Stella International Holdings Limited · HKEX:1836
Stella International — H1 2022 Earnings Presentation
24 slides from Stella International's earnings presentation, 2022
Slide 1: Corporate Presentation Interim Results 2022
CORPORATE PRESENTATION Interim Results 2022 1
Slide 2: Disclaimer
Disclaimer This presentation and the accompanying slides (the “Presentation”) which have been prepared by Stella International Holdings Limited (“Stella” or the “Company”) do not constitute any offer or invitation to purchase or subscribe for any securities, and shall not form the basis for or be re
Slide 3: Financial Summary
FINANCIAL SUMMARY 3
Slide 4: Operational Highlights for 3Q 2022
Operational Highlights for 3Q 2022 For the three months ended 30 Sept (Unaudited) 2022 2021 Change Group Revenue (US$ million) 460.5 439.3 4.8% Revenue (US$ million) 453.6 431.6 5.1% Manufacturing 15.0 14.9 0.7% Quantity (million pairs) business ASP (US$/pair) 30.2 28.9 4.5% 4
Slide 5: Operational Highlights YTD Sept 2022
Operational Highlights YTD Sept 2022 For the nine months ended 30 Sept (Unaudited) 2022 2021 Change Group Revenue (US$ million) 1,287.7 1,134.8 13.5% Revenue (US$ million) 1,261.0 1,115.3 13.1% Manufacturing 44.1 41.4 6.5% Quantity (million pairs) business ASP (US$/pair) 28.6 27.0 5.9% 5
Slide 6: Interim Results 2022
Interim Results 2022 6
Slide 7: Highlights
Highlights Revenue increased by 18.9% with support from 9.4% growth in shipment volume ASP increased by 7.8% mainly due to higher raw material costs Net profit increased to US$60.2 million, significantly improved from US$32.2 million for the same period last year Continued to enhance customer portfo
Slide 8: Financial Highlights
Financial Highlights For the six-months ended 30 June 2021 2022 Increased customer US$ m (unaudited) (unaudited) Change demand and order recovery Revenue 695.5 827.2 18.9% Stable GPM despite Gross Profit 139.0 163.9 17.9% changes in customer and product mix Operating Profit 36.3 68.6 89.0% Better op
Slide 9: Cost Structure
Cost Structure Breakdown of Costs of Sale (as % of Revenue) 100% 20.0% 19.8% 75% 6.3% 6.4% 2.9% 3.5% 1.4% 2.1% 12.1% 11.6% 50% 56.0% 57.9% 25% 0% 2021 1H 2022 1H Direct material Direct labour Subcontracting costs Depreciation Manufacture overhead Gross Profit *Manufacturing only 9
Slide 10: Capex and Cash Flow Summary
Capex and Cash Flow Summary For the six-months ended 30 June Generated 2021 2022 US$ m positive net (unaudited) (unaudited) Change cashflow Cash flows (used in)/ from operating from activities (9.3) 33.5 460.2% operations Profit before Tax 36.7 68.4 86.4% Depreciation 27.7 30.3 9.4% Changes in worki
Slide 11: Solid Financial Position with Net Cash
Solid Financial Position with Net Cash As of 30 June 2021 2022 US$ m (unaudited) (unaudited) Cash and cash equivalents 76.6 76.4 Debt (7.8) (7.4) Net Cash / (Debt) 68.8 69.0 Net Gearing Ratio* -7.2% -6.8% Current assets 691.8 748.0 Non-current assets 520.4 549.9 Current liabilities 228.8 263.0 Non-c
Slide 12: Impact of COVID-19 on Operations
Impact of COVID-19 on Operations Timeline 2020 Feb • COVID-19 outbreak in China • Disruption to factory operations in China Mid-Mar onwards • Europe and US lockdowns affected our customers, leading to shipment postponement and order cancellation Apr • China reopened and retail sales improved May - J
Slide 13: Business Review: Manufacturing Business
BUSINESS REVIEW Manufacturing BUSINESS 13
Slide 14: World's Leading Footwear Brand Customers
World’s Leading Footwear Brand Customers Our client base includes well-known global Sports , Luxury, Fashion and Casual footwear brands Sports Luxury Fashion Casual 14
Slide 15: Stable Geographic Breakdown for Group Revenue
Stable Geographic Breakdown for Group Revenue 1H2021 Revenue 1H2022 Revenue US$695.5 m US$827.2 m Others Others 2.2% 2.7% 2Asia 2Asia 8.2% 6.5% 1PRC 1PRC North 13.3% 20.5% North America America 49.5% Europe 51.9% Europe 23.9% 21.3% 1PRC included Hong Kong 2Asia excluded the PRC 15
Slide 16: Breakdown of Manufacturing Revenue by Product Category
Breakdown of Manufacturing Revenue by Product Category 1H2021 1H2022 Casual Casual Sports 33.6% 25.3% Sports 42.1% 42.3% Fashion 14.7% Luxury Fashion Luxury 23.6% 8.8% 9.6% *Excluding sales from samples and others 16
Slide 17: Revenue Growth by Product Category
Revenue Growth by Product Category Category Revenue growth YoY Remarks • Continued order growth Sports +18.7% • Added new customers • Strong 1H shipment from existing Luxury +7.8% customers • Ramp-up of new customers • Strong recovery of existing Fashion +90.1% customers • Added new customers • Real
Slide 18: Volume & ASP Trends
Volume & ASP Trends Shipment Volume 80 58.2 56.6 60.2 59.4 55.8 53.3 52.6 50.8 50.8 53.1 52.9 60 43.4 42.7 (m pairs) 40 26.5 29.0 20 CAGR = 2.3% 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 1H 1H 2021 2022 ASP 28.6 28.3 29.6 29.3 28.1 30 27.1 26.7 27.1 27.8 25.8 25.8 25.7 25.8
Slide 19: Our Manufacturing Facilities
Our Manufacturing Facilities Facility Locations (Footwear) Geog. Mix of Production 1H2020 Hebei Hunan 13% 25% 62% • Weiyuan • Shuangfeng • Shaoyang Liantai China • Dongkou Selena 1H2021 13% 19% 68% Dongguan Guangxi • Stella PCC • Lingshan • NPCC Guangdong 1H2022 12% 19% 70% • Longchuan Bangladesh •
Slide 20: High Vaccination Rate Against Covid-19 at Factories
High Vaccination Rate Against Covid-19 at Factories Location 2-shot 3rd Booster Shot Full Vaccination Rate Vaccination Rate Vietnam ~ 100% > 93% Indonesia ~ 100% ~ 100% Philippines ~ 100% ~ 20% Bangladesh ~ 100% 3rd shot - waiting for local government’s approval China ~ 100% ~ 90% As of Mid-Aug 2022
Slide 21: Outlook
OUTLOOK 21
Slide 22: Opportunities and Challenges
Opportunities and Challenges Opportunities Challenges • Athleisure trend remains popular • High inventory issues faced by customers • Luxury and Fashion brands experimenting with and expanding • Macroeconomic headwinds athleisure product lines e.g. inflation and higher interest rates • Speed-to-mark
Slide 23: Outlook for 2H2022
Outlook for 2H2022 Ø Committed to L-T capacity expansion & diversification q Reduced 2022 capex from $110m to $80m as a result of delaying capacity expansion q Slowed down incremental expansion on existing production sites q Ramp-up of the new factory in Solo, Indonesia q Adding new factory for key
Slide 24: Outlook for 2H2022
Outlook for 2H2022 Ø Expect full-year 2022 ASP and volume growth rate to moderate from 1H2022 YoY growth rate Ø Increased logistics cost for raw materials & lower capacity utilization will impact 2H2022 gross margin Ø Tighten up cost control q To reduce impact from lower capacity utilization in 2H20
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