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AR2013AR2013Corporate PresentationCorporate Presentation
February 2014February 2014
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Disclaimer
This presentation and subsequent discussion may contain certain forward-lookingstatements with respect to the financial condition, results of operations and business ofCabbeen Fashion Limited. These forward-looking statements represent Cabbeen’sexpectations or beliefs concerning future events and involve known and unknown risks anduncertainties which could cause actual results, performance or events to differ materiallyfrom those expressed or implied in such statements.
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I. Company Overview &Major Achievements in 2013
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Design, market and sell men’s apparel, footwear and accessories under our 2 brands and a sub-brand
Conveys the concept of a modern, trendy, individualistic and innovative lifestyle, as well as confidence and zest for life
Accumulated 210,000 VIP customers(1)
Revenue contribution: Cabbeen Lifestyle + Cabbeen Chic:
>90% Cabbeen Urban: <10%
Our Designer BrandOur Designer Brand
Company Overview
Chairman and Chief Designer – Mr. Ziming Yang, commonly known as “Mr. Cabbeen”
Won the award for the “14th
China Fashion Design Top Award” 2010, which is recognized within the industry as top honor
Lead our design and R&D team consisted of 127 members as at 31 Dec 2013
Leading apparel designer brand in China(2)
One of theTOP 3 fashion casual menswear companies in China(3)
Ranks 2nd in terms of brand recognition among China’s fashion casual menswear brands (4)
Our Top DesignerOur Top DesignerOur Leading Market PositionOur Leading Market Position
Our Retail OutletsOur Retail Outlets
A total of 1,027 retail outlets as at 31 Dec 2013, representing a net increase of 69 retail outlets yoy
CabbeenLifestyle:
931 retail outlets, +46
CabbeenUrban:
96 retail outlets, +23
Source: Company information, Frost & Sullivan1. As of 31 Dec 20132. China Fashion Association, based on retail revenue, the number of retail outlets and brand awareness3. Based on 2012 retail revenue4. In 2012, survey data provided by Frost & Sullivan
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Major Achievements in 2013
Turnover increased by 0.4% to RMB943 million from RMB940 million in 20122
Profit for the year recorded RMB195 million, up 50.0% yoy3
A total of 1,027 retail outlets as at 31 Dec 2013, a net increase of 69 retail outlets yoy5
SSS growth in 2013 at 11.7% amidst fierce competition6
No. of VIP members increased to over 210,000, up 64% yoy7
Successfully listed on the Main Board of HKEx on 28 Oct 20131
Proposed a final dividend of HK14.5 cents4
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Future Development Strategies
Continue to promote our brand name and enhance our brand recognition throughout China
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Further enhance our design and R&D capabilities2
Further strengthen and enhance the efficiency of our distribution network. Plan to establish 10 self-operated retail outlets in 2014
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Continue to upgrade and expand our ERP system to enhance the management of our value chain
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Source: Company information
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II. Operational Review
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Expanding Distribution Network
Source: Company information1. As of 31 Dec 20132. As of 31 Dec 2013, tier-1 cities include Beijing, Shanghai, Shenzhen, Guangzhou; tier-2 cities include the capital cities of each province (excl. Guangzhou), municipalities
(excl. Shanghai and Beijing) and the capitals of each autonomous regions; tier-3 cities are prefecture-level cities except tier-1 and tier-2 cities; tier-4 cities are county-level and township-level cities
Distribution Network Coverage(1)Distribution Network Coverage(1)Distribution ChannelDistribution Channel
27 28 37 32
283
393 391 408
0
100
200
300
400
500
12/31/2010 12/31/2011 12/31/2012 12/31/2013
Distributors Sub-distributors
No.
No. of Distributors / Sub-distributorsNo. of Distributors / Sub-distributors
327 458 416 443
266
416 427 44044
91 115 144637
965 958 1,027
0
250
500
750
1,000
12/31/2010 12/31/2011 12/31/2012 12/31/2013
Street Shops Department Store Concessions Shopping Mall Outlets
No. of RetailOutlets
Our Group
End customers
Retail outlets operated by distributors
Retail outlets operated by us
Distributors Sub-distributors
Retail outlets operated by sub-
distributors
A total of 1,027 retail outlets as at 31 Dec 2013,representing a net increase of 69 retail outletsA total of 1,027 retail outlets as at 31 Dec 2013,representing a net increase of 69 retail outlets
Store Breakdown by Distribution ChannelStore Breakdown by Distribution Channel
Cities(2) No. of Stores % of total outlets
Tier 1 67 6.5%
Tier 2 256 24.9%
Tier 3 517 50.3%
Tier 4 187 18.2%
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Well-Implemented ERP System among Peers
Our ERP system, designed by SAP and customized in-house, is one of the most advanced systems among peers
Enhance outlet management and operation
Make sales forecasts and provide purchase guidance Send monthly sales report to each distributor with analysis
Enhance inventory control
Closely monitor the inventory levels, age and composition of distributors and sub-distributors on a daily basis
Provide guidance to distributors to reallocate inventories
Better understand consumer preferences
Make timely assessments regarding market trends Help to determine the corresponding marketing events and
customer services offered to VIP
Enhance logistics control Use EWM system to better facilitate logistics management
in warehouse Keep track of each and every product from OEMs to end
consumers
Cabbeen ERP system
Outlet
Outlet
OutletOutlet
Outlet
Product innovation and improvement
Design and R&D
VIP database
Analysis and study for
improvement
Data analysis via ERP system
Inventory management & sales results
analysis
Point-to-point communication
with outlets/ distributors
Outlet information
transmitted to Cabbeen on a real-time basis
Enhance management and tackling
capability
Manage all information related to production, supply chain & distribution, and monitor every
product from production, warehouse to sale and provides 100% coverage to the entire value chain
Manage all information related to production, supply chain & distribution, and monitor every
product from production, warehouse to sale and provides 100% coverage to the entire value chain
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Research latest fashion trends
Conceptualize and transform designs into commercially viable products
Responsible for cuts, fabrics, patterns, colors mix, and source raw materials
Develop production technology to ensure cost and quality control
5-year scholarship arrangement with Beijing Institute of Fashion Technology
Strategic agreements with international design institutes
127 team members as at 31 Dec 2013
Led by Chief Designer Mr. Cabbeen
Strong Design and R&D Support
Strong design, R&D capabilities is critical to our leading Chinese designer brand position
Source: Company information
Design and R&D
Design and R&D team Design and R&D Center Strategic Cooperation
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Customer-oriented Sales Management and Loyal End Customer Base
Expanding VIP Customer BaseExpanding VIP Customer Base Detailed VIP AnalysisDetailed VIP Analysis
Our customer-oriented sales management has helped us build a large and loyal end customer base, which has contributed to the growth of our business
Value-added VIP ServicesValue-added VIP Services
Use VMS system to manage VIP customers
Monitor and review VIP customers’ purchase patterns and records
SMS notifications (birthday blessings, special offer reminders, new arrivals, etc.)
Birthday offers
Gold VIPs will receive fashion magazine ,CabbeenVision every quarter for free
All VIP members have the opportunity to participate in brand promotional events and other VIP–exclusive activities
Local value-added services to VIP customers in different regions, such as garment alteration and free dry–cleaning
Source: Company information1. Valid for 2 years; card holders will lose their accumulated points if they are unable to achieve membership status prior to the expiration of their membership
Over 210,000 Silver and Gold VIP customers in total as of 31 Dec 2013:
Cabbeen Lifestyle
membership requirements
Types of
membershipDiscounts
First purchase Point card(1) –
Spending over RMB3,000 Silver (1) 10%
Spending over RMB8,000 Gold (1) 15%
Cabbeen Urban
membership requirements
Types of
membershipDiscounts
First purchase Point card(1) –
Spending over RMB4,000 Silver(1) 10%
Spending over RMB10,000 Gold(1) 15%
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Creative Marketing and Promotion to Strengthen Brand Image
Sponsorship and product placementSponsorship and product placement Cabbeen VisionCabbeen Vision Self-operated outletsSelf-operated outlets
• Sponsored the CBA Sports in the name Cabbeen Lifestyle, and became the official supplier of CBA
• Interviewed by major documentary program 《时尚圈》 produced by CCTV Documentary
• Product placements in hit TV dramas such as《风云天地》and《@妇产科》
• Official Weixin and Weibo platform “CabbeenApparel”
• Self-edited and self-published fashion magazine “Cabbeen Vision” is circulated in-store and posted to our VIP customers
• Established for 10 years and serves as an outlet for our loyal customers to keep up with Cabbeen’s latest development and fashion trend
• As model stores to enhance our brand recognition, demonstrate our standards for store appearance and provide guidance to distributors in brand promotion and retail management
• We believe that these model stores, along with our other efforts, would help to further improve and unify our brand image at the retail level
• 6 self-operated retail outlets in Guangdong province selling Cabbeen Urban products as of 31 Dec 2013
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III. Financial Highlights
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P&L Summary
For the year ended 31 Dec2013
(RMB’ 000)2012
(RMB’000)Change
(%)
Turnover 943,492 940,057 0.4%
Gross Profit 389,735 380,300 2.5%
Profit before taxation 274,394 200,775 36.7%
EBITDA 293,202 240,890 21.7%
Profit for the year 195,355 130,217 50.0%
Basic and Diluted EPS (RMB) 0.35 0.25 40.0%
Final dividend per share (HK Cents) 14.5 N/A N/A
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Revenue(1)Revenue(1) Total Sales VolumeTotal Sales Volume
Note：1. Revenue from sales to distributors/average number of retail outlets at the beginning and end of the year
Revenue Analysis
292
890940 943
2010 2011 2012 2013
No. of retail outlets increased by 69 to 1,027 in 2013 and average wholesale price remained stable
To help distributors lower their inventory, we proactively reduced the purchase orders we accepted for our 2013 S/S collections and postponed the introduction of our 2013 spring collection
2.9
6.7 5.8 5.5
2010 2011 2012 2013
(m units)
Average Unit Wholesales Selling PriceAverage Unit Wholesales Selling Price
(RMB/Unit)
(RMB m)
101
133
162 169
2010 2011 2012 2013
16Source: Company information1. (Loss) / profit from operations + depreciation + amortisation of lease prepayments + amortisation of intangible assets
Rapid Profit Growth
EBITDA(1) and EBITDA MarginEBITDA(1) and EBITDA Margin NP and NP MarginNP and NP Margin
Average wholesales discount rate offered to our distributors and weighted average retail selling price of our products remained fairly stable in 2013 as compared to 2012
The increase in GP margin in 2013 as compared to 2012 mainly due to a decrease in provision of sales rebates to our distributors
The increase in EBITDA margin in 2013 was consistent with the increase in GP margin, and attributable to an one-off government grant income of RMB29 million and tight cost control
NP margin increased in 2013, which was consistent with the improvement in GP and EBITDA margin, and reduction of finance cost of RMB20.2 million
(7)
78
130
195
(2.4%)
8.8%
13.9%
20.7%
2010 2011 2012 2013
62
284
380 390
21.2%
31.9%
40.5% 41.3%
2010 2011 2012 2013
6
145
241
286
2.1%
16.2%
25.6% 30.3%
2010 2011 2012 2013
GP and GP MarginGP and GP Margin
(RMB m) (RMB m) (RMB m)
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Cost Structure
The decrease in selling and distribution expense primarily represented the expenses saved by the Group by not organizing fashion shows in 2013, whereas in 2012 the Group organized an annual fashion show and an additional fashion show in celebration of its 15th anniversary
Excluding the listing expenses of RMB13.2 million charged for the year ended 31 December 2013, administrative expenses accounted for 10.0% of the Group’s revenue for the same period.
(RMB ‘000)
110,595 107,300
48,288 45,100
158,883 152,400
16.9% 16.2%
2012 2013
Administrative & Other Operating Expenses
Selling & Distribution Expenses
% of Revenue
Administrative & Other Operating Expenses and Selling & Distribution Expenses to Revenue (%)Administrative & Other Operating Expenses and Selling & Distribution Expenses to Revenue (%)
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Average Inventory Turnover Days(1)Average Inventory Turnover Days(1)
Operational Cycle
Average Trade and Bills Receivables Turnover Days(2)
Average Trade and Bills Receivables Turnover Days(2)
Average Trade and Bills Payables Turnover Days(3)
Average Trade and Bills Payables Turnover Days(3)
The decrease of average inventory turnover days in 2013 mainly attributable to the decrease in closing inventory at year end as a result of improved procurement planning , better logistic management with implementation of our EWM system and the disposal of the Group’s production operations in February 2012
Starting in Jul 2012, the Group has ceased to take commercial acceptance bills and has tightened its credit policy, which resulted in the significant decrease in the trade and bills receivables turnover days
Consistent with the credit period granted by the Group’s suppliers and the Group’s practice of using 6-month bank bills to settle trade payables.
Note:1. (average value of inventory at the beginning and end of the relevant period/cost of sales of the relevant year/period) × 365 or 181 days2. (average value of trade and bills receivables at the beginning and end of the relevant period/revenue (including VAT) of the relevant year/period) × 365 or 181 days3. (average value of trade and bills payables at the beginning and end of the relevant period/cost of sales of the relevant year/period) × 365 or 181 days
(Days) (Days) (Days)
55
30
2012 2013
87
34
2012 2013
236253
2012 2013
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Healthy Balance Sheet and Ratios
As at 31 Dec2013
(RMB’ 000)2012
(RMB’000)Change
(%)
Total assets 1,219,342 865,459 40.9%
Total equity 602,588 126,608 376.0%
Cash and cash equivalents 531,800 186,044 185.8%
Return on total assets(1) 16.0% 15.0% 1.0%
Return on equity(2) 32.4% 102.9% -70.5 ppt
Current ratio 1.90 1.07 N/A
Interest coverage ratio(3) 39.9 8.4 N/A
Net debt to equity ratio(4) (73.2%) (38.8%) N/A
Gearing ratio(5) 15.0% 108.2% -93.2 ppt
1. Return on total assets equals net profit for the year divided by the closing balance of total assets.2. Return on equity equals net profit for the year divided by the closing balance of total shareholders’ equity.3. Interest coverage ratio equals profit before interest and tax for one period divided by interest expenses of the same period.4. Net debt to equity ratio equals net debt divided by total equity as of the end of the period. Net debt includes all borrowings net of cash and cash equivalents.5. Gearing ratio equals total debts divided by total equity.
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Use of Proceeds and CAPEX
Purpose of net proceeds %Amount of net
proceeds(HK$ m)
Further enhance our design and R&D capabilities, including acquiring land and equipment, and construct a new building in Guangzhou for expansion of our design and R&D centre
40% 156.3
Brand promotion and marketing 20% 78.1
Establish self-operated retail outlets 20% 78.1
Enhance and upgrade our ERP system 10% 39.1
Working capital and other general corporate purposes 10% 39.1
100% 390.7
CAPEX in 2013: RMB5.2 mCAPEX in 2014: RMB72 m
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Q & A Session