Shenzhou International Group Holdings Limited · HKEX:2313
Shenzhou International — H1 2019 Earnings Presentation
25 slides from Shenzhou International's earnings presentation, August 2019
Slide 1: Interim Results 2019
INTERIM RESULTS 2019 August 2019
Slide 2: Agenda
Agenda Page 1 Financial Highlights 3 2 Business Review 12 3 Strategies and Plans 20 4 Open Forum 24
Slide 3: Financial Highlights
SHENZHOU INTERNATIONAL GROUP HOLDINGS LIMITED —4 FH} 0 BS ARES OR Dl STOCK CODE ARMS = 2313
Slide 4: Financial Highlights
Financial Highlights For the 6 months ended 30 Jun (RMB '000) 2019 2018 % Change Turnover 10,279,693 9,159,900 +12.2 Gross profit 3,174,879 2,956,863 +7.4 Profit attributable to equity holders 2,416,027 2,178,871 +10.9 Basic EPS (RMB) 1.61 1.45 +11.0 Interim dividend(HK$) 0.90 0.85 +5.9
Slide 5: Sales Analysis
Sales Analysis Turnover Profit Attributable to Equity Holders (RMB million) (RMB million) 15,000 3,000 12,000 2,416.0 2,500 2,178.9 10,279.7 9,159.9 2,000 9,000 1,500 6,000 1,000 3,000 500 0 0 1H 2018 1H 2019 1H 2018 1H 2019 Maintained satisfactory growth in revenue and achieved decent operating r
Slide 6: Net Profit to the Shareholders of Listed Co. Excluding Retail Business & Donation
Net Profit to the Shareholders of Listed Co. Excluding Retail Business & Donation 1H 2018 1H 2019 Change RMB ‘000 RMB ‘000 Net Profit to 2,178,871 2,416,027 10.90% Shareholders Retail Business Loss 26,315 82,944 Sharing 51% 13.30% 2,205,186 2,498,971 Donation (net of tax) 793 32,094 Net Profit (adju
Slide 7: Profit Margins Analysis
Profit Margins Analysis Gross Profit Net Profit Attributable to Equity Holders (RMB million) (RMB million) 4,000 32.3% 33% 30.9% 3,000 23.8% 23.5% 25.0% 3,174.9 2,956.9 2,416.0 2,500 3,000 2,178.9 20.0% 22% 2,000 15.0% 2,000 1,500 10.0% 11% 1,000 1,000 5.0% 500 0 0% 0 0.0% 1H 2018 1H 2019 1H 2018 1H
Slide 8: Dividend and Payout Ratio
Dividend and Payout Ratio (HK$) 2.0 60% 53.40% 53.36% 1.8 50.70% 50.67% 48.70% 49.32% 48.08% 50% 45.71% 46.55% 45.73% 1.6 1.4 0.85 40% 1.2 31.35% 30.62% 29.97% 29.60% 0.70 1.0 0.35 30% 0.35 0.8 0.35 0.20 20% 0.6 0.20 0.85 0.90 0.90 0.4 0.75 0.65 0.72 10% 0.50 0.50 0.55 0.2 0.35 0.36 0.15 0.16 0.20 0
Slide 9: Domestic and International Cotton Prices
Domestic and International Cotton Prices RMB/tonne 43,000 Domestic cotton (328) Price 38,000 CC Index 3128B Cotlook A 1% customs duties Cotlook A Sliding duties 33,000 28,000 23,000 1 18,000 13,000 8,000 Note 1: New cotton national standard GB1103-2012 has come into effect since September in 2013 an
Slide 10: Turnover Breakdown by Products
Turnover Breakdown by Products Growth in sportswear sales was mainly attributable to the increase in demand for garment products of sports brands in the US and mainland China market Increase in casual wear sales was driven by growing demand in procurement from Japan Revenue decreased by 35.8%
Slide 11: Turnover Breakdown by Regions
Turnover Breakdown by Regions Significant revenue growth in the US market was mainly due to the increase in demand for order for the Group’s sportswear products Recorded growth in the Japanese market due to the increase in procurement demand for causal wear and sportswear products European mar
Slide 12: Key Financial Indicators
Key Financial Indicators 2019.06.30 2018.12.31 2018.06.30 Inventory turnover days 139 124 140 Debtor turnover days 58 56 55 Creditor turnover days 23 21 28 2019.06.30 2018.12.31 2018.06.30 Gross gearing ratio (debt to equity) (%) 10.6 11.3 10.6 Current ratio (times) 4.3 3.7 3.9 Cash and cash equival
Slide 13: Inventories
Inventories 20 June 2019 31 December 2018 RMB ‘000 RMB ‘000 Raw materials 1,001,209 1,179,985 Work in progress 2,298,571 2,075,322 Finished goods 2,492,429 2,104,700 5,792,209 5,306,007 Provision (131,470) (122,575) 5,660,739 5,237,432
Slide 14: Inventories Turnover Days Analysis
Inventories Turnover Days Analysis 145 140 140 139 135 132 130 129 125 125 124 121 124 120 120 115 110 2015 June 2015 Dec 2016 June 2016 Dec 2017 June 2017 Dec 2018 June 2018 Dec 2019 June
Slide 15: Business Review
SHENZHOU INTERNATIONAL GROUP HOLDINGS LIMITED —4 FH} 0 BS ARES OR Dl STOCK CODE ARMS = 2313
Slide 16: Major Achievements in 1H2019: Expand overseas production capacity
Major Achievements in 1H2019 Further expand production capacities and productivity of overseas production base Effectively alleviating the pressure of insufficient production capability resulting from the increase in customer demand overseas factories has made significant progress in management,
Slide 17: Major Achievements in 1H2019: Enterprise development and environmental protection
Major Achievements in 1H2019 Achieve the coordination of enterprise development and environmental protection The Group started to expand the capacity of upstream fabric processes for domestic bases The Group is currently building more automated and Hang Seng Corporate Sustainability Index Series
Slide 18: Major Achievements in 1H2019: Automatic equipment application
Major Achievements in 1H2019 Focus on automatic equipment application to mitigate rising labour costs Promote the progress of science and technology and management, continue to deepen lean production and management and further improve the production efficiency to cope with the rising cost Achiev
Slide 19: Major Achievements in 1H2019: Investor relations
Major Achievements in 1H2019 Actively promote excellence in the investor relations Plant visit 2018 Annual Results Announcement Best IR by Company, CEO,CFO, IR Team, IRO, Investor Meeting(Large Cap) by HKIRA- total 6 IR Awards Successfully achieve transparency and effective communications with inv
Slide 20: Optimization of Product Structure
Optimization of Product Structure Sportswear customers Casual wear customers Strengthened cooperation with strategic customers by prioritizing the allocation of production resources and reducing the orders the Group obtained from small-to medium-sized customers, the Group also introduced certain q
Slide 21: Strategies & Plans
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Slide 22: Future Strategies
Future Strategies Promote science Enhancing product and technology innovation ability and management Effectively arrange & distribute order business Employee care of domestic and foreign production bases
Slide 23: Oversea New Garment Factories Expansion Planning
Oversea New Garment Factories Expansion Planning Vietnam Cambodia Area of land use right (sq. m.) 300,000 450,000 Employees Target 8,000 18,000 Employees Recruit 2,000 - Investment amount (USD million) 100 200 Starting operation Mid of 2019 1H 2020
Slide 24: Future Strategies: Outlook for 2019
Future Strategies The Group Holds an Optimistic View on 2019 Prospects Positive Automation and technological advancement Improved operation efficiency New capacity from Vietnam and Cambodia plants Depreciation of RMB against USD Yarn Price Decreasing Negative • Sino-US trade war • Increasi
Slide 25: Open Forum
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Shenzhou International Group Holdings — H1 2019 Earnings Presentation on 6ix