China Lilang Ltd. · HKEX:1234
China Lilang — H1 2014 Earnings Presentation
24 slides from China Lilang's earnings presentation, August 2014
Slide 1: Interim Results 2014
Interim Results 2014 August 2014
Slide 2: Disclaimer
Disclaimer The information contained in this presentation is intended solely for your personal reference. Such information is subject to change without notice, its accuracy is not guaranteed and it may not contain all material information concerning China Lilang Limited (the “Company”). The Company
Slide 3: Agenda
Agenda Interim Results Highlights Financial Review Business and Operational Review Prospect and Strategies Open Forum 3
Slide 4: Interim Results Highlights
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Slide 5: Outperformed Other Industry Players
Outperformed Other Industry Players PRC menswear industry showed no obvious improvement Channel inventory of the industry improving slowly Industry’s aggressive retail discounts and store realignment continue Industry’s issue of product homogeneity remains serious China Lilang outperformed oth
Slide 6: 2014 Interim Results Financial Highlights
2014 Interim Results Financial Highlights (RMB million) 1H2014 1H2013 Change Turnover 1,090.5 1,092.5 -0.2% Gross profit 445.8 436.7 +2.1% % of Turnover 40.9 40.0 +0.9p.p. Profit from operations 295.0 275.0 +7.3% % of Turnover 27.1 25.2 +1.9p.p. Net Profit 248.1 242.3 +2.4% % of Turnover 22.7 22.2 +
Slide 7: Financial Review
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Slide 8: Turnover Analysis
Turnover Analysis Total Turnover Turnover change due to: & Turnover By Brand 1. Weak retail market (RMB million) -0.2% 1,200.0 1,092.5 1,090.5 2. ASP decline as the Group 3.5 implements its strategy of 79.3 “improving product quality without 1,000.0 95.3 raising the price” and shares the fruit of it
Slide 9: Cost of goods sold
Cost of goods sold Gross profit margin increased by 0.9 (RMB million) p.p. to 40.9% from 40.0% for 1H2013, (60.0%) due to: (59.1%) Stable raw materials prices (3.2%) 21.2 Increased proportion of original 80.7 (12.5%) products: Cost of self production, including process (41.4%) 271.5 outsourcin
Slide 10: SD&A Expenses
SD&A Expenses SD&A Expenses SD&A Expenses As % of Turnover Total Amount (RMB million) Advertising and promotional expenses Other selling and distribution expenses Administrative expenses 44.3 44.2 9.8% 26.4 9.1% 9.0% 25.5 8.3% 115.6 109.6 90.1 97.7 4.1% 4.3% 4.1% 3.7% -14.5 1H2013 1H2014 2.5% 2.3% 2
Slide 11: Increased Profit and Margins
Increased Profit and Margins Gross Profit & Gross Margin EBITDA & EBITDA Margin (Unit: RMB million) (Unit: RMB million) 40.9% 26.7% 28.7% 40.0% 445.8 291.2 312.7 436.7 1H2013 1H2014 1H2013 1H2014 Operating Profit & Operating Margin Net Profit & Net Margin (Unit: RMB million) (Unit: RMB million) 27.1
Slide 12: Working Capital Cycle
Working Capital Cycle Notes Turnover Days Trade Receivables Turnover Days Average turnover days improved (Unit: Days) Turnover days based on period end Average Trade Receivables Turnover balance was 82 days, similar to June Days 2013 Average Inventory Turnover Days Balance increased over the
Slide 13: Cash Flow Statement
Cash Flow Statement Cash and cash equivalents (RMB million) 1,800 1,600 188.5 (175.4) 7.1 0.2 1,400 1,435.8 1,456.2 1,200 Cash and cash Net cash from Net cash used in Net cash from Effect of foreign Cash and cash equivalents at 1 operating investing financing exchange rate equivalents at 30 January
Slide 14: Healthy and Strong Cash Position
Healthy and Strong Cash Position Total Cash and Bank Balance (Unit: RMB million) 2,445.8 2,207.8 1,897.2 Cash position remained healthy 1,667.0 and strong: Net cash balance of 1,644.8 RMB1.67 billion, up from RMB1.64 billion at the end 1,461.1 of 2013 Fully secured by 778.8 pledged bank 436.1 563.0
Slide 15: Business & Operational Review
Business &Operational Review
Slide 16: Nationwide Distribution Network
Nationwide Distribution Network No. of stores Group store’s count 2014 Jun 30 2014 Jan 1 Change renovated Eastern China 952 1,011 -59 Central and southern China 791 806 -15 2012 280 South Western China 651 656 -5 North Eastern China 334 367 -33 2013 750 Northern China 313 330 -17 2014 700-800 (targe
Slide 17: Sales Channel Management
Sales Channel Management Brand LILANZ L2 Total Total no. of retail 3,022 293 3,315 Paying close attention to the stores potential of e-business channel Total area • Current online sales market in China is still mainly of retail focused on discount sales with relatively low profitability stores 345,0
Slide 18: Product Design and Development
Product Design and Development Provide more diverse products to target consumers LILANZ International R & D team headed by a group of designers from abroad set up in 2013: Bring in new ideas by adding innovative and international taste and elements to the brand’s fashionable yet simple product s
Slide 19: Marketing and Promotion
Marketing and Promotion • A micro film, starring Chen Dao Ming, the spokesperson of LILANZ was made and is planned to be officially broadcasted in September or October this year both online and on television • Placing soft-sell advertisements in magazines and newspapers • Setting up billboards in a
Slide 20: Trade Fair Results
Trade Fair Results LILANZ: LILANZ: +High-single +Mid- digit single digit LILANZ: L2: -Low-single digit +Low- L2: double LILANZ: L2: + 10 to15% digit -16% +High-single L2: digit LILANZ: +Low-single -26% digit L2: Flat 2013 2013 2014 2014 2014 Autumn Winter Spring/Summer Autumn Winter (Shipment (Shipm
Slide 21: Production and Supply Chain
Production and Supply Chain Sub-contracting services Self production Distributors Cooperate with suppliers in the R&D of fabrics Design Outsourced production • Continued to improve its supply chain management and identify more cost- efficient fabric suppliers and processing plants • Shared the benef
Slide 22: Prospect and Strategies
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Slide 23: Prudent and Flexible Operation Strategy
Prudent and Flexible Operation Strategy Enhance core competitiveness Continue with the policy of “improving product quality without raising the price” and enhance products’ value for money Increase proportion of original products in sales and enhance product differentiation Supply chain Brand bu
Slide 24: Open Forum
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