Li Ning Company Limited · HKEX:2331
Li Ning — H1 2010 Earnings Presentation
29 slides from Li Ning's earnings presentation, August 2010
Slide 1: Interim Results 2010
Interim Results 2010 August 2010
Slide 2: Agenda
Agenda Financial Highlights Business Review Outlook & Future Strategies Open Forum 1
Slide 3: Financial Highlights
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Slide 4: Consistent Growth for Seven Consecutive Years
Consistent Growth for Seven Consecutive Years RMB (million) RMB (million) Operating profit Revenue 33.7% 4,504.6 44.6% CAGR CAGR 4,051.9 813.3 3,060.8 685.8 452.6 1,909.4 1,371.9 266.6 1,104.3 788.7 172.5 113.2 89.0 1H04 1H05 1H06 1H07 1H08 1H09 1H10 1h04 1H05 1H06 1H07 1H08 1H09 1H10 RMB (million)
Slide 5: Financial Highlights
Financial Highlights 1H2010 1H2009 Change For the 6 months ended 30 June (RMB million) Revenue 4,504.6 4,051.9 +11.2% Gross profit 2,158.4 1,936.6 +11.5% Operating profit 813.3 685.8 +18.6% EBITDA 912.6 773.3 +18.0% Profit attributable to 581.6 472.5 +23.1% equity holders Earnings per share (RMB cen
Slide 6: Profit Margins and Expense Ratios
Profit Margins and Expense Ratios 1H2010 1H2009 Change For the 6 months ended 30 June Gross Profit Margin 47.9% 47.8% +0.1p.p. Operating Margin 18.1% 16.9% +1.2p.p. Margin of profit attributable to 12.9% 11.7% +1.2p.p. equity holders R&D Expenses (as % of revenue) 2.5% 2.3% +0.2p.p. A&P Expenses (as
Slide 7: Key Financial Indicators
Key Financial Indicators Average Average Average Average Inventory Inventory Turnover Turnover Cash Cash Conversion Conversion Trade Trade Receivable Receivable Trade Trade Payable Payable (Days) (Days) Cycle Cycle (Days) (Days) Turnover Turnover (Days) (Days) Turnover Turnover (Days) (Days) 71 68 7
Slide 8: Healthy Balance Sheet
Healthy Balance Sheet 2010-6-30 2009-12-31 Change (RMB million) Cash and Cash Equivalents 1,440.6 1,266.6 13.7% (Including time deposits and restricted deposits) Bank Loans 231.9 260.0 -10.8% Net Cash* 1,208.7 1,006.6 20.1% Current Liabilities 1,861.7 1,864.9 -0.2% Current Ratio (times) 1.9 1.7 0.2p
Slide 9: LI-NING Brand Revenue Breakdown by Product Category
LI-NING Brand Revenue Breakdown by Product Category LI-NING LI-NING Brand Brand Revenue Revenue Breakdown Breakdown Revenue Revenue from from LI-NING LI-NING brand brand by by Product Product Category Category to to Group’s Group’s total total 6.1% 5.6% 8.2% 7.8% 44.6% 45.9% 91.8% 92.2% 49.3% 48.5%
Slide 10: LI-NING Brand Revenue Breakdown by Geography
LI-NING Brand Revenue Breakdown by Geography International Market 1.1% 1.1% Northern 43.7% 14.8% 43.7% Eastern 37.4% 37.4% 5.8% Southern 17.8% 17.8% 9.4% Domestic Market 98.9% 98.9% % % of of Total Total Growth 9
Slide 11: Business Review
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Slide 12: Changing Industry Landscape
Changing Industry Landscape Explosive Growth before 2008 *Size of the Sporting Goods Industry in China and Forecasts Per capita income grew to a new level RMB billion Beijing Olympics raised the enthusiasm for sports to unprecedented levels CAGR 30% CAGR 14% International brands entered China market
Slide 13: Changes in Business Model and Consumers' Needs
Changes in Business Model and Consumers’ Needs Cost Cost Increases Increases Drive Drive Polarization Polarization of of the the Market Market Characteristics of mainstream market Support premium pricing with Mainstream investments in branding and market products Characteristics of the transition ma
Slide 14: LI-NING's Choice – Highlight Sports DNA and Develop a Unique Personality
LI-NING’s Choice – Highlight Sports DNA and Develop a Unique Personality for the Brand Our Our Choice: Choice: Action Action Steps: Steps: Clearly defined brand positioning Real sports for real sports lovers anchored on sports categories Strengthen product innovation to cater to Target the mainstrea
Slide 15: Brand Revitalisation – A Systematic Approach to Brand Management
Brand Revitalisation – A Systematic Approach to Brand Management Consistency in Communications, Product and Retail Operations Brand Brand Essence Essence Brand Brand DNA DNA Brand Brand Positioning Positioning Brand Brand Personality Personality Brand Brand Manifesto Manifesto Inspiring Inspiring He
Slide 16: Brand Revitalisation – Distinctive Marketing Strategy
Brand Revitalisation – Distinctive Marketing Strategy to Strengthen Brand Association Category Sponsorship Resources Benchmark Chinese National Badminton Team Sport Chinese National Youth Badminton Team and several top provincial teams LI-NING LI-NING Singapore Badminton Team Brand Brand Key Busines
Slide 17: Brand Revitalisation – Leverage R&D Strength
Brand Revitalisation – Leverage R&D Strength to Create a Clearly Defined Product Mix New Product Collections Product Design and R&D Li Ning Sports Science Research and Development Center: Specialises in sports science research, product testing, research and development of core Urban Sports technolog
Slide 18: Brand Revitalisation – Upgrading of Retail Experience
Brand Revitalisation – An Across-the-Board Upgrading of Retail Experience Launched the sixth-generation stores to showcase the brand’s DNA Target mostly at metropolitan and 1st-tier cities to enhance the brand image As at 30 June 2010, there were 41 sixth-generation stores The majority of stores in
Slide 19: Promoting Sales Channel Reforms
Promoting Sales Channel Reforms Exerted more influence on distribution channels to drive market share No. of stores 2010-6-30 2009-12-31 2009-6-30 Focused on strengthening shopping mall/department store channels to drive single-store efficiency and competitiveness LI-NING 7,478 7,249 6,809 Explored
Slide 20: Flexible and Responsive Supply Chain Management
Flexible and Responsive Supply Chain Management Organized 2 trade fairs Continued to improve supply chain planning Optimised the procurement system and cost structure Improved corporate social responsibility guidelines for suppliers Developed distribution logistics for retail operations First phase
Slide 21: Multi-brand Strategy to Complete Product Offerings
Multi-brand Strategy to Complete Product Offerings Reinforced leadership in table-tennis sector Launched more than 100 new products An Italian sports fashion label completed defining the product design themes based on consumer preference studies and differentiation strategies Famous badminton brand,
Slide 22: Testing the Water in Niche Markets
Testing the Water in Niche Markets Fashion Lifestyle Brand e-Commerce LI-NING Kids’ Collection “LNG” and Mini Footwear Stores A sports-inspired fashion Integrate resources to Licensed business brand capture the fast-growing Target children and B2C business Sell single-category or teenagers aged 2-14
Slide 23: Prospects and Strategies
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Slide 24: Cautiously Optimistic Outlook
Cautiously Optimistic Outlook Market Outlook Opportunities and Challenges Competitive landscape Opportunities International brands appropriate more attention to Government policy continues to benefit the second- and third-tier cities, intensifying industry competition in the mid- to high-end price p
Slide 25: Reinforcing Leadership Position
Reinforcing Leadership Position Integrated Branding and Marketing Branding Branding Strategy Strategy Product Product Strategy Strategy Strengthen the Develop and expand positioning and strategic lines while personality of leveraging product the LI-NING brand capabilities Retail Retail Strategy Stra
Slide 26: Prospects, Missions and Core Values
Prospects, Missions and Core Values A world – leading brand in the Vision sporting goods industry Through sports, we inspire people the Mission desire and power to make breakthroughs Core Values Live for Dream Break-throughs Consumer oriented Integrity and Commitment Achieving excellence “We”Culture
Slide 27: Questions and Answers
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Slide 28: Investor Relations
Investor Relations http://www.lining.com http://www.li-ning.com http://www.irasia.com/listco/hk/lining/ http://www.hkex.com.hk Investor Relations Division Tel. : +86 212326 7366 E-mail: investor@li-ning.com.cn 27
Slide 29: Disclaimer
Disclaimer This presentation incorporates information contained in the interim results announcement (the “Results Announcement”) for the period ended 30 June 2010 of Li Ning Company Limited (the “Company”). This presentation should be read in conjunction with the Results Announcement and is qualifie