2005 Interim Results Corporate Presentation - Li Ning

lining.com

2005 Interim Results Corporate Presentation - Li Ning

2005 Interim ResultsCorporate PresentationAugust 2005


AgendaFinancial HighlightsOperational ReviewMarket AnalysisFuture Outlook and StrategiesOpen ForumPage 2


Financial Highlights


Financial Summary(RMB Mil) 2004 2005 ChangeTurnover788.71,104.3+40.0%Gross profit361.5530.6+46.8%Profit before taxation87.0119.5+37.4%Profit attributable to equity holders54.978.3+42.6%Basic EPS (RMB cents)7.287.65+5.2%Interim dividend per share (RMB cents)Nil2.30N.A.For the 6 months ended 30 JuneNote:Period-on-period growth of profit attributable to equity holders without the IFRS2effect would have been 55.7%.Page 4


Continual Turnover and Profit GrowthSatisfactory turnover andprofit growth mainlyattributable to:- Well defined and clearbrand promotionstrategies- Network enhancementand expansion- A strong productportfolio that fulfills theneeds of customers- Continual enhancementin supply chainmanagement(RMB Mil)2,5002,0001,5001,0005000(RMB Mil)200150100500Turnover1,089.4756.81,104.3788.6519.42003 2004 2005Net Profit67.556.478.337.654.92003 2004 20052H1H2H1HPage 5


Sustainable MarginsStable gross and net profitmargins as a result of:Margin Overview- Strong product R&Dadded value to products- Transformed fromcontrolling manufacturingcosts to deployingresources for the R&D ofnew products to offermore room for profitmargins60%40%20%45.8% 45.8%48.1%7.2% 7.0% 7.1%16%12%8%4%- Continual improvementsin inventory management0%1H2003 1H2004 1H20050%- Implementation of EPOSsystem that led toincreased efficiencyGross MarginNet MarginPage 6


Turnover AnalysisBy Product Categories and BrandsBy product categories:(RMB Mil)By brands(RMB Mil) 2004 2005 Change1,20077.8Apparel454.3648.9+42.8%1,00080034.1Footwear 238.1 366.8+54.0%60040011.8754.61,026.5200507.6Accessories 96.2 88.6-7.9%01H2003 1H2004 1H2005For the 6 months ended June 30LI-NINGKAPPAPage 7


Turnover Analysis By RegionTurnover Breakdown in 1H2005(By Region)Northwesternregion:1.7%Southwesternregion:7.9%Beijing & Shanghai: 8.5%BeijingShanghaiNortheasternregion:12.0%Northern region:14.6%Eastern region:23.3%International markets: 1.3%KAPPA: 7.0%Central region:11.8%Southern region:11.9%Page 8


Key Financial Indicators(RMB Mil)As at31 Dec 2004As at30 June 2005ChangeInventories 318.3 291.9 -8.3%Avg. Inventories Turnover (days) 11297 -15Avg. Accounts Receivables Turnover (days) 3339 +6Avg. Trade Payables Turnover (days)Short-term Liabilities774065 -129 -77.5%Long-term LiabilitiesNilNilN.A.Cash and Cash Equivalents322.6149.1 -53.8%Page 9


Review of Operations


Strategic Alliances with World LeadersFostered alliances with leaders in their respective fieldsBranding andMarketingJoined hands with NetEase to establish adedicated sports channel named “Li Ning-NetEase Sports Channel” for thepromotion of sports and the “Li-Ning”brandEntered into a 3-year strategic marketingpartnership with NBA Properties Inc.Product DesignCooperated with Swarovski for the launchof sports goods with Swarovski’s productsLong-termStrategicAllianceDeveloped long-term alliance with AIGLEto form a joint venture with the exclusiveright for the manufacture, sales anddistribution of products under the AIGLEbrand in the PRC for 50 yearsPage 11


Effective Marketing andAdvertising ProgrammesPage 12


Rapid Distribution and RetailNetwork ExpansionLI-NING brand31 Dec 2004 Jun 30, 2005changeFranchised retail outlets2,2722,698+18.8%Directly managed retail stores117115-1.7%Directly managed concessions233245+5.2%Total 2,622 3,058+16.6%KAPPA brand (Disposed of in August 2005)Franchised retail outlets254314+23.6%Directly managed retail stores32-33.3%Directly managed concessions88N.ATotal 265 324+22.3%Page 13


Well-received New Product SeriesAn enriched product offering with a full range of specialised productsfor popular sportsRunningBasketballTennisGeneralsportsSoccerSwarovski seriesfor ladiesPage 14


“RUN FREE” SpreeLaunched on 15 March, 2005 and soonbecame a hot item for customers“Sold-out” rate from mid March till end of May2005, according to the E-POS system, wasabout 83.5%Page 15


Competitive StrengthsExtensivedistribution andretail networkUnique marketposition anddiversifiedproduct rangeThe leadingsports brand inthe PRCAbundantsports marketingand sponsorshipresourcesProfessionalmanagementteamPage 16


Market Analysis


Market Analysis by SegmentChina Sports Goods Market by SegmentsMarket growthfuelled byincreasingconsumptionpower and the2008 BeijingOlympics3rd tier andothers2nd tier1st tierMetropolitan2nd and 3rd tiercities offerexponentialgrowth potentialin the next fewyears in China2003 2008ERemarks: By retail valueSource: Consumer Behavior Yearbook, Company ResearchPage 18


Market Analysis byProduct Retail Prices2003 – 2008 Sports Goods Retail Price Analysis23%20%30%30%High End: >RMB 500Mid Range: RMB 200-50057%40%Low End:< RMB 200RMB 14.8 billion RMB 50 billionMarket size of branded2003 2008Esporting goods• Currently, low end products form the market mainstream• Along with increasing consumption power, mid ranged products is expected topick up rapidly• By 2008, mid ranged and high end products will each take up 30% share in themarket, eroding the share of low end productsRemarks: By retail valueSource: CompanyPage 19


Market Analysis by Sports TypesSports population (’000 persons)50,00040,00030,00020,00010,0000461513Swimming2008 Sports Market Segment Estimates7HikingRunningBadmintonPing Pong20Basketball95Soccer18FitnessTennis36Unit:RMB 100 MilTargetCustomersGolf0 1,000 2,000 3,00015Driving Force in theSports Market• Basketball and soccerwill continue to takethe lead in the Chinasports market• Increasing popularityand high consumerspending of tennis willmake it a major sportsactivity• Running and fitnesswill also be two majorsports in terms ofmarket size growthAverage spending on sports of the sports population (RMB p.a.)Remarks: The number in each circle denote segment market size by value of sports apparel and footwearSource: Consumer Behavior Yearbook, Company ResearchPage 20


Market OverviewWith increasing GDP, rising sports population and growing salesnetwork in China, the sports product market is expected to maintainrobust growth in the next five yearsSports footwear and apparel will form the top two largest marketsegments. Sales of these two segments in aggregate are expectedto take up 80% of the market in terms of sales value2nd and 3rd tier cities will form the market mainstream by 2008Products for running, basketball, soccer, tennis and fitness will beincreasingly important in the market, along with the increasingpopularity of these sport activitiesGrowing consumption power will fuel the growth of mid ranged andhigh end productsPage 21


Future Outlook andStrategies


Future StrategiesSales Network ExpansionIncrease the number of retail outlets to a total of 5,000 Li-Ning outlets in 2008Launch flagship stores at prime locations in metropolitan and 1st tier citiesEnhance Product DevelopmentEstablish own research and development teamCollaborate with local and international suppliers andmanufacturers on new materials and technologies to enhanceproduct performance (running, basketball, soccer, tennis andfitness)Li Ning Retail OutletExpansion Plan2005Total3,3002006 4,0002007 4,5002008 5,000Page 23


New Store Image4th generation Li-Ning store promotes a strong brand identityPage 24


Future StrategiesStrengthen brand awareness and loyaltyLaunch specialised footwear seriesConduct advertising campaigns to increase mass appealCapture business opportunities arising from the 2008 Beijing OlympicCapture the full potential of the network to maximiserevenues and profitabilityContinue to enhance the Li-Ning brand profileDevelop a multiple brand portfolio through market segmentation strategiesEnhance supply chain managementAchieve faster response to market changes and better efficiencyInstall and upgrade E-POS systems connecting HQ with all retail outletsEmbark on a rolling sales ordering systemPage 25


Li-Ning Brand Business StrategiesCore ProductsTarget SportsFootwear and ApparelFive major areas: Running Basketball Soccer Tennis FitnessGeographicalMarketsPricingBrand building in metropolitan and 1st tier citiesMajor revenue streams from 2nd and 3rd tier citiesPositioned as mid-range priced productsPage 26


Vision, Mission & Core ValuesVisionThe world’s leading brandin the sports goodsindustryMissionThrough sports, we inspirein people the desireand power to makebreakthroughsCore ValuesIntegrity, professionalism,passion, breakthroughs,and trustPage 27


To know more about us, please visit the following websites:http://www.lining.com/http://www.irasia.com/listco/hk/lining/Open Forum

More magazines by this user
Similar magazines