361 Degrees International Ltd. · HKEX:1361
361 Degrees International — H1 2017 Earnings Presentation
35 slides from 361 Degrees International's earnings presentation, August 2017
Slide 1: 361 Degrees International Limited 2017 Interim Results
361 Degrees International Limited (Stock code: 1361.HK) 2017 Interim Results August 2017
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 year ended 30 Jun 2016 and may not be reproduced or redistributed. In particular, these presentation
Slide 3: Agenda
Section 1 Operating Strategies 3 Section 2 Financial Highlights 5 Section 3 Operational Highlights 17 Section 4 Outlook 26 Section 5 Appendix 29 Section 6 Q&A 34 2
Slide 4: Operating Strategies
Operating Strategies
Slide 5: Operating Strategies
Operating Strategies No. 11 Guidance〔2015〕 issued by the State Council No. 46 Guidance〔2014〕 The golden issued by the State Council decade of China’s sports industry Steadily increase dividend payout 361° 361° Kids High-end Core Brand Outdoor Rapid growth of ≥40% five business segments International
Slide 6: Financial Highlights
Financial Highlights
Slide 7: Key Financial Highlights
Key Financial Highlights For the six months ended 30 June RMB mn 2017 2016 Change Revenue 2,798.1 2,555.5 +9.5% Gross profit 1,184.1 1,059.0 +11.8% Operating profit 629.1 506.1 +24.3% Profit attributable to equity shareholders 318.3 273.1 +16.5% Basic EPS (RMB cents) 15.4 13.2 +16.7% Profitability R
Slide 8: Revenue
Revenue RMB mn Gross margin (%) 3,000 45% 41.4% 42.3% 40% Revenue increased by 9.5% to RMB 2,798.1 million, mainly a reflection 35% of order book growth of 2017 spring and summer trade fairs 30% With the benefit of both in-house 25% and outsourced production and the 2,500 increase of the average
Slide 9: Overall Revenue Mix
Overall Revenue Mix 2.2% 1.2% 10.7% 11.0% 0.8% 1.0% Footwear 45.1% 46.8% 2016 Apparel 2017 RMB2,555.5 mn Accessories RMB2,798.1 mn 361° Kids 41.2% 40.0% Others For the six months ended 30 June 1. The proportion of footwear sales to the total revenue increased to 46.8%, primarily driven by the demand
Slide 10: Revenue Analysis – by Product
Revenue Analysis – by Product Footwear Apparel RMB mn Gross margin (%) RMB mn Gross margin (%) 1,500 50% 1,500 50% 43.3% 43.1% 42.1% 40.7% 1,400 40% 40% 1,000 1,300 30% 30% 1,200 20% 20% 1,052.2 1,118.4 500 1,309.7 1,100 10% 10% 1,153.5 1,000 0% 0 0% 2016 1H 2017 1H 2016 1H 2017 1H Footwear Apparel
Slide 11: Revenue Analysis – 361° Kids
Revenue Analysis – 361° Kids RMB mn Gross margin (%) 361° Kids 350 60% Sales volume increased by 19.9% 300 whereas the AWP dropped by 6.0% 50% 43.0% 42.3% A higher proportion apparel sales 250 with lower margin were delivered 40% and sold during the period, thus the 200 gross margin slightly adj
Slide 12: Operating Expenses Analysis
Operating Expenses Analysis Selling and Distribution Costs Administrative Expenses For the six months ended 30 June For the six months ended 30 June RMB mn 2017 2016 Change RMB mn 2017 2016 Change A&P 215.9 310.9 -30.6% Packing & transportation expenses 54.0 15.1 +257.6% R&D 82.2 72.4 +13.5% Staff c
Slide 13: Operating Cash Flow
Operating Cash Flow For the six months ended by 30 June RMB mn 2017 2016 Operating profit 629.1 506.1 Change in inventories (143.4) (41.3) Change in trade and bills receivables (248.4) (83.2) Change in trade and other payables 387.1 109.7 Change in deposits, prepayments and other 9.7 20.1 receivable
Slide 14: Working Capital Cycle
Working Capital Cycle Working Capital Turnover Days （days） 100 As at As at Turnover days Change 30 Jun 2017 31 Dec 2016 90 80 76 Inventories 69 69 -- 70 66 60 Trade and bills 152 163 -11 50 receivable 40 Trade and bills 30 155 156 -1 payable 20 10 Overall working 66 76 -10 capital 0 31 Dec 2016 30 J
Slide 15: Balance Sheet Highlights
Balance Sheet Highlights RMB mn As at 30 June 2017 As at 31 Dec 2016 Change Current assets 9,780.4 9,034.0 +8.3% Current liabilities 2,772.7 2,343.1 +18.3% Net current assets 7,007.7 6,690.9 +4.7% Equity attributable to owners of the 5,650.4 5,303.3 +6.5% company Net asset value per share (RMB) 2.8
Slide 16: Trade Debtors and Ageing Analysis
Trade Debtors and Ageing Analysis As at As at RMB mn 30 Jun 2017 31 Dec 2016 Trade debtors 2,425,346 2,093,569 As at 30 Jun 2017, Less: Allowance for doubtful debts (56,655) (56,655) approximately 91% of trade debtors are within 2,368,691 2,036,914 90 days ageing from Bills Receivable 101,000 184,
Slide 17: Maintain a Strong Financial Position
Maintain a Strong Financial Position RMB ‘000 As at 30 Jun 2017 As at 31 Dec 2016 Pledged bank deposits 176,095 185,580 Deposits with bank with maturities > 3mths 2,210,518 2,537,113 Cash and cash equivalents 3,582,078 2,881,632 Total cash 5,968,691 5,604,325 Bank loans 79,168 76,236 Senior unsecure
Slide 18: Operational Highlights
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Slide 19: 361° Sales Network
361° Sales Network Sales Network Types of Stores Types of No. of % of total stores stores stores Northern region 2,384 Street-level Western region 4,584 78.2% 1,177 stores Eastern region 1,333 Total: 5,859 Southern region 965 Mall 1,275 21.8% stores First-tier cities 8.5% Second-tier cities 5,859 10
Slide 20: Building the 361° Brand
Building the 361° Brand The 361° Group generally spends between 8-12% of its revenue on brand promotion Major International Events Sponsorships 2010 2011 2014 2016 2018 2010 Asian Games in World University Games Nanjing Youth Olympic Games Rio Olympic Games Jakarta Asian Games Guangzhou Asian Game
Slide 21: Building the 361° Brand (cont’d)
Building the 361° Brand (cont’d) Apart from sports events sponsorships, the Group also promotes its brand through professional sports teams sponsorships and celebrity endorsements Professional Sports Teams Sponsorships Chinese National Swimming Team Chinese National Cycling Team Swedish National C
Slide 22: 361° Kids Operational Data
361° Kids Operational Data Sales Network Revenue (RMB million) Northern 651.2 region 588.9 598 507.5 420.4 370.1 Western 306.9 272.1 region 238.7 286 Eastern Total: 1,791 region 512 37.6 735 in (1) (1) Southern 2010 2011 2012 2013 2014 2015 2016 2016 1H 2017 1H Composite region stores 395 Trade Fair
Slide 23: 361° High-end Product Line — For International Market
361° High-end Product Line — For International Market International business unit has been established since 2014, with a focus on high-end functional and value-for- money running products and cross training products Revenue (RMB mn) % of revenue Praises of Products 80 5.0% • Rewarded as “The Best
Slide 24: 361° High-end Product Line — International Promotion
361° High-end Product Line — International Promotion is the sports gear and equipment sponsor for Mr. Kai Markus, a German runner. has provided running shoes, training apparel, accessories and other support necessary to Kai and his team Kai began his run from Hamburg, Germany, and he is running
Slide 25: 361° High-end Outdoor JV Brand — ONE WAY
361° High-end Outdoor JV Brand — ONE WAY 51 self-operated outlets in China for the six months ended of 30 June 2017 Revenue % of Revenue (RMB mn) （%） 10 0.5% 9.1 8.1 0.4% 0.3% 0.3% 0.3% 5 0.2% 0.1% 0 0.0% 2016 1H 2017 1H 24
Slide 26: 361° E-commerce Business
361° E-commerce Business 361° has been keen to develop its E-commerce business. The E-commerce platform currently accounted for 4.1% of the Group’s total revenue Revenue from E-commerce Business: RMB115.2 million official website and other platforms: 31% Tmall flagship store: 56% Tmall flagship st
Slide 27: Outlook
Outlook
Slide 28: Enormous Potential for Future Growth of the Industry
Enormous Potential for Future Growth of the Industry Benefiting from the structural tailwinds below, China’s sports apparel market is developing steadily Structural Tailwinds Consumption Rising population As people seek a Development of more upgrade in from two-child healthier lifestyle, the suppo
Slide 29: Favorable Government Policies
Favorable Government Policies 2014 2015 2016 2017 No. 46 Guidance Reformation of Soccer Opinions on the Support the society in issued by the State Policies Acceleration of Winter Organizing Large-scale Council Sports Development Mass Sports Events, such (2016-2022) as Marathon and Cycling
Slide 30: Appendix
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Slide 31: 361° Brand Positioning
361° Brand Positioning Premium 10 ONE WAY 8 6 361° International 4 2 361° International Fashion -10 -8 -6 -4 -2 0 2 4 6 8 10 Performance -2 -4 361° Kids 361° Core Brand -6 361° Kids -8 -10 Mass Market Brand Brief Introduction Market An integrated international sportswear brand that engages in brand,
Slide 32: Mature and Effective Distributor Business Model with Unique Marketing Strategy
Mature and Effective Distributor Business Model with Unique Marketing Strategy Polarised Distribution Network Effective Distribution Network Management Experienced management team Brand Brand licensing once a year Management Reduce Strong profitable business model inventory Exclusive distrib
Slide 33: Established a Leading Position as China’s Fastest-growing Sports Brand
Established a Leading Position in the Industry as China’s Fastest- growing Sports Brand 2014-2017 Comprehensive 2011-2013 upgrade Capital 2008-2010 enhancement As the first Chinese sports Further brand to sponsor the 2005-2007 development Olympic Games, 361° was and expansion Established a joint ven
Slide 34: Constantly Enhancing Product Functionality
Constantly Enhancing Product Functionality The Group has obtained 212 patents as at 30 June 2017 Core proprietary R&D technology R&D Innovation center completed in May 2017 Quick Dynamic Defense SAC-air CD stretch mesh NFO 3M reflective material Archlock Fabric Quikfoam Air suspens
Slide 35: Q&A
Q&A
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