Daphne International Holdings Limited · HKEX:210
Daphne International — FY2012 Earnings Presentation
42 slides from Daphne International's earnings presentation, Mar 21, 2013
Slide 1: 2012 Annual Results Presentation
2012 Annual Results Presentation 21 March 2013
Slide 2: Disclaimer
Disclaimer The information contained in this presentation is intended solely for your personal reference. Such information is subject to change without notice, its accuracy is not guaranteed and it may not contain all material information concerning Daphne International Holdings Limited (“the Compan
Slide 3: Highlights of 2012 Annual Results
Highlights of 2012 Annual Results Group turnover increased by 22.8% to HK$10,529.1 million Turnover of Core Brands business recorded a growth of 25.0%, reaching HK$9,591.9 million Core Brands’ same store sales achieved a YoY growth of 9% Group’s gross profit increased by 18.8% to HK$6,228.8
Slide 4: Financial Review
Financial Review DAPHNE GROUP rc Ale, Dr =-| ro) m Sm DAPHNE INTERNATIONAL HOLDINGS LIMITED ZBRRRR ER AR AA
Slide 5: Group Financial Highlights
Group Financial Highlights For the 12 months ended 31 Dec (HK$ million) Change 2012 2011 Turnover 10,529.1 8,576.8 +22.8% Gross profit 6,228.8 5,243.8 +18.8% Operating profit 1,364.9 1,368.6 -0.3% Profit attributable to shareholders 955.7 933.1 +2.4% Basic EPS (HK cents) 58.1 57.0 +1.9% Dividend per
Slide 6: Group Turnover
Group Turnover Core Brands segment continued to be Turnover Breakdown (For the 12 months ended 31 Dec) the Group’s focus, with its proportion in Group turnover rising to 90%, up by 1 HK$ million ppt year-on-year 12,000 10,529.1 Other Brands segment increased its 3% 10,000 proportion in Group tur
Slide 7: Inventory Turnover Days & Working Capital
Inventory Turnover Days & Working Capital Inventory turnover days was 188 days Made great efforts in managing inventory in 2H 2012, resulting in a decrease of 14 inventory turnover days as compared to interim period Inventory level of Core Brands maintained at reasonable and healthy level St
Slide 8: Other Key Financial Indicators
Other Key Financial Indicators Increased CAPEX and inventory led to lower cash and bank balances No convertible bonds were converted during 2012 Current ratio remained healthy, reflecting sound financial structure As at 31 Dec (HK$ million) Change 2012 2011 Cash and bank balances 1,494.8 1,795
Slide 9: Solid Growth
Solid Growth Turnover (For the 12 months ended 31 Dec) Basic EPS (For the 12 months ended 31 Dec) (HK$ million) (HK cents) 12,000 70 CAGR 22% 10,529.1 CAGR 20% 57.0 58.1 10,000 60 8,576.8 50 8,000 41.1 6,623.8 36.5 5,832.0 40 6,000 5,289.3 30.1 3,853.6 30 23.5 4,000 20 2,000 10 0 0 2007 2008 2009 20
Slide 10: Business Review
Business Review DAPHNE GROUP rc Ale, Dr =-| ro) m Sm DAPHNE INTERNATIONAL HOLDINGS LIMITED ZBRRRR ER AR AA
Slide 11: Group Sales Network
Group Sales Network Continued network expansion to Total No. of Points-of-Sales (POS) (As at 31 Dec) maintain leading market position 8,000 Added 716 POS to the Group’s 6,881(+716) 7,000 sales network 6,165(+966) 512 6,000 Core Brands total POS = 6,369 5,199*(+974) 563 5,000 297 Net increase
Slide 12: Core Brands Sales Network – by Store Category
Core Brands Sales Network – by Store Category Expansion with focus on directly-managed stores, of which proportion increased to 85% A net increase of 767 POS (added 880 directly-managed stores, and decreased 113 franchised stores) As at 31 Dec As at 31 Dec Change % Change 2012 2011 - Directly-ma
Slide 13: Core Brands Sales Network – by City Tier
Core Brands Sales Network – by City Tier The Group maintained greater representation in lower tier cities As at 31 Dec 2012 As at 31 Dec 2011 Change % Change No. % No. % Tier 1 cities 721 11% 614 11% +107 17.4% Tier 2 cities 1,342 21% 1,100 19% +242 22.0% Tier 3 cities 981 15% 863 15% +118 13.7% T
Slide 14: Core Brands Business – Performance
Core Brands Business – Performance Despite economic growth slowdown, turnover of Core Brands business maintained steady growth, increasing by 25.0% YoY Operating margin was mainly affected by the following : Proactive promotion efforts in response to slowing macro economy, leading to 2.9 ppt d
Slide 15: Core Brands Business – SSSG
Core Brands Business – SSSG Achieved 9% SSS growth despite market slowdown 2H same store sales growth was affected by high base in the prior year Sales growth was volume-driven, indicating expansion in customer base and market share Proactive promotion efforts and change in product sales mix
Slide 16: Other Brands Business
Other Brands Business Turnover growth was mainly driven by mid- to high-end brands business Performance affected by the softness in department store channel Consolidated sales network and closed underperforming POS Mid- to high-end brands business, as one of the Group’s future growth engines
Slide 17: Outlook & Strategies
Outlook & Strategies DAPHNE GROUP rc Ale, Dr =-| ro) m Sm "i ZBRRRR ER AR AA
Slide 18: 2013 Outlook
2013 Outlook Continued urbanisation Increasing labour and drives consumption rental costs in China growth Opportunities Challenges Consumption sentiment Increasing disposable is still weak and takes income time to improve Government continues to foster domestic consumption and boost market
Slide 19: Strategic Initiatives for 2013
Strategic Initiatives for 2013 1. Strengthen sales operation management and enhance sales productivity 2. Continue expansion in sales network and increase market share 3. Enhance supply chain management to increase competitiveness 4. Improve brand recognition and value, especially for mid- to high-e
Slide 20: Strengthen Sales Operation Management
Strengthen Sales Operation Management Enhance store operation management Further optimise salespeople scheduling Adopt more comprehensive KPIs in management and monitoring Invest in salespeople development to increase sales productivity Reinforce “Train the Trainers” programs Introduce a
Slide 21: E-commerce
E-commerce To integrate e-commerce, brick-and-mortar stores and CRM to increase revenue and enhance the shopping experience Adopt a prudent and gradual approach in its expansion while closely monitoring the changing market environment Enrich and enhance the online product offering and presenta
Slide 22: Expand Sales Network
Expand Sales Network Continue to expand Core Brands’ sales network to strengthen its market-leader position and increase market share Maintain a steady growth of Core Brands’ POS Look for expansion into new cities Increase penetration in existing cities Focus on directly-managed stores I
Slide 23: Strengthen Supply Chain Management
Strengthen Supply Chain Management Ensure a smooth setup of the new retail management system To implement agile supply chain management and support meticulous/more refined retail management To enable the integration of category and product planning, and its financial planning, to improve accur
Slide 24: Mid- to High-end Brands Development
Mid- to High-end Brands Development Remain as a long-term growth driver Cater to the growing middle-class Broaden customer base Enable Daphne customers to trade up 2013 action plan: Establish more precise brand development strategies and goals Develop stronger brand identity and differ
Slide 25: Cost Control Management
Cost Control Management Implement cost control and monitoring measures at all levels in the Group Improve cost control, monitoring and variance analysis to build a cost- conscious culture Tighten control on rental costs Increase labour productivity Optimise organisation and human resources
Slide 26: Strategic Goals
Strategic Goals 1 Expand the Core Brands business to increase market share Increase market Diversify into mid- to penetration of high-end market segment Core Brands through brand from solid base of and products extension Core Brands 2 3 26
Slide 27: Vision
Vision Diversification Strategy Brands Products A leading brand management company that provides ladies and their family members with trendsetting and quality products Pricing Sales Channels 27
Slide 28: Thank you
Thank you ......Q & A Session DAPHNE INTERNATIONAL HOLDINGS LIMITED i FR Ye Bl BE 1S AY B PR 2S)
Slide 29: Investor Relations Contact
Investor Relations Contact Ms. Macy Leung (852)-2367 9022 macyleung@daphneholdings.com 29
Slide 30: Appendix
Appendix DAPHNE GROUP rc Ale, Dr =-| ro) m Sm DAPHNE INTERNATIONAL HOLDINGS LIMITED ZBRRRR ER AR AA
Slide 31: Growth Drivers
Growth Drivers 1 Continuous improvement in operational efficiency More focused sales operation More agile and efficient supply chain management Further enhancement in product design and development Increasing the depth and breadth of marketing Strengthening brand management 2 Strong profes
Slide 32: Growing Market Potential of China
Growing Market Potential of China Continued urbanisation Increasing disposable Growing domestic income consumption 712 M 9.6% Urban population Urban residents’ disposable 14.3% China retail sales income per capita 52.57% China urbanisation rate Continued urbanisation Income per capita on Re
Slide 33: China Footwear Market Potential
China Footwear Market Potential 2011 Footwear Market Comparison Population: 1,337 million China Population: 311 million USA 2.13 billion 2.26 billion pairs pairs 6.8 pairs per capita 1.7 pairs per capita Data source: SCMP Footwear consumption per capita in China is low China Footwear market size
Slide 34: China Women's Footwear Market Prospect
China Women’s Footwear Market Prospect China Women’s Footwear Market Forecast (RMB million) CAGR: 10.5% +10.0% 250,000 +10.0% 223,070 +10.1% +10.7% 202,857 200,000 184,367 +12.2% 167,463 151,262 150,000 134,861 119,133 100,000 50,000 0 2010 2011 2012E 2013E 2014E 2015E 2016E Data source: Euromonitor
Slide 35: Consistent Turnover Growth
Consistent Turnover Growth (HK$ million) 12,000 11,000 10,529.1 10,000 CAGR: 24% 9,000 8,576.8 8,000 7,000 6,623.8 5,832.0 6,000 5,289.3 5,000 3,853.6 4,000 3,093.1 3,000 2,622.7 1,788.5 2,000 1,407.0 1,180.7 933.1 955.7 1,000 492.9 597.3 672.8 254.6 291.6 384.4 25.8 82.9 176.2 0 2002 2003 2004 2005
Slide 36: Daphne Group's Market Share
Daphne Group’s Market Share China Women’s Footwear Market Share* 2010 2011 4.8% 5.3% Daphne Group Women’s footwear market 2010: Women’s footwear market 2011: RMB 119.1 billion RMB 134.9 billion *Based on Goldman Sachs research report (2012) 36
Slide 37: Competitive Advantages
Competitive Advantages Leading retailer in ladies’ footwear in China with strong own-brands, “Daphne” and “Shoebox” Unparalleled leadership position in the mass market Extensive nationwide sales network – reaching county level with over 6,800 outlets Vast directly-managed store network enabl
Slide 38: Company Overview
Company Overview One of the leading ladies’ footwear retailers in China Engage in product design & development, production, distribution, retail, and brand management Has 6,881 points-of-sales (POS) (as at 31 December, 2012) The Group’s core brands (“Daphne” and “ShoeBox”) are distributed in
Slide 39: Shareholding Structure
Shareholding Structure As at 31 December, 2012 Lucky Earn Top Glory Assets Int’l Ltd. Pushkin Holding Ltd. Ltd. (held by Mr. CHANG Premier China Ltd. Public (held by Mr. CHEN Chih-Kai, (held by Mr. CHEN Ying- Tommy Yi-Hsun and his Mr. CHANG Chih-Chiao Chieh and his family) family) and their family)
Slide 40: Major Brand Portfolio
Major Brand Portfolio Brand Ownership ASP (RMB) Own brand (channel) < 200 Core Brands Own brand (product) 200 – 300 Own brand (product) Sole distributorship Mid- (international brand) to High- 400 – 1200 end Sole distributorship Brands (international brand) Own brand (channel) 40
Slide 41: Group Milestones
Group Milestones 2012 • Market capitalisation over HK$ 17 bn • Retail POS exceeded 6,000 2011 • Group turnover exceeded HK$8 billion • Entered mid- to high-end ladies’ footwear market 2010 through acquisition of Full Pearl Group • Exited sportswear market 2008 • Renamed to “Daphne International Hold
Slide 42: Management Team - Profile
Management Team - Profile Date joined Title Experiences Daphne Group Mr. CHEN Ying-Chieh, Joined the Group since 1992 and has over 22 years of Chairman & CEO 1992 Eddie experience in the footwear industry Mr. LIN Che Li, Has over 18 years of financial planning and management CFO Jan 2010 Jerry exper
Daphne International Holdings — FY2012 Earnings Presentation on 6ix