China Lilang Ltd. · HKEX:1234
China Lilang — FY2014 Earnings Presentation
25 slides from China Lilang's earnings presentation, March 2015
Slide 1: Annual Results 2014
Annual Results 2014 Hong Kong, March 2015
Slide 2: Disclaimer
Disclaimer The information contained in this presentation is intended solely for your personal reference. Such information is subject to change without notice, its accuracy is not guaranteed and it may not contain all material information concerning China Lilang Limited (the “Company”). The Company
Slide 3: Agenda
Agenda Annual Results Highlights Financial Review Business and Operational Review Outlook and Strategy Open Forum 3
Slide 4: Results Highlights
LILANZ fl ER CHINA LILANG LIMITED HE Bd A) BE 4 A 2S] RESULTS HIGHLIGHTS
Slide 5: Outperformed Other Industry Players
Outperformed Other Industry Players Menswear industry in the PRC remained weak in 2014 Retail consumption slowed down Indiscriminative and extensive expansion in the past led to excess inventory and winding-up of retail stores Channel inventory clearance was drawing to a close, and operating e
Slide 6: 2014 Annual Results Financial Highlights
2014 Annual Results Financial Highlights (RMB million) FY2014 FY2013 Change Turnover 2,433.0 2,298.6 +5.8% Gross profit 1,035.7 979.8 +5.7% % of Turnover 42.6 42.6 - p.p. Profit from operations 680.8 582.0 +17.0% % of Turnover 28.0 25.3 +2.7 p.p. Net Profit 554.9 516.1 +7.5% % of Turnover 22.8 22.5
Slide 7: Financial Review
LILANZ fl ER CHINA LILANG LIMITED HE Bd A) BE 4 A 2S] FINANCIAL REVIEW
Slide 8: Turnover Analysis
Turnover Analysis Total Turnover & Turnover By Brand Turnover change due to: (RMB million) 2,298.6 2,433.0 Measures to boost brand image 2,500.0 9.7 and product designs drove stable 16.8 volume growth with more 223.6 190.6 competitive products 2,000.0 ASP fell slightly under the strategy of “imp
Slide 9: Cost of Goods Sold
Cost of Goods Sold (RMB million) Gross profit margin stable at 42.6% 57.4% 57.4 % Slight pressure on GP margin under “improving product quality without raising (4.9%) 64.3 121.3 (8.7%) price” strategy Production cost savings from: ― Slightly lower raw materials prices (46.1%) (44.1%) ― Increased
Slide 10: SD&A Expenses
SD&A Expenses SD&A Expenses SD&A Expenses Total Amount As % of Turnover (RMB million) Administrative expenses 430 Other selling and distribution expenses 380 Advertising and promotional expenses 99.6 103.1 330 24.6 9.8% 280 9.7% 57.2 54.4 8.8% 9.1% 230 8.2% 180 130 306.7 235.7 275.6 224.9 80 3.9% 4.
Slide 11: Increased Profit and Margins
Increased Profit and Margins Gross Profit & Margin EBITDA & Margin (Unit: RMB million) (Unit: RMB million) 29.4% 42.6% 42.6% 26.9% 716.0 979.8 1,035.7 617.5 FY2013 FY2014 FY2013 FY2014 Operating Profit & Margin Net Profit & Margin (Unit: RMB million) (Unit: RMB million) 28.0% 22.5% 22.8% 25.3% 680.8
Slide 12: Working Capital Cycle
Working Capital Cycle Working Notes capital cycle shortened Turnover Days (Unit: Days) Trade Receivables Average turnover days decreased by 10 days to 70 80 days Year-end balance increased by 22.0% due to sales 76 76 growth of 2014 winter collections and extended credit terms granted to some d
Slide 13: Cash Flow
Cash Flow Cash and cash equivalents (RMB million) 2,200 2,000 (76.2) 1,800 (83.1) 0.3 568.4 1,600 1,400 1,200 1,000 1,845.2 800 1,435.8 600 400 200 0 Cash and cash Net cash from Net cash used in Net cash used in Effect of foreign Cash and cash equivalents at 1 operating activities investing activiti
Slide 14: Healthy and Strong Cash Position
Healthy and Strong Cash Position Total Cash and Bank Balance (Unit: RMB million) 2,445.8 2,791.3 2,207.8 Cash position 1,936.7 remained healthy 1,667.0 and strong: Net cash balance of 1,644.8 RMB1.94 billion, up from RMB1.64 billion at the end of 2013 854.6 Secured by pledged 778.8 563.0 bank deposi
Slide 15: Business & Operational Review
BUSINESS & OPERATIONAL REVIEW
Slide 16: Nationwide Distribution Network
Nationwide Distribution Network Group store count 2014 Dec 31 2014 Jan 1 Change No. of stores renovated Eastern China 850 1,011 -161 Central and southern China 740 806 -66 2012 280 South Western China 615 656 -41 2013 750 North Eastern China 305 367 -62 Northern China 295 330 -35 2014 680 North West
Slide 17: Sales Channel Management
Sales Channel Management Paying close attention to the potential of e-business Managing sales channel Enhancing the channel • Monitor sales and management skills and channel inventories efficiency of distributors • Operate online flagship stores for LILANZ and L2 through ERP system • Training progra
Slide 18: Product Design and Development
Product Design and Development • Promote individuation in its product designs and further differentiate its products from market peers • 2014 products of LILANZ incorporating new design concepts from the international R&D team were well received by the market • Increased proportion of original produ
Slide 19: Marketing and Promotion
Marketing and Promotion • Continue to engage Mr. Chen Dao Ming (陳道明), as the spokesperson for “LILANZ”. A micro film was made during the year and available for viewing on the internet since December • Putting soft-sell advertisements in magazines and newspapers • Placing pre-movie advertisements in
Slide 20: Trade Fair Results
Trade Fair Results + High- + Low- + Low- single + 10-15% double digit double digit digit Sequential improvement of + Low-single trade fair results Flat digit 2015 Spring/Summer products + High- +High- + Mid- single digit single digit shipment commenced in single digit January 2015 2013 AUTUMN 20
Slide 21: Production and Supply Chain
Production and Supply Chain Sub-contracting services Self production Distributors Cooperate with suppliers in the R&D of fabrics Design Outsourced production Continue to improve its supply chain management and control costs by identifying more cost-efficient fabric suppliers and processing plants
Slide 22: Outlook & Strategy
LILANZ fl ER CHINA LILANG LIMITED HE Bd A) BE 4 A 2S] OUTLOOK & STRATEGY 22
Slide 23: Growth in five years since listed
Growth in five years since listed Turnover Net Profit (Unit: RMB million) (Unit: RMB million) FY2009-FY2014 CAGR: 9.3% FY2009-FY2014 CAGR: 12.9% 2,708.0 2,793.4 2,298.6 2,433.0 623.1 626.8 2,053.0 516.1 554.9 1,559.9 418.7 303.0 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2009 FY2010 FY2011 FY2012 F
Slide 24: Prudent and Flexible Operation Strategy
Prudent and Flexible Operation Strategy Enhance core competitiveness Continue to implement the strategy of “improving product quality without raising the price” Raise the proportion of original products in sales Further enhance value for money of its products by improving product design, workm
Slide 25: Open Forum
LILANZ fl ER CHINA LILANG LIMITED HE Bd A) BE 4 A 2S] OPEN FORUM