Anta Sports Products Ltd. · HKEX:2020
Anta Sports Products — FY2007 Earnings Presentation
36 slides from Anta Sports Products's earnings presentation, 2008
Slide 1: 2007 Annual Results Presentation
2007 Annual Results Presentation Stock code: 2020
Slide 2: Disclaimer
Disclaimer The presentation is prepared by ANTA Sports Products Limited (the “Company”) and is solely for the purpose of corporate communication and general reference only. The presentation is not intended as an offer to sell, or to solicit an offer to buy or to form any basis of investment decision
Slide 3: Achievements in 2007
Achievements in 2007 IPO Listing on 10 July 2007 In terms of financial performance In terms of operational performance ¾ Turnover breakthrough RMB3 billion, ¾ Number of ANTA authorised retail with an increase of more than 1.5 times outlets reached 4,716, a net increase ¾ Gross profit margin increase
Slide 4: Awards
Awards Awards of ANTA Sports Awards of Mr. Ding Shizhong ¾ In 2002, ANTA trademark was named as one ¾ In 2006, being named as one of the of “China’s Well-Known Trademarks” “Top Ten Outstanding Young ¾ In 2005, “ISO 9001 quality control Persons in China” certification” has been awarded for ANTA ¾ In
Slide 5: Financial Highlights
Financial Highlights (For the year ended 31 December) (RMB$ ’000) (%) Profitability data 2007 2006 Change Turnover 3,182,453 1,250,142 S 154.6 Gross profit 1,055,287 313,228 S 236.9 Profit from operation 600,877 148,279 S 305.2 Profit attributable to shareholders 537,793 147,417 S 264.8 RMB’ (Cents)
Slide 6: Financial Highlights
Financial Highlights (For the year ended 31 December) (in%) (%) Profitability ratios 2007 2006 Change Gross profit margin 33.2 25.1 S 8.1 Operating profit margin 18.9 11.9 S 7.0 Net profit margin 16.9 11.8 S 5.1 Effective tax rate 10.2 0.4 S 9.8 (in%) (%) Operating ratios (as a percentage of turnove
Slide 7: Turnover – Product mix
Turnover – Product mix 2007 Turnover is 155% higher than 2006 3,182M RMB 5% +15 1,250M 670M 311M New business model, focused: Apparel/accessory segment have a higher growth rate as: ¾ Brand building ¾ Develop: Product diversity; ¾ Product offering ¾ Footwear: durable and insensitive to seasonal fact
Slide 8: ASP Growth
ASP Growth Footwear Apparel RMB RMB 100 % 60 9 .0 % 2 88.0 0 + 53.8 15. 53.6 + 80 68.2 50 56.6 51.5 60 46.6 40 47.5 40 2004 2005 2006 2007 2004 2005 2006 2007 Factors for significant increase in average selling prices ¾ Continuous growth of China economy and consumption level ¾ increase in disposabl
Slide 9: Volume Growth
Volume Growth Footwear Apparel Unit (million) 25 Unit (million) 23.6 25 56% % 20 + 18.3 20 67 +1 15 11.7 15 7.9 10 8.8 10 5.6 4.0 5 5 0.8 0 0 2004 2005 2006 2007 2004 2005 2006 2007 Factors for volume growth ¾ Improving the quality of the distribution network ¾ Upgrade of brand and store image ¾ Mov
Slide 10: Cost of Sales Breakdown
Cost of Sales Breakdown % of total cost of sales 2007 2006 Self-production % ANTA bra nd (Whole s a le ) Footwear Apparel 2007: 62.5% 4.3% Self-production 2006: 75.4% 0.0% Raw materials 21.5% 31.5% Direct labour 5.7% 6.3% Overhead 5.5% 5.6% 32.7% 43.3% Self-production Sub-contracting arrangement Cha
Slide 11: Gross Profit
Gross Profit Gross Profit Gross Profit Margin RMB’ million in % 1,055.2 % 6 .9 3 +2 33.2 313.2 25.1 18.8 125.9 14.1 43.8 2004 2005 2006 2007 2004 2005 2006 2007 ASP increased - footwear: 29.0% & apparel: 5.0% ¾ Far higher than the increase in unit costs - footwear: 14.5% & apparel: 2.3% ¾ Resulting
Slide 12: Operating ratios
Operating ratios Profit From Operations Operating Profit Margin RMB’million in % % 5.2 0 +3 600.9 18.9 11.9 7.6 148.3 51.1 -5.1 -1.6 2004 2005 2006 2007 2004 2005 2006 2007 ANTA Brand International Brands Total RMB’000 % RMB’000 % RMB’000 Revenue from external customers 2,989,723 93.9% 193,730 6.1%
Slide 13: Net Profit
Net Profit Net Profit Net Profit Margin RMB’million in % 590.0 % 4.8 15.0 6 +2 490.0 390.0 10.0 16.9 290.0 537.8 11.8 190.0 5.0 7.2 90.0 147.4 48.0 - (10.0) (8.4) (2.7) 2004 2005 2006 2007 2004 2005 2006 2007 (5.0) Other revenue Mainly comprise of interest income from IPO proceeds ¾ From over-subscr
Slide 14: Assets/liabilities Turnover Ratio
Assets/liabilities Turnover Ratio Average Trade Receivables Average Inventory Turnover Days Turnover Days Days Days 35 60 45 43 20 30 51 26 42 15 26 29 19 15 0 5 2004 2005 2006 2007 2004 2005 2006 2007 ¾ Increase in average inventory turnover ¾ Favorable changes in average trade days mainly due to t
Slide 15: Capital expenditure
Capital expenditure Capital expenditure increases along with turnover CAPEX RMB’ M (forecast) 400.0 367.6 300.0 264.4 200.0 74.3 83.6 100.0 36.7 - In % 2004 2005 2006 2007 2008 20.0% CAPEX / Turnover Depreciation & amortisation / Turnover 11.8% 11.1% 10.0% 8.3% 6.7% 1.6% 1.3% 1.0% 0.9% 15 0.0% 2004
Slide 16: Income tax
Income tax 2008 2009 2010 2011 2012 ANTA China 12.5% 12.5% 25.0% 25.0% 25.0% ANTA Changting 0.0% 12.5% 12.5% 12.5% 25.0% ANTA Xiamen 0.0% 0.0% 12.5% 12.5% 12.5% ANTA Quanzhou 0.0% 0.0% 12.5% 12.5% 12.5% Xiamen Trading 18.0% 20.0% 22.0% 24.0% 25.0% Fengxian 25.0% 25.0% 25.0% 25.0% 25.0% New tax law i
Slide 17: Market Opportunities
Market Opportunities GDP and disposable income growth Beijing Olympics Increasing / Shanghai Expo/ sports Guangzhou participation rate Asian Games Sportswear market in China will continue to expand rapidly Growth of public awareness of Increasing and interest in urbanization sports and fitness Shift
Slide 18: Market Opportunities
Market Opportunities ANTA targets at mass market and provided professional ‘value- for-money’ sportswear, which capture this opportunities Customers in second & third tier cities and middle-income group demand functional sportswear with mid-priced range China GDP reached RMB24.7 trillion (an increas
Slide 19: Brand Building and Marketing
1 Brand Building and Marketing ¾ The Group have increased the proportion on advertising and promotion, representing 11.7% in turnover in 2007, compared to 8.3% in 2006 Olympics “I Believe” Promotional Campaign ¾ Started a one and half year long Olympics integrated communication campaign, with 5 them
Slide 20: Brand Building and Marketing
Brand Building and Marketing Actively Sponsoring Major Sports Leagues in China ¾ Sponsors top-tier professional sports leagues, including the equipment sponsor for all 16 basketball teams of CBA (「中 國男子籃球職業聯賽」)and the indoor advertisements ¾ Sole equipment sponsor for “China Table Tennis Super Leagu
Slide 21: Brand Building and Marketing
Brand Building and Marketing Co-operative Agreements with National Athletic Organizations ¾ Established co-operative relationships including Bicycle and Fencing Administrative Center under China General Administration of Sports, Fencing Association of China, Bicycle Association of China, Triathlon A
Slide 22: Distribution Management and Retail Network
2 Distribution Management and Retail Network Number of Sales floor Average sales ANTA brand in China market stores area floor area As of 31 December 2006 4,108 328,530 80 Open Bigger Stores 1,394 n/a n/a Shut Down Smaller Stores (786) n/a n/a As of 31 December 2007 4,716 433,843 92 Refurbished 691 n
Slide 23: Nationwide Distribution and Retail Network
Nationwide Distribution and Retail Network 23
Slide 24: Distribution Management
Distribution Management ANTA brand in China ¾ Managed 39 distributors and operated 4,716 ANTA authorized retail outlets through 6 regional operational centers ¾ 22% are in the form of departmental concessionary stores 6 Regional Operational Centers ¾ Opened 4 flagship stores in Shanghai, Wuhan and S
Slide 25: Distribution Management
Distribution Management Stratified management system ¾Motivate distributors to open larger and attractive stores in prime locations which can generate higher sales ¾The Group also provides renovation materials and promotional resources to distributors Open 5% to 15% first-tier stores (sales area ove
Slide 26: ANTA Brand in Overseas Market
ANTA Brand in Overseas Market ¾Designers from Southeast Asia, Eastern Europe and Middle East to design sportswear for overseas customers ¾TV commercials, outdoor billboards, PR promotional strategies were launched in overseas markets ¾Sponsored 2 teams in “Philippines Basketball Association’’ and th
Slide 27: Retail business for International brands
Retail business for International brands As at 31 As at 30 Retail business for International brands Dec 2007 June 2007 adidas 93 42 Reebok 56 24 Kappa 23 12 Total 172 78 S121% ¾Established 3 sports retail complexes to engage in retailing sportswear business of ANTA, adidas, Reebok and Kappa as well
Slide 28: Retail business for International brands
Retail business for International brands RMB GP% Retail business for International brands /million Wholesales 57.2 11 Retail 136.5 36 Footwear 39.5% Apparel 55.8% Accessory 4.7% 5.5 Operating Loss (Less than our n/a forecast RMB 16.0million) 28
Slide 29: Quality Control
3 Quality Control ¾Fabrics and finished goods of sportswear and shoes were sampled and verified ¾On-site examination of products at factories and suppliers’ production was carried out ¾ANTA brand has reached the apex of quality under industrial standards: ¾ ‘‘ISO 9001 quality control certification’’
Slide 30: R&D and Design
4 R&D and Design ¾R&D expenditure increased from 0.5% in 2006 to 2.3% (as a percentage of cost of sales) in 2007 ¾Collaborated with international R&D institutions from Japan, U.S., Italy, Belgium, Hong Kong and other countries ¾Design teams in headquarter, Beijing and Guangzhou ¾Collaborated with wo
Slide 31: Vertical Integrated Business Model
5 Vertical Integrated Business Model ¾ Production capability of the Group reached 11.4 million pairs of footwear and 1.0 million pieces of apparel ¾ 62.5% footwear and 4.3% apparel produced in house in 2007 (nil:2006) ¾ Launched 5 sizable trade fairs so as to be more responsive to changes of consume
Slide 32: Prospects
1 Prospects Multi-brand strategy ANTA ANTA ANTA Kids (Focusininmass (Focus massmarket) market) series Endorsed NBA Collaboration players series Internationalbrands brands International (High-endmarket) (High-end market) ¾ The Group targets for mass market and will continue to seek collaboration with
Slide 33: Prospects
2 Prospects Enhancement of brand equity TA ’s b rand equity an d S tr engthen AN Leverage ¾ To enhance overseas recognition and brand’s professional image in a global context ¾ To enhance brand desirability by constructing the sixth generation store ¾ CBA Stars Track Scheme and “CBA ANTA Star Traini
Slide 34: Prospects
3 Prospects Extend nationwide distribution and retail network ¾Open approx. 5,300 stores * (open approx. 800 bigger stores ¾Increase to approx. 230 - & consolidate approx. 200 250 stores* smaller stores) ¾Open 10 flagship stores * ¾ Promote well-performed franchisees as distributors ¾ Channel mix fo
Slide 35: Prospects
4 Prospects Product quality and production capacity improvement ¾ 12 footwear production lines (will commence production at different time around 2008 to early 2009) ¾ Apparel production base will be expanded ¾ Improving capability of research and development, by advanced technology ¾ aligning its p
Slide 36: Prospects
5 Prospects Human Resources ¾ By using “performance management system”, outstanding performance will be recognized and rewarded ¾ An internal corporate culture that respects talents, embraces fairness and promotes motivation ¾ Recruit excellent talents on an ongoing basis 36