Stella International Holdings Limited · HKEX:1836
Stella International — FY2023 Earnings Presentation
23 slides from Stella International's earnings presentation, Mar 21, 2024
Slide 1: Corporate Presentation Annual Results 2023
CORPORATE PRESENTATION Annual Results 2023
Slide 2: Disclaimer
Disclaimer This presentation and the accompanying slides (the “Presentation”) which have been prepared by Stella International Holdings Limited (“Stella” 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 be re
Slide 3: Financial Highlights
Financial Highlights Group
Slide 4: Group Overview: 2023 Highlights
Group Overview: 2023 Highlights Enhanced Group Revenue US$1,493m GPM OPM 10.7% Customer Portfolio -8.5% 24.6% +240bps +300bps ASP Volume +4.2% -12.5% OP US$159.4m *Adj. NP US$147.6m Net Cash +18.2% Dividend +23.5% US$287.4m per share #Dividend +39.4% yoy 103 payout ratio HK cents 70% Adj. NPM 9.9% +
Slide 5: Financial Highlights
Financial Highlights For the year ended 31 December 2022 2023 (audited) (audited) Change Shipment Volume (m pairs) 56.0 49.0 -12.5% ASP (US$) 28.5 29.7 4.2% US$ m Revenue 1,630.8 1,492.7 -8.5% Gross Profit 352.1 366.7 4.1% GP Margin 21.6% 24.6% +300bps Operating Profit 134.8 159.4 18.2% OP Margin 8.
Slide 6: Capex and Cash Flow Summary
Capex and Cash Flow Summary For the year ended 31 December 2022 2023 US$ m (audited) (audited) Change Cash flows (used in)/ from operating 240.1 229.2 -4.5% activities Profit before Tax 133.2 161.3 21.1% Depreciation 56.4 56.2 -0.4% Changes in working capital 65.5 (35.5) -154.2% Other operating cash
Slide 7: Solid Financial Position with Net Cash
Solid Financial Position with Net Cash • Net cash position $287m, in which $140m is earmarked for Indonesia & Bangladesh delayed capex • The two new factories are fully funded by existing cash balance For the year ended 31 December 2022 2023 US$ m (audited) (audited) Cash and cash equivalents 213.3
Slide 8: Valuation & Dividend Yield
Valuation & Dividend Yield Net Profit US$'m Dividend HK cents Dividend Yield 140.3 14% 140 120.2 121.0 12% 117.2 120 11.8% 11.2% 10% 95.9 90.8 100 70% Net Profit ‘m 81.6 Payout Ratio(1,2) 8% 8.1% 80 8.2% 59.7 62.2 6% 6.8% 60 85 103 Dividend Yield (3) 85 5.6% 5.1% 85 87 9% 4% 77 40 4.4% 70 75 4.1% 60
Slide 9: Cost Structure
Cost Structure Breakdown for Costs of Sale (as % of Revenue) 100.0% 90.0% 21.5% 24.6% 80.0% 2.8% 7.6% 3.2% 70.0% 5.6% 60.0% 10.8% 9.8% 50.0% Gross Profit 40.0% Depreciation 30.0% 57.3% 56.8% Manufacturing Overheads 20.0% Direct Labour 10.0% Direct Materials 0.0% 2022 2023 9
Slide 10: Volume & ASP Trends
Volume & ASP Trends Shipment Volume 80 58.2 56.6 60.2 59.4 55.8 56.0 49.0 53.3 52.6 50.8 50.8 53.1 52.9 60 42.7 43.4 (m pairs) 40 20 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 ASP 28.6 28.3 29.6 29.3 28.1 28.5 29.7 30 27.1 26.7 25.8 25.8 25.7 27.1 22.6 23.2 20 (US$/
Slide 11: Operating Profit and Margin
Operating Profit and Margin US$ ’m 180 12.0% 167 OP OPM 159 160 11% 157 11% 11% 10% 10% 10.0% 140 137 136 135 129 9% 129 120 8% 8% 8.0% 108 7% 100 103 100 6% 7% 88 6.0% 6% 80 63 66 60 4% 4.0% 4% 40 2.0% 20 2 0% 0.0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 *2009-201
Slide 12: ROIC - 2019
ROIC - 2019 NOPAT $97m Working Fixed Invested Capital + Assets = Capital $425m $473m $898m ROIC 10.8% • NOPAT represents EBIT x (1-effective tax rate) • Working capital (current assets minus current liabilities excluding cash) and fixed assets are based on 2019 year-end balance sheet figures 12
Slide 13: Management Focus on ROIC
Management Focus on ROIC Net Profit Growth • Improve customer mix with Luxury & High-end Fashion customers • Grow with our largest Sports Customer • Relentless focus on factory efficiencies and process improvement • Expanding & diversifying our production base in new regions Improve Invested Capital
Slide 14: ROIC - 2023
ROIC - 2023 NOPAT $42m 2023 vs 2019 $139m Working Fixed Invested Capital + Assets = Capital $266m $532m $798m $159m $59m 2023 vs 2019 2023 vs 2019 ROIC 17.4% • NOPAT represents EBIT x (1-effective tax rate) • Working capital (current assets minus current liabilities excluding cash) and fixed assets
Slide 15: Business Review
Business Review
Slide 16: World's Leading Brand Customers
World’s Leading Brand Customers Our client base includes well-known global Sports, Luxury, Fashion and Casual brands SPORTS LUXURY FASHION CASUAL 16
Slide 17: Breakdown of Manufacturing Revenue by Product Categories
Breakdown of Manufacturing Revenue by Product Categories • Added and grew • Order recovery from • Improved ASP • Reallocation of capacity with new Luxury existing customers in partially offset to other categories customers 2023 volume drop • Destocking of some • Customers launched • Added and grew •
Slide 18: Geographic Breakdown for Group Revenue
Geographic Breakdown for Group Revenue Europe 2023: 24.9% 2022: 24.1% PRC N. America 2023: 17.3% 2023: 45.6% 2022: 13.5% 2022: 51.3% Asia 2023: 8.8% 2022: 8.2% 2023 Group Revenue: US$1,492.7m Others 2023: 3.4% 1PRC included Hong Kong 2022 Group Revenue: US$1,630.8m 2Asia excluded the PRC 2022: 2.8%
Slide 19: Our Manufacturing Facilities
Our Manufacturing Facilities Geog. Mix Of Footwear Production 2022 28% 46% 26% 2023 26% 51% 23% 2024 (planned) 25% 50% 25% 0% 50% 100% China Vietnam Rest of Asia (Bangladesh, Indonesia & Philippines) 19
Slide 20: Branding Business – Downsizing Retail Operations
Branding Business –Downsizing Retail Operations • Winded up store operations in Europe • Significantly scaled down retail operation in China – Closed 31 POS during 2023 – 62 POS as at end of Dec 2023 – Further reduction of 9 POS in 1Q24 20
Slide 21: Outlook for 2024
Outlook for 2024
Slide 22: Outlook for 2024
Outlook for 2024 First year (2023) of 3-Year Plan already ahead of original targets. Strong momentum for the remainder of the 3- Year Plan. Strong demand from Luxury and Fashion customers as they 3-Year Plan (2023 – 2025) expand or launch premium lifestyle/athleisure footwear Targets: products to su
Slide 23: Thank You
Thank You
Stella International Holdings — FY2023 Earnings Presentation on 6ix