Li Ning Company Limited · HKEX:2331
Li Ning — H1 2006 Earnings Presentation
29 slides from Li Ning's earnings presentation, August 2006
Slide 1: 2006 Interim Results Corporate Presentation
Stock Code: 2331 2006 INTERIM RESULTS Corporate Presentation August 2006 0
Slide 2: Agenda
Agenda Financial Highlights Review of Operations Future Outlook and Strategies Open Forum 1
Slide 3: Financial Highlights
Financial Highlights 2
Slide 4: Financial Highlights
Financial Highlights For the six months ended 30 June 1H2006 1H2005 Change (RMB Mn) (RMB Mn) Turnover * 1,371.9 1,104.3 24.2% Gross profit 683.6 530.6 28.8% Operating profit 172.5 113.2 52.4% Profit attributable to equity holders 129.9 78.3 65.9% Basic EPS (RMB cents) 12.66 7.65 65.3% Interim DPS (R
Slide 5: Strong Turnover Growth
Strong Turnover Growth Boosted by strong product sales, in particular LI-NING brand footwear which surged by over 49.9% Rapid network expansion propelled product penetration and drove sales growth Store Expansion 1H2006 Sales Breakdown 1H 2006 1H 2005 Change LI-NING Stores 3,630 3,058 18.7% LI-NING
Slide 6: Margin Overview
Margin Overview Margin Overview 60% 20% Gross profit margin Margin expansion attributable to: Continual enhancement in product 49.8% 15% design contributed to maintaining 48.1% 40% 45.8% high gross margin Efficient supply chain and logistics Net profit margin 10% management 9.5% 20% Continual improv
Slide 7: Key Financial Indicators
Key Financial Indicators As at 30 June 1H2006 1H2005 Change Inventory Turnover (days) 77 97 -20.6% Avg. A/R Turnover (days) 58 39 48.7% Avg. Trade Payables 66 65 1.5% Turnover (days) R&D Expenses 3.0% 3.8% -0.8% (as % to cost of sales) A&P Expenses 17.5% 15.7% 1.8% (as % to turnover) 6
Slide 8: Strong Balance Sheet
Strong Balance Sheet (RMB Mn) 1H2006 FY2005 Change Cash and Cash Equivalents * 781.6 731.5 6.8% Current Ratio (times) 3.2 3.6 -0.4 Short-term Liabilities Nil Nil N/A Long-term Liabilities Nil Nil N/A Net Cash** 781.6 731.5 6.8% Total Liabilities to 29.5% 25.6% 3.9% Total Assets Ratio * Including fix
Slide 9: Sustainable and Remarkable Growth
Sustainable and Remarkable Growth Turnover (RMB Mn) Profit attributable to equity holders (RMB Mn) 1,600 160 1,371.9 129.9 1,200 8.2 % 1,104.3 120 1.2 % R: 3 : 5 CA G AGR C 78.3 800 788.7 80 519.4 54.9 37.6 400 40 0 0 1H2003 1H2004 1H2005 1H2006 1H2003 1H2004 1H2005 1H2006 Basic EPS chart (RMB cents
Slide 10: Review of Operations
Review of Operations 9
Slide 11: A Multi-brand Operator
A Multi-brand Operator Li-Ning SHAQ Strategic Principal Brand Co-branding Cooperation 10
Slide 12: Product Strategy Supported by Cost-effective Marketing
Product Strategy Supported by Cost-effective Marketing Running Basketball Soccer Tennis Fitness 11
Slide 13: Cooperation with Shaquille O'Neal
Cooperation with Shaquille O’Neal Strengthened the competitiveness of the LI-NING brand in the middle- to high-end market while enhancing its influence in the international arena 5-year cooperation agreement with Shaquille O’Neal in the greater China market (Hong Kong, Macau and Taiwan inclusive) 12
Slide 14: Basketball Strategic Alliances with NBA
Basketball Strategic Alliances with NBA Enhanced international profile and professional image of the LI- NING brand Joint marketing campaigns with NBA Jam Van tour in China Entered into agreement with two NBA stars to become the first- ever Chinese sports brand featured in NBA league games 13
Slide 15: Soccer Sponsorship for CUFL
Soccer Sponsorship for CUFL 10-year cooperation with the Federation of University Sports of China Jointly launched the new LI-NING China University Football League (“CUFL”), which involves the largest number of universities with the highest level of skills and exerts the most extensive influence in
Slide 16: Cooperation with ATP
Cooperation with ATP Strengthened promotion of products with professional features 7-year cooperation agreement with Associate Tennis Professional (“ATP”) as an Official partner of ATP in the greater China market (Hong Kong, Macau and Taiwan inclusive) Exclusive franchise rights to Li Ning Join hand
Slide 17: Running Sponsorship for Professional Athletic Teams
Running Sponsorship for Professional Athletic Teams Enhanced professional image for the running series Sponsorship for the domestic and overseas professional athletic teams National Athletic Team of the Republic of Sudan Running teams of Shandong and Gansu provinces 16
Slide 18: Product Design and Development
Product Design and Development Remarkable improvements in design capabilities through recruiting new designers with international exposure Steffen Aas Alan Yip Chief Designer Accessories of Apparel Designer Function Ruby Li Sports Fashion Silvio Chan Zhang Meiyi Creative Executive Sports Life Superv
Slide 19: 4th Generation Stores
4th Generation Stores 18
Slide 20: JV with AIGLE
JV with Developed a multi-brand business and enhanced overall competence Established a long-term alliance via the formation of a joint venture with exclusive rights to manufacture, market, distribute and sell AIGLE products for 50 years Opened a total of 21 AIGLE stores (as at 30 June 2006) 19
Slide 21: Supply Chain Management
Supply Chain Management Organized 2 large-scale trade fairs for distributors to shorten the lapse between product development and order placements Reformed the traditional supply chain model with advanced information technology systems E-POS system to exercise stringent inventory control and acceler
Slide 22: Future Plans and Strategies
Future Plans and Strategies 21
Slide 23: Future Strategies
Future Strategies Increase Network market Expansion penetration Branding Multi-brand Operator Strengthen product Products R&D 22
Slide 24: Multi-brand Operator
Multi-brand Operator Seek opportunities for long-term cooperation with reputable international brands Facilitate the entry of international brands into the PRC market Develop into a multi-brand operator with a portfolio of reputable sports brands 23
Slide 25: Product R&D
Product R&D Continue to focus on footwear and apparel products Enrich product portfolio, focusing on the five target product series: running, basketball, soccer, tennis and fitness Improve product quality and technology Launch the newly patented “LN ARCH” series in Fall 2006 24
Slide 26: Network Expansion
Network Expansion Increase the number of LI-NING retail outlets to 5,100 outlets by the end of 2008 Launch flagship stores at prime locations in metropolitan and 1st tier cities Increase penetration in 2nd and 3rd tier cities Li Ning Retail Outlet Expansion Plan As at year end date Total 2006 4,100
Slide 27: Vision, Mission & Core Values
Vision, Mission & Core Values Vision A world’s leading brand in the sports goods industry Core Mission Values Through sports, Integrity, we inspire in people professionalism, the desire and power to passion, make breakthroughs breakthroughs, and trust 26
Slide 28: Open Forum
Open Forum 27
Slide 29: IR Contact
IR Contact To know more about Li Ning Company Limited, please visit http://www.lining.com http://www.irasia.com/listco/hk/lining/ http://www.hkex.com.hk For enquiries, please contact: WANG Yong Investor Relations Manager Tel: +86 21 5879 7298 Email: yong.wang@lining.com 28