Gome Retail Holdings Limited · HKEX:493
Gome Retail — GOME Electrical Appliances Holding — Q1 2006 Earnings Presentation
28 slides from Gome Retail's earnings presentation, May 10, 2006
Slide 1: 1Q2006 Results Announcement
1Q2006 Results Announcement 10 10 May May 2006 2006 Strictly Strictly private private and and confidential confidential
Slide 2: Disclaimer
Disclaimer This presentation, the document containing materials for this presentation that has been supplied to you (the “Document”) and subsequent discussion may contain certain forward-looking statements with respect to the financial condition, results of operations and business of GOME. These for
Slide 3: 1. Summary Performance
1. Summary Performance
Slide 4: Network Coverage
Network Coverage Listco - Number of traditional stores Parent Group - Number of traditional stores 350 + 250 300 250 1 mega 259 291 200 + 3 digital 176 193 200 4 digital 150 150 144 100 79 56 100 32 47 50 24 50 11 14 0 0 2001 2002 2003 2004 2005 1Q06 2001 2002 2003 2004 2005 1Q06 Listco – City cover
Slide 5: Growth in Sales Area – Listco
Growth in Sales Area – Listco Total sales area at period end Weighted sales area during period 1,200,000 1,200,000 1,000,000 1,000,000 800,000 800,000 Sqm S qm 600,000 600,000 400,000 400,000 200,000 200,000 0 0 2001 2002 2003 2004 2005 1Q06 2001 2002 2003 2004 2005 1Q06 HK000JDC Confidential 5
Slide 6: Summary Financial Results
Summary Financial Results (RMB mm) Unaudited 1Q05 1Q06 Change Revenue 3,339 5,604 67.8% Gross Profit 315 512 62.4% Operating Profit 138 159 15.2% Net Profit (before MI) 126 153 21.7% Net Profit (after MI) 80 96 20.0% HK000JDC Confidential 6
Slide 7: Summary Financial Results
Summary Financial Results Unaudited 1Q05 1Q06 Change Gross Margin 9.44% 9.13% 0.31pt Other Operating Income Margin 3.62% 3.77% 0.15pt Operating Margin 4.13% 2.83% 1.30pt Net Margin (before MI) 3.78% 2.74% 1.04pt Net Margin (after MI) 2.41% 1.72% 0.69pt HK000JDC Confidential 7
Slide 8: Store Network by Region at the end of 1Q06
Store Network by Region at the end of 1Q06 Region Traditional Digital Region Traditional Digital Beijing 39 0 Fuzhou 19 0 Tianjin 21 0 Nanjing 9 0 Chengdu 23 1 Tangshan 3 0 Chongqing 15 0 Suzhou 3 0 Xian 11 0 Hefei 3 SHENYANG 0 Shenyang 14 0 Changzhou BEIJING 3 BENXI 0 Qingdao 11 1 Lanzhou 1 0 TIANJ
Slide 9: Progress of Store Rollout
Progress of Store Rollout Branch Office Traditional Mega Beijing 6 Sales Area Chengdu 3 Sheny ang 1 1 Qingdao 2 Jinan 1 Mar 31, 2005 Mar 31, 2006 Shenzhen 3 Guangzhou 4 Wuhan 2 Fuzhou 1 Period end Period end Nanjing 1 Tangshan 1 458,600 sqm 1,195,100 sqm Suzhou 1 Hef ei 1 Changzhou 2 Weighted Averag
Slide 10: 2. Revenue and Gross Profit Analysis
2. Revenue and Gross Profit Analysis
Slide 11: Revenue Composition Analysis
Revenue Composition Analysis By Products (Unaudited) 1Q05 1Q06 Small Electrical Digital Small Electrical Digital 8% Appliances 8% Appliances 10% Audio 11% Audio Computer Visual Visual 6% 32% Computer 32% 5% Telecommuni- Telecommuni- cations cations 15% Refrigerators 15% Refrigerators Air & Washing A
Slide 12: Revenue Growth Breakdown
Revenue Growth Breakdown (Unaudited, RMB mm) Change 1Q05 1Q06 (YoY) Audio Visual 1,066 1,799 68.8% Air Conditioners 326 546 67.4% Refrigerators & 641 1,079 68.1% Washing Machines Telecom. 514 858 66.8% Small Electrical 331 591 78.5% Appliances IT Products 207 306 47.8% Digital 250 425 70.5% HK000JDC
Slide 13: Revenue Breakdown Analysis
Revenue Breakdown Analysis By Region (Unaudited) 1Q05 1Q06 Beijing Beijing 20% 17% Others 32% Others Tianjin Tianjin 40% 9% 11% Chengdu 7% Shenzhen Chengdu Chongqing 12% 10% 5% Guangzhou Chongqing Shenzhen Guangzhou 9% 6% 12% 10% Total: RMB3,335 million Total: RMB5,604 million HK000JDC Confidential
Slide 14: Sales Efficiency
Sales Efficiency SSS 1Q05 1Q06 RMB3,112 RMB3,133 0.68% 111 stores million million % of total 93% 56% revenue Sales (RMB mm) 3,335 5,604 Weighted average sales area (sqm) 441,400 1,036,800 Sales/sqm (annualized; RMB) 30,200 21,600 28% HK000JDC Confidential 14
Slide 15: 3. Margin and Expense Analysis
3. Margin and Expense Analysis
Slide 16: Gross Profit Margin (By product category)
Gross Profit Margin (By product category) 16.00% - 0.25% -0.11% -0.22% -0.12% -0.74% -0.41% -0.38% -0.22% 14.00% 13.30% 1Q05 1Q06 12.56% 12.00% 9.93% 9.35% 9.83% 9.71% 10.00% 9.58% 9.31% 8.93% 9.13% 8.46% 8.35% 8.00% 7.60% 7.48% 6.00% 4.53% 4.12% 4.00% 2.00% 0.00% AV Products Air-conditioners Refige
Slide 17: Other Operating Income Assessment
Other Operating Income Assessment Other Operating Income 1Q06 Composition Other Operating Other Operating Income/ Income Total Revenue Management & (RMB mm) (%) Purchasing Service 250 5.0% Fee from Parent 3.77% 23% 200 3.62% 4.0% Promotion Others Income 6% 43% 150 3.0% Product Listing Fee 6% 100 2.0
Slide 18: Operating Expenses Breakdown
Operating Expenses Breakdown (RMB’000) Selling & Distribution Administrative Other Operating 600,000 10.07% 0.48% 500,000 1.86% 400,000 8.93% 300,000 0.40% 1.65% 7.73% 200,000 100,000 6.88% 0 1Q05 1Q06 HK000JDC Confidential 18
Slide 19: Selling & Distribution Expenses Analysis
Selling & Distribution Expenses Analysis (RMB’000) 450,000 7.73% 400,000 0.98% Others 350,000 0.81% Utilities 300,000 1.29% Advertising & 250,000 6.88% 0.45% Promotion 0.86% 200,000 Distribution 0.61% 1.43% 150,000 1.41% 0.36% Salaries 100,000 1.14% 2.86% Rent 50,000 2.41% 0 Confidential 1Q05 1Q06 1
Slide 20: Administrative Expenses Analysis
Administrative Expenses Analysis (RMB000) 110,000 1.86% 100,000 90,000 80,000 1.01% 70,000 Others 60,000 1.65% Salaries 50,000 40,000 0.91% 30,000 0.85% 20,000 10,000 0.74% 0 1Q05 1Q06 HK000JDC Confidential 20
Slide 21: Other Operating Expenses Analysis
Other Operating Expenses Analysis (RMB000) 28,000 0.48% 0.01% 24,000 20,000 0.20% Others 16,000 0.40% 0.01% Business Tax 12,000 0.18% 8,000 0.28% Bank Charges 4,000 0.21% 0 1Q05 1Q06 HK000JDC Confidential 21
Slide 22: Overview of Financial Position
Overview of Financial Position (RMB mm) Cash Pledged deposit 2,270 3,292 Inventory Inventory Turnover 2,313 44 days Accounts Payable Accounts Payable Days 2,171 35 days Bills Payable Bills Payable Days 5,322 91 days HK000JDC Confidential 22
Slide 23: 4. 2006 Initiatives
WIS 4 2006 Initiatives Agzee
Slide 24: Business Targets in 2006
Business Targets in 2006 Enhancing network coverage: Rapid build-out in Yangtze River Delta Strength consolidation in key markets: Beijing, Tianjin, Guangzhou, and Shenzhen Improvement in Chongqing and Chengdu Expansion into new markets Strengthening store network – attrition of weak stores Improvin
Slide 25: Improving Core Retail Competencies
Improving Core Retail Competencies Action plan Objectives Store operating efficiency Store competitiveness Store level cost control Optimization of SKUs Differentiation Relations with key suppliers Promotion and management of the GOME brand Brand loyalty Analysis and utilization of membership data C
Slide 26: Strength Building on Growing Platform
Strength Building on Growing Platform Revenue Combined gross profit 20,000 Gross profit (RMBm) 3,000 15,000 2,500 2,000 RMBm 10,000 1,500 17,959 2,392 12,647 1,000 5,000 9,356 1,703 5,604 500 972 3,339 723 436 0 0 2003 2004 2005 1Q05 1Q06 2003 2004 2005 1Q05 1Q06 Operating profit Net profit (Before
Slide 27: Our Key Challenges
Our Key Challenges Revenue growth Mitigate competitive pressure and accelerate growth Sale efficiency Maintain +ve SSS and moderate decline in sales/sqm Implement tight cost control and improve sales Cost ratio performance Management Differentiate GOME from competition through initiatives successful
Slide 28: Summary – GOME Investment Highlights
Summary – GOME Investment Highlights GOME Group – No. 1 electrical appliance retailer in China Industry leader Unrivalled nationwide coverage with superior brand recognition First mover into 2nd tier cities – the next phase of growth Store level control and management Focus on Dedicated resources to
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