2q13 (oct’12 – dec’12) results...2013/02/07 · 2q13 (oct’12 – dec’12) results...

2Q13 (Oct’12 – Dec’12) Results Presentation

DUKANG DISTILLERS HOLDINGS LIMITED

INDUSTRY OVERVIEW

CORPORATE PROFILE

FINANCIAL HIGHLIGHTS

GROWTH STRATEGIES

INVESTMENT MERITS

Industry overview

A

Industry overview

4

• China’s baijiu market is a mature market with a huge demand

• Baijiu industry grew at a CAGR of 30% in 2007-2011

• Baijiu industry maintained a high growth rate despite global headwinds amidst the 2009 financial crisis

RMB’ Billion Jan-Nov 2007 Jan-Nov 2008 Jan-Nov 2009 Jan-Nov 2010 2011

Sales 108.7 142.4 185.8 242.2 374.7

Net Profit 13.6 18.7 23.5 31.9 57.2

Source: China Alcohol Drinks Industry Association（ Chinese Baijiu industry research report 2010 ） China Daily, http://sp.chinadaily.com.cn/wine/20120724/43917.html#

• Henan, the most populated province in China, is the largest baijiu consumption province

• Baijiu market in Henan is currently valued at more than RMB35 billion

http://sp.chinadaily.com.cn/wine/20120724/43917.html

Flavor of baijiu

5

• Three fragrance type : Thick Fragrance, Sauce Fragrance, and Light Fragrance

• Thick Fragrance baijiu dominates 75% of China’s baijiu market, followed by Light

Fragrance baijiu and Sauce Fragrance baijiu, which accounts for 10% and 7% of market

share, respectively

75%

10%

7% 8%

Thick Fragrance baijiu dominates the PRC baijiu market

Thick Fragrance

Sauce Fragrance

Light Fragrance

Others

Peer comparison: P/E vs. CAGR

Sources: Bloomberg, 23 August 2012 6

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

0.0 10.0 20.0 30.0 40.0 50.0

Luzhou Laojiao

P/E (x)

3-yr Sales CAGR (%)

Wu Liang Ye

Moutai Gujinggong

Shanxi Fen Wine Jiugujiu

Tuopai

Swellfun

Yanghe

Laobaigan Dukang Golden Seed

Yilite

Corporate profile

B

Brand origin of Dukang

8

Famous baijiu with a history dating back > 2,000 years

Named after Du Kang (杜康) who lived in the Xia Dynasty (21st – 16th century B.C.)

• Forefather of baijiu in China

Frequently cited by numerous famous poets & personalities

• Cao Cao (曹操) (a central figure in the Three Kingdom Period) said in his poem《短歌行》

“对酒当歌，人生几何，譬如朝露，去日苦多。

慨当以慷，忧思难忘，何以解忧，唯有杜康。”

Premier Zhou Enlai called for the revival of Dukang baijiu

“复兴杜康，为国争光”

• Yichuan Dukang Group was set up in 1968

• Ruyang Dukang Group Co was established on the original site of Du Kang’s brewery in 1972

Corporate milestones

9

2005

2008

2010

2011

February

Acquired Henan Siwu Spirit

September

Listed on SGX Mainboard as the first and remains to be the only non A-share listed PRC baijiu manufacturer

May

Completed acquisition of Luoyang Dukang Holdings

March

Listed TDR on the TWSE and raised proceeds of RMB237 million for expansion

April

Launched iconic premium product series “Jiuzu Dukang” (酒祖杜康)

Yu Shang Jiu

Siwu Old Cellar 1949

New Laojiao Zhencang

Jin Yu Zun

Zone 12 Cellar Jiuzu Dukang Series

Classic Huagui Guohua Dukang Series

5 Star Zhonghua Dukang Series

Lao Dukang Lao Dukang Series

Wide range of products

Well-established baijiu brand since 1949

Targets mid-to-mass market

Nationally famous baijiu brand

Targets mid-to-high end market

10

Established brand awareness

11

China Well-Known Trademark (2005)

China Intangible Cultural Heritage (2008)

Dukang’s brand synonymous with market leadership in product quality and brand identity

National awards won include:

China Time-honored Brand (2005)

Top 10 Chinese Wine Brands (2001)

Star Enterprise Of The National Wine Industry (1994)

Henan Well-Known Trademark (2008)

Financial highlights

C

13

2Q13 sales up 36.7% yoy

Note: Financial Year End - 30 June

441.7 445.4 455.1

535.6

225.8 255.5 170.2 167.6

261.2 216.8 199.1 169.1

76.7 51.0 56.9 33.8

63.2

455.9

635.8

285.3

483.6

182.8 310.2

54.3

315.6

486.1

194.7

354.7

130.1

226.7

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

FY09 FY10 FY11 FY12 1H12 1H13 2Q12 2Q13

RM

B (

mil)

Turnover

Siwu Regular Siwu Premium Luoyang Dukang Regular Luoyang Dukang Premium

702.9 779.6

1,425.7

1,826.6

782.5

1,144.8

2Q13: Oct – Dec 2012

738.3

540.0

14

Enlarged sales contribution from 「Dukang」 brand


22.1%

32.0% 14.0%

31.9%

FY2011

30.7%

42.0%

4.6%

22.7%

2Q2013

24.1%

33.9% 10.5%

31.5%

2Q2012

Luoyang Dukang Premium Luoyang Dukang Regular Siwu Premium Siwu Regular

26.6%

34.8% 9.3%

29.3%

FY2012

2Q13: Oct – Dec 2012

100.5 133.6 123.9

83.7 81.7 137.6 136.1

90.0 93.0 155.6 154.5

51.8 55.6

170.2 144.2 165.6 87.9

167.6

71.3

98.2 57.0

34.8 42.4

72.8 65.5

36.1 41.5

76.5 65.4

15.7 19.8

56.9 58.6 33.8

17.2

33.8 63.2 44.6

124.0 177.8

109.3 102.4

182.8 215.2

135.4

173.4

310.2

54.3 31.4

86.5

117.4

80.4 64.6

130.1 172.7

118.7

128

226.7

0

100

200

300

400

500

600

700

800

1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13

RM

B (

mil)

Seasonality Of Quarterly Sales


15

2Q13 sales boom in traditionally lull quarter


406.5

242.5

453.4

590.7

540.0

257.6

515.1

442.5

210.5 243.6

201.6 210.4

124.1 118.5

180.9

231.8

171.8

2Q13: Oct – Dec 2012

738.3

Sales volume & average selling price

16

290 208 553 643 633 422 730 907 593 679 1,136

187.2

151.0 156.4 182.6

126.8 153.1

178.2 190.4 200.2 188.5 199.6

0

50

100

150

200

250

300

0

200

400

600

800

1,000

1,200

4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13

Luoyang Dukang Premium

Total Sales Volume (tonnes) ASP (RMB/kg)

2,272 1,332 3,378 4,768 3,575 3,004 5,380 6,265 3,960 5,027 8,615

27.8

33.5 36.7 37.3

30.6 34.1 34.0 34.3 34.2 34.5 36.0

0

10

20

30

40

-

2,000

4,000

6,000

8,000

10,000

4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13

Luoyang Dukang Regular

Total Sales Volume (tonnes) ASP (RMB/kg)

(Tonnes) (RMB/Kg)

(Tonnes) (RMB/Kg)

Note: Financial Year End - 30 June 2Q13: Oct – Dec 2012

438 635 373 249 266 458 421 230 276 530 431 108 148 467 495 210 137 268

162.8 154.6 152.7 139.6

159.4 159.0 155.6 156.8 150.4 144.3 151.7 145.4 133.8 121.8 118.4

160.9

125.5 126.1

0.0

50.0

100.0

150.0

200.0

0

200

400

600

800


Siwu Premium

Sales Volume (tonnes) ASP (RMB/kg)

4,349 5,543 4,957 3,371 3,713 6,197 5,943 3,856 4,285 7,169 6,491 2,258 2,357 7,129 6,218 6,635 4,343 7,852

23.1 24.1 25.0 24.8 22.0 22.2 22.9 23.4 21.7 21.7

23.8 23.1 23.6 23.9 23.2 25.0

20.2 21.3

0.0

10.0

20.0

30.0

40.0

0

2,000

4,000

6,000

8,000

10,000


Siwu Regular

Sales Volume (tonnes) ASP (RMB/kg)

(Tonnes) (RMB/Kg)

(Tonnes) (RMB/Kg)

Sales volume & average selling price

17 Note: Financial Year End - 30 June 2Q13: Oct – Dec 2012

22.0 28.7 27.3 16.0 12.7 29.3 29.3 20.7 19.3 32.5 40.9

13.7 15.8 44.6 35.6 34.8 20.6

40.9 34.3

50.4 29.7

17.6 22.0

38.0 34.5 19.5 20.8

37.8 36.4

8.9 10.8

31.5 31.3

16.0 9.1

20.2 18.0 12.7

38.9 59.6

34.6 32.4

59.3 67.6

42.7 60.5

105.2

27.4 14.6

42.3

58.1

41.4 34.0

69.0 95.1

63.8 70.9

125.7

0

50

100

150

200

250

300

350


RM

B (

mil)

Quarterly Gross Profit


57.0

18

2Q13 gross profit up 42.9% yoy


56.3

79.1

33.6 34.7

67.3 63.8

85.5

67.4

151.5

195.1

98.6 93.0

204.4

229.6

157.3 161.1

2Q13: Oct – Dec 2012

292.0

19

21.9% 21.5% 22.0% 19.1%

15.6%

21.3% 21.5% 23.0% 20.8% 20.9%

26.5% 26.5% 28.4%

26.2% 24.7%

21.0% 23.4% 24.4%

48.1% 51.3% 52.2%

50.7% 51.9% 52.2% 52.7% 54.0%

50.0% 49.4%

55.7% 56.5% 54.5% 55.4%

53.4%

47.3%

53.0%

59.8%

28.5% 28.5% 31.4%

33.5% 31.7% 31.6% 32.5% 31.4% 31.6%

34.9% 33.9%

50.4%

46.4% 48.9% 49.5%

51.5% 52.7% 53.0%

55.1%

53.7%

55.4%

55.4%

0%

10%

20%

30%

40%

50%

60%

70%


Gross Profit Margins


Upward trend in margins for 「Dukang」 brand


9.6 20.2 11.4 10.8 8.9 14.3 13.5 19.4 18.1 36.3 45.9 29.5 19.4 35.6 97.4 71.9 39.4 50.6

5.6% 8.7%

6.3% 9.2%

7.2% 7.2% 6.7% 8.0% 8.6% 8.2% 8.9% 11.5%

8.0% 6.6%

16.5% 15.9%

9.7% 6.9%

0%

5%

10%

15%

20%

25%

30%

35%

40%

0

20

40

60

80

100


A&P expenses and A&P as a percentage of sales

A&P A&P as a % of sales

20

(RMB ‘Mil) %

Investments to enhance brand value


China National Sugar and Alcoholic Commodities Fair

Peony Cultural Festival

TV Ads

Luoyang Dukang National Trade Fair

2Q13: Oct – Dec 2012

104.9

25.1

168.0

218.1

131.1

207.9

94.4

144.0

149.7 14.9%

3.2%

11.8% 11.9%

16.8% 18.2% 17.5% 19.5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

0

20

40

60

80

100

120

140

160

180

200

FY09 FY10 FY11 FY12 1H12 1H13 2Q12 2Q13

Pe

rce

nta

ge (

%)

RM

B (

mil)

Net Profit & Margin

Profit attributable to equity holders Net Profit Margin

21

*

1H13 earnings represents 95.3% of FY12 earnings

*One-off non-cash valuation loss of RMB149.7 million related to the fair value loss recognized upon the conversion of convertible bonds in November 2010. The fair value loss represents the difference between the initial recognition of the fair value of all components of the convertible bonds of RMB349.7 million as at 10 May 2010 (issue date) and the principal amount of the convertible bonds of RMB 200.0 million. Note: Financial Year End - 30 June 2Q13: Oct – Dec 2012

Half Year Analysis

Quarterly Analysis

22

27.7 34.9 27.7 14.6 15.9 35.6 33.2

-59.6*

13.4 60.8 75.2 18.6 36.6 94.4 62.4 24.7 63.9 144

16.1% 15.0% 15.3% 12.4% 12.8%

16.9% 16.5%

-24.5%

6.4%

13.7% 14.6%

7.2%

15.1% 17.5%

10.6%

5.4%

15.7% 19.5%

-30%

-20%

-10%

0%

10%

20%

30%

40%

-100

-50

0

50

100

150

200


(%)

RM

B (

mil)

Quarterly Net Profit & Margin

Net Profit Net Profit Margin

2Q13 earnings up 52.5% yoy on margin improvement


*One-off non-cash valuation loss of RMB149.7 million related to the fair value loss recognized upon the conversion

of convertible bonds in November 2010

2Q13: Oct – Dec 2012

RMB (mil) As at 31 Dec 2012 As at 30 Jun 2012

Total Equity 1,773.1 1,565.2

Total Assets 2,229.7 1,976.7

Inventories 385.6 404.9

Cash & Equivalents 731.3 469.2

Total Liabilities 456.6 411.5

Bank Borrowings 60.0 55.0

Gearing Net cash Net cash

23

Healthy financial position


RMB (mil) 2Q13 2Q12

Net cash generated/(used in) operating activities 221.6 314.9

Net cash generated/(used in) investing activities (0.9) (0.2)

Net cash generated/(used in) financing activities (16.0) (2.2)

Net Increase/(decrease) in cash and cash equivalents

204.7 312.5

2Q13: Oct – Dec 2012

24

No. of days 1Q13 FY12

Accounts Receivable Turnover 10 15

Accounts Payable Turnover 47 72

Inventory Turnover 108 176

Turnover ratios

Notes: Accounts Receivable Turnover = Trade receivables as at end of quarter x 365 days 4 x Revenue for the quarter Accounts Payable Turnover = Trade and bills payables as at end of quarter x 365 days 4 x Cost of sales excl. consumption tax for the quarter Inventory Turnover = Inventories as at end of quarter x 365 days 4 x Cost of sales excl. consumption tax for the quarter


Growth strategies

D

Our vision

26 Geographical Reach

Scal

e o

f O

pe

rati

on

s

Top-tier brand in Henan Province by 2013 Top-tier brand in the PRC by 2015

Henan Province (Luoyang and Zhengzhou)

Neighbouring Provinces

National

Three-pronged growth strategies

27

2. Strengthen distribution

network

3. Improve capacity and utilisation

1. Enhance brand value

1. Enhance brand value

Premium positioning of Jiuzu Dukang "千年老窖万年糟，酒好全凭窖池老” – grain alcohol from older fermentation pools make better

quality baijiu

Rather then separate each product range by the age of grain alcohol, Jiuzu Dukang retails under four categories distinctly characterized by age of fermentation pools, aged between 20 to 50 yrs

Made a 19.7% contribution to Group sales in 2QFY13

Differentiated positioning of Dukang and Siwu brands to target mid to high class and mass-market consumers respectively High-quality but economically-priced Siwu brand products appeal highly in times of economic

uncertainty

Widen product range under Dukang brand Leverage on listing in Taiwan by cooperating with Taiwan Tobacco and Liquor Corporation in Dec

2011 to OEM sake

Penetration into overseas liquor markets Partnership with one of Korea’s largest F&B business group - Lotte Chilsung Beverage Co., Ltd in

December 2011 to enter the South Korean market

The accreditation of Sino-Japanese Friendship Partnership Award kicks off its journey to Japan

28

2. Strengthen distribution network

No. of distributors *

Siwu Luoyang Dukang

2010 2011 Dec 2012 2010 2011 Dec 2012

Henan Province 369 64 69 80 114 144

The rest of China 8 5 0 22 56 83

*None of the top 5 distributors accounts for more than 10% of sales

Super Market Restaurant Specialty Store Flagship Store Dennis Department Stores

Present at “China National Sugar and Alcoholic Commodities Fair”

Host the annual “Dukang National Trade Fair” on 18 May

Streamline distribution network of Siwu and expand distribution network of Luoyang Dukang

29

3. Improve capacity & utilisation

700

2,200 2,410

2,300

700

2,200 2,410

2,300

700

2,200

347

1,025 1,175 1,262

355

2,196

2,446 2,403

802

2,313

50% 47% 49% 55%

51%

100% 101% 104%

115%

105%

0%

20%

40%

60%

80%

100%

120%

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13

Grain Alcohol of Luoyang Dukang*

Quarterly Capacity Output Utilisation Rate

(Tonnes) %

30

*Annual capacity of 7,610 tonnes from 2,968 of fermentation pools ** Fermentation period of 60 days for Luoyang Dukang Note: Financial Year End - 30 June 2Q13: Oct – Dec 2012

3. Improve capacity & utilisation

309

929 929

723

309

929

788 636

-

636

478

919 844

651

357

1,082

749 642

-

638

155%

99% 91%

90%

116%

116%

95%

101%

100%

0%

20%

40%

60%

80%

100%

120%

140%

160%

(100)

100

300

500

700

900

1,100

1,300

1,500

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13

Grain Alcohol of Siwu*

Quarterly Capacity Output Utilisation Rate

(Tonnes) %

*Annual Capacity of 1,909 tonnes from 1,548 of fermentation pools ** Fermentation period has been adjusted from 45 days to 60 days since Jan 2012 Note: Financial Year End - 30 June

31

Zero output as pool idle time changed

from Jun - Aug to

Jul - Sep

2Q13: Oct – Dec 2012

Investment merits

E

Investment Merits

Strong growth momentum for the Chinese baijiu industry; supported by

population growth and rising disposable income

Baijiu industry appears largely resilient to economic cycles as consumers

tend to drink baijiu in both good and bad times

「Dukang」 brand enjoys strong brand recognition in China

Growth potential from the launch of new premium products and

increasing utilization rates

Attractive valuation in comparison with Chinese peers

33

Thank You “何以解憂，唯有杜康。”

Contact details: Ngo Yit Sung Corporate & IR Manager, Dukang Distillers Holdings Ltd Tel: +65 8111 4885 (Singapore) + 886 989 260 687 (Taiwan) Email: [email protected] Kamal Samuel / Kathy Zhang IR Consultant, Financial PR Pte Ltd Tel: +65 6438 2990 (Singapore) Email: [email protected]

34

mailto:[email protected]




2q13 (oct’12 – dec’12) results...2013/02/07 · 2q13 (oct’12 – dec’12) results...

Documents