Li Ning Company Limited · HKEX:2331
Li Ning — H1 2004 Earnings Presentation
27 slides from Li Ning's earnings presentation, 2004
Slide 1: Interim Results 2004
jy Li Ning Company Limited SBE i 2 al Interim Results 2004
Slide 2: Agenda
Agenda Financial Highlights Operational Review Future Plans and Strategies Open Forum 1
Slide 3: Financial Highlights
TB Einanciat Highlights
Slide 4: Financial Summary
Financial Summary (RMB’ M) For the 6 months ended June 30 2003 2004 Change Turnover 519.4 788.7 +51.8% Gross profit 237.9 361.5 +52.0% Profit from operations 55.7 90.2 +61.9% Profit before taxation 53.2 88.3 +66.0% Profit for the period 37.6 56.2 +49.5% Basic earnings per share (RMB cents) 5.01 7.45
Slide 5: Rapid Turnover Growth
Rapid Turnover Growth Turnover Net Profit (RMB’M) (RMB’M) 1,400 120 1,200 756.8 100 1,000 56.4 80 2H 800 2H 60 788.7 600 56.2 40 400 519.4 1H 37.6 1H 200 1H 20 1H 0 0 2003 2004 2003 2004 Rapid financial growth driven by Expansion of sales channels and product range Increased advertising and prom
Slide 6: Promising Gross Margin & Net Margin
Promising Gross Margin & Net Margin Gross Margin Net Margin 55% 8.0% 50% 7.5% 7.2% 45.8% 45.8% 7.1% 45% 7.0% 40% 6.5% 35% 6.0% 1H2003 1H2004 1H2003 1H2004 Maintained gross margin and net margin at healthy level Benefited from strong growth in turnover Enhanced economies of scale and effective co
Slide 7: Turnover Growth by Product Categories
Turnover Growth by Product Categories (RMB’ M) For the 6 months ended June 30 2003 2004 Change Apparel 283.7 454.3 +60.2% Footwear 172.0 238.1 +38.5% Accessories 63.8 96.2 +50.8% Total 519.4 788.7 +51.8% Strong growth in sales of apparel driven by Expansion of product range and sales channels 6
Slide 8: Turnover Breakdown by Brands
Turnover Breakdown by Brands (RMB’M) 900 34.1 800 700 188.3% 600 11.8 500 400 754.6 300 48.6% 507.6 200 100 0 1H2003 1H2004 LI-NING KAPPA 7
Slide 9: Turnover Breakdown
Turnover Breakdown Turnover Breakdown in 1H2004 Turnover Breakdown in 1H2004 (By Region) (By Retail Format) KAPPA 4.3% Beijing & Shanghai International 9.9% International markets markets 2.4% 2.4% Northwestern region 2.9% Retail store sales Central 10.8% Northeastern region region 12.3% Concession 1
Slide 10: Key Financial Information
Key Financial Information (RMB’ M) As at As at 31 Dec 2003 30 June 2004 Change Inventories 296.2 286.3 - 3.3% Avg. Inventories Turnover (days) 143 124 - 19 Accounts Receivables 120.1 166.5 + 38.7% Avg. Accounts Receivables Turnover (days) 29 33 +4 Avg. Trade Payables Turnover (days) 75 71 -4 Short-t
Slide 11: Operational Review
Operational Review 10
Slide 12: 1H2004 Major Achievements
1H2004 Major Achievements Successfully listed on the Main Board of the SEHK Reinforced sales channels Opened 468 stores and further enhance market penetration Upgraded product design and development capabilities Set up a product design and development centre in Hong Kong Strengthened brand aware
Slide 13: Competitive Strengths
Competitive Strengths A leading sports brand in the PRC Unique market Extensive position and distribution and diversified product retail network range Abundant Professional sports marketing management team and sponsorship with motivated resources corporate culture 12
Slide 14: Extensive Distribution & Retail Network
Extensive Distribution & Retail Network LI-NING brand 31 Dec 2003 30 June 2004 change Franchised retail outlets 1,722 2,099 +21.9% Directly managed retail stores 87 105 +20.7% Directly managed concessions 176 217 +23.3% Total 1,985 2,421 +22.0% KAPPA brand Franchised retail outlets 144 180 +25.0% Di
Slide 15: Diversified Product Range
Diversified Product Range Continue to expand range of sporting products Launched and promoted new specialised footwear series for Footwear distinct sports categories such as soccer, baseball, tennis, running and fitness Sportswear Launched professional ‘Tie’ series soccer shoes designed for famous
Slide 16: Effective Marketing & Promotion Activities
Effective Marketing & Promotion Activities Sponsored the Chinese sports delegation for the 2004 Athens Summer Olympic Games Sponsored various major Chinese national sports team LI-NING’s advertising slogan “Anything is possible” is widely recognised in the market New advertising series – “LI-NING: F
Slide 17: Participation in 2004 Athens Summer Olympic Games
Participation in 2004 Athens Summer Olympic Games LI-NING is the official partner of the Chinese Olympic Committee and sponsored the Chinese National teams in the Games Olympic Games boosted brand equity and stimulated purchase of sports apparel, sales figures in July and August were encouraging Rec
Slide 18: Sports Sponsorship in 2004 Athens Summer Olympic Games
Sports Sponsorship in 2004 Athens Summer Olympic Games 17
Slide 19: Future Plans & Strategies
a : ; » Future Plans & Strategies a | 18
Slide 20: Future Strategies
Future Strategies Fortify sales channels and distribution infrastructure Roll out plan for Open over 1,000 retail outlets from 2004 to 2006 new retail outlets Improve store locations and launch flagship stores Total in 1st-tier cities 2004 2,800 2005 3,200 Modernise and upgrade store image 200
Slide 21: Future Strategies
Future Strategies Strengthen brand awareness and loyalty Launch specialised footwear series for soccer, basketball, tennis, etc. Conduct advertising campaigns to increase mass appeal Capture business opportunities emerging from the 2008 Beijing Olympic Games Enhance supply chain management A
Slide 22: Vision, Mission & Core Values
Vision, Mission & Core Values Vision Creating and providing quality sporting goods for people pursuing a healthy lifestyle and enjoy sports Mission Core Values Becoming the leader in the Passionate pursuit of: China’s sports industry and Excellence operator and owner of Professionalism international
Slide 23: Open Forum
Open Forum 22
Slide 24: Appendix
Appendix 23
Slide 25: About LI-NING
About LI-NING The Leading Sports Brand in the PRC Established by Mr. Li Ning in 1989 Dominant player in PRC’s branded sporting goods industry LI-NING is one of the leading sports brands: Most “easy-to-purchase” Offers the best “value for money” One of the top tier brands in terms of customer s
Slide 26: Business Overview
Business Overview Sales and marketing of LI-NING branded sports products: Product design, marketing, and research development Retail sales Supply chain management and distribution Product portfolio includes: Sports footwear Sports and leisure apparel Sports accessories Sales and marketin
Slide 27: Shareholding Structure
Shareholding Structure Mr. Li Ning Senior Other founding Tetrad CDH Public and his family management shareholders (Note 2) (Note 3) (Note 4) members team (Note 1) 42.719% 9.977% 3.575% 15.185% 3.544% 25.000% Li Ning Company Limited Sales, marketing and Licensing of distribution of the international