Li Ning Company Limited · HKEX:2331
Li Ning — FY2021 Earnings Presentation
44 slides from Li Ning's earnings presentation, March 2022
Slide 1: Annual Report
ANNUAL REPORT
Slide 2: Disclaimer
LI-NING · ·LI-NING · DISCLAIMER This presentation incorporates information contained in the annual results announcement (the “Results Announcement”) for the year ended 31 December 2021 of Li Ning Company Limited (the “Company”). This presentation should be read in conjunction with the Results Announ
Slide 3: LI-NING · ·LI-NING ·
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Slide 4: Results Highlights
Results Highlights
Slide 5: 2021 Financial Highlights
2021 ANNUAL REPORT RESULTS HIGHLIGHTS 2021 FINANCIAL HIGHLIGHTS ✦ Net profit attributable to equity holders increased by 136% to RMB4,011 million, and the net profit margin raised from 11.7% to 17.8%： ➢ Revenue increased by 56% to RMB22,572 million ➢ Gross profit margin expanded by 3.9 percentage po
Slide 6: 2021 Operational Highlights
2021 ANNUAL REPORT RESULTS HIGHLIGHTS 2021 OPERATIONAL HIGHLIGHTS ✦ The retail sell-through for the overall platform increased by high-fifties, including online and offline channels. ✦ Channel inventory turnover improvement continued with aging structure optimized materially. ✦ Offline channel new p
Slide 7: Financial Review
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Slide 8: Revenue
2021 ANNUAL REPORT FINANCIAL REVIEW REVENUE Group Total Growth, YoY Group: 56% Footwear Apparel Equipment & Accessories 22,572 -RMB million- 1,242 13,870 14,457 11,824 754 675 10,511 8,874 594 7,365 7,110 523 5,316 4,192 9,506 6,085 6,338 4,159 4,601 2017 2018 2019 2020 2021 Growth driven by all pro
Slide 9: Revenue and Sell-Through Mix
2021 ANNUAL REPORT FINANCIAL REVIEW REVENUE AND SELL-THROUGH MIX LN Brand (excl. International Markets and LN YOUNG) Company Revenue Mix Sell-Through Mix (Incl. Retail and Wholesale) E-commerce Retail Wholesale Old Product New Product (Current and Last Season) 100% 100% 49% 47% 49% 48% 47% 78% 80% 7
Slide 10: Same Store Sales Growth (SSSG) Rate
2021 ANNUAL REPORT FINANCIAL REVIEW SAME STORE SALES GROWTH (SSSG) RATE LN Brand (excl. International Markets and LN YOUNG) Overall Platform SSSG （2021* vs 2020*) Overall Offline Low- High- eighties seventies Overall Low-forties Retail Mid-forties High- Mid- Low- Low- twenties Wholesale Mid-thirties
Slide 11: Online and Offline Expansion
2021 ANNUAL REPORT FINANCIAL REVIEW ONLINE AND OFFLINE EXPANSION LN Brand (excl. International Market Sales) POS number Sell-through growth, YoY % (Year end) (excl. LN YOUNG) LN Brand LN Young Offline Channel Online and Offline Channels 7,550 High- Mid- fifties fifties 7,137 7,137 6,933 1,101 6,435
Slide 12: Wholesale Business
2021 ANNUAL REPORT FINANCIAL REVIEW WHOLESALE BUSINESS^ LN Brand (excl. International Market Sales and LN YOUNG) Business Performance Sell-through and Revenue Change, YoY% Revenue No. of POS (RMB million) (Year End) 5,157 Wholesale Wholesale Sell-through Revenue Revenue（excl. (excl. Specialty Stores
Slide 13: Retail Business
2021 ANNUAL REPORT FINANCIAL REVIEW RETAIL BUSINESS^ LN Brand (excl. LN YOUNG) Business Performance Revenue Change Analysis Revenue No. of POS (RMB million) (Year End) 1,541 1,506 1,292 1,149 1,165 52% , YoY +648 -292 -34 4,915 +1,367 3,226 4,915 3,580 3,226 3,105 2,699 2020 Same New Closed Transfer
Slide 14: GP Margin Analysis
2021 ANNUAL REPORT FINANCIAL REVIEW GP MARGIN ANALYSIS Net Change in Major Items 2020 Inventory 2021 E-commerce Direct Retail Reported Provision & Others Reported Gross Margin Gross Margin GP Margin R&D cost GP Margin +0.7p.p. 53.0% +0.9p.p. +0.3p.p. +2.0p.p. 49.1% Gross margin expansion largely dri
Slide 15: Profitability Analysis
2021 ANNUAL REPORT FINANCIAL REVIEW PROFITABILITY ANALYSIS Net Change of Major P&L Items （RMB Million） 2020 Other 2021 Reported Gross Sales Related Platform Operation # income Tax Reported Net Profit Profit Variable Costs Costs & Interest Net Profit Retail & EC Logistics Advertising & Other Business
Slide 16: Channel Inventory
2021 ANNUAL REPORT FINANCIAL REVIEW CHANNEL INVENTORY Incl. Online and Offline Inventory Level* (Tag Price) Turnover Months (Store + Warehouse Inventory) 6 months or less 7 - 12 months Over 12 Months (New Product) Turnover Months (Store Inventory Only) 100% 2% 6.0 15% 12% 9% 9% 6% 4.9 4.2 15% 13% 4.
Slide 17: Company Inventory
2021 ANNUAL REPORT FINANCIAL REVIEW COMPANY INVENTORY 28% , YoY 6 months or less 7 - 12 months Over 12 months At cost, before provision (RMB Million) （New Product） 1,866 100% 6% 14% 13% 15% 13% 12% 11% 14% 15% 1,540 20% 1,459 1,364 1,233 82% 75% 71% 72% 67% Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec 20
Slide 18: Trade Receivables
2021 ANNUAL REPORT FINANCIAL REVIEW TRADE RECEIVABLES At gross amount, before provision (RMB Million) Below 90 days 91 - 180 days Over 180 days 100% 19% 15% 22% 23% 24% 2% 1,540 7% 8% 4% 4% 18% , YoY 1,213 1,111 83% 70% 74% 73% 72% 945 939 Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec 2017 2018 2019 2020
Slide 19: Working Capital Efficiency
2021 ANNUAL REPORT FINANCIAL REVIEW WORKING CAPITAL EFFICIENCY -RMB Million- Payable^ Trade Receivables^ Inventory^ Working Capital ~ Working Capital~as % of Revenue 4000 3000 2000 1,737 1,536 1,290 1,154 1,275 1000 20% 6% 15% 9% 8% 0 -1000 -2000 2017 2018 2019 2020 2021 Healthy working capital stru
Slide 20: Balance Sheet Summary and Cash Position
2021 ANNUAL REPORT FINANCIAL REVIEW BALANCE SHEET SUMMARY AND CASH POSITION -RMB Million- 18,482 Net Cash Position^ 7,443 5,963 3,672 2,529 Dec Dec Dec Dec Dec 2017 2018 2019 2020 2021 Cash Conversion Cycle (Days) 49 40 26 20 20 Dividends** 0 215 380 510 1,203 Operating Cash Flow 1,159 1,672 3,503 2
Slide 21: Strategic Direction
Strategic Direction
Slide 22: Lead the Robust Growth Momentum in the Industry, Continuously Optimise LI-NING's Experience Value
2021 ANNUAL REPORT STRATEGIC DIRECTION Lead the Robust Growth Momentum in the Industry, Continuously Optimise LI-NING’s Experience Value “Common Prosperity” Vision to Increase National Income, Further Promote the Sports Consumption Upgrade Under China’s promotion of common prosperity, the disposable
Slide 23: Consolidate the Strategy of Single Brand, Multi-categories, Diversified Channels
2021 ANNUAL REPORT STRATEGIC DIRECTION Consolidate the Strategy of “Single Brand, Multi-categories, Diversified Channels” through Practice Running Basketball Flagship/Benchmark Store Sports & Fashion Fitness Sports Casual LI-NING 1990 Badminton Kidswear China LI-NING LI-NING YOUNG Factory Store 23
Slide 24: Professionalism and Fashion as Dual Engines to Drive Core Categories
2021 ANNUAL REPORT STRATEGIC DIRECTION Professionalism and Fashion as Dual Engines to Drive the Strong Momentum of Core Categories Retail Sell-through — YoY Change (2021) Retail Sell-through – Mix Total Value 59% Running 53% 1% Fitness 57% Basketball 46% 16% 43% Sports Casual 71% 15% 25% Revenue — Y
Slide 25: Basketball — Drive Business with Professional Products
2021 2021ANNUAL ANNUALREPORT REPORT STRATEGIC STRATEGICDIRECTION DIRECTION Basketball — Drive Business with Professional Products, Deliver Values via Basketball Culture Crossover with Basketball Stars Professional Basketball Street Basketball 25 25
Slide 26: Running — Well Poised for Growth with Comprehensive Product Matrix
2021 ANNUAL REPORT STRATEGIC DIRECTION Running — Well Poised for Growth with Comprehensive Product Matrix, Add New Products Equipped with the LI-NING BOOM Technology With LI-NING BOOM Technology platform as the core, LI-NING focuses on building LI-NING BOOM Technology Platform the professional runni
Slide 27: Fitness – Accelerate Development in the Niche Markets, Focus on Female Power
2021 ANNUAL REPORT STRATEGIC DIRECTION Comprehensively upgrade ”No Boundaries 3 ” fitness shoes by adopting the “LI-NING BOOM Fitness –Accelerate Development in the Technology” Niche Markets, Focus on Female Power Upgrade protective equipment, introduce products in more youthful style, and create mo
Slide 28: Sports Casual – Show the Beauty of Sports and Lifestyle
2021 ANNUAL REPORT STRATEGIC DIRECTION Sports Casual – Show the Beauty of Sports and Lifestyle “Rich Everyday” Series— Classic Multi-colour Series — Welcome the good fortune of inherit the beauty of pure the new year with traditional colour Chinese New Year series Skateboarding Series — Shine in the
Slide 29: Brand Marketing – Continuously Strengthen Professional Sports Resources Matrix
2021 ANNUAL REPORT STRATEGIC DIRECTION Brand Marketing – Continuously Strengthen Professional Sports Resources Matrix CBA Basketball League Olympic Champion, Olympic Champion, Chinese Athlete – Chen Long Chinese Athlete – Ma Long Canada Snowboard Federation Hungarian Skating Federation 2021 Qingdao
Slide 30: Brand Marketing – Expand Crossover Resources to Reach Diverse Consumer Groups
2021 ANNUAL REPORT STRATEGIC DIRECTION Brand Marketing – Expand Crossover Resources to Reach Diverse Consumer Groups 30 30
Slide 31: Brand Marketing – China LI-NING Spring/Summer 2022
2021 ANNUAL REPORT STRATEGIC DIRECTION Brand Marketing – China LI-NING Spring/Summer 2022 Fashion Music Festival In December 2021, China LI-NING held a fashion music festival “The Power of Thoughts” in Sanya, Hainan, and unveiled its Spring/Summer 2022 collection. Mr. Jackie Chan & Mr. Li Ning 31
Slide 32: Operational Progress
Operational Progress
Slide 33: Center on Business Development Strategy, Unleash Operation Efficiency
2021 ANNUAL REPORT OPERATIONAL PROGRESS Center on Business Development Strategy, Unleash Operation Efficiency to Drive the Growth of Business Kidswear Product Merchandising • Revenue greatly increased Supply • Profit margin significantly Business Development Chain Operation improved Strategy • Expen
Slide 34: Core Business Development Strategy
2021 ANNUAL REPORT OPERATIONAL PROGRESS Core Business Development Strategy Store Operation Efficiency Enhance Omni-channel Consumer Focus Discipline Cost Control Effective Inventory Management Business Core Competitiveness Fitness & Efficiency-driven Corporate Culture Channel Products and Efficiency
Slide 35: Product Merchandising: Strengthen Product Operation Management
2021 ANNUAL REPORT OPERATIONAL PROGRESS Product Merchandising: Strengthen Product Operation Management, Optimize Product Planning System Product Operation Product Inventory Product Product Inventory Inventory Structure Sales Cost Structure Product Greatly Proportion of Product New product New produc
Slide 36: Channel: Expand High-Quality Profitable Stores
2021 ANNUAL REPORT OPERATIONAL PROGRESS Channel: Expand High-Quality Profitable Stores, Accelerate Development of High-Quality Channels Optimize the Standards and Procedures of Store Opening, Enhance the Efficiency and Quality of Stores Store Sell-through Penetration Big Store Structure Penetration
Slide 37: E-Commerce: Promote the Establishment of Li Ning Omni-Channel Business Model
2021 ANNUAL REPORT OPERATIONAL PROGRESS E-Commerce: Promote the Establishment of Li Ning Omni-Channel Business Model E-commerce Business Retail Retail Channel Member Omni-channel Sell-through Indicators Structure Development Number of low- Average retail efficiency online Number of Sell-through of w
Slide 38: Retail Operation: Progressively Develop Single-Store Business Model
2021 ANNUAL REPORT OPERATIONAL PROGRESS Retail Operation: Progressively Develop Single-Store Business Model to Improve Retail Performance Retail KPIs* Conversion Retail Unit Per Rate Discount Rate Transaction Overall retail Overall conversion discount rate Overall unit per increased by transaction r
Slide 39: Retail Operation: Build the Matrix of Big Stores with High Efficiency
2021 ANNUAL REPORT OPERATIONAL PROGRESS Retail Operation: Build the Matrix of Big Stores with High Efficiency, Comprehensively Improve Store Efficiency Matrix of Directly-operated Comprehensive Efficiency Upgrade Enhance Omni-channel Stores with High Efficiency of Wholesale and Retail Stores Profita
Slide 40: Supply Chain: Continuously Integrate and Optimize Supply Chain Organization
2021 ANNUAL REPORT OPERATIONAL PROGRESS Supply Chain: Continuously Integrate and Optimize Supply Chain Organization Supply Chain Efficiency Production Number of Suppliers Top 3 Suppliers Capacity Overall increased by 50% Overall increased 4 Accounted for over 45% Footwear Apparel Footwear Apparel Fo
Slide 41: Kidswear Business: Enhance Professional Kidswear Image
2021 ANNUAL REPORT OPERATIONAL STRATEGIC DIRECTION PROGRESS Kidswear Business: Enhance Professional Kidswear Image, Drive Efficiency and Business Growth Retail Channel New product retail Efficiency Efficiency ⚫ discount rate improved by mid-single-digit ⚫ Retail sell-through (percentage points) incr
Slide 42: Appendix
Appendix
Slide 43: Summary of Income Statement and Balance Sheet
2021 ANNUAL REPORT APPENDIX Appendix 1 — Summary of Income Statement and Balance Sheet 2021 2020 Better/ 2021 2020 Better/ (RMB million) (RMB million) Year ended 31 December (Worse) Year ended 31 December (Worse) Revenue 22,572 14,457 56.1% Cash and Cash Equivalents 14,745 7,187 105.2% Gross Profit
Slide 44: Profit Margins and Key Operating Indicators
2021 ANNUAL REPORT APPENDIX Appendix 2 — Profit Margins and Key Operating Indicators 2021 2020 Better/ 2021 2020 Better/ Year ended 31 December (Worse) Year ended 31 December (Worse) Gross Profit Margin 53.0% 49.1% 3.9p.p. Inventory Turnover (Days) 54 68 14 Trade Receivables Operating Profit Margin