswear Market （RMB bn） 400 356.6 350 324.2 293.7 300 264.9 250 237.2 193.0769 212.1 174.2468 188.6 156.4393 200 166.9 139.4139 141.8 139.2 134.7 148.3 122.8099 150 130.6 107.617
Slide 32: Winter Sports Industry Has High Potential for Growth
Winter Sports Industry Has High Potential for Growth Market Size of China’s Winter Sports (RMB billion) 2007-2017 Number of Participants in Skiing (in million) 800 80% 20 17.5 60.7% 600 15.1 600 523 60% 15 12.5 42.7% 456 10.3 365 398 9 400 40% 10 8 270 6.3 7 4.7 5 5.5 189 35.1% 14.7% 14.7% 14.7% 200
Slide 33: eSports Market is Growing Rapidly
eSports Market is Growing Rapidly Rapid Global Development of eSports In August 2018, eSports will debut as a Demonstration Sport 2018 2022 of the Asian Games Demonstration Sport Official Medal Event In 2022, eSports will be featured as Official Medal Event of Hangzhou Asian Games Chinese User (hund
Slide 34: Favorable Government Policies
Favorable Government Policies 2018 《Marathon Sports Industry Development Plan》 （2018-2020） 《Cycling Industry Development Plan 》(2018-2020） 2017 Support the society in Organizing Large-scale Mass Sports Events, such as Marathon and Cycling Events （ 2017） Opinions on the Acceleration of Winter
Slide 35: Appendix
Appendix 34
Slide 36: 361° Brand Positioning
361°Brand Positioning Premium 10 ONE WAY 8 6 361°国际 4 2 361°International Fashion -10 -8 -6 -4 -2 0 2 4 6 8 10 Performance -2 -4 361°Core Brand 361°Kids -6 -8 -10 Mass Market Brand Description Market An integrated international sportswear brand that engages in brand, R&D, design, Apparel, Footwear,
Slide 37: Mature and Effective Distributor Business Model with Unique Marketing Strategy
Mature and Effective Distributor Business Model with Unique Marketing Strategy Two-tier Distribution Network Effective Distribution Network Management Well-experienced management team Brand Annual renewal of brand licensing Management Reduce Strong profitable business model Inventory Exclusi
Slide 38: Established a Leading Position in the Industry as China's Fastest-growing Sports Brand
Established a Leading Position in the Industry as China’s Fastest-growing Sports Brand 2014-2018 2011-2013 Comprehensive Upgrade Capital 2008-2010 Further Enhancement As the first Chinese sports brand to sponsor 2005-2007 Development the Olympic Games, and Expansion 361°was the official Cultivation
Slide 39: Steady Growth Among All the 361° Brands
Steady Growth Among All the 361°Brands 361°Retail Sales Performance 361°Kids Retail Sales Performance Retail Sales (in terms of the retail value) Retail Sales (in terms of the retail value) Low-teen growth High single-digit High single-digit High single-digit High single-digit High single-digit High
Slide 40: Q&A
Q&A 39
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