Grape King Bio Ltd. · TWSE:1707
Grape King Bio — Investor Presentation (February 2019)
41 slides from Grape King Bio's investor presentation, February 2019
Slide 1: Investor Presentation
Investor Presentation February 2019
Slide 2: Disclaimer
2 Disclaimer • The information contained in this confidential document ("Presentation") has been prepared by Grape King Bio (the "Company"). It has not been fully verified and is subject to material updating, revision and further amendment. • While the information contained herein has been prepared
Slide 3: Why Invest in Us?
3 Why Invest in Us? • We are a leading health food manufacturer in Taiwan with product development strength focusing on probiotics and herbal-based supplements. • We are one of the few companies in Taiwan that possess the capability to produce our own raw materials, manufacture our product and distr
Slide 4: Company Background
falselt FX _,Company Background
Slide 5: Company Milestones
5 Company Milestones • 2015 - Pro Partner’s • 2017 – Grape King’s • 2008 - Pro-Partner’s • 2011 - Grape • 2013 - Pro-Partner products have obtained King’s reached NT$5bn revenue reached revenue reached 10 patents and won 20 Bioengineering sales, +28% YoY, NT$6.7bn, ranked as No. NT$1.6bn, surpassed
Slide 6: Company Overview
6 Company Overview • Our Group is composed of three business units: - Grape King Taiwan (retail sales channel, OEM/ODM business) - Pro-Partner (direct selling channel) - Grape King Shanghai (OEM/ODM business) • Since 2008, Pro-Partner has experienced an explosive growth thanks to robust member growt
Slide 7: We have a Complete Product Range
7 We have a Complete Product Range
Slide 8: R&D Backed by Patents and Papers
8 R&D Backed by Patents and Papers We have acquired more than 52 patents and published over 20 research papers We have also acquired more than 10 TFDA Health Food certifications on our products Approval Recent Acquired Patent Country Number Date An Active Substance for Treating Dementia, Its Prepara
Slide 9: State-of-the-Art Research & Production
9 State-of-the-Art Research & Production Grape King Bio-Tech Research Institute Optical microscope High Performance Liquid Centrifuge PCR Machine Shaker Chromatography Grape King Bio-Tech Specialist Fermentation, Cultivation and Manufacturing 500 Liters Fermentor 50 Tons Fermentor High Speed Mixer C
Slide 10: Grape King Brand Sales Channels
10 Grape King Brand Sales Channels
Slide 11: Grape King Diverse Product Portfolio
11 Grape King Diverse Product Portfolio ComeBest Series/Golden Snow Brightening Grape King Antrodia Grape King Ling Zhi King ComeBest/PowerBOMB Essential Drink King Energy drinks that restore Strengthens the Liver protection and Beauty Drink that energy and provides immune system and hangover preven
Slide 12: Grape King Key Products Sales Breakdown
12 Grape King Key Products Sales Breakdown 7.Slim Turmeric 1.ComeBest 6.PowerBOMB, Complex, 5.96% Energy Drink, 7.85% 23.27% 5.Ganoderma, 10.16% 4.Antrodia, 10.30% 2.Probiotics, 12.61% 3.200P, 10.83% *3Q18 sales breakdown
Slide 13: Pro-Partner Overview
13 Pro-Partner Overview Largest domestic direct selling company in Taiwan based on revenue Second largest overall direct selling company (including global companies) in Taiwan Smallest product range – 27 Health and Beauty products among the top 5 No. 56 in the worldwide direct selling company rankin
Slide 14: Pro-Partner Overview
14 Pro-Partner Overview • Established in 1993, Pro-Partner was initially 100% owned by Grape King. • In 1998, a capital injection was completed by the new management team, with the management team now owning 40% of Pro-Partner. • To date, Pro-Partner remains one of the fastest growing direct selling
Slide 15: Pro-Partner Products - More Complex Formulas
Pro-Partner Products - More Complex Formulas 15 Super 13 Probiotics & 995 Bio-tech Probiotics & Antrodia Bio Aid Prebiotics Nourishment Prebiotics Promote healthy Promote healthy Post operative Post operative digestive system and digestive system and convalescence convalescence suppress allergy supp
Slide 16: Pro-Partner Key Products Sales Breakdown
16 Pro-Partner Key Products Sales Breakdown 5.Meal Supplement 1.Super 13 (Original), 5.90% Probiotics & 4.Probiotics & Prebiotics, Prebiotics, 21.90% 8.90% 3.Antrodia Aqua, 11.70% 2.Bio Aid 995, 15.00% *3Q18 sales breakdown
Slide 17: How is Pro-Partner different from other direct selling companies?
17 How is Pro-Partner different from other direct selling companies? Traditional Direct Selling Business Pro-Partner x Minimum purchase requirement. ü No minimum purchase requirement. x Initial investment could be significant. ü Members buy products directly from the Products purchase x Members may
Slide 18: How is Pro-Partner different from other direct selling companies?
18 How is Pro-Partner different from other direct selling companies? • Nearly 78% of Pro-Partner’s sales are contributed by old members. • Our members retention rate in the past three years are more than 75%, which is a remarkedly high number in the direct selling industry. • The growth rate of our
Slide 19: Grape King Shanghai Overview
19 Grape King Shanghai Overview • Established in 1993, Grape King Shanghai was initially targeted as the production base for Grape King’s own brand products in China. • However, a change in strategy steered by the new management to an OEM/ODM model has reversed several years of losses and turned the
Slide 20: Grape King's Competitive Strengths
20 Grape King’s Competitive Strengths
Slide 21: Industry Trends
falselt FX Industry Trends
Slide 22: Taiwan Health Food Industry
22 Taiwan Health Food Industry • Taiwan’s heath food industry saw a 7.5% CAGR from 2003-2017. • The industry will continue to be driven by consumers’ increasing interest in healthier lifestyles as a cost-effective way to combat ageing and prevent modern illness. • We have been gaining marketing shar
Slide 23: Taiwan Direct Selling Industry
23 Taiwan Direct Selling Industry • Taiwan is ranked in the top 15 markets for direct selling globally. The direct selling industry in Taiwan delivered 6% 2010-2016 CAGR, with health food accounting for nearly 60% of the value. • Direct selling in Taiwan is strictly regulated particularly in 1) prod
Slide 24: Taiwan Direct Selling Industry
24 Taiwan Direct Selling Industry • While Taiwan’s direct selling industry delivered a 6% CAGR during 2010-2016, Pro- Partner delivered a 22% CAGR during the same period. • Pro-Partner is the only domestic company among the top 10, with the remainder being foreign companies. Top 10 companies account
Slide 25: China Health Food Industry
25 China Health Food Industry • China’s health food industry delivered a 30% CAGR between 2009-2016, mainly driven by economic growth, disposable income, and rising health awareness. • Direct selling has become an important distribution channel as sales from direct selling has grown from 26% in 2011
Slide 26: Our Goals and Strategies
falselt FX Our Goals and Strategies
Slide 27: Our Group Goals
27 Our Group Goals Long-term Goals • Transform Grape King into a group enterprise. • Continue to explore partnership or new business opportunities and take the Group to international level. • Grape King own brand, Pro-Partner, and Grape King Shanghai each to contribute 1/3 of consolidated revenue. M
Slide 28: Integrated Marketing Strategy
Integrated Marketing Strategy 28 Cross-Channel Integration CRM Loyalty Program Virtual channel penetration Retail channel penetration - Grape King online store - Pharmacies - Drugstores - Online B2C stores - CVS - Department Stores - TV shopping channels - Supermarkets - Discount Stores - Catalogue
Slide 29: Creative Brand Building & Product Campaigns
29 Creative Brand Building & Product Campaigns Grape King Antrodia King (liver protection) Grape King Ginseng Vitamin B Complex Plus Anger causes high blood pressure but also harms liver. Flight attendant no longer needs to roll her eyes for unreasonable requests Grape King’s micro film commercial s
Slide 30: New Products Pipeline
30 New Products Pipeline 2018 2019 Probiotics Snacks New Antrodia and Lion’s Probiotics sweets for mane mushroom products children Both expected to be 2018 Taiwan FDA certified Dental Hygiene Products 2019 Probiotic- and fungal- Supplement Food for Pets based toothpaste and Probiotics- and fungal- b
Slide 31: Ongoing Research for Future Products
Ongoing Research for Future Products 31 On-going Clinical Trials Probiotics-based – Animal Trials - Hericium Erinaceus (Lion’s Mane mushroom) - - Super 13 Pro & Prebiotics - Desensitizes and improves Alleviate cognitive impairment (Chung Shan intestinal flora (China Medical University) Medical Unive
Slide 32: Capacity and Overseas Strategy
Capacity and Overseas Strategy 32 Grape King Specialist Fermentation & Grape King Shanghai Headquarters Manufacturing Site Liquids: 140,880 k bottles/year Fermentation: 285 tons (100% utilized) Powders: 98,366 k pack/year Bottling: 63k bottles/hr Troches: 639,006 k capsules/year SIG Combibloc: 11k p
Slide 33: Our CSR Commitments
Our CSR Commitments 33 We regularly Employees are one provide free of the most valuable training courses assets of our and internship business. We opportunities to continue to look more than 16 after our employees universities in by supporting issues Taiwan. and causes that matter to them. We offer
Slide 34: Financial Performance
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Slide 35: Impact from IFRS 15 starting 2018
35 Impact from IFRS 15 starting 2018 After adopting After adopting (NT$m) IFRS 15 IFRS 15 9M18 9M17 Revenue breakdown 3Q18 3Q17 YoY 2Q18 2Q17 YoY Revenue 6,516 6,002 Grape King Taiwan 112 102 10.1% 95 104 -8.3% COGS (1,312) (1,036) Pro-Partner 1,731 1,671 3.6% 1,925 1,826 5.4% Gross Profit 5,204 4,9
Slide 36: Financial Highlights
36 Financial Highlights Historical revenue vs. net profit ater tax Historical gross margin vs. operating margin 10,000 1600 89% 30% 9,000 1400 88% 8,000 25% 1200 87% 7,000 86% 20% 6,000 1000 85% 5,000 800 15% 84% 4,000 600 3,000 83% 10% 400 82% 2,000 5% 1,000 200 81% 0 0 80% 0% 2008 2009 2010 2011 2
Slide 37: Five-Year Income Statement
37 Five-Year Income Statement YoY (%) NT$m 2013 2014 2015 2016 2017 9M18 2013 2014 2015 2016 2017 9M18 Revenue 5,639 6,283 7,248 9,185 9,388 6,516 22.3 11.4 15.4 26.7 2.2 (1.3) Gross Profit 4,983 5,561 6,385 7,919 7,865 5,204 23.7 11.6 14.8 24.0 (0.7) (6.5) Operating Expenses (3,653) (3,961) (4,573)
Slide 38: Five-Year Balance Sheet
38 Five-Year Balance Sheet YoY (%) NT$m 2013 2014 2015 2016 2017 9M18 2013 2014 2015 2016 2017 9M18 Total Assets 4,629 5,369 8,612 9,550 9,892 9,768 19.4 16.0 60.4 10.9 3.6 7.7 Cash 1,069 1,374 1,433 1,899 1,920 1,195 (1.5) 28.6 4.3 32.6 1.1 (3.3) AR & NR 86 98 97 204 160 147 (38.1) 14.0 (1.9) 111.6
Slide 39: Dividend Payout and Capex
39 Dividend Payout and Capex (NT$m) 2012 2013 2014 2015 2016 2017 2018F Net profit Notes: 619 836 942 1,052 1,297 1,352 1. dividend Cash Cash yield is calculated based 482 on Grape 651 King’s 690 closing share 730price before 862the ex-dividend 903 day of the following year. DPS 2. (NT$) 3.7 The big
Slide 40: 2018-2019 Priorities
40 2018-2019 Priorities Taiwan Domestic Market • Continue to work on our Brand, Products, and Business refresh through realignment of our organization structure and distribution channels • Solidify our leadership position in Taiwan health food market • Continue to identify and innovate quality produ
Slide 41: Thank You
Thank You For more information, please visit our company website at www.grapeking.com.tw
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