Financial Performance

Transcription

1 INTERIM RESULTS 2017

2 Disclaimer This presentation and the accompanying slides (the Presentation ) which have been prepared by Stella International Holdings Limited ( Stella or the Company ) do not constitute any offer or invitation to purchase or subscribe for any securities, and shall not form the basis for or be relied on in connection with any contract or binding commitment whatsoever. They are only being furnished to you and may not be photocopied, reproduced or distributed to any other persons at any time without the prior written consent of the Company. This Presentation has been prepared by the Company based on information and data which the Company considers reliable, but the Company makes no representation or warranty, express or implied, whatsoever, and no reliance shall be placed on, the truth, accuracy, completeness, fairness and reasonableness of the contents of this Presentation. This Presentation may not be all inclusive and may not contain all of the information that you may consider material. Any liability in respect of the contents of or any omission from this Presentation is expressly excluded. Certain matters discussed in this presentation may contain statements regarding the Company s market opportunity and business prospects that are individually and collectively forward-looking statements. Such forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and assumptions that are difficult to predict. The Company s actual results, levels of activity, performance or achievements could differ materially and adversely from results expressed in or implied by this Presentation, including, amongst others: whether the Company can successfully penetrate new markets and the degree to which the Company gains traction in these new markets; the sustainability of recent growth rates; the anticipation of the growth of certain market segments; the positioning of the Company s products and services in those segments; the competitive environment; and general market conditions. The Company assumes no obligation to update any forward-looking information contained in this presentation. Any forward-looking statements and projections made by third parties included d in this Presentation are not adopted d by the Company and the Company is not responsible for such third-party statements and projections. 2

3 FINANCIAL summary

4 Financial Performance US$ mn 2016 (unaudited) For the six-months ended 30 June (unaudited) Change Revenue % Gross Profit % EBIT % Net Profit % EPS (US ) % Excluding one-off non-recurring items in 2017: US$5.4 million Adjusted EBIT % Adjusted Net Profit % 4

5 Operating Margins 25.0% 24.2% 22.9% 21.0% 21.0% 20.0% 18.7% 18.5% 18.6% Adjusted Gross Profit Margin 15.0% 11.4% 10.9% 10.7% 10.0% 5.0% 9.7% 97% 9.7% 8.4% 8.2% 8.0% 7.3% 9.5% 6.8% 7.2% 7.9% 5.3% 5.3% 73% 7.3% 7.8% 4.2% 4.8% 42% 4.2% 44% 4.4% Adjusted EBITDA Margin Adjusted EBIT Margin Adjusted Net Profit Margin 0.0% H H

6 Healthy Financial Position For the six-months ended 30 June US$ mn (unaudited) (unaudited) Change Cash and cash equivalents % Inventory % Trade receivables % Other receivables % Trade and other payables % Current assets % Non-current assets % Current liabilities % Bank borrowings % Net assets % 0.8% Quick ratio ppt Current ratio ppt Return on invested capital 7.7% 7.4% -0.3 ppt 6

7 Operating Leverage Breakdown of Costs of Sale (as % of Revenue) 100% 75% 61% 6.1% 60% 6.0% 2.7% 0.9% 1.0% 2.9% 15.1% 15.2% 50% 25% 60.3% 59.8% 0% 1H H 2017 Manufacture overhead Subcontracting costs Direct material/finished goods Depreciation Direct labour *Manufacturing only 7

8 Summary of Cash Flow For the six months ended 30 June US$ mn 2016 (unaudited) 2017 (unaudited) Change Cash flow from operating activities Cash flow from investing activities (72.1) (55.6) -22.9% (47.2) (22.6) -52.1% Capital Expenditure (49.3) (23.5) -52.3% Others % Cash flow from financing activities % Dividend paid (56.3) (40.8) -27.5% Bank borrowings % 6% Others (0.3) (0.2) -33.3% Net outflow of cash (34.8) (1.5) -95.7% 8

9 Interim Dividend in 2017 Earnings per share US 3.6 cents or HK 28 cents Interim dividend HK 30 cents 9

10 People Index Size of Labour Force (FTE) 90,000 80,000 78,000 70,000 67,000 60, ,000 As at 30 June 2016 As at 30 June 2017 For the six months ended 30 June Turnover rate* 24.0% 12.0% *Direct Labor Only; Annualized 10

11 BUSINESS REVIEW BUSINESS REVIEW manufacturing business

12 World s Leading Footwear Brand Customers Our client base includes well-known global casual and high- fashion footwear brands 12

13 Stable Geographic Breakdown 1H 2016 Revenue US$721.4 mn 1H 2017 Revenue US$762.4 mn Asia (ex. Other Asia (ex. Other PRC) 20% 8.0% 2.0% PRC) 7.6% 2.1% PRC (inc. HK) 13.9% North America 49.2% PRC (inc. HK) 13.5% North America 47.1% Europe 26.9% Europe 29.7% 13

14 Breakdown by Business Type by Revenue 1H H 2017 Fashion 42.9% Casual 34.2% Fashion 39.1% Casual 30.7% Fashion Fashion Athletic Athletic 23.0% 30.2% *Manufacturing only 14

15 Stable Quantity & ASP Growth Quantity (mn pai rs) CAGR = 1.2% H 1H ASP Higher shipment volume YoY in 1H due to previous low base, growing demand for fashion athletic products and stable demand for casual and fashion products (US$/pai r) CAGR = 4.3% H 1H Fall in ASP attributable to changes to customer product mix 15

16 Our Factories Factory Locations Capacity by Locations China Hebei BDF Hunan Shuangfeng Shaoyang Liantai Dongkou Selena Longhui Stella % 58% 32% 2016 Bangladesh Guangxi Rongxian Beiliu Lingshan Dongguan Selena Stella Simona Longchuan % 53% 40% 2017 (planned) Bay Footwear Coastal China Overseas Hai Phong Quang Ninh Taiping Nike VN Vietnam Philippines Clark Inland China Indonesia Surabaya 16

17 Labour Cost Index DG Inland China Indonesia Vietnam Bangladesh Philippines Incentive Fringe Benefits Over Time Basic Productivity-adjusted Cost per hour (US$) Data as of 30 June

18 BUSINESS REVIEW retail ilbusiness

19 Our Retail Brand Positioning: Affordable Luxury Higher End Luxury (US$400+) Basic Classic Modern Fashion Premium (US$ ) Mid-price (US$51-120) Value (below US$50) Contemporary 19

20 MEDIA EXPOSURE US CELEBRITY Emma Stone, American actress attended the AFI Life Achievement Award Gala. Amanda Seyfried, American actress attended the premiere of Twin Peaks Gigi Hadid, American top model named a Top 50 Model on Models.com 20

21 MEDIA EXPOSURE EU CELEBRITY Naomi Watts, British actress, famous for her role in the film Birdman Elsa Hosk, Swedish top model, attended the De Grisogono Party Monika Jagaciak, Polish top model, attended the 2017 Balmain after- party 21

22 MEDIA EXPOSURE INTERNATIONAL BLOGGER Chriselle Lim, Korean-American stylist and digital influencer Irene Kim, Korean fashion influencer Amiee Song, American fashion blogger 22

23 MEDIA EXPOSURE ASIA CELEBRITY Liying Zhao, Chinese top actress Wu Wang, Chinese top model, shooting by OK! Magazine Mini Yang, Chinese top actress, attended Estee Lauder Asia campaign 23

24 MEDIA EXPOSURE INTERNATIONAL MAGAZINE La Parisienne May Issue 2017 Harper s Bazaar US April Issue 2017 ELLE France June Issue 2017 Smoda Magazine July Issue 2017 Vogue Collections April Issue 2017 Niméro France March hissue 2017 Vogue Paris May Issue

25 MEDIA EXPOSURE INTERNATIONAL MAGAZINE Harper s Bazaar Spain June Issue 2017 Vogue Turkey May Issue 2017 Io Donna Italy March Issue 2017 Grazia France June Issue 2017 Hola Fashion April Issue 2017 Glamour France April Issue 2017 Harper s Bazaar Spain June Issue

26 OUTLOOK

27 Challenges and Opportunities Challenges Opportunities and Strategies Subdued current global economic environment is likely to continue Continue to benefit from growing but normalised demand for fashion athletic products, strategic changes to production allocation o to align with market demand d Rising labour costs, labour turnover and unstable labour supply Diversification of manufacturing base to overseas, primarily Vietnam, to control labour costs and secure a stable workforce Unstable macro environment from recent terrorist attacks and commencement of Brexit negotiations Introduce retail brands to strategically build brand value. Continue to explore opportunities for more new brands and / or strategic partnerships 27

28 SUPPLEMENTARY materials

29 World Premium Footwear Market Our Target Market Shoe Industry and Markets in Western Europe and Brazil (2016, million pairs) m pairs/ USD Production Export price (leather only) (USD per pair) Italy France Spain Portugal Germany Great Britain 5 29 Brazil (leather only) Stella STELLA s addressable market size: around 500 million pairs Source: 2017 Yearbook, Portuguese Footwear, components and leather goods manufacturers association 29

30 COMPANY overview

31 Our Management Team Strong senior management with in-depth industry knowledge and an established track record Name Position Years of Relevant Years with Experience Stella Executive Jack Chiang Chairman & Executive Director Directors: Eric Chao Executive Director Lawrence Chen Executive Director & Group CEO Business Division: Corporate Division: Stephen Chi Executive Director, CEO of the Women s Footwear Business Division and Retail Business Division Dermot Smowton Group COO 35 2 Ray Chen GM of Men s Footwear Business Division Steve Chu GM of Oversea s Footwear Business Division Roger Yang GM of Fashion Footwear Business Division Jerry Chang GM of Sports Fashion Footwear Business Division Experienced Independent Non-Executive Board with diversified background and competencies Don Lee Group CFO Sean Chiu Operation Director 24 2 Mr. Johnny Chen, INED, over 20 years experience in China s capital market and professional service sectors Mr. Peter Bolliger, INED, over 30 years experience in footwear and retail Mr. William Chan, INED, over 30 years experience in human resources profession Mr. Thomas Yue, INED, over 35 years experience in accounting profession Mr. Jie Lian, INED, over 15 years experience in investment banking and private equity 31

32 Corporate and Shareholder Structure Cordwalner Bonaventure Inc. Directors Public 31.02% 9.99% 58.99% STELLA 1836 Manufacturing Retailing WFOE Processing factories Contractual arrangement Greater China Europe Distributor (Asia, GCC) 32

33 Employee Participation Pre IPO Combat Team Vesting Period 5-year (in 5 tranches) 5-year (one-time), KPI triggered Arrangement Held under Cordwalner Bonaventure and several SPVs Held under several Special Purpose Vehicles (SPVs) Ownership 33% 6% Background Around 500 senior managements and other employees shared 1/3 of the company. 30% already distributed to employees Founding families distributed 50mn shares to 500 middle managements and supervisors Considerations Employees contributed capital to Discount to book value build PRC factories Roughly more than 1000 employees own about 40% of the company, which ensures Stella s long term sustainability 33

34 Key Milestones Manufacturing focus Expansion to retail International outreach 1982: Established in Taiwan 2006: Opens first Stella Luna 2009: A global fashion brand 1991: Relocation to PRC 1998: First factory in Vietnam 2010: Diversified into inland China store in Shanghai 2007: Opens first What For store in Shanghai 2008: Opens 100 th Stella Luna store Stella Luna opens first non-east Asia store in Dubai 2011: Launches new men s affordable luxury footwear brand JKJY 2012: New Indonesian production line 2012: Opens first Stella Luna store in Paris 2013: Invested in and developed our design and manufacturing capability for leather accessories, such as handbags 2013: Opens first What For store in Paris 2014: Established footholds in Philippines and Myanmar 34

35 THANK you