361 Degrees International Ltd. · HKEX:1361
361 Degrees International — FY2016 Earnings Presentation
37 slides from 361 Degrees International's earnings presentation, March 2017
Slide 1: 361 Degrees International Limited 2016 Annual Results
361 Degrees International Limited （Stock code: 1361:HK） 2016 Annual Results March 2017
Slide 2: Disclaimer
Disclaimer These presentation slides have been prepared by 361 Degrees International Limited (the “Company”) solely for us during its presentation held in connection with its interim results for the year ended 31 Dec 2015 and may not be reproduced or redistributed. In particular, these presentation
Slide 3: Agenda
1 Operating Strategies 2 Financial Highlights 3 Operational Highlights 4 Outlook 5 Appendix 6 Q&A 2
Slide 4: Operating Strategies
Operating Strategies
Slide 5: Operating Strategies
Operating Strategies Steadily increase The golden decade of dividend payout China’s sports industry ≥40% No. 11 Guidance〔2015〕No. 46 Guidance〔2014〕 issued by the State issued by the State Council Council Rapid growth of five business segments International 361°Core Brand 361°Kids One Degree Beyond H
Slide 6: Financial Highlights
Financial Highlights
Slide 7: Key Financial Highlights
Key Financial Highlights For the year ended 31 December RMB mn 2016 2015 Change Revenue 5,022.7 4,458.7 +12.6% Gross profit 2,109.9 1,823.0 +15.7% Operating profit 949.3 914.7 +3.8% Profit attributable to equity shareholders 402.7 517.6 -22.2% Net profit excluding the one-off loss on 457.7 517.6 -11
Slide 8: Revenue
Revenue RMB mn Gross margin (%) 6,000 42.0% 45% 40.9% 40% Revenue increased by 12.6％ to 5,000 RMB5,022.7million, mainly a 35% reflection of 2016 trade fair order growth 4,000 30% 25% Gross margin increased to 42.0% 3,000 20% 5,022.7 4,458.7 2,000 15% 10% 1,000 5% 0 0% 2015 2016 7
Slide 9: Overall Revenue Mix
Overall Revenue Mix 2.1% 13.2% 13.0% 2.0% 1.9% Footwear 42.3% 43.9% 2015 Apparel 2016 RMB4,458.7 mn Accessories RMB5,022.7 mn 361°Kids Others 42.5% 39.1% Footwear 17.0% Apparel 3.7% Kids 10.6% Accessories 7.2% 8
Slide 10: Revenue Analysis – by Product
Revenue Analysis – by Product Footwear Apparel RMB mn Gross margin (%) RMB mn Gross margin (%) 2,500 50% 2,500 50% 41.5% 43.0% 40.9% 40.9% 2,000 40% 2,000 40% 1,500 30% 1,500 30% 2,204.7 1,000 20% 1,000 1,966.2 20% 1,884.8 1,895.9 500 10% 500 10% 0 0% 0 0% 2015 2016 2015 2016 Footwear Apparel Both
Slide 11: Revenue Analysis – 361°Kids
Revenue Analysis – 361°Kids RMB mn Gross margin (%) 361°Kids 700 60% Sales volume increased by 14.9% 600 whereas the AWP dropped by 3.8%; 50% mainly because a higher proportion 43.5% of summer apparels with lower 500 41.0% AWP were ordered and delivered 40% 400 The gross profit margin was pushed
Slide 12: Operating Expenses Analysis
Operating Expenses Analysis Selling and Distribution Costs Administrative Expenses For the year ended 31 Dec For the year ended 31 Dec RMB mn RMB mn 2016 2015 Change 2016 2015 Change A&P 570.7 570.5 +0.03% R&D 187.4 139.6 +34.2% Depreciation 85.4 42.7 +100.0% Exhibitions 25.3 17.8 +42.3% Legal and 2
Slide 13: Operating Cash flow
Operating Cash flow For the year ended 31 Dec RMB mn 2016 2015 Operating profit 949.3 914.7 Change in inventories 11.4 18.1 Change in trade and bills receivables 269.6 (596.9) Change in trade and other payables 60.4 (152.2) Change in deposits, prepayments and other (20.5) 256.6 receivables Taxes pai
Slide 14: Working Capital Cycle
Working Capital Cycle Turnover days As of 31 Dec 2016 As of 31 Dec 2015 Change 69 78 -9 Inventories 163 160 +3 Trade and bills receivable 156 169 -13 Trade and bills payable 76 69 +7 Overall working capital 13
Slide 15: Balance Sheet Highlights
Balance Sheet Highlights RMB mn As at 31 Dec 2016 As at 31 Dec 2015 Change Current assets 9,034.0 7,354.8 +22.8% Current liabilities 2,343.1 1,930.4 +21.4% Net current assets 6,690.9 5,424.3 +23.3% Current asset ratio (times) 3.9 3.8 +0.1 times Equity attributable to owners of the 5,303.3 5,282.6 +0
Slide 16: Trade Debtors and Ageing Analysis
Trade Debtors and Ageing Analysis As at As at RMB ’000 Amount of trade debtors 31 Dec 2016 31 Dec 2015 and bills receivable reduced Trade debtors 2,093,569 2,097,831 by RMB31.9 million Less: Allowance for doubtful debts (56,655) (80,155) Confidently written back 2,036,914 2,017,676 RMB23.5 milli
Slide 17: Maintain a Strong Financial Position
Maintain a Strong Financial Position As at As at RMB ’000 31 Dec 2016 31 Dec 2015 Pledged bank deposits 185,580 122,026 Deposits with bank with maturities > 3mths 2,537,113 1,500,000 Cash and cash equivalents 2,881,632 2,286,225 Total cash 5,604,325 3,908,251 Bank loans 76,236 15,116 Senior unsecure
Slide 18: Operational Highlights
Operational Highlights
Slide 19: 361°Sales Network
361°Sales Network Sales Network Northern region 2,519 Western region 1,320 Eastern region 1,504 Approximately 1,340 composite stores Total Southern region 6,357 1,014 First-tier cities 2014 2015 2016 8.4% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Second-tier cities Openings 159 352 404 469 249 249 265 264
Slide 20: 361°Operational Data
361°Operational Data Number of Stores & SSSG Channel Inventories (times) (No. of Stores) (SSSG) 5,000 10% 4.4 4,155 4.3 4,068 3,916 4,097 3,819 3,772 3,707 3,864 3,749 4.3 4,000 3,539 3,509 3,543 8% 4.2 4.2 4.2 4.2 4.2 4.2 8.1% 7.9% 4.2 3,000 7.2% 7.2% 7.3% 7.5% 6% 4.1 4.1 4.1 4.1 7.0% 6.3% 4.1 5.5%
Slide 21: Building the 361°Brand
Building the 361°Brand The 361°Group generally spends between 11-13% of its revenue on brand promotion Major International Events Sponsorships 2010 2011 2014 2016 2010 Asian Games in World University Nanjing Youth Olympic Games Rio Olympic Games Guangzhou Games Asian Games in Incheon Paralympic Ga
Slide 22: Building the 361°Brand (cont’d)
Building the 361°Brand (cont’d) Apart from sports events sponsorships, the Group also promotes its brand through professional sports teams sponsorships and celebrity endorsements Professional Sports Teams Sponsorships Chinese National Swimming Team Chinese National Cycling Team Swedish National Cu
Slide 23: 361°Kids Operational Data
361°Kids Operational Data Sales network Revenue (RMB million) 651.2 Northern region 588.9 616 507.5 Western region 420.4 313 370.1 Eastern region 238.7 596 Southern region 37.6 Total: 2,000 475 (1) (1) 2010 2011 2012 2013 2014 2015 2016 921 in Composite 2014 2015 2016 2017 stores First-tier cities Q
Slide 24: 361°Kids Brand
361°Kids Brand Brand Philosophy ：One Extra Degree of Passion, One Extra Piece of Hope. 361°Kids advocates a happy, healthy and optimistic childhood, and strives to provide comfortable wearing experiences for children between the ages of 3 and 12 Generally regarded as a leading kids’ brand in China a
Slide 25: 361°High-end Product Line— For International Market
361°High-end Product Line— For International Market Revenue % of revenue (RMB mn) 100 10.0% 80.7 Nominated as “Best Buy” by Runner’s World in 2015 50 44.7 5.0% 1.6% 1.0% Praises of 0 0.0% Products 2015 2016 Sensation Strata By the end of 2016, the Group has 1,017, 264, 67, and 20 points of sales i
Slide 26: 361°High-end Product Line—International Promotion
361°High-end Product Line—International Promotion 361°will be the sports gear and equipment sponsor for Mr. Kai Markus, a German runner. 361°will provide running shoes, training apparel, accessories and other support necessary to Kai and his team Kai will run from Hamburg, Germany to Shanghai, C
Slide 27: 361°High-end Outdoor JV Brand—ONE WAY
361 °High-end Outdoor JV Brand—ONE WAY Revenue % of Revenue 58 self-operated outlets in cities in China by the end of 2016 (RMB mn) ONE WAY successfully sponsored the Chinese skiing team at Asian Winter 40 5.0% Games 31.6 30 4.0% ONE WAY builds its brand in the Greater China through: 3.0% En
Slide 28: 361°E-commerce Business
361°E-commerce Business official website Tmall flagship store Jingdong flagship store In August 2016, the Group switched the distribution model of the e-commerce platform to self-operation Target Contribution by acquiring 80% equity interest of its sole e- commerce distributor 20% For the four m
Slide 29: Outlook
Outlook
Slide 30: Enormous Potential for Future Growth of the Industry
Enormous Potential for Future Growth of the Industry 2011-2021 Market size of China’s sports apparel market (RMB bil) 300 269.6 252.3 250 235.2 218.5 81.3 202.2 76.7 200 186.6 71.7 167.0 66.4 10.1 148.3 60.9 9.1 141.8 139.2 134.7 55.4 8.2 49.6 150 47.6 7.6 46.0 7.0 42.2 38.1 37.0 40.7 6.5 38.3 36.4
Slide 31: Favorable Government Policies
Favorable Government Policies Since 2014, the Chinese government has promulgated a series of policies related to sports. The favorable policies led to the rising trend of “mass sports participation”, and the sports industry became a huge market with massive growth potential 2014 No. 46 Guidance is
Slide 32: Appendix
Appendix
Slide 33: 361°Brand Positioning
361°Brand Positioning Premium 10 ONE WAY 8 6 361°International 4 2 361°International Fashion -10 -8 -6 -4 -2 0 2 4 6 8 10 Performance -2 -4 -6 361°Core Brand 361°Kids -8 -10 Mass Market Brand Brief Introduction Market An integrated international sportswear brand that engages in brand, R&D, design, A
Slide 34: Mature and Effective Distributor Business Model with Unique Marketing Strategy
Mature and Effective Distributor Business Model with Unique Marketing Strategy Polarized Distribution Network Effective Distribution Network Management Experienced management team Brand Brand licensing once a year Management Reduce Strong profitable business model inventory Exclusive distrib
Slide 35: Established a Leading Position in the Industry as China’s Fastest-growing Sports Brand
Established a Leading Position in the Industry as China’s Fastest- growing Sports Brand 2014-2016 Comprehensive 2011-2013 upgrade Capital 2008-2010 enhancement As the first Chinese sports Further brand to sponsor the 2005-2007 development and Olympic Games, 361°was Established a joint venture expans
Slide 36: Constantly Enhance Product Functionality
Constantly Enhance Product Functionality The Group has obtained 210 patents as at 31 Dec 2016 Core independent R&D technology Quick Dynamic Defense SAC-air CD stretch mesh +1° COOL +1° LIGHT WARM NFO 3M reflective material +1° STRETCH +1° LITE Archlock Fabric +1° ANTI-UV +1
Slide 37: Q&A
Q&A
361 Degrees International — FY2016 Earnings Presentation on 6ix