Hung Hing Printing Group Limited · HKEX:450
Hung Hing Printing — FY2010/11 Earnings Presentation
28 slides from Hung Hing Printing's earnings presentation, Mar 31, 2011
Slide 1: Annual Results Presentation
Annual Results Presentation For the 12 months ended 31 Mar 2011 0
Slide 2: Disclaimer
Disclaimer The presentation is prepared by Hung Hing Printing Group Limited (the “Company”) and is solely for the purpose of corporate communication and general reference only. The presentation is not intended as an offer to sell, or to solicit an offer to buy or to form any basis of investment deci
Slide 3: Highlights - 12 Months ending March 2011
Highlights - 12 Months ending March 2011 Group revenues are up 15% YOY - volume and price Raw material and labor costs have impacted earnings We are pleased with our ability to limit that impact and are continuing to address this Positions with major customers are strong and we expect further upside
Slide 4: Hung Hing has established infrastructure in the PRD region and East China
Hung Hing has established infrastructure in the PRD region and an established base in East China Hung Hing–overview of manufacturing facilities Zhongshan Wuxi Printing and manufacturing of folding Printing and manufacturing of folding cartons, cartons, litho lam and corrugated litho lam and corrugat
Slide 5: Hung Hing operates four complementary business segments
Hung Hing operates four complementary business segments Book & package Consumer product Corrugated box Paper trading printing packaging Leader globally Top 5 in China Major player in South Leader in South China Market position China 53% (HK$1,452mm) 26% (HK$706mm) 10% (HK$290mm) 11% (HK$316mm) % FY2
Slide 6: Book and package printing – Overview
Book and package printing – Overview Global leader in printing of children’s books Leader in paper-based packaging for exports from Pearl River Delta region Focus on toys, electronics and other consumer products Very loyal “blue-chip” customer base Longstanding customer relationship of 20 years on a
Slide 7: Book and package printing – Corporate strategy
Book and package printing – Corporate strategy Corporate strategy Further solidify customer relationships and increase share of wallet with long term customer base through service and order management process improvements (i.e., improve responsiveness, order status, turnaround times and customer int
Slide 8: Hung Hing has a broad and high quality product offering
Hung Hing has a broad and high quality product offering… Book printing Package printing1 (~ 68% of Book and Packaging segment sales) (~32% of Book and Packaging segment sales) Key product offerings Children’s books & novelty items (71% of the total) Toys (~80% of total) End-market Conventional books
Slide 9: Segment financials – Books and package printing
Segment financials – Books and package printing Books and package printing Commentary External revenue In FY2011, sales rebounded strongly and improved by Segment profit (%) Revenue (HK$mm) 23% as a result of the recovery in the United States and 1,600 18% European export markets and customers conso
Slide 10: Consumer product packaging – Overview
Consumer product packaging – Overview Leading consumer product packaging company in China, in a highly fragmented market Excellent platform to capture additional growth in the China consumer product packaging sector Leveraging on Hung Hing’s established presence in the PRD region and its existing fa
Slide 11: Consumer product packaging – Corporate strategy
Consumer product packaging – Corporate strategy Corporate strategy Focus on key target segments and customers that represent substantial customer accounts required to scale up business – i.e., in the food & beverage, personal care, cosmetics and pharmaceuticals sectors Implement operational and faci
Slide 12: Hung Hing has a diverse and high quality product offering
Hung Hing has a diverse and high quality product offering Key product offerings OTC healthcare & personal care (51% of total) End-market Food packaging (15% of total) usage Consumer electronics (10% of total) Others e.g. greeting cards (24% of total) Forest Stewardship Council (“FSC”) certification
Slide 13: Segment financials – Consumer product packaging
Segment financials – Consumer product packaging Consumer product packaging Commentary External revenue China growth strategy progressing, with revenue up 14% Revenue (HK$mm) Segment profit (%) New Consumer Product Packaging organization working well, with good progress made in making in-roads with 1
Slide 14: Corrugated box – Overview
Corrugated box – Overview Leading corrugated box supplier in the Pearl River Delta region, in a highly fragmented sector Ability to provide both corrugated box and printing services, differentiates Hung Hing from typical corrugated box manufacturers which have limited printing capabilities (e.g., li
Slide 15: Corrugated box – Corporate strategy
Corrugated box – Corporate strategy Corporate strategy Operating under a new management structure, separated from the Shenzhen printing and packaging facilities, has implemented a significant shift in ownership and accountability that has led to a 20-30% efficiency improvement Drive operating effici
Slide 16: Segment financials – Corrugated box
Segment financials – Corrugated box Corrugated box Commentary External Intersegment Segment profit (%) Improved export conditions in the Pearl River Delta Revenue (HK$mm) Operating profit margins up by 2%-points to 12%, due to: Higher paper prices – the relatively short-term nature 600 20% of contra
Slide 17: Paper trading – Overview
Paper trading – Overview Leading paper trader in South China Annual purchase of ~300,000 metric tonnes of paper, and annual external trading volumes of ~145,000 metric tonnes Storage capacity of ~80,000 tonnes Centralized paper sourcing for both Hung Hing’s internal use and clients Ability to achiev
Slide 18: Paper trading – Corporate strategy
Paper trading – Corporate strategy Corporate strategy Function as centralized planning and strategic procurement operation for Hung Hing’s internal use, expanding this capability beyond the PRD region Expand trading capacity to RMB denominated domestic business with potential to incorporate addition
Slide 19: Segment financials – Paper trading
Segment financials – Paper trading Paper trading Commentary External Intersegment Segment profit (%) Benefitting from rising paper prices, operating profit Revenue (HK$mm) margins rose to 8% from 6% 1,000 10% 9% Inventory flexibility to use internally or sell externally 9% 8% provides a natural raw
Slide 20: Revenue Is Up By +15%
Revenue Is Up By +15% 2,873 3,000 2,828 2,765 332 2,392 464 2,398 316 2,500 341 290 281 352 343 Paper Trading 2,000 323 256 (HK$ million) 752 706 636 Corrugated Box 1,500 525 621 Consumer Product 1,000 Packaging 1,376 1,448 1,452 1,263 1,178 Book and Package 500 Printing 0 FY06/07 FY07/08 FY08/09 FY
Slide 21: Operating Profit Impacted By Higher Paper & Labor Costs
Operating Profit Impacted By Higher Paper & Labor Costs 350 301 300 270 Paper Trading 268 55 237 250 35 63 Corrugated Box (HK$ million) 46 45 192 200 88 25 55 34 Consumer Product 56 150 Packaging 39 50 68 46 Book and Package 100 164 Printing 119 50 100 90 91 0 -1 FY06/07 FY07/08 FY08/09 FY09/10 FY10
Slide 22: Business Unit Analysis for Continuing Operations
Business Unit Analysis for Continuing Operations Year Ended Year Ended 31/3/2011 31/3/2010 Inter- External segment Sales sales Contribution Contribution Continuing operations HK$'000 HK$'000 HK$'000 HK$'000 Book & Package Printing 1,452 4 91 119 Consumer Product Packaging 706 7 (1) 39 Corrugated Box
Slide 23: Solid Financial Position
Solid Financial Position (HK$ million) 2011 2010 2009 2008 2007 Assets Non-current 1,569 1,467 1,563 1,840 1,713 Current 2,076 2,356 2,525 2,956 2,401 3,645 3,823 4,088 4,796 4,114 Liabilities Non-current 57 41 100 297 803 Current 776 795 895 2,063 787 833 836 995 2,360 1,590 Net Assets 2,812 2,987
Slide 24: Key Balance Sheet Items
Key Balance Sheet Items 31 Mar 31 Mar (HK$ million) 2011 2010 Change % Property, plant & equipment 1,331 1,304 27 2% Properties under construction 35 - 35 N/A Inventories 683 656 27 4% Trade and bills receivables 559 525 34 6% Cash 788 1,109 (321) -29% Borrowings 411 425 (14) -3% Short-term 400 425
Slide 25: Capital Investment – business capability
Capital Investment – business capability Commentary 250 We have continued to invest in technology that enhances efficiency and quality. 201 Increased Capex to support business 200 growth in the export and domestic markets 154 157 Bought 5 advanced printing presses to (HK$ million ) 150 replace older
Slide 26: Profit Attributable To Equity Holders & Earnings Per Share
Profit Attributable To Equity Holders & Earnings Per Share Profit attributable to equity holders Basic Earnings per share 300 277 50 46.1 250 40 200 167 30 (HK$ million) 156 (HK Cents) 150 20 18.2 17.3 100 10 50 2 0.2 0 0 (18) (3.0) (50) (10) FY06/07 FY07/08 FY08/09 FY09/10 FY10/11 FY06/07 FY07/08 F
Slide 27: Proposed Dividends
Proposed Dividends Commentary 35 29.5 30 27.0 FY 10/11 Dividends 23.0 25 Interim (paid) 5 cents (HK Cents) 20 Special (paid) 17 cents 20 9 17 Final (proposed) 5 cents 14 15 27 cents 8.5 10 10 10 1 5 5 9.5 7.5 4 4 5 0 FY06/07 FY07/08 FY08/09 FY09/10 FY10/11 Interim dividend Final dividend Special div
Slide 28: Thank you Q&A
Thank you Q&A Oos
Hung Hing Printing Group — FY2010/11 Earnings Presentation on 6ix