Roo Hsing CO, Ltd 7/31/2017
Contents Page Jeans are back to the fashion trend and dominate the market again 3 The market positioning of Roo Hsing company 8 4 big factors driving the growth 12 Continuous pouring of the investment into research and development 17 2
Jeans are back to the fashion trend and dominate the market again 3
The market size and growth of global apparel retail industry Unit:$ Billion USD 11354 11802 12257 12777 13231 13828 14465 15141 15849 16595 2017 2018 2019 2020 2021 2012 2013 2014 2015 2016 2017 estimate 預估 2018 estimate 預估 2019 estimatee 預估 2020 estimate 預估 2021 estimate 預估 Source:2017 version of Euromonitor Passport Data In the year of 2012, the global apparel retail industry market was approximately $11,354 million Until 2016, the market had been growing to $13,231 million The compound annual growth rate is about 39% It is estimated that the global apparel retail industry market will reach $16,595 million in 2021 The compound annual growth rate is about 46% The main factors of future growth: Consumption upgrade the increase of average sale price( driven by developing countries) 4
The market share and future growth of the jeans in the apparel retail industry Rank (the 2016 retail sales) items Percentage (the 2016 retail sales) Retail sales(10 billions USD) 2012 2016 2021 (estimated} Compound annual growth rate% 2012~2016 2016~2021 1 Tops 1726% 1970 2284 2854 377% 456% 2 Sportswear and casual wear 1302% 1389 1723 2306 553% 600% 3 Bottoms 1247% 1455 1650 1990 319% 382% 4 Underwear 849% 920 1123 1454 511% 530% 5 Jeans 757% 866 1002 1298 371% 531% 6 Sweater 637% 738 843 1048 338% 445% 7 Jacket and coat 611% 749 809 945 195% 316% 8 Living clothing 225% 248 298 377 470% 482% Other clothing 2645% 3018 3499 4322 377% 432% Total 10000% 11354 13231 16594 390% 463% Source:2017 version of Euromonitor Passport Data According to the marketing distribution of global apparel retail industry divided by product categories, jeans rank number 5 in global apparel sales in 2016 The compound annual growth rate from year 2012 to 2016 is about 371% The estimate rate to year 2021 can be 531% 5
The year of 2014 is the bottom for global sales of the jeans Source:CNBC, Statistic by Piper Jaffray According to the report by CNBC in 2014, the legging yoga pants, which was the main product for outdoor recreation, officially surpassed the jeans and became the female and teens first choice At that time, the reports speculated whether the jeans would be disappearing from the market or not CNBC even described that the jeans faced the unprecedented strong opponent and were moving on the way of chronic death 6
Denim is back and sport and casual wears should be careful Source:Google Trends data Starting from the end of 2015, the interest of market in jeans was becoming higher and higher The search interest data statistics in November 2016 even revealed that the gap between jeans and yoga paints was becoming significantly widening The analytic report published for the investors by foreign analyst said, We believe the trend of sport and casual wear has remained stagnant For the future, we can only expect the slight growth 7
The market positioning of Roo Hsing company 8
The huge market of clothing industry The statistics of world famous branders The statistics of famous Asia branders Rank Top ten branders Market share 1 H&M 15% 2 Inditex 14% 3 Nike 12% 4 Gap 11% 5 Fast Retailing 10% 6 adidas 10% 7 PVH 09% 8 VF 07% 9 Hanesbrands 07% 10 Levi's 06% Rank Top ten branders Market share 1 Fast Retailing 27% 2 Bestseller 11% 3 adidas 09% 4 Heilan Home 08% 5 Shimamura 08% 6 Nike 08% 7 Inditex 07% 8 World Co Ltd 05% 9 H&M 05% 10 Semir Group 05% source:2017 version of Euromonitor Passport Data The clients of Roo Hsing Company In 2005, WTO started to cancel global textile quota system Clothing industry has the brand-new competition Amancio Ortega Gaona, the CEO of Inditex Group(Zara), is the fifth richest man for Forbes by having 14% of the global clothing market share Yanai Tadashi, the founder of Fast Retailing (Uniqlo), is the richest man in Japan To serve one Zara, Taiwan needs 12 Eclat Textile or 14 Makalot Industrial International big brands have started to integrate their suppliers ( ie decrease the numbers of suppliers) For example, Levi s will have only 5-8 suppliers in the next 2 to 3 years around the world, and only two of them ( Roo Hsing Company in Taiwan, Crystal Group in Hong Kong) are located in East Asia 9
The investment structure of Roo Hsing Company Roo Hsing CO, Ltd 100% 100% 100% 100% 100% 100% 100% Roo Hsing Clothing CO,Ltd (Cambodia) 100% Fain Tei Enterprise Co, Ltd (BVI) 100% Operadora Internaciona l de Zonas Francas Managua Co, Ltd (Nicaragua) Roo Hsing Clothing Ltd (El Salvador) Roo Hsing Clothing Ltd (Dominican ) Tooku Holdings Limited (BVI) JD United (BVI) Limited Cheng Tai Rinsing Ltd Roo Hsing (Shanghai) Import/Export Ltd The subsidiaries which Roo Hsing holds 100% or more than 50% shares amount to 31 Factories in China (7) Factories in Southeast Asia Cambodia(15) Myanmar(2) Factories in Africa Tanzania(1) 10
The world s largest manufacturing group of jeans An important player on the world stage With the design, style development, and material development in Taiwan, we provide the one-stop service from raw material Combine with Taiwan s precision machinery technology, enhance manufacturing efficiency and quality, deepen the industry s connection The big go bigger Rank 1 Main listed Companies at stock exchange market Shenzou International Group Countries FY14 Revenue FY15 Revenue Growth rate% Hong Kong 1,807 2,012 113 2 Hansae Korea 1,248 1,403 124 3 Youngone Korea 1,184 1,401 183 4 LUEN THAI Hong Kong 1,224 1,114 (-89) 5 Delta-Galil Industries Israel 1,032 1,080 47 6 Eclat Textile Taiwan 688 804 169 7 Makalot Industry Taiwan 689 736 68 8 Basic House Korea 522 559 71 9 Roo Hsing Company Taiwan 510 555 88 10 Handsome Korea 499 545 92 11
4 big factors driving the growth 12
Sales growth Organic Growth Expanding the orders of existed clients Levi s would decrease the suppliers from 33 to 26, and then further reduce to 22 from 2013 to 2015 According to Levi s planning, there will be decrease of the suppliers from 20 to 5-8 main suppliers in the next 2 to 3 years Every supplier is expected to provide 125%~20% of Levi s requirements of purchase The increase of the orders from other famous brands Developing new customers Tanzania, Myanmar, Cambodia all have GSP offer, which can raise the willingness of European clients to place the orders Nicaragua, El Salvador are close to the local market of USA New branders in the USA have placed orders for delivery Mergers and Acquisitions(M&A) The branders requirements of supplier integration have been established Roo Hsing deeply feels that textile industry will face the same competition and consolidation as electronics industry Just like what English idioms always said, Go Big or Go Home, in the real world, we choose the Go Big way to expand the scale of economy by merging Refer to what the competitors do: 1 In February 2017, the 35-year-old private Hong Kong Company Crystal Apparel Ltd applied for listing 2 In May 2017, Texhong acquired Nien Hsing s Cambodian factory 13
Enhancement of production efficiency and adjustment The introduction of automation in factory After half year of the introduction of automation in the Roo Hsing Cambodian factory, the production of the jeans per worker per day increases from 17 to 21 Instead of using the traditional rinsing process, the introduction of the laser machine and ozone rinsing machine can save 67% of the water consumption, 85% of the usage of the chemicals and 62% of the usage of energy Inspected raw material distribution China Factories Inspection Factory Southeast Asia Factories Centralized the logistics operation The introduction of ERP and RFID, all global factories online operation Tanzania Factories Unify fabric inspection, raw material is verified by the fabric inspection factory and then distribute to the global plants uniformly Computerize the warehouse management and shorten the pre-operation schedule 14
Capital costs are effectively reduced Cost Revenue The advantages of low capital cost Using the US dollar as the main currency Taiwan has sound financial system and the interest rate is also lower than overseas financing Having strong liquidity of funds in the capital market Capital allocation is more flexible and the benefits of capital utility appear very quickly 15
The management of the suppliers value chain Roo Hsing company Shipment Payment suppliers Banks discount; payment in advance Activating the efficiency of funds for the group Through the banks as the payment platform, the suppliers can get paid earlier With the huge amount of group procurement, the supply price is expected to decline, which will improve the efficiency of capital utility Payment term is stable, which helps Roo Hsing Company have a more flexible capital planning The cost of purchase decreases and the interest rate can be kept low 16
Continuous pouring of the investment into research and development 17
The development of fabrics and the pattern design OEM ODM One-stop service, starting from the source Fabric development: combine the elements including being elastic, electronic, cool, quick-drying and warm with denim fabrics The planning of layout: The marking layout increases the efficiency and saves the fabric from wasting Style design: follow the fashion trend to meet the customers needs Photo taken from:internet 18
Continue the improvement of production process and the development of machinery The research and development of how to improve the production process Shorten the working sections Enhance the utility of the automatic machinery Connecting the machines and operation system together, moving to the one-click production schedule planning system The revolution from handwork to machine Cooperate with the industry sector and academic sector to improve and develop the textile equipment together The history and quality of developing the precision machine tools in Taiwan has achieved the world level Cooperate with the Taiwan dealers to develop and manufacture the automation equipment, strengthening the horizontal connection The cost of developing the precision machines in Taiwan is unrivaled in the world 19
Q&A 20