Hung Hing Printing Group Limited · HKEX:450
Hung Hing Printing — FY2011/12 Earnings Presentation
30 slides from Hung Hing Printing's earnings presentation, Mar 31, 2012
Slide 1: Annual Results Presentation
Annual Results Presentation For the 12 months ended 31 Mar 2012 0
Slide 2: Disclaimer
Disclaimer The presentation is prepared by Hung Hing Printing Group Limited (the “Company”) and is solely for the purpose of corporate communication and general reference only. The presentation is not intended as an offer to sell, or to solicit an offer to buy or to form any basis of investment deci
Slide 3: Highlights - 12 Months ending March 2012
Highlights - 12 Months ending March 2012 Group revenues were up +3 % YOY. Labour costs and RMB appreciation have impacted earnings, particularly in our export business. Our shift in product portfolio - expanding our presence in luxury packaging & conventional books and the tightening of cost/quote r
Slide 4: Hung Hing has established infrastructure in the PRD region and East China
Hung Hing has established infrastructure in the PRD region and an established base in East China Hung Hing–overview of manufacturing facilities Zhongshan Wuxi Printing and manufacturing of folding Printing and manufacturing of folding cartons, cartons, litho lam and corrugated litho lam and corrugat
Slide 5: Hung Hing operates four complementary business segments
Hung Hing operates four complementary business segments Book & package Consumer product Corrugated box Paper trading printing packaging Leader globally Major player in China Major player in South Leader in South China Market position China 53% (HK$1,513mm) 27% (HK$768mm) 9% (HK$264mm) 11% (HK$310mm)
Slide 6: Book and package printing – Overview
Book and package printing – Overview Global leader in printing of children’s books Leader in paper-based packaging for exports from Pearl River Delta region Focus on toys, luxury packaging, greeting cards and other consumer products Very loyal “blue-chip” customer base Longstanding customer relation
Slide 7: Segment financials – Books and package printing
Segment financials – Books and package printing Books and package printing Commentary External revenue Revenue (HK$mm) Segment profit (%) We maintain our market share and leadership 1,600 14% position. Sales were up by 4% as we grew in 13% 1,513 1,448 1,452 the luxury packaging and greeting card 1,3
Slide 8: Books and package printing – Cost impacts
Books and package printing – Cost impacts USD vs CNY during Apr 2009 – Mar 2012 • RMB went up by 4% during FY2011/12. • Books and Package Printing (“BPP”) focuses on export business; its revenue is mostly in USD/HKD. • BPP’s production costs are mostly in RMB. • The rise in RMB by 4% impacted earnin
Slide 9: Books and package printing – Impacts to profitability
Books and package printing – Impacts to profitability Payroll costs as a % of revenue 40.0% • Payroll cost, as a % of revenue, rose by 4.2% 31.8% Other (incremental cost of HK$64m) in FY2011/12 27.6% payroll 30.0% 24.9% & • In response, we having been taking the following 13.7% benefits initiatives:
Slide 10: Consumer product packaging – Overview
Consumer product packaging – Overview Leading consumer product packaging company in China, in a highly fragmented market Excellent platform to capture additional growth in the China consumer product packaging sector Leveraging on Hung Hing’s established presence in the PRD region and its existing fa
Slide 11: Segment financials – Consumer product packaging
Segment financials – Consumer product packaging Consumer product packaging Commentary External revenue Revenue (HK$mm) Segment profit (%) China growth progressing, with revenue up 9%. 1,000 10% 9% Rising labour rate and production costs in in 8% 2011. Pace of increase has slowed during 768 8% the pa
Slide 12: Segment financials – Corrugated box
Segment financials – Corrugated box Corrugated box Commentary External Intersegment Segment profit (%) Impacted by the slowdown in export Revenue (HK$mm) manufacturing, across Pearl River Delta. Business development efforts now shifted to 600 18% 20% domestic market which helped to partially 18% off
Slide 13: Segment financials – Paper trading
Segment financials – Paper trading Paper trading Commentary External Intersegment Segment profit (%) The relatively soft trend of paper price for Revenue (HK$mm) 1,000 10% most part of the year pushed down trading 9% margin by 5 %. 9% 8% 8% 800 8% Inventory flexibility to use internally or sell exte
Slide 14: Revenue Is Up By +3%
Revenue Is Up By +3 % 2,873 2,854 2,828 2,765 2,398 13
Slide 15: Cost Breakdown
Cost Breakdown Group Book & Package Printing Consumer Product Packaging Corrugated Box 14
Slide 16: Operating Profit Impacted By Paper, Labor Costs and RMB appreciation
Operating Profit Impacted By Paper, Labor Costs and RMB appreciation 301 268 237 192 83 15
Slide 17: Business Unit Analysis for Continuing Operations
Business Unit Analysis for Continuing Operations Year Ended Year Ended 31/3/2012 31/3/2011 (HK$ million) Inter- External segment Profit Profit Sales sales Total Contribution Contribution Book & Package Printing 1,513 2 1,515 14 91 Consumer Product Packaging 768 9 777 18 (1) Corrugated Box 264 91 355
Slide 18: Profit before income tax – FY2011 to FY2012
Profit before income tax – FY2011 to FY2012 (HK$ million) 250 19 -82 200 150 -29 -52 100 197 -16 8 50 45 0 FY2011 Revenue Payroll & RMB 'One-time' Paper Others F2012 Profit before Benefit appreciation deemed provision Profit before tax impact disposal tax gain in prior year Profit before income tax
Slide 19: Solid Financial Position
Solid Financial Position (HK$ million) 2012 2011 2010 2009 2008 Assets Non-current 1,572 1,569 1,467 1,563 1,840 Current 2,214 2,076 2,356 2,525 2,956 3,786 3,645 3,823 4,088 4,796 Liabilities Non-current 358 57 41 100 143 Current 624 776 795 895 2,217 982 833 836 995 2,360 Net Assets 2,804 2,812 2,
Slide 20: Capital Investment – business capability
Capital Investment – business capability Commentary We always believe advanced technology brings competitive advantage in terms of quality, timeliness and costs. Bought 4 printing presses to replace older ones. We’ll continue to invest in production equipment to help automation and improve labour ef
Slide 21: Profit Attributable To Owners of the HHPG & Earnings Per Share
Profit Attributable To Owners of the HHPG & Earnings Per Share Profit Attributable to Owners of HHPG Basic Earnings per share 20
Slide 22: Proposed Dividends
Proposed Dividends Commentary 35 30 27 FY 11/12 Dividends 23 25 Interim (paid) 2 cents Final (proposed) 2 cents (HK Cents) 20 9 17 4 cents 14 15 8.5 10 10 10 1 5 4 5 7.5 2 4 4 5 2 0 FY07/08 FY08/09 FY09/10 FY10/11 FY11/12 Interim dividend Final dividend Special dividend 21
Slide 23: Rengo, our strategic partner
Rengo, our strategic partner Since Aug 2011, Rengo has become a 29.9% shareholder of the Group. Rengo is a leader in the general packaging industry in Japan, and has been a business partner of HH Group for over two decades. Rengo has significant presence in Asia (outside Japan) with a number of pape
Slide 24: Hung Hing & Rengo, co-operative opportunities
Hung Hing & Rengo, co-operative opportunities Hung Hing packaging plants (3) China Folding Cartons : Wuxi, Zhongshan, • Cross selling e.g. HH Shenzhen selling folding cartons Corrugated : Zhongshan, and to Rengo clients in Shenzhen PRC and beyond. • Provide OEM services to Rengo in Japan. • Leverage
Slide 25: Business Outlook (short-term)
Business Outlook (short-term) 1. We see increasing order intake from the U.S. and UK market driving up our capacity utilisation in our export-oriented plants in Shenzhen and Heshan. 2. Growth in production cost and the inflation rate in general has slowed in China. Material costs have softened. Thes
Slide 26: Business Outlook (medium term)
Business Outlook (medium term) 1. Increasing consolidation among export printers in southern China - HH is a beneficiary to this trend. - Our breadth of capabilities, cost efficiency and solid track record in corporate social responsibility make HH a vendor of choice among large/MNC customers. 2. Ne
Slide 27: Corporate Social Responsibility
Corporate Social Responsibility Hung Hing conforms to HIGH Safety Environment, Safety & Business Ethics Standards It helps to position HH as the Vendor of Choice among large / overseas customers. HUNG HING Business Environment Ethic Environment Certificates Safety Compliance Business Ethic Certifica
Slide 28: BelugaBloo – a new e-publishing service
BelugaBloo – a new e-publishing service 27
Slide 29: BelugaBloo – a new e-publishing service
BelugaBloo – a new e-publishing service • Natural extension to our core business in children’s book printing • Complementary and value-added service targeted for children’s book publishers • End-to-end e-publishing solution - design, built, marketing, distribution and support • Major offering - Inte
Slide 30: Thank you Q&A
Thank you Q&A 29
Hung Hing Printing Group — FY2011/12 Earnings Presentation on 6ix