Daphne International Holdings Limited · HKEX:210
Daphne International — H1 2012 Earnings Presentation
46 slides from Daphne International's earnings presentation, Aug 16, 2012
Slide 1: 2012 Interim Results Presentation
2012 Interim Results Presentation 16 August 2012
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 Interim Results
Highlights of 2012 Interim Results Group’s turnover increased by 28.9% to HK$5,079.5 million (1H 2011: HK$3,939.3 million) Turnover of core brands business registered a growth of 33.4% to HK$4,639.7 million Same store sales growth of core brands business increased by 17% Group’s gross profit increas
Slide 4: Financial Review
Financial Review Daphne International Holdings Limited 3 達 芙 妮 國 際 控 股 有 限 公 司
Slide 5: Group Financial Highlights
Group Financial Highlights For the six months ended 30 June (HK$ million) 2012 2011 Change Turnover 5,079.5 3,939.3 +28.9% Gross profit 3,083.3 2,412.4 +27.8% Operating profit 699.6 630.2 +11.0% Profit attributable to shareholders 482.6 440.2 +9.6% Basic EPS (HK cents) 29.4 26.9 +9.2% Interim divide
Slide 6: Group Turnover
Group Turnover Turnover (For the six months ended 30 June) Core Brands segment, being the 100% 3% Group’s focus, increased its 9% 6% 7% 6% proportion in Group’s turnover to 5% 90% 80% Other Brands segment, with a 60% higher growth rate than that of the Group, increased its 90% proportion to the Grou
Slide 7: Group Operating Margin
Group Operating Margin Group gross profit margin decreased by 0.5 ppt Increased promotional efforts to boost sales Offset by improved business mix with a reduced proportion of OEM business as the Group focuses on higher-margin own brands business General increase in rental and labour costs Mid-
Slide 8: Other Key Financial Indicators
Other Key Financial Indicators As at As at Increased CAPEX and (HK$ million) 30 Jun 31 Dec Change inventory led to lower 2012 2011 cash and bank balances Cash and bank 1,550.0 1,795.7 -13.7% balances No convertible bonds Shareholders’ 4,391.6 4,035.9 +8.8% equity were converted during 1H 2012 Bank l
Slide 9: Other Key Financial Indicators
Other Key Financial Indicators For the six months ended 30 June Higher CAPEX due to: 2012 2011 Change Average Inventory More store openings and Turnover (days) 202 149 +53 related expenditures Average Debtors 12 11 +1 Turnover (days) More investments in Average Creditors self-used properties, Tu
Slide 10: Inventory Strategy to Drive Sales
Inventory Strategy to Drive Sales Strong support from inventory supply Core Brands 1H 2012 Drive higher sales growth Turnover growth (YoY) +33% Increase market share SSS growth (YoY) +17% Facilitate accelerated store opening plan Directly-managed stores for core brands increased by 789 (+19%
Slide 11: Proven Solid Growth
Proven Solid Growth Turnover Basic EPS (For the six months ended 30 June) (For the six months ended 30 June) (HK$ million) (HK cents) 6,000.0 CAGR 24% 35.00 CAGR 21% 5,079.5 29.36 5,000.0 30.00 26.88 3,939.3 25.00 4,000.0 19.93 3,138.1 20.00 17.70 2,773.9 15.78 3,000.0 2,487.0 15.00 11.26 1,750.6 2,
Slide 12: Business Review
Business Review Daphne International Holdings Limited 11 達 芙 妮 國 際 控 股 有 限 公 司
Slide 13: Group Retail Network
Group Retail Network No. of points-of-sales (POS) Continued sales network expansion to maintain leading 7,000 6,581 (+19%) market position 613 6,000 5,552 (+19%) Store openings during 1H 2012 356 in line with expectation 5,000 4,670 (+19%) 200 Net increase of POS in 1H 4,000 2012: 3,000 5,968 5,196
Slide 14: Group Retail Network – Distribution
Group Retail Network – Distribution Focus on directly-managed stores Pace of expansion for directly-managed stores on track As at As at Proportion Proportion Change % Change 30 Jun 2012 31 Dec 2011 Core Brands 5,968 91% 5,602 91% +366 +6.5% POS - Directly- managed 4,958 76% 4,547 74% +411 +9.0% POS
Slide 15: Core Brands Sales Network – by City Tier
Core Brands Sales Network – by City Tier As at As at Proportion Proportion Change % Change 30 Jun 2012 31 Dec 2011 Tier 1 cities 668 11% 614 11% +54 +8.8% Tier 2 cities 1,222 20% 1,100 19% +122 +11.1% Tier 3 cities 908 15% 863 15% +45 +5.2% Tier 4-6 3,170 54% 3,025 55% +145 +4.8% cities Total 5,968
Slide 16: Core Brands Business - Performance
Core Brands Business - Performance Core Brands business continued For the six months ended 30 June to grow, with turnover up 33.4% (HK$ million) 2012 2011 Change YoY, despite the slow economic Turnover 4,639.7 3,477.8 +33.4% growth Gross profit 2,821.8 2,171.9 +29.9% Gross margin 60.8% 62.5% -1.7 pp
Slide 17: Core Brands Business – Same Store Sales Growth
Core Brands Business – Same Store Sales Growth Same Store Sales Growth 1Q 2012 2Q 2012 1H 2012 +22% +15% +17% 1Q 2011 2Q 2011 1H 2011 +1% +32% +17% Same store sales growth was solid, considering the high base in 2Q 2011 Sales growth was driven by increase in volume Average selling price decreased by
Slide 18: Other Brands Business
Other Brands Business For the six months ended 30 June Sales growth mainly driven by (HK$ million) 2012 2011 Change mid- to high-end brands business Turnover 332.6 239.0 +39.1% Attributable to the considerable Gross profit 192.4 148.4 +29.7% addition of stores last year Gross margin 57.9% 62.1% -4
Slide 19: Manufacturing Business
Manufacturing Business Turnover from OEM business decreased by 38.2% to HK$145.4 million (1H 2011: HK$235.3 million) Gradually allocate more capacity to production of own brands OEM business, currently accounting for approximately one-fourth of the Group’s production capacity, will gradually phase o
Slide 20: Outlook & Strategies
Outlook & Strategies Daphne International Holdings Limited 19 達 芙 妮 國 際 控 股 有 限 公 司
Slide 21: 2H 2012 Outlook
2H 2012 Outlook Positive Negative Market Inflation trending down Uncertainties in the European PRC government to launch new and US economies policies to encourage domestic General slowdown in local consumption economy affects consumption sentiment General increase in rental and labour costs The Grou
Slide 22: 2H 2012 Action Plan
2H 2012 Action Plan Initiatives to improve operational efficiency Sales operation management Sales channel management Supply chain management Product development Marketing Realignment for mid- to high-end brands Cost control management Daphne International Holdings Limited 21 達 芙 妮 國 際 控 股
Slide 23: Sales Operation Management
Sales Operation Management Strengthen sales operation Optimise staff scheduling to increase manpower productivity Invest in training to improve customer service Strengthen store operation management system Enhance store appeal: Adopt new store design Improve visual merchandising Consolidat
Slide 24: Sales Channel Management
Sales Channel Management Expand sales network Maintain full-year store opening target of 700 stores for core brands (i.e. target 334 store addition in 2H 2012) Monitor market conditions closely and adjust expansion pace accordingly Core brands (Daphne and Shoebox) remain the focus of network exp
Slide 25: Product Development
Product Development Enhance product portfolio Increase the product variety in each season to offer more diversified and fashionable selection Provide a more balanced product portfolio and a broader price range Strengthen best-selling product offerings through enhanced sales analysis Improve pr
Slide 26: Supply Chain Management
Supply Chain Management Enhance inventory management Monitor market conditions and actual sales closely and adjust seasonal procurement and replenishment accordingly Adjust the procurement and stocking of mid- to high-end brands in accordance with its store opening plan Employ a wider range of
Slide 27: Marketing
Marketing Launch integrated marketing campaign for Core Brands Strengthen out-store promotions Roll out 25th anniversary promotion campaign Introduce large-scale thematic promotional activities Broaden marketing reach Increase the variety of new media deployed to adapt to the changing consum
Slide 28: Realignment for Mid- to High-end Brands
Realignment for Mid- to High-end Brands Remain as a long-term growth driver but will cautiously adjust its execution and expansion to match the changing market environment Cater to the growing middle-class Broaden customer base High Price Enable Daphne customers to trade up Face challenges rec
Slide 29: Cost Control Management
Cost Control Management Accelerate staff scheduling optimisation to improve labour productivity Tighten control on the rental costs Optimise human resources structure to ensure competitiveness and efficiency Improve cost control, monitoring and variance analysis to build a cost-conscious culture Inv
Slide 30: Experienced Management Team
Experienced Management Team Chairman & Chief Executive Officer Mr. Eddie Chen Chief Chief Chief Chief Strategy Financial Operating Sales Officer Officer Officer Officer Mr. Allen Liang Mr. Jerry Lin Mr. Michael Hu Mr. Jonathan Shih Chief Chief Chief Chief Chief Human Resources Information Product De
Slide 31: Growing Market Potential of China
Growing Market Potential of China Continuous urbanisation boosts consumption growth Urbanisation rate in China exceeded 50% for the first time in 2011 and reached 51.27% Total urban population reached 690 million in 2011 Increasing disposable income Disposable income for urban population rose
Slide 32: China Footwear Market Potential
China Footwear Market Potential 2011 Footwear Market Comparison Population: 1,337 million China Population: 311 million 2.13 2.26 US billion 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 re
Slide 33: China Women's Footwear Market Prospect
China Women’s Footwear Market Prospect (RMB million) China Women’s Footwear Market Forecast +10.0% 250,000 +10.0% 223,070 CAGR 10.5 % +10.1% 202,857 200,000 +10.7% 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 34: Strategic Goals
Strategic Goals Increase market Expand sales penetration of network of core core brands through brands to increase brand and products market share extension Diversify into mid- to high-end market segment from solid base of core brands Daphne International Holdings Limited 33 達 芙 妮 國 際 控 股 有 限 公 司
Slide 35: Vision Diversification Strategy
Vision A leading brand management company that provides ladies and their family members with trendsetting and quality products Diversification Strategy Sales Brands Channels Products Pricing Daphne International Holdings Limited 34 達 芙 妮 國 際 控 股 有 限 公 司
Slide 36: Thank You – Q & A Session
Thank You ......Q & A Session DAPHNE INTERNATIONAL HOLDINGS LIMITED i FX Me Bl iS AR BPR BS)
Slide 37: Investor Relations Contact
Investor Relations Contact Ms. Macy Leung (852)-2367 9022 macyleung@daphneholdings.com 36
Slide 38: Appendix
Appendix Daphne International Holdings Limited 37 達 芙 妮 國 際 控 股 有 限 公 司
Slide 39: Growth Drivers
Growth Drivers Continuous improvement in operational efficiency More efficient supply chain management More focused sales operation More specialised sales channel management Further enhancement in product design and development Increasing the depth and breadth of marketing programmes Str
Slide 40: 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 6,500 outlets Vast directly-managed store network enables direc
Slide 41: Company Overview
Company Overview One of the leading ladies’ footwear retailers in China Engages in product design & development, production, distribution, retail, and brand management Has 6,581 points-of-sales (POS) (as at 30 June, 2012) The Group’s core brands (Daphne and ShoeBox) are distributed in nearly 6,000 P
Slide 42: Shareholding Structure
Shareholding Structure As at 30 June, 2012 Lucky Earn Int’l Ltd. Top Glory Pushkin (held by Mr. CHANG Assets Ltd. Holding Ltd. Premier China Chih-Kai, (held by Mr. CHEN (held by Mr. CHEN Public Ltd. Mr. CHANG Chih- Tommy Yi-Hsun and Ying-Chieh and his Chiao and their his family) family) family) 24.3
Slide 43: Group's Brand Portfolio
Group’s Brand Portfolio High Price Group’s own product brands Daphne AEE dulala Group’s own channel brands ShoeBox Ameda Sole distributorship of international brands ALDO AEROSOLES Leisure Trendiness Low Price Daphne International Holdings Limited 42 達 芙 妮 國 際 控 股 有 限 公 司
Slide 44: Group Milestones
Group Milestones 2010 Entered mid- to high-end ladies’ 1987 1995 footwear Prime Listed on 2004 market through 2010 2011 Success Hong Kong Established acquisition of Retail POS Retail POS was Stock 2nd own brand Full Pearl exceeded exceeded established Exchange “ShoeBox” Group 5,000 6,000 1991 2002 2
Slide 45: Management Team - Profile
Management Team - Profile Date joined Experiences Daphne Group Chairman & CEO Joined the Group since 1992 and has over 21 years of experience in the 1992 Mr. CHEN Ying-Chieh, Eddie footwear industry CFO Has over 18 years of financial planning and management experience at Jan 2010 Mr. LIN Che Li, Jer
Slide 46: Consistent Turnover Growth
Consistent Turnover Growth (HK$ million) 10,000.0 9,000.0 8,577 Turnover CAGR: 25% 8,000.0 7,000.0 6,624 5,832 6,000.0 5,289 5,000.0 3,854 4,000.0 3,093 3,000.0 2,623 2,000.0 1,789 1,407 1,181 933.1 1,000.0 492.9 597.3 672.8 254.6 291.6 384.4 25.8 82.9 176.2 0.0 2002 2003 2004 2005 2006 2007 2008 20
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