Li Ning Company Limited · HKEX:2331
Li Ning — FY2010 Earnings Presentation
29 slides from Li Ning's earnings presentation, March 2011
Slide 1: Annual Results 2010
Annual Results 2010 March 2011
Slide 2: Financial Highlights, Review of Strategies, Business Review, Outlook
Financial Highlights Review of Strategies Business Review Outlook & Future Strategies Open Forum 1
Slide 3: Financial Highlights
Slide 4: Revenue, Operating Profit, Profit and EPS 2004-2010
Revenue Operating profit RMB (million) 9,478.5 RMB (million) 8,386.9 1,546.8 CAGR 31.0% CAGR 43.1% 1,341.9 6,690.1 960.2 4,348.7 3,180.5 609.9 2,450.5 402.5 1,878.1 271.5 180.4 2004 2005 2006 2007 2008 2009 2010 2004 2005 2006 2007 2008 2009 2010 Profit attributable to equity holders Earnings per sh
Slide 5: FY2010 Income Statement Highlights
For the year ended 31 December (RMB Million) FY2010 FY2009 Change Revenue 9,478.5 8,386.9 +13.0% Gross Profit 4,481.6 3,969.9 +12.9% Operating Profit 1,546.8 1,341.9 +15.3% EBITDA 1,759.2 1,524.9 +15.4% Profit attributable to equity holders 1,108.5 944.5 +17.4% Earnings per share (RMB cents) 105.84
Slide 6: Margins and Expense Ratios
For the year ended 31 December FY2010 FY2009 Change Gross Profit Margin 47.3% 47.3% 0 Operating Profit Margin 16.3% 16.0% +0.3p.p. Margin of profit attributable to equity 11.7% 11.3% +0.4p.p. holders R&D Expenses (as % of revenue) 2.6% 2.7% -0.1p.p. A&P Expenses (as % of revenue) 15.1% 15.4% -0.3p.p
Slide 7: ROE, ROA, CAPEX and Working Capital Turnover
Average Average Inventory Turnover Cash Conversion Trade Receivables Trade Payables (Days) Cycle (Days) Turnover (Days) Turnover (Days) 69 70 71 61 53 52 48 47 52 40 30 33 2008 2009 2010 2008 2009 2010 2008 2009 2010 2008 2009 2010 For the year ended 31 December FY2010 FY2009 Change Return on Equity
Slide 8: Cash, Net Cash and Current Liabilities
As at 31 December (RMB million) FY2010 FY2009 Change Cash and Cash Equivalents 1,470.4 1,264.2 +16.3% Bank Borrowings 312.2 260.0 +20.1% Net Cash* 1,158.2 1,004.2 +15.3% Current Liabilities 2,371.6 1,864.9 +27.2% Current Ratio (times) 1.8 1.7 +0.1 Total Liabilities to Total Assets Ratio 45.8% 46.8%
Slide 9: LI-NING Brand Revenue Breakdown by Product Category
LI-NING Brand Revenue Breakdown Revenue from LI-NING brand by Product Category to the Group total 6.0% 5.6% 7.9% 8.3% 43.8% 45.2% 92.1% 91.7% 50.2% 49.2% LI-NING brand apparel LI-NING brand footwear Revenue from LI-NING brand LI-NING brand accessories/ equipment Revenue from other brands FY2010 FY20
Slide 10: Revenue by Region and Market
Northern 42.2% 42.2% 16.5% Eastern 38.0% 38.0% 9.9% Southern 18.4% 18.4% 12.6% Domestic International Market Market 98.6% 98.6% 13.2% 1.4% 1.4% 48.9% Growth % % of of Total Total 9
Slide 11: Review of Strategies
Slide 12: Core Strategy: Essence of Sports + Brand Strength
Core Strategy: Essence of Sports + Brand Strength Essence of Sports 1. Use sports to inspire Brand Strength people’s desire and 1. Focus on brand power to strike enhancements and product breakthroughs innovation 2. Real sports for real sports 2. Compete on differentiation lovers Our core strategy su
Slide 13: Demand-Side and Supply-Side Market Changes
Demand-Side Supply-Side Competition intensifies Market growth softens People’s passion for sports began waning after the 08 International brands step up their pace in penetrating Beijing Olympics, cooling growth in the market into lower-tier cities 2011 projected industry growth: 13-14% Most domesti
Slide 14: Initiate Adjustments to Prepare for Change
Our choice – Further create brand premium to grab mainstream market share in mainstream market Brand innovation Product innovation Initiate adjust ments to get pre pared for cha Our solution nge Brand revitalisation – establish brand personality Channel reforms – enhance profitability of distributor
Slide 15: Brand Revitalisation Initiated in June 2010
On the back of changes in the market environment, the Company seized the market opportunity and initiated the brand revitalisation exercise in June 2010 after a three-year preparation Infuses new energy to the brand and solidifies LI-NING’s position as a professional sporting goods brand, further di
Slide 16: Achievements and Areas for Improvement
Achievement Areas for improvement New logo awareness meets target New consumer numbers remained insignificant High brand preference among core consumer group Message delivered to consumers at all stages, from brand (Generation 1 creator) positioning to creative execution, is not clear enough Further
Slide 17: Sustainable Growth Model Through Retail Efficiency
Improve economies of Optimize product life Help distributors/ Enhance distributors/sub- scale at the retail level cycle management sub-distributors alleviate distributors’ retail escalating cost pressures management capability Advance consolidation Rationalise store Offer more wholesale Enhance prof
Slide 18: Business Review
Slide 19: Channel, Branding, Design and R&D, Supply Chain
Channel Branding Design and Supply Chain R&D 18
Slide 20: LI-NING Brand Store Numbers and Future Target
LI-NING brand store numbers and future target 9,400 10,000 8,900 As at the end of 2010 8,300 7,915 8,000 7,249 LI-NING Sixth Factory Flagship 6,245 brand stores Generation Outlet Stores 6,000 5,233 4,297 Stores 4,000 3,373 2,622 Number 58 133 9 2,000 0 E E E 04 05 06 07 08 09 10 11 12 13 20 20 20 20
Slide 21: Sponsored Athletes, Teams and Tournaments
Running (Track & Basketball Tennis Fitness Badminton Football Olympic Champion Field) Teams Top-notch Elena Isinbayeva Shaquille O’Neal Marin Cilic Lesmills Chinese National Chinese National Table sports Asafa Baron Davis Ivan Ljubicic Badminton Team Tennis Team teams/athlet Powell Jose Calderon Pen
Slide 22: Product R&D and Design; Supply Chain Management
Product R&D and Design Supply Chain Management Customised professional gear for the Chinese Completed the architectural design blueprint of National Badminton Team “LI-NING Logistics Centre” in Jingmen Industrial City. Scheduled for trial operation in end-2011 Partnered with Australia’s SKINS and la
Slide 23: Outlook and Strategies
Slide 24: Branding, Channel, Human Resources and Product Strategies
Branding Channel Deepen distribution reform Ensure consistency in brand communications and enhance retail efficiency Strengthen consistency across brand and product Enhance profitability of distributors/sub- concepts and creative execution so as to raise distributors efficiency Effectively implement
Slide 25: 2011 Outlook: Revenue Pressure and Margin Guidance
Short term pressure on revenue growth as Projected order growth rates for LI-NING brand reform measures will bring temporary pain to trade fairs in 2011Q3 and 2011Q4 will be lower the Group. than those of the two preceding quarters Exercise gross profit margin management by: 1. Gross profit margin t
Slide 26: Vision, Mission, Core Values
Vision A world-leading brand in the sporting goods industry Mission Through sports, we inspire people the desire and power to make breakthroughs Core Values Live for Dream Breakthroughs Consumer oriented Integrity and commitment Achieving excellence “We” Culture 25
Slide 27: Q&A
Slide 28: Investor Relations Department
http://www.lining.com http://www.li-ning.com http://www.irasia.com/listco/hk/lining/ http://www.hkex.com.hk Investor Relations Department Tel : +86 212326 7366 E-mail : investor@li-ning.com.cn 27
Slide 29: Disclaimer
This presentation incorporates information contained in the annual results announcement (the “Results Announcement”) for the period ended 31 December 2010 of Li Ning Company Limited (the “Company”). This presentation should be read in conjunction with the Results Announcement and is qualified in its