361 Degrees International Ltd. · HKEX:1361
361 Degrees International — FY2018 Earnings Presentation
39 slides from 361 Degrees International's earnings presentation, Mar 15, 2019
Slide 1: 361 Degrees International Limited 2018 Annual Results
361 Degrees International Limited (Stock Code: 1361.HK) 2018 Annual Results 2019 March 15
Slide 2: Disclaimer
Disclaimer These presentation slides have been prepared by 361 Degrees International Limited (the “Company”) solely for us during its presentation held in connection with its interim results for the twelve months ended 31 December 2018 and may not be reproduced or redistributed. In particular, these
Slide 3: Contents
Contents Section 1 Development Strategies 3 Section 2 Financial Highlights 5 Section 3 Operational Highlights 16 Section 4 Outlook 28 Section 5 Appendix 32 Section 6 Q&A 38 2
Slide 4: Development Strategies
Development Strategies
Slide 5: Development Strategies
Development Strategies Official partner of Asian Games; New market, new sales channel, new growth drivers Sponsored 2018 Jakarta Asian Games, providing Olympic Council of Asia with whole sets of sports apparels and accessories. The sponsorship received international recognition and increased brand
Slide 6: Financial Highlights
Financial Highlights
Slide 7: Key Financial Highlights
Key Financial Highlights For the year ended 31 December RMB mn 2018 2017 Change Revenue 5,187.4 5,158.2 +0.6% Gross profit 2,105.9 2,156.4 -2.3% Operating profit 782.3 987.6 -20.8% Profit attributable to equity shareholders 303.7 456.7 -33.5% Basic EPS (RMB cents) 14.7 22.1 -33.5% Profitability Rati
Slide 8: Revenue
Revenue RMB mn Gross margin (%) 5,200 45% 41.8% 5,180 40.6% 38.5% 5,160 40% 5,140 5,120 35% 5,100 38.5% 5,187.4 Footwear 5,080 5,158.2 30% 44.7% 1.5% Apparel 5,060 1.5% 13.8% 1.6% Accessories 5,040 25% 42.7% 5,020 361°Kids 5,000 20% 15.7% Others 2017 2018 1.5% For the year ended 31 December Revenu
Slide 9: Revenue Analysis - by Product Type
Revenue Analysis - by Product Type Footwear Apparel RMB mn Gross margin (%) RMB mn Gross margin (%) 2,400 50% 2,050 42% 40.8% 44.0% 40.0% 2,300 41.4% 45% 40% 2,200 2,000 2,100 40% 38% 1,950 2,000 35% 36% 1,900 2,306.2 2,212.2 1,900 1,999.2 1,987.6 1,800 30% 34% 1,700 1,850 25% 32% 1,600 1,500 20% 1,
Slide 10: Revenue Analysis – 361°Kids
Revenue Analysis – 361°Kids RMB mn Gross margin (%) 850 44% 42.8% 361°Kids 800 42% Sales volume and the AWP increased by 1.9% and 41.0% 12.8%, respectively 750 40% GP margin rose to 42.8% 700 38% 650 36% 600 816.0 34% 550 711.1 32% 500 450 30% 400 28% 2017 2018 9
Slide 11: Major Operating Expenses
Major Operating Expenses Selling and Distribution Costs Administrative Expenses For the year ended 31 December For the year ended 31 December RMB mn 2018 2017 Change RMB mn 2018 2017 Change A&P 557.3 506.5 +10.0% R&D 214.6 173.2 +23.9% Commission & other 116.3 86.0 +35.3% service fees Provision for
Slide 12: Operating Cash Flow
Operating Cash Flow For the year ended 31 December RMB mn 2018 2017 Operating profit 782.3 987.6 Change in inventories (249.4) (273.2) Change in trade and bills receivables (250.7) 71.5 Change in trade and other payables 190.5 349.2 Change in deposits, prepayments and other 6.5 (59.0) receivables Ta
Slide 13: Working Capital Cycle
Working Capital Cycle Working Capital Turnover Days （days） As at 31 Dec As at 31 Dec 100 Turnover days 2018 2017 Change 90 Inventories 110 82 +28 80 75 70 60 Trade and 60 bills 160 155 +5 receivable 50 40 Trade and 195 177 +18 30 bills payable 20 10 Overall 75 60 +15 0 31 December 2017 31 December 2
Slide 14: Balance Sheet Highlights
Balance Sheet Highlights RMB mn As at 31 December 2018 As at 31 December 2017 Change Current assets 10,650.0 9,748.5 +9.3% Current liabilities 3,354.2 2,744.4 +22.2% Net current assets 7,295.8 7,004.1 +4.2% Equity attributable to owners of the 5,767.7 5,706.5 +1.1% company Net asset value per share
Slide 15: Trade Debtors and Ageing Analysis
Trade Debtors and Ageing Analysis RMB’000 As at 31 Dec As at 31 Dec 2018 2017 As at 31 December 2018, Trade debtors 2,362,054 1,985,544 approximately 61.7% of trade Less：Allowance for doubtful debts (57,855) (56,655) debtors are within 90 days 2,304,199 1,928,889 ageing from invoicing Bills Receiv
Slide 16: Maintain a Strong Financial Position
Maintain a Strong Financial Position RMB’000 As at 31 Dec 2018 As at 31 Dec 2017 Pledged bank deposits 327,405 335,283 Deposits with bank with maturities > 3mths 4,500,000 3,605,691 Cash and cash equivalents 1,651,281 2,116,422 Total cash 6,478,686 6,057,396 Bank loans 112,176 12,814 Senior unsecure
Slide 17: Operational Highlights
Operational Highlights
Slide 18: Rebranding
Rebranding Establishing a new brand concept and strategy that inherited 361°brand equity to differentiate itself from competitors and connect with consumer and latest trend Brand Upgrading New Strategy for Product Focus on brand upgrading and take Development pre-emptive action to exploit the Formul
Slide 19: Cross-border collaboration with trendy brand “M1°RO”
Cross-border collaboration with trendy brand “M1°RO” On 26 December every year, i.e. the 361th day of the year, is the brand day of 361°. On 26 December 2018, with 361° SPIRE 3 as the prototype and inspirations drawing from “merops philippinus”, a type of bird whose habitat is adjacent to the M1°R
Slide 20: 361°Increases Its Global Brand Influence with a Comprehensive Approach
361°Increases Its Global Brand Influence with a Comprehensive Approach 361°’s mission is to provide high-valued sports apparels and products to mass consumers and strives to be an internationally-respected sports brand Major Sports Events Sponsorships Adhering to its internationalization strategy,
Slide 21: 361°Remains Dedicated to Sponsoring Professional Sports Teams
361°Remains Dedicated to Sponsoring Professional Sports Teams Sponsored professional sports teams in 2018: Chinese National Swimming Chinese Freestyle Halfpipe Ski team team Chinese Slopestyle Ski team Chinese National Cycling team Chinese National Mixed Chinese Freestyle Ski Cross team
Slide 22: 361°Selects Its Brand Ambassadors
361°Selects Its Brand Ambassadors 361°Brand Ambassadors for Domestic Market 361°International Brand Ambassadors Ashton Eaton and Brianne Theisen-Eaton, American decathlete couple Katie Zaferes, USA Triathlon Olympic representative Sarah Crouch, USA American long-distance runner Morgan Pearso
Slide 23: 361°Core Brand Sales Network
361°Core Brand Sales Network 361°Sales Network in Domestic Market 361°Type of Stores Type of Stores No. of Stores % to Total Northern Stores region 2,448 Street-level 4,092 74.0% Stores Western Mall + region Eastern 1,172 Department 1,447 26.0% region 1,160 Stores Total: 5,539 Southern 5,539 100.0%
Slide 24: 361°Kids – “Foster Positive, Free and True Self Characteristics of The Next Generation”
361°Kids – “Foster Positive, Free and True Self Characteristics of The Next Generation” Points-of-Sales Network Revenue（RMB mn） Northern 816.0 region 711.1 711 651.2 588.9 507.5 420.4 Western 370.1 region Eastern 238.7 338 region 449 37.6 Southern (1) (1) Total: 1,837 2010 2011 2012 2013 2014 2015 2
Slide 25: 361°Kids – Strategic Partnering with Youth Training Team
361°Kids – Strategic Partnering with Youth Training Team Football is only one mainstream sports that has its courses to be included in school curriculum. The population of youth playing footballs is expected to grow dramatically in next few years 361°kids attempts to take youth football sports a
Slide 26: 361°Kids – Cooperates with Excellent IP Resources
361°Kids – Cooperates with Excellent IP Resources The authorized “Kung Fu Panda” products were officially released in 2018. As a well-known animated IP, Kung Fu Panda not only provides abundant inspirations and elements of designs and patterns for 361°Kids , but the story of Po, showing his advent
Slide 27: 361°OW— Premium Outdoor Joint Venture Brand
361°OW— Premium Outdoor Joint Venture Brand As at 31 December 2018, there were 35 self-operated ONE WAY stores and 12 franchised stores in China The Group repositions ONE WAY as a high-end outdoor lifestyle brand for elite middle-class, and OW products with new strategies are expected to be laun
Slide 28: 361°E-commerce
361°E-commerce 361°E-commerce position itself as a complementary channel to promote premium products with the aim of making profitability The Web exclusive products sales of E-commerce contributes to 14.3% of the Group’s total revenue in 2018 and is expected to become an important revenue contri
Slide 29: Outlook
Outlook
Slide 30: Favorable Government Policies
Favorable Government Policies 2019 Implementation Plan for Further Optimizing Supply to Promote the Stable Consumption Growth and Facilitating the Formation of a Strong Domestic Market (2019) 2018 《Marathon Sports Industry Development Plan》 （2018- 2020） 《Cycling Industry Development Plan 》(201
Slide 31: Numerous Positive Factors to drive Industry Development
Numerous Positive Factors to drive Industry Development 2014-2022 Market Size of China’s Sportswear Market （RMB bn） Benefiting from the structural tailwinds below, China’s sportswear market sees steady development 356.6 324.2 293.7 264.9 193.1 237.2 174.2 212.1 156.4 Consumption upgrade and younge
Slide 32: Winter Sports Industry Has High Potential for Growth
Winter Sports Industry Has High Potential for Growth Market Size of China’s Winter Sports 2007-2017 Number of Participants in Skiing (RMB billion) (in million) 800 80% 60.7% 600 20 17.5 600 523 60% 15.1 42.7% 456 15 12.5 365 398 10.3 400 40% 10 8 9 270 7 189 5.5 6.3 35.1% 14.7% 14.7% 14.7% 4.7 5 200
Slide 33: Appendix
Appendix
Slide 34: 361°Brand Positioning
361°Brand Positioning Premium 10 ONE WAY 8 6 4 2 Fashion -10 -8 -6 -4 -2 0 2 4 6 8 10 Performance -2 -4 361°Core Brand 361°Kids -6 -8 -10 Mass Market Brand Description Market An integrated international sportswear brand that engages in brand, R&D, design, manufacturing and Apparel, Footwear, Accesso
Slide 35: Mature and Effective Distributor Business Model with Unique Marketing Strategy
Mature and Effective Distributor Business Model with Unique Marketing Strategy Two-tier Distribution Network Effective Distribution Network Management Well-experienced management team Brand Annual renewal of brand licensing Management Strong profitable business model Reduce Inventory Exclusi
Slide 36: Established a Leading Position in the Industry as China’s Fastest-growing Sports Brand
Established a Leading Position in the Industry as China’s Fastest-growing Sports Brand 2019 Brand 2014-2018 Rebuilding 2011-2013 Comprehensive Upgrade The new brand will inherit the good assets correlated to Capital the industry that attached to 2008-2010 Enhancement As the first Chinese sports bran
Slide 37: 361°Product Technologies
361°Product Technologies As at 31 December 2018, the Group has accumulated 335 patents, among which includes 190 footwear patents, 131 apparels patents, and 14 accessory patent. In 2018, the Group newly obtained 68 patents Core Own Proprietary Technologies QDP SYSTEM TRIGRIP +1° HEATING +1
Slide 38: 361°Product Awards
361°Product Awards The functionality of 361°products is comparable to the world-leading products STRATA 2 Spire 3 Meraki KgM2 2 “Editors’ Pick” by “Canadian The ISPO Global Design The Best Product Award “Soul Mate Awards”, the Running” 2018 Spring Shoe Award in Munich, by “TEST 4 OUTSIDE”
Slide 39: Q&A
Q&A
361 Degrees International — FY2018 Earnings Presentation on 6ix