Daphne International Holdings Limited · HKEX:210
Daphne International — H1 2013 Earnings Presentation
41 slides from Daphne International's earnings presentation, Aug 27, 2013
Slide 1: Interim Results Presentation
Interim Results Presentation 27 August 2013
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 Daphne International Holdings Limited (“the Compan
Slide 3: 2013 Interim Results Highlights
2013 Interim Results Highlights Group turnover increased by 1.7% to HK$5,168.2 million Turnover of Core Brands business recorded a growth of 2.1%, reaching HK$4,738.6 million Core Brands’ same store sales declined 9.2% YoY Group’s gross profit margin was 58.3% Group’s operating profit marg
Slide 4: Financial Review
FINANCIAL REVIEW
Slide 5: Group Financial Highlights
Group Financial Highlights For the six months ended (HK$ million) 30 Jun Change 2013 2012 Turnover 5,168.2 5,079.5 +1.7% Gross profit 3,013.2 3,083.3 -2.3% Operating profit 450.5 699.6 -35.6% Profit attributable to shareholders 310.3 482.6 -35.7% Basic EPS (HK cents) 18.8 29.4 -35.9% Interim dividen
Slide 6: Group Turnover
Group Turnover Turnover Breakdown Core Brands segment continued (For the six months ended 30 Jun) to be the Group’s focus, with HK$ million turnover contribution rising to 5,500 5,079.5 5,168.2 3% 91%, up by 1 ppt YoY 5,000 3% 6% 7% 4,500 Other Brands segment slightly 3,939.3 4,000 6% decreased
Slide 7: Group Profit Margins
Group Profit Margins Group gross profit margin decreased by 2.4 ppt Discounting was slightly increased in the second quarter to boost sales growth Change in product sales mix More aggressive efforts to clear off-season stocks Increased inventory provision Operating profit margin fell by
Slide 8: Inventory Turnover Days & Working Capital
Inventory Turnover Days & Working Capital Inventory turnover days was 209 days Mainly due to lower-than-expected turnover growth Adjusted volume of procurement for upcoming season and will continue to step up inventory management and control Lower CAPEX mainly due to slower store expansion
Slide 9: Other Key Financial Indicators
Other Key Financial Indicators Increase in inventories led to decrease in cash and bank balances No convertible bonds were converted during the period Current ratio remained healthy, reflecting sound financial structure (HK$ million) As at 30 Jun 2013 As at 31 Dec 2012 Change Cash and bank bal
Slide 10: Historical Financial Performance
Historical Financial Performance Turnover (For the 6 months ended 30 Jun) Basic EPS (For the 6 months ended 30 Jun) (HK$ million) (HK cents) 6,000 40 5,079.5 5,168.2 5,000 29.36 3,939.3 30 26.88 4,000 3,138.1 19.93 2,773.9 17.70 18.82 3,000 20 2,000 10 1,000 0 0 2009 2010 2011 2012 2013 2009* 2010*
Slide 11: Business Review
BUSINESS REVIEW
Slide 12: Group Sales Network
Group Sales Network Total No. of Points-of-Sale (POS) Slowed down store expansion in view of soft market situation in 8,000 the first half 6,881 (+300) 7,054 (+173) 7,000 6,581 (+416) 473 Net increase = 173 POS 613 512 (2012: 300 POS) 6,000 Core Brands total POS = 6,581 5,000 Net increase =
Slide 13: Core Brands Sales Network – by Store Category
Core Brands Sales Network – by Store Category Expansion focus on directly-managed stores, of which proportion increased to 86% A net increase of 212 POS. Added 263 directly-managed stores, and decreased 51 franchised stores As at As at Change % Change 30 Jun 2013 31 Dec 2012 - Directly-managed P
Slide 14: Core Brands Sales Network – by City Tier
Core Brands Sales Network – by City Tier The Group maintained greater representation in lower tier cities As at 30 Jun 2013 As at 31 Dec 2012 Change % Change No. % No. % Tier 1 cities 747 11% 721 11% +26 +3.6% Tier 2 cities 1,428 22% 1,342 21% +86 +6.4% Tier 3 cities 1,025 16% 981 15% +44 +4.5% Ti
Slide 15: Core Brands Business – Performance
Core Brands Business – Performance Turnover of Core Brands business grew 2.1% YoY Same Store Sales Growth -9.2% Slowed down store expansion Frontline staff turnover rate rose after For the 6 months the Chinese New Year holiday, but now ended 30 Jun (HK$ mililon) Change returns to normal alre
Slide 16: Core Brands Business – SSSG
Core Brands Business – SSSG SSS decreased by 9.2%, mainly due to: Weak consumer sentiment as economic growth decelerated Poor weather conditions and unusually cold spring season Avian flu outbreak in Eastern China Average selling price fell 1% YoY to RMB 194 Same Store Sales 1Q 2Q 1H Growt
Slide 17: Other Brands Business
Other Brands Business Gross profit margin grew by 1.3 ppt, mainly due to improved product cost Operating loss similar to that of last year Continued consolidation of sales network and resulted a net closure of 39 non-performing stores For the 6 months ended 30 Jun (HK$ million) Change 2013 201
Slide 18: Outlook & Strategies
OUTLOOK & STRATEGIES
Slide 19: Outlook for the Second Half of 2013
Outlook for the Second Half of 2013 Opportunities Challenges Competitive Advantages Chinese government puts Low visibility of market Leading position in mass urbanisation as a major outlook market economic focus in 2013 Consumption sentiment is Extensive nationwide sales Continued urbani
Slide 20: Objectives for 2013 2H
Objectives for 2013 2H Improve full-year results of 2013 Build stronger fundamentals to pursue long-term growth Sales Operation Product Marketing • Strengthen • Bolster the brand • Increase sales product image productivity offering • Increase marketing • Enhance same • Strengthen efficiency stor
Slide 21: Increase sales productivity, and enhance SSSG
Increase sales productivity, and enhance SSSG Boost sales productivity Put in place more structured and comprehensive training programs Refine incentive programs for frontline staff Enhance effectiveness by focusing on the follow- through and execution Improve in-store product display In
Slide 22: Step up rental cost control
Step up rental cost control Maintain prudent expansion focusing on store quality Tighten control on rental costs Expand into areas where rental is more reasonable Demand reasonable rental increments upon lease renewal Rationalisation of store size Enhance overall quality of store portfol
Slide 23: Bolster brand image and increase marketing efficiency
Bolster brand image and increase marketing efficiency Uplift brand image of “Daphne” by conducting a nationwide integrated marketing Movie campaign, covering TV, print, internet and movie sponsorship Sponsorship TV Appointed famous artist Mr. Richie Ren (任賢齊) as Philanthropic Ambassador for “Sho
Slide 24: Strengthen the product offering and SCM
Strengthen the product offering and SCM Strengthen the responsiveness to customer preference Increase diversity of product range to broaden customer base and increase value per transaction Integration of the new retail management system in good progress Improve product development, planning
Slide 25: Drive E-commerce business
Drive E-commerce business Develop omni-channel retail model by driving integration of online channel, physical stores and customer relationship management (CRM) to generate synergy The official online flagship store to collaborate with other online partners to maximise overall online sales reven
Slide 26: Mid- to High-end Brands
Mid- to High-end Brands Focus on better-performing brands Adjust the brand-positioning of mid- to high-end brands to facilitate future development Continue the rationalisation of sales network to improve overall performance Become one of the Group’s growth drivers in the long run Cater to
Slide 27: Vision
Vision A leading brand management company that provides ladies and their family members with trendsetting and quality products Brands Products Diversification Strategy Pricing Sales Channels 27
Slide 28: Thank you
Thank you ..Q&A Session DAPHNE INTERNATIONAL HOLDINGS LIMITED =z F t@ HM FR BPR BR A A
Slide 29: Investor Relations Contact
Investor Relations Contact Ms. Macy Leung (852)-2367 9022 macyleung@daphneholdings.com 29
Slide 30: Appendix
APPENDIX ate id — - ke ; \
Slide 31: Growth Drivers
Growth Drivers More focused sales operation Increasing the depth and breadth of marketing More agile and efficient supply chain management Strengthening brand management Further enhancement in product design and development 31
Slide 32: Growing Market Potential of China
Growing Market Potential of China Continued urbanisation Increasing disposable Growing domestic income consumption 712 M Urban population 6.5% 12.7% Urban residents’ disposable income per capita China retail sales 52.6% China urbanisation rate Continued urbanisation Income per capita on the r
Slide 33: China Footwear Market Potential
China Footwear Market Potential Footwear Markets Comparison Population: 1,337 million China Population: 311 million USA 2.13 billion 2.26 billion pairs pairs 6.8 pairs per capita 1.7 pairs per capita Footwear consumption per capita in China is low China Footwear market size reached 2.26 billion
Slide 34: China Women's Footwear Market Prospect
China Women’s Footwear Market Prospect (RMB million) China Women’s Footwear Market Forecast 250,000 +10.0% +10.0% 223,070 CAGR: 10.0% +10.1% 202,857 200,000 +8.9% 184,367 +13.0% 167,463 153,736 150,000 134,861 100,000 50,000 0 2011 2012 2013E 2014E 2015E 2016E Euromonitor forecasts China women’s f
Slide 35: Consistent Turnover Growth
Consistent Turnover Growth (HK$ million) 12,000 11,000 10,529.1 10,000 9,000 8,576.8 8,000 7,000 6,623.8 5,832.0 6,000 5,289.3 5,000 3,853.6 4,000 3,093.1 3,000 2,622.7 2,000 1,788.5 1,180.7 1,407.0 933.1 955.7 1,000 492.9 597.3 672.8 254.6 291.6 384.4 25.8 82.9 176.2 0 2002 2003 2004 2005 2006 2007
Slide 36: Daphne Group's Market Share
Daphne Group’s Market Share China Women’s Footwear Market Share* 2011 2012 5.3% 6.1% Daphne Women’s footwear Women’s footwear Group market 2011: market 2012: RMB 136.0 billion RMB 153.7 billion *Data source: Euromonitor 36
Slide 37: Competitive Advantages
Competitive Advantages Leading retailer in ladies’ footwear in China with strong own-brands, “Daphne” and “Shoebox” Unparalleled leadership position in the mass market Extensive nationwide sales network – reaching county level with over 7,000 outlets Vast directly-managed store network enabl
Slide 38: Company Overview
Company Overview One of the leading ladies’ footwear retailers in China Engage in product design & development, production, distribution, retail, and brand management Has 7,054 points-of-sale (POS) (as at 30 June 2013) The Group’s core brands (“Daphne” and “ShoeBox”) are distributed in nearl
Slide 39: Shareholding Structure
Shareholding Structure As at 30 June, 2013 Lucky Earn Top Glory Assets Int’l Ltd. Pushkin Holding Ltd. Ltd. (held by Mr. CHANG Premier China Ltd. Public (held by Mr. CHEN Chih-Kai, (held by Mr. CHEN Ying- Tommy Yi-Hsun and his Mr. CHANG Chih-Chiao Chieh and his family) family) and their family) 24.3
Slide 40: Major Brand Portfolio
Major Brand Portfolio Brand Ownership ASP (RMB) Own brand (channel) <200 Core Brands Own brand (product) 200 – 300 Own brand (product) Mid- Sole distributorship to (international brand) High- 400 – 1,200 end Sole distributorship Brands (international brand) Own brand (channel) 40
Slide 41: Group Milestones
Group Milestones • Retail POS exceeded 7,000 • Retail POS exceeded 6,000 • Group turnover exceeded HK$8 billion • Entered mid- to high-end ladies’ footwear market through acquisition of Full Pearl Group • Exited sportswear market • Renamed as “Daphne International Holdings Ltd.” • Established 2nd ow
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