Gome Retail Holdings Limited · HKEX:493
Gome Retail — GOME Electrical Appliances Holding — H1 2011 Earnings Presentation
31 slides from Gome Retail's earnings presentation, Aug 29, 2011
Slide 1: 2011 Interim Results Announcement
2011 Interim Results Announcement August 29, 2011
Slide 2: Disclaimer
Disclaimer This presentation and the accompanying slides (the “Presentation”) which have been prepared by GOME Electrical Appliances Holding Limited (“GOME” 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
Slide 3: Today’s Presentation
Today’s Presentation 1. 1H2011 Review 2. Leaping Ahead − Major Operating Initiatives − Strategic Alliances − Financial Results − Other Achievements 3. Strong Prospects 4. Appendix − Strong Demand Due to − Top 5 Suppliers Replacement − Gross Margins by Products − Maintain Industry − Revenue Analysis
Slide 4: New Board Structure
New Board Structure Chairman Independent Executive Non-Executive Directors Directors Directors Zhang Da Sze Tsai Ping Ng Kin Wah Zhu Jia Zhong Chan Yuk Zou Xiao Ian Andrew Sang Chun Reynolds Lee Kong Wai Wang Li Hong Thomas Joseph Manning Ng Wai Hung Interim Results 2011 | Page 3
Slide 5: 1H2011 Review
1H2011 Review Interim Results 2011 | Page 4
Slide 6: Major Operating Initiatives in 1H2011
Major Operating Initiatives in 1H2011 The Group opened 131 stores and closed 19 stores, representing a net Store Network increase of 112 stores. Total number of stores reached 938 by the end of Optimization June, 2011. There were 69 new stores in T1 cities and 62 in T2 cities. Ten new cities were
Slide 7: Income Statement Summary
Income Statement Summary RMB Million 1H2011 1H2010 Change % Revenue 29,806 24,873 19.8% Consolidated Gross Profit 5,466 4,238 29.0 % Operating Profit 1,597 1,249 27.9 % Profit before Tax 1,666 1,256 32.6 % Net Profit Attributable to Shareholders 1,252 962 30.1 % Basic Earnings Per Share (RMB fen) 7.
Slide 8: Improved Productivity
Improved Productivity 1H2011 Period-end Sales Area 1H2011 Weighted Average Sales Area Sq.km Sq.km Average Sales Per Store RMB 10,000 1,852 1,877 1,627 1,780 1,675 1,638 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Interim Results 2011 | Page 7
Slide 9: Store Operating Efficiency Continued to Excel
Store Operating Efficiency Continued to Excel Same Store Sales Growth Average Sales per Sq.m. RMB 4,809 4,989 5,184 4,418 4,582 4,469 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Comparable Stores: 582 532 651 638 669 Interim Results 2011 | Page 8
Slide 10: Profit Margins Near All-Time High
Profit Margins Near All-Time High Consolidated Gross Margin Operating Profit Margin Net Profit Margin 20% 18.3% 6% 16.3% 17.0% 5.1% 5.0% 5.3% 13.5% 5% 4.2% 4.2% 15% 16.5% 3.8% 4% 3.3% 14.9% 4.8% 3.9% 10% 3% 3.6% 2.8% 2% 5% 1.9% 1% 0% 0% 1H06 1H07 1H08 1H09 1H10 1H11 1H06 1H07 1H08 1H09 1H10 1H11 Int
Slide 11: Consolidated Gross Profit Margins Analysis
Consolidated Gross Profit Margins Analysis % of Revenue: 18.3% 17.0% RMB Million RMB million: 5,466 4,238 Items 1H2011 1H2010 Revenue 29,806 24,873 Total Other Income 1,737 1,564 Include: Other Income from Supplier 1,089 1,102 Management fee from non- listed GOME parent co. and 228 184 Dazhong Other
Slide 12: Financial Statement Summary and Analysis
Financial Statement Summary and Analysis RMB Million 1H2011 1H2010 Change % Cash and Cash Equivalents 8,398 5,990 40.2 % Pledged Deposit 6,235 7,415 (15.9) % Inventories 8,521 5,794 47.1 % Trade Payables 5,625 4,468 25.9 % Bill Payables 12,849 11,746 9.4 % Inventory Turnover Days 58 days 50 days 8 d
Slide 13: Operating Costs Under Control
Operating Costs Under Control As % of Revenue 1H2011 1H2010 Change % Selling & Distribution 10.4% 9.5% 0.9 pct pt Rent 3.9% 3.9% --- Salaries 2.8% 2.1% 0.7 pct pt Advertisement 1.1% 1.0% 0.1 pct pt Distribution cost 0.6% 0.5% 0.1 pct pt Water & Electricity 0.6% 0.7% (0.1) pct pt Other S&D 1.4% 1.3%
Slide 14: Leaping Ahead
Leaping Ahead Interim Results 2011 | Page 13
Slide 15: 1H2011 New Strategic Alliances
1H2011 New Strategic Alliances Jun. 2011 Signed exclusive strategic Apr. 2011 Five- agreement years exclusive GOME can enter all partnership Lifespace Shopping Collaborative Centers supply chain Share customer Production resource Mar. 2011 Form according to the Enhance the brand strategic co
Slide 16: Cooperation with China Telecom
Cooperation with China Telecom Free phone for prepaid service fees Discounted Purchase phone for phone and prepaid given free service telecom fees service Commenced nationwide promotion Five Promotional Methods on April 1, 2011 Profit from commission on developing new Business subscribers package
Slide 17: Informationization — New ERP-SAP System
Informationization — New ERP-SAP System 2010 1H2011 The End of 2011 Planning 1H2011 Employee Leading Enterprise and Testing Nationwide in Informationization Training for Blueprint Launch SAP Seamless interaction between Economies of Scale supply chain and demand chain 1 Improving the efficiency of s
Slide 18: Major E-commerce Initiatives
Major E-commerce Initiatives Upgraded platform Acquisition finished in launched in April, 2011 October, 2010 Accelerate the construction of logistics and One-stop shopping distribution system — Cover 9 major categories — Establish self-owned distribution centers — Target mainly at individuals an
Slide 19: Product Differentiation and Product Mix Optimization
Product Differentiation and Product Mix Optimization • OEM • Private label • Small appliances • Popular • ODM • Exclusive • Accessories products • Flagship selling rights • Extended warranty (Apple) products service • High-end products Private/ Differentiated Differentiated OEM/ODM Exclusive Profit
Slide 20: Strong Prospects
Strong Prospects Interim Results 2011 | Page 19
Slide 21: Macro Environment Favorable to Home Appliances Industry
Macro Environment Favorable to Home Appliances Industry Growth in T2 Markets Change of Real GDP and Retail Sales YoY (%) Number Per 100 Families Real GDP Total retail sales of consumer goods T2 cities and T1 cities 1H2011 1H2010 rural areas Source: CEIC, analyst report Source: National Bureau of Sta
Slide 22: Positive Effect from Welfare Houses on Home Appliances Industry
Positive Effect from Welfare Houses on Home Appliances Industry Government’s Initiatives on Welfare Houses Sales Growth Resulting from per One Million Houses 2010: 5.8 million houses 2011: 10 million houses The next five years： 36 million houses 5.2% covering 20% of urban residents 4.3% 3.2% Ministr
Slide 23: Demand Boosted by Replacement
Demand Boosted by Replacement White TV Appliances • Tablets • LED TV • Smart phone • Frequency / energy • All-in-one • 3D TV • 3G phone efficient air- conditioners • Rolling washing • Smart TV machines • Multi-door refrigerators Mobile Computer Phone An average 50 million units of home appliances ar
Slide 24: Expanding Footprint to Maintain Leadership
Expanding Footprint to Maintain Leadership Leverage existing logistics and infrastructure 60% of the new stores in 2011 are to further penetrate into T2 markets. located in T2 cities. Great Great Beijing Shanghai Shandong • Opened 139 stores 2010 • Closed 39 stores • Speed up expanding store network
Slide 25: Appendix
Appendix Interim Results 2011 | Page 24
Slide 26: Stable Supplier Relationship
Stable Supplier Relationship Top 5 Suppliers for 1H2010 Top 5 Suppliers for 1H2011 Interim Results 2011 | Page 25
Slide 27: Improved Category Gross Margins
Improved Category Gross Margins Primary drivers for improved gross margins: Increased differentiated products Improved purchasing contracts Interim Results 2011 | Page 26
Slide 28: Revenue Analysis by Region
Revenue Analysis by Region Shanghai Shanghai Guangzhou Guangzhou Beijing Beijing Shenzhen Shenzhen Tianjin Tianjin Xi’an Fuzhou Chengdu Chengdu Other Other 1H2011 1H2010 Total: RMB 29.8 billion Total: RMB 24.9 billion Interim Results 2011 | Page 27
Slide 29: Proportion of Revenue from Each Product Category
Proportion of Revenue from Each Product Category 1H2011 1H2010 Total: RMB 29.8 billion Total: RMB 24.9 billion Interim Results 2011 | Page 28
Slide 30: Store Network
Store Network As of June 30, 2011 Group GOME Paradise CellStar Flagship stores 104 86 18 0 Standard stores (incl. supermarket 0 789 662 127 stores) Specialized stores 45 4 1 40 Total: 938 752 146 40 T1 Market 576 432 110 34 T2 Market 362 320 36 6 Net store increase in 1H2011: 112 74 18 20 Stores ope
Slide 31: Thank you
Thank you Interim Results 2011 | Page 30
GOME Electrical Appliances Holding — H1 2011 Earnings Presentation on 6ix