interim results - todayir · this presentation may contain forward looking statements which are...
TRANSCRIPT
Interim Results
Peak Sport Products Co., Limited (1968.HK)
This presentation is prepared by Peak Sport Products Co., Limited (the “Company”) solely for information purposes and is not to be construed as a solicitation of an offer to buy or sell any securities of the Company in any jurisdiction. Information is given in summary form and does not purport to be complete. This presentation is prepared without taking into account the investment objectives, financial situation or particular needs of any particular person. In this connection, information in this presentation is not investment advice and is not intended to be used as a basis for making an investment decision.
This presentation may contain forward looking statements which are based on current
expectations of the Company’s management about future events and past performance. These expectations are, however, subject to known and unknown risks, uncertainties and assumptions, many of which are outside the control of the Company, and may involve significant elements of subjective judgment and assumptions as to future events which may or may not be correct. Past performance is no guarantee of future performance. Therefore, there is no assurance that actual results or performance will not differ materially from future results or performance expressed or implied by the forward looking statements.
Information in this presentation is made only as at the date of this presentation unless otherwise
stated and subject to change without notice. None of the Company’s directors, employees or agents undertakes any obligation to correct or update information in this presentation as a result of new information, future events or otherwise.
Disclaimer
2
4 Financial Review
Business Operations
Future Strategies
Questions and Answers
Company Background
3
14
24
28
29
Agenda
Tony Parker
Financial Review
(RMB million) 1H2014 1H2013 Change
Turnover 1,291.0 1,172.9 +10.1%
Gross profit 496.2 398.8 +24.4%
Operating profit 198.9 150.5 +32.2%
121.0 89.9 +34.6% Net profit
Gross profit margin 38.4% 34.0% +4.4 pts
Operating profit margin 15.4% 12.8% +2.6 pts
Net profit margin 9.4% 7.7% +1.7 pts
Basic earnings per share (RMB cents) 5.77 4.29 +34.5%
Diluted earnings per share (RMB cents) 5.77 4.29 +34.5%
Interim dividend per share (HKD cents) 4 8* -50.0%
Dividend payout ratio 55.0% 148.7% -93.7 pts
Key Financials
5 *Including 6 cents special dividend
(As a percentage of turnover) 1H2014 1H2013 Change
Advertising & promotion expenses 11.2% 11.2% +0.0 pts
Staff costs 16.6% 13.4% +3.2 pts
Research & development expenses 2.3% 2.5% -0.2 pts
1H2014 1H2013 Change
Effective tax rate 36.1% 37.7% -1.6 pts
Expense Ratios
Corporate Income Tax
(1) The calculation of gearing ratio is based on the total bank loans divided by the equity.
Assets and Liabilities Ratios
(As at the period / year end date) 30 Jun 2014 31 Dec 2013
Current ratio 4.7 4.6
Gearing ratio (1) 23.6% 18.6%
Net asset value per share (RMB) 1.96 1.96
Key Financials
6
(Days) 30 Jun 2014 31 Dec 2013 30 Jun 2013
Avg inventory turnover days (2) 87 81 85
Avg trade and bills receivable turnover days (3) 123 135 151
Avg trade and bills payable turnover days (4) 53 45 45
(2) Average inventory turnover days is equal to the average of the opening and closing inventory divided by the cost of sales and multiplied by the number of days for the period / year.
(3) Average trade and bills receivable turnover days is equal to the average of the opening and closing trade and bills receivable divided by the turnover and multiplied by the number of days for the period / year.
(4) Average trade and bills payable turnover days is equal to the average of the opening and closing trade and bills payable divided by the cost of sales and multiplied by the number of days for the period / year.
As at the period / year end date
For the period / year ended
(RMB million) 30 Jun 2014 31 Dec 2013 30 Jun 2013
Inventories 400.4 365.7 340.2
Trade and bills receivable 831.2 906.9 938.6
Trade and bills payable 225.3 241.8 215.2
Working Capital
7
(RMB million) 30 Jun 2014 30 Jun 2013
Net cash flow generated from operating activities +129.9 +224.7
(RMB million) 30 Jun 2014 31 Dec 2013 Change
Cash & bank deposits (including pledged deposits) 3,491.4 3,280.7 +6.4 %
Less: Bank loans (969.8) (766.2) +26.6 %
Net cash & bank balances 2,521.6 2,514.5 +0.3 %
Net Cash & Bank Balances
For the period
As at the period / year end date
Operating Cash Flow
Net Cash & Operating Cash Flow
8
998.9 999.6
174.0 291.4
1H2013 1H2014 1H2013 1H2014
Europe 14.1%
22.6% N. America 1.8%
S. America 1.0% Eastern 25.0%
Southern 28.1%
77.4% Northern 24.3%
1H2014 (1H2013: 85.2%)
China Overseas
0.1% 67.5%
China 77.4%
(1H2013: 14.8%)
Overseas 22.6%
Market Segment Analysis
By Regions (China) By Regions (Overseas Market)
Africa 0.7%
Asia 4.6%
Australasia 0.4%
For the six months ended 30 June 2014
Turnover by Market Segment
9
4,646.9
2,902.9 2,612.9
1,172.9 1,291.0
2011 2012 2013 1H2013 1H2014
RMB (million)
(%) of Turnover
RMB (million)
(%) of Turnover
Change In (%)
Footwear 513.6 39.8 475.8 40.6 7.9
Apparel 751.8 58.2 665.6 56.7 13.0
Accessories 25.6 2.0 31.5 2.7 (18.7)
Total 1,291.0 100.0 1,172.9 100.0 10.1
10.1%
1H2014 1H2013
Turnover Changes
Turnover by Product Category
10
Sales Volume & Average Unit Selling Price (ASP)
Revenue (RMB million) 513.6 475.8 7.9
Volume (million pairs) 5.6 5.3 5.7
ASP at wholesale level (RMB) 91.7 89.8 2.1
Footwear
Revenue (RMB million) 751.8 665.6 13.0
Volume (million pieces) 12.8 13.6 (5.9)
ASP at wholesale level (RMB) 58.7 48.9 20.0
Apparel
1H2014 1H2013 Change (%)
1H2014 1H2013 Change (%)
11
Gross Profit 24.4%
Gross Profit Margin 4.4 pts
1,159.7 1,616.3
Footwear - Gross Profit Margin Apparel - Gross Profit Margin
Gross Profit Margin
(RMB in millions)
Overall Gross Profit / Gross Profit Margin
For the six months ended 30 June 2014
Gross Profit & Gross Profit Margin
12
1,832.5
1,058.2 926.6
398.8 496.2
39.4%
36.5% 35.5%
34.0%
38.4%
30%
35%
40%
0
400
800
1,200
1,600
2,000
2011 2012 2013 1H2013 1H2014
38.9% 36.0% 35.2% 34.7% 36.1%
0%
10%
20%
30%
40%
50%
2011 2012 2013 1H2013 1H2014
40.0% 37.1% 35.6% 33.4% 40.1%
0%
10%
20%
30%
40%
50%
2011 2012 2013 1H2013 1H2014
Net Profit Margin 1.7 pts
Net Profit 34.6% Operating Profit 32.2%
(RMB in millions) (RMB in millions)
Operating Profit Margin 2.6 pts
For the six months ended 30 June 2014 vs 30 June 2013
Operating Profit / Margin Net Profit / Margin
Profitability
13
414.0 403.3
150.5 198.9
14.3% 15.4% 12.8%
15.4%
0%
6%
12%
18%
0
100
200
300
400
500
600
2012 2013 1H2013 1H2014
310.6
244.3
89.9 121.0
10.7% 9.3%
7.7% 9.4%
-3%
2%
7%
12%
0
100
200
300
400
500
2012 2013 1H2013 1H2014
Net Profit Margin Operating Profit Margin
Tony Parker
Business Operations
Highlights in Overseas Market FIBA
Global Sponsorship
Australasia 0.4%
Australia National Basketball Team
New Zealand National Basketball Team
Africa 0.7%
Côte d’Ivoire National Basketball Team
Cameroon National Basketball Team
New Zealand Olympic Committee
Europe 14.1%
Serbia National Basketball Team
Montenegro National Basketball Team
Germany National Basketball Team
Slovenia National Olympic Committee
Asia 4.6%
Stanković Continental Champions' Cup
Lebanon National Olympic Committee
N. America 1.8%
S. America 1.0%
Overseas Market Sales
15
WTA
Asia Pacific Sponsorship
Iran National Basketball Team
(RMB in millions)
274
401 459
388
533
291
0
100
200
300
400
500
600
2009 2010 2011 2012 2013 1H2014
1. Andrew Nicholson 2. Anthony Morrow 3. Beno Udrih 4. Carl Landry 5. C.J. Watson
6. Chase Budinger 7. George Hill 8. Jason Richardson 9. JaVale McGee 10. Tony Parker
Teams
Players
Peak has the right to display PEAK signage at home stadiums of Houston Rockets, Miami Heat and San Antonio Spurs Endorsed NBA players are required to wear PEAK athletic shoes during all kinds of events and tournaments
10 Endorsed Players in 9 NBA
Teams as at 30 June 2014
League Peak is the Official Marketing Partner of NBA in China
NBA – the world’s most recognized basketball league
Association with NBA
16
Battier VIII for Shane Battier
Team Attitude GH3 for George Hill
TP9 I for Tony Parker
“Thorns & Flowers” 2014 NBA Playoffs Collection
National Basketball Teams
Basketball & Other Promotion Partners
New Zealand Slovenia Lebanon
Serbia Australia New Zealand Cameroon Montenegro Côte d'Ivoire Germany
FIBA
Stanković Continental Champions’ Cup
Basketball Tournament Organizers National Olympic Committees
Iran
17
Other Focuses: Tennis & Running
Tennis Running
Exclusive supplier of apparel & footwear in the Asia-Pacific Region
Women’s Tennis Association
24 International Tennis Spokespersons
- “悦跑 (Fly Running)”, a series of innovative running products - Promotion partners included CCTV, Guangdong
Sport TV, internet media and sports magazines
18
2014 Peak Team China Tour
2014 Tour of Qinghai Lake International Cycling Race
2014 Stanković Continental Champions’ Cup
It was an annual international highway cycling race held in China, attracting top
cyclists around the world
Our NBA spokespersons will visit more than 10 cities in China
Peak will sponsor the US Team in 27th Winter Universiade in Granada
It was an annual international basketball tournament for national
teams held in China
2014 NBA Nation
It was an interactive event promoting basketball held across 10 cities in
China
WTA Tour
It included 7 tennis tournaments held in 5 countries
USA University Sports Federation
Major Sponsored Events
19
Distribution Model
* Based on the comparison with the actual sales (derived from sales fair orders and replenished orders) for the same quarter in 2013.
Distributors & Same Store Sales
Product Season Growth Sales Fair
Date
2014Q2 High single-digit* 5 Nov 2013
2014Q3 Mid-teens 24 Feb 2014
2014Q4 Mid-teens 20 Apr 2014
2015Q1 Mid-teens 20 Jun 2014
Quarter Growth
2013Q3 Low single-digit
2013Q4 Low single-digit
2014Q1 Low single-digit
2014Q2 Low single-digit
Sales Fair Order Book at wholesale
prices
Same Store Sales
at retail prices
Peak 69 Exclusive
Distributors as at 30 June 2014 Retailers Consumers
20
Total number of authorized retail outlets in China 6,000 6,012
- Flagship 19 20
- Basic 3,639 3,626
- Department Store or Shopping Mall 2,279 2,303
- Basketball Specialty 63 63
Total retail floor area (sq. m) 540,394 541,607
Average floor area per retail outlet (sq. m) 90.1 90.1
1st tier 3.0%
2nd tier 12.3% 3rd tier 84.7%
No. of Outlets by Types of City
31 Dec 2013 30 Jun 2014
As at 30 Jun 2014
Northern 30.9% Eastern 33.8%
Southern 35.3%
As at 30 Jun 2014
No. of Outlets by Regions
Authorized Retail Outlets in China
21
Fengze (Fujian Province) 1.2m pairs 1.2m pieces
Shang’gao (Jiangxi Province) 2.3m pairs 0.2m pieces
Hui’an (Fujian Province) 1.3m pairs 4.9m pieces
Self-Production Volume 4.8m pairs 6.3m pieces
Total Production Volume (self-produced + outsourced) 5.9m pairs 12.9m pieces
Apparel Footwear
Outsourced 18.6%
Self-produced 81.4%
1H2014 (1H2013: 32.1%)
(1H2013: 67.9%)
Outsourced 51.2%
Self-produced 48.8%
1H2014 (1H2013: 64.2%)
(1H2013: 35.8%)
Footwear Apparel
Production Volume
22
1H2014 Production Volume
Research & Development
▲ 4 R&D workshops with 3 in China (Beijing, Guangzhou, Quanzhou) and 1 in USA (Los Angeles)
▲ Employed 225 research and design professionals
▲ Introduced 270 new footwear, 688 new apparel and 244 new accessory products
R&D Facilities and Capabilities
As at 30 June 2014
23
Future Strategies
Focus on basketball and increase the marketing and promotion activities on other sports categories: running and tennis Continue to utilize renowned tournaments
organizers such as FIBA, WTA and other promotion partners
Strive to enhance the international & professional image Continue to allocate a significant portion of resources
to brand building and maintenance
Enhancement of the Peak Brand
Future Strategies
25
Improvement of Product Functionality and Variety
Future Strategies
Continuously increase resources in technical innovation to improve products’ comfort, durability and performance
Strengthen the collaboration with sponsored elite athletes and enhance communication with customers
Still place emphasis on basketball, running and tennis sectors and consistently look at opportunities to expand our footprint to meet new customer needs
May consider expanding some of our current product lines, for example, outdoor products and kidswear
26
Optimization of Distribution Channels
Future Strategies
Increase the number of distributors to enhance their competitiveness and optimize resource allocation
Encourage distributors to open more of their own retail outlets to further enhance their responsiveness to market changes
Distributors Retail Outlets
Continue to optimize the distribution channels and expect the total number of retail outlets in China to remain at approximately 6,000 in 2014
Strive to bolster store profitability and efficiency
27
Questions and Answers
Tony Parker
Company Background
2007
PEAK has been an official marketing partner of National Basketball Association (“NBA”) in China since 2007
2009 The Company was listed on the
Main Board of the Hong Kong Stock Exchange on 29 September 2009
1988 The Company’s chairman, Mr. Xu
Jingnan, set up his first factory producing athletic shoes in 1988
2008 PEAK has had an association with
Fédération Internationale de Basketball (“FIBA”) since 2008
2010 PEAK has had an association with
Women’s Tennis Association (“WTA”) since 2010
1991 The “PEAK” brand was launched in
1991
Brand History
30
Peak Shoes Peak Jiangxi Peak China
100% 100% 100% 100%
Peak Xiamen Peak Shandong Peak Sports
100% 100%
100%
68.8% 31.2%
Other Investors
Peak Sport ( the listed company )
Peak Investment
Peak Hong Kong
100%
100%
Outside China
In China
Peak USA
As at 30 June 2014
Xu’s Family
Shareholding Structure
31
