Li Ning Company Limited · HKEX:2331
Li Ning — H1 2007 Earnings Presentation
35 slides from Li Ning's earnings presentation, August 2007
Slide 1: 2007 Interim Results Corporate Presentation
Stock code: 2331 2007 Interim Results Corporate Presentation August 2007
Slide 2: Agenda
Agenda Financial Highlights Business Review Future Outlook and Strategies Open Forum 1
Slide 3: Financial Highlights
jy Financial Highlights
Slide 4: Financial Highlights
Financial Highlights 1H 2007 1H 2006* Change (RMB Mil) For the six months For the six months ended 30 June ended 30 June Revenue 1,909.4 1,371.9 +39.2% Gross Profit 930.4 668.4 +39.2% Gross Margin 48.7% 48.7% - Operating Profit 266.6 172.5 +54.5% Operating Margin 14.0% 12.6% +1.4p.p. Profit attribut
Slide 5: Sustainable and Remarkable Growth
Sustainable and Remarkable Growth Revenue (RMB Mil) Profit attributable to equity holders (RMB Mil) 2,500 240 198.3 % 1,909.4 2,000 R: 38.5 200 1 .6% CAG 1,371.9 160 GR: 5 1,500 CA 129.9 1,104.3 120 1,000 788.7 78.3 519.4 80 54.9 37.6 500 40 0 0 1H2003 1H2004 1H2005 1H2006 1H2007 1H2003 1H2004 1H200
Slide 6: Margin Overview
Margin Overview Margin Overview 60% 20% Continuous growth of Net Margin due to: Gross Profit Margin – Effective gross margin management 48.1% 48.7% 48.7% – Efficient cost management 45.8% 40% 15% – Optimized supply chain management Net Profit Margin 20% 10% 10.4% 9.5% 7.0% 7.1% 0% 5% 1H2004 1H2005 1
Slide 7: Revenue Analysis by Product Categories
Revenue Analysis by Product Categories As % of revenue 100 1.5 1H 2007 1H 2006 Change 0.6 For the six For the six 0.3 6.3 7.8 (RMB Mil) months ended months ended 30 June 30 June 80 LI-NING 39.9 38.4 993.6 728.9 +36.3% Apparel 60 LI-NING 761.6 527.2 +44.5% Footwear 40 LI-NING 120.0 107.7 +11.4% 52.0
Slide 8: Revenue Analysis by Region
Revenue Analysis by Region Beijing & Shanghai : ： Northeastern Region： 6.9%/ 27.4% 14.9%/43.4% Northwestern Region: 2.7%/79.6% Northern Region: 19.4%/54.6% Beijing Eastern Region: Southwestern Region: 19.1%/18.9% 10.0%/42.3% Shanghai Central Region: International Market: 1.1%/33.2% 13.1%/50.2% Z-DO:
Slide 9: Key Financial Indicators
Key Financial Indicators 1H 2007 1H2006 Change For the six months For the six months ended 30 June ended 30 June Inventory Turnover (days) 71 75 -4 Avg. A/R Turnover (days) 55 58 -3 Avg. Trade Payables Turnover (days) 69 66 +3 Cash Conversion Cycle (days) 57 67 -10 R&D Expenses (as % to cost of sale
Slide 10: Strong Balance Sheet
Strong Balance Sheet 1H 2007 FY2006 (RMB Mil) Change As at 30 June As at 31 Dec Cash and Cash Equivalents* 821.1 849.2 -3.3% Current Ratio (times) 2.7 3.2 -17% Current Liabilities 729.8 688.5 +6.0% Non-Current Liabilities 56.2 59.8 -6.0% Total Liabilities to 33.9% 29.5% +4.4 p.p. Total Assets Ratio
Slide 11: Business Review
jy Business Review 10
Slide 12: Gearing Up for 2008 Beijing Olympics
Gearing Up for 2008 Beijing Olympics 11
Slide 13: Sponsorship of Overseas National Olympic Delegations
Sponsorship of Overseas National Olympic Delegations Spanish Olympic Delegation – An official partner of the Spanish Olympic Committee – The Official Sportswear Provider for the Spanish Olympic Delegation during the 2008 Beijing Olympics Swedish Olympic Delegation – An official partner of the Swedis
Slide 14: Sponsorship of Overseas National Sports Teams
Sponsorship of Overseas National Sports Teams Argentina National Basketball Team – Entered into a sponsorship agreement with the Argentina basketball federation Confederacon Argentina de Basquet (“CABB”) to become its official partner – Sponsored a series of sports apparel for the men’s and women’s
Slide 15: Sponsorship of Overseas Athletes
Sponsorship of Overseas Athletes Sponsorship of Ethiopian marathon runner, Ambesse Tolossa – One of the top 15 runners in world marathon ranking – He will wear Li-Ning brand running shoes in 2008 Beijing Olympics 14
Slide 16: Sponsorship of National Sports Teams
Sponsorship of National Sports Teams Sponsorship of 4 National Gold Medal Teams – Gymnastics Team – Diving Team – Table Tennis Team – Shooting Team 15
Slide 17: Cooperation with China National TV Channel
Cooperation with China National TV Channel Promotion of LI-NING brand’s international and professional image through cooperation with CCTV National Sports TV Channel – All host, news presenter and reporters will put on LI-NING brand and AIGLE brand apparel, footwear and accessories – Exclusive appar
Slide 18: Diversified Marketing Events
Diversified Marketing Events Basketball Strategic alliance with NBA Sponsor Chuck Hayes and Damon Jones Cooperate with O’Neal to launch “LI-NING SHAQ” product series Sponsor China University Basketball Association (“CUBA”) Li Ning “3+1” Basketball tournament 17
Slide 19: Diversified Marketing Events
Diversified Marketing Events Football Jointly launched the new LI- NING China University Football League (“CUFL”) with the Federation of University Sports of China Tennis Sponsor Sun Shengnan and Ivan Ljubicic An Official partner of ATP in the Greater China market (including Hong Kong, Macau and Tai
Slide 20: Diversified Marketing Events
Diversified Marketing Events The 2nd Asian Indoor Games Will be held in Macau in October 2007 A multi-sport event held every two years among athletes representing countries from Asia Composed by sports with TV broadcasting potential and not included in the Asian Games and Winter Asian Games Programs
Slide 21: Multi-Brand Operator
Multi-Brand Operator Principal brand Co-branding with ATP Sub brand LI-NING Co-branding Joint with Shaq Venture 20
Slide 22: Newly Launched Sub-brand – Z-DO
Newly Launched Sub-brand – Z-DO Newly launched in April 2007 Major sales channels: hypermarkets Network: covers 183 stores in of 1H 2007 Products: shoes, apparels and accessories Price range: RMB 100 – 300 Future strategies: – Strengthening brand image and positioning – Broadening product portfolio
Slide 23: JV with AIGLE
JV with AIGLE 41 stores in PRC as at 30 June 2007 Turnover in 1H 2007 RMB 6.2 million, achieved the target planned Future development will focus on fine-tuning product portfolio and localizing supply chain 22
Slide 24: Co-Branding with ATP and SHAQ
Co-Branding with ATP and SHAQ 23
Slide 25: Sales Channel Management
Sales Channel Management Rapid network expansion propelled product penetration and drove sales growth By 30 June 2007, there are 2,640 the 4th Generation Stores Established Distribution Sales Representative (DSR) team, set up a nation-wide store visit mechanism E-POS system covers more than 2200 out
Slide 26: Product R&D
Product R&D Focus on the professional quality and image of Li Ning’s products Introduce core patented “LN Bow” anti-shock technology to running shoe products Launch the 4th generation “Super light” (“逐风”) running shoes Apply Hi-tech materials into apparel Continue to optimize product R&D to develop
Slide 27: Future Outlook and Strategies
Future Outlook and Strategies 26
Slide 28: Future Strategies in Full Swing
Future Strategies in Full Swing Network Branding Expansion Supply Chain Products Management 27
Slide 29: Branding - Anything is Possible
Branding - Anything is Possible* Uniformity in distribution outlets Advertisement and Promotions Product planning, developing & design Brings a consistent & distinct brand image Professional sports marketing resources to customers through integrated marketing Online media, e.g. iRun.cn, li-ning.com,
Slide 30: Network Expansion
Network Expansion Increase the number of LI-NING retail outlets to 5,600 outlets by the end of 2008 Strengthen sales efforts and adding flagship stores in metropolitan and 1st-tier cities to capitalize on the 2008 Beijing Olympics opportunities Increase Li Ning’s network penetration in 2nd- and 3rd-
Slide 31: Product Development & Design
Product Development & Design Emphasize product design and technology application Combine the oriental elements with international design & technology Adopt regional product planning to strategically target the needs and preferences of customers in different regional markets Super Light 3 30
Slide 32: Supply Chain Management
Supply Chain Management Streamline supply chain management system by adopting a demand- driven approach Organize large-scale sales fairs for distributors to shorten the cycles between product development and order placements Establish Apparel Technology Center and Responsive Supply Chain Center in G
Slide 33: Vision, Mission & Core Values
Vision, Mission & Core Values Vision The world’s leading brand in the sports goods industry Mission Core Values Through sports, Athleticism, integrity, we inspire in people professionalism, the desire and power to passion, breakthroughs, make breakthroughs and trust 32
Slide 34: Open Forum
jy Open Forum 33
Slide 35: IR Contact
IR Contact To know more about Li Ning Company Limited, please visit http://www.lining.com http://www.li-ning.com http://www.irasia.com/listco/hk/lining/ http://www.hkex.com.hk For enquiries, please contact: Mr. LI Chuan Investor Relations Department Tel: +86 21 5879 7298 Email: chuan.li@lining.com 3