China Resources Beer (holdings) Co. Ltd. · HKEX:291

China Resources Beer (holdings) — China Resources Enterprise — Q1 2014 Earnings Presentation

32 slides from China Resources Beer (holdings)'s earnings presentation, May 26, 2014

  1. Slide 1: Financial and operational review Q1 2014

    Financial and operational review Q1 2014 Investor presentation 26 May 2014 1

  2. Slide 2: Results Summary

    Results Summary Q1 2014 Q1 2013 change HK$m HK$m Turnover 41,812 36,153 +16% EBITDA 2,027 1,812 +12% Earnings 356 512 -30% 30% Underlying net profit * 349 512 -32% EPS (HK¢) – Basic 15 21 -29% ROE (%) (based on earnings and underlying net profit *) 0.8 1.2 -33% Net (borrowings)/cash (1 932) (1,932)

  3. Slide 3: Turnover Breakdown - by Divisions

    Turnover Breakdown - by Divisions Q1 2014 Prop Q1 2013 Prop change HK$ HK$m HK$ HK$m Core businesses Retail 28,081 67% 25,923 71% +8% Beer 7,876 19% 6,548 18% +20% Food 3,942 9% 2,433 7% +62% Beverage 2,259 5% 1,453 4% +55% 42,158 100% 36,357 100% +16% Less: inter-co transactions (346) (204) Turnove

  4. Slide 4: Underlying Net Profit Breakdown - by Divisions

    Underlying Net Profit Breakdown - by Divisions Prop Q1 2013 Prop change Q1 2014 HK$m HK$m Core businesses Retail 464 108% 525 93% -12% Beer 6 1% (23) (4%) +126% Food (50) (11%) 57 10% -188% Beverage 10 2% 8 1% +25% 430 100% 567 100% -24% Net corporate int. & expenses (81) (55) Underlying Net Profit

  5. Slide 5: CRE segment assets and balance sheet movement

    Segment assets  Unique with four consumer businesses complementing each other Distribution of segment g assets: Movement in balance sheet items 31 Mar 14 31 Dec 13 change HK$m HK$m Beer Total assets 153,671 155,289 -1% Total liabilities (94,069) (95,678) Assets: $54bn -2% 35% Liabilities: ($31bn) T

  6. Slide 6: Operating cashflow and CAPEX

    Change in operating cashflow CAPEX Q1 2014 Q1 2013 % change HK$m HK$m  Grasping opportunities through expansion Cash inflow +1,336 +4,844 -72% 12.0 8.5 8.0 0.4 1.2 K$bn 3.2 HK 4.0 3.1 1.5 0.1 0.7 # 0.2 3.7 ## 0.1 0.3 2.3 0.9 - Q1 2014 Q1 2013 FY 2014 (budget) (b d t) Retail Beer Food Beverage # The

  7. Slide 7: Retail

    Retail  Growth through: Multi-format with regional leadership Q1 2014 Q1 2013 Change HK$ HK$m HK$ HK$m Turnover 28,081 25,923 +8% Underlying EBITDA # 1,276 1,224 +4% Underlying net profit # 464 525 -12% Underlying EBITDA margin (%) # 4.5 4.7 -4% U d l i nett profit Underlying fit margin i (%) # 17

  8. Slide 8: Retail: Geographical distribution of retail network

    Notation: Retail shop no. (no. of hypermarket) [addition in past 12 months] Region Northern areas Retail New region 4 (4) [-] Inner Mongolia  Growth through: Multi-format with regional leadership 4 (4) [-] Jilin Geographical distribution of retail network Northern west areas 139 ((7)) [7] Beijing j

  9. Slide 9: Retail: Winning market share by multiple-format

    Retail  Growth through: Multi-format with regional leadership Business model Winning market share by  Multiple-format Multiple format store approach  Multiple distribution centres (more than 14 D.C.)  Trade-upp strategy gy  Innovative in format  Regional focus "Get Ready for the next journey"

  10. Slide 10: Retail: multiple formats in mall and city

    Retail  Growth through: Multi-format with regional leadership In a shopping mall In a city 6 formats in Guangzhou 5 formats in Beijing 5 formats in Nanjing: Taikoo Hui (Swire properties): Galleria (CR Land): "Get Ready for the next journey" 10

  11. Slide 11: Beer (No.1 brand by volume in the world since 2008)

    Beer (No.1 brand by volume in the world since 2008)  Growth through: Solidifying market leader position and upgrade of product mix Q1 2014 Q1 2013 change HK$m HK$m Sales volume (million KL) 2.58 2.30 +12% Turnover 7,876 6,548 +20% EBITDA 672 436 +54% Earnings (#) 12 (45) +127% EBITDA margin (%) 8.5

  12. Slide 12: Beer: Geographical distribution of the breweries

    Beer (No.1 brand by volume in the world since 2008)  Growth through: Solidifying market leader position and upgrade of product mix Geographical distribution of the breweries 5(1.1mkl) [-] Heilongjiang gj g Having presence in 25 out of 34 regions/cities (incl (incl., autonomous regions regions, muni

  13. Slide 13: Beer: China beer market share

    Beer (No.1 brand by volume in the world since 2008)  Growth through: Solidifying market leader position and upgrade of product mix Distribution of China beer market share: Total market share of top 4 players was 61% in 2012, of which Snow has 22%. 23% 100% 18% 20% 21% 21% 22% In 2013 80% 14% 14% 14

  14. Slide 14: Beer: Strong robust growth in turnover and profitability

    Beer (No.1 brand by volume in the world since 2008)  Strong robust growth in both turnover and profitability UNP Turnover In HK$’m In HK$’m 40,000 1,000 800 30,000 600 20,000 400 10,000 200 - - 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 "Get

  15. Slide 15: Food

    Food  Growth through: Quality premium products Q1 2014 Q1 2013 change HK$ HK$m HK$ HK$m Turnover 3,942 2,433 +62% Underlying EBITDA 69 142 -51% Underlying net profit (50) 57 -188% Underlying EBITDA margin (%) 1.8 5.8 -69% Underlying net profit margin (%) (1.3) 2.3 -157% Profitability was mainly aff

  16. Slide 16: Food: Supply base distribution

    Food  Growth through: Quality premium products Supply base distribution Heilongjiang Having presence in 15 out of 34 regions/cities (incl. autonomous regions, municipalities and SAR) in China Liaoning Shandong Shaanxi Henan Sichuan Jiangsu Hubei Guangxi Sh Shanghai h i Zhejiang Jiangxi Fujian Notat

  17. Slide 17: Beverage

    Beverage  Growth through: strong partnership with Kirin Q1 2014 Q1 2013 change HK$ HK$m HK$ HK$m Sales volume (million KL) 1.40 0.97 +44% Turnover 2,259 1,453 +55% EBITDA 56 42 +33% Earnings (#) 15 13 +15% EBITDA margin g (%) ( ) 2.5 2.9 -14% Net margin (%) (#) 0.7 0.9 -22% Higher sales volume gene

  18. Slide 18: Beverage: Geographical distribution

    Beverage  Growth through: strong partnership with Kirin Geographical g p distribution Having presence in 13 out of 34 regions/cities (incl. autonomous regions, municipalities and SAR) in China Number of beverage plant: 38 (9 own factories; 29 OEM factories*) 1* Liaoning 2* Hebei 1 4* 1, Sichuan 5*

  19. Slide 19: Appendix I – Details of Retail formats

    Appendix I – Details of Retail formats 31 Mar 14 31 Dec 13 31 Mar 13 App. Average Major % of Average Self- Self- Self- Format brands areas turnover GP operated Franchised operated Franchised operated Franchised (sq.m) margin Over I. Hypermarket 6,000 6 000 app.79% 20% 569 13 563# 13 529# 13 II. Stan

  20. Slide 20: Appendix II – Historical track record of CRE

    Appendix II – Historical track record of CRE  Strong growth momentum in each businesses Retail (incl. investment property, Beer excl.l non-core assets) t ) HK$’mn HK$’mn HK$’mn HK$’mn 100,000 900 40,000 1,000 800 80,000 700 800 30,000 600 60,000 600 500 400 20,000 40,000 400 300 20,000 200 10,000 2

  21. Slide 21: Appendix III – Historical operating summary

    Appendix III – Historical operating summary  Increasing market share and net asset without share dilution in past 4 years HK$/share HK$’m 20 9,000 18.34 15 16 97 16.97 15.77 13.40 6,000 8 425 8,425 10 7,099 7,501 6,159 5 3,000 2010 2011 2012 2013 Underlying EBITDA Net asset per share "Get Ready for

  22. Slide 22: Appendix IV – Strong growth in China

    Appendix IV – Strong growth in China  Strong growth in China According to McKinsey, top 225 cities of China will contribute app. 30% of global GDP growth in the next 10-15 years. Mega- and middleweight developing world cities: Mega- and middleweight developed cities: 45% of global growth 16% of glo

  23. Slide 23: Appendix V – Better position for CRE

    Notation: CRE’s CRE s presence Cluster’s Cluster s hub city Appendix V – Better position for CRE Expected cluster size: Small Sizable Mega  Better positioning to capture strong growth in China According to McKinsey, more than 90% of China’s urban GDP in 2015 will come from 22 clusters. Huhehaote Ch

  24. Slide 24: Appendix VI – Experience in Homeworld's turnaround

    Appendix VI – Experience in Homeworld’s turnaround Management with experience and abilities to turnaround of loss-making acquisition in retail business: Net Profit (HKD mn) 200 51 -563 563 -63 -38 38 0 2007 2008 2009 2010 -200 -400 -600 "Get Ready for the next journey" 24

  25. Slide 25: Appendix VII – Market share of Retail business

    Appendix VII – Market share of Retail business Lower market concentration in China than other developed countries: Percentage of top 5 retailers to total grocery retail market share in the state: 63 60 59 47 40 20 9 7 Top ten Top five Source: Euromonitor; Planet Retail; McKinsey and Company data ret

  26. Slide 26: Appendix VIII – Historical major M&As in beer business

    Appendix VIII – Historical major M&As in beer business Strong bargaining power and lower acquisition cost on M&A CRB acquired 100% stake in Kingway beer US$/kl AB InBev acquired furhter Carlsberg acquired Tsingtao acquired ABInbev 2,500 1.31% stake of Zhujiang Shenzhen Jingyalong 12.25% stake in 100

  27. Slide 27: Appendix IX – Global beer consumption summary

    Appendix IX – Global beer consumption summary Beer consumption per capita in China increased double in past 10 years (from 18 litres in 2001 to 36 litres in 2011 (provisional)). 147 111 78 78 75 60 46 37 36 22 22 Czech Germany USA Australia UK South Japan South China Taiwan Hong Republic Africa Kore

  28. Slide 28: Appendix X – CRE awards

    A Appendix di X – CRE awards d  Highlights of accolades received Since 2002 Produced quarterly financial and operational review on a voluntary basis. First conglomerate company among the constituent stocks in the Hang Seng Index to initiate such a move 2005-2012 Named one of outstanding enterprises

  29. Slide 29: Appendix X – CRE awards (Cont'd)

    A Appendix di X – CRE awards d (Cont'd) (C t'd)  Highlights of accolades received 2010-2013 Received awards for cover photo/design in the categories of food distributors, processors & wholesalers, manufacturing & Distributing, Food & Consumer Packaged Goods and Multi- Industry – Products & Services

  30. Slide 30: Appendix X – CRE awards (Cont'd)

    A Appendix di X – CRE awards d (Cont'd) (C t'd)  Highlights of accolades received 2011-2014 Awarded as one of the companies receiving the commendation in Corporate Social Responsibility Award by CAPITAL and CAPITAL Weekly 2011–2013 Ranked number 39 /46/37 in Fortune China 500 2011 Received 2 best a

  31. Slide 31: Appendix X – CRE awards (Cont'd)

    A Appendix di X – CRE awards d (Cont'd) (C t'd)  Highlights of accolades received 2013 Mr. Frank Lai was selected as Asian Company Secretary of the Year by Corporate Governance Mr Asia th 2013 Received award as the Winner of Global Top Mid-Cap and ranked 19 in Global Top 50 Gold in IR Magazine 2013

  32. Slide 32: Disclaimer

    Disclaimer Data and information contained in this presentation is provided for informational purposes only. Neither Chi Resources China R E t Enterprise, i Li it d nor any off its Limited it subsidiaries b idi i shall h ll be b liable li bl for f any errors or delays d l i in the content, or for any

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