Transcript Shenzhou International Group Holdings Limited

2008
Annual Results Announcement
March 2009
0
Agenda
Financial Highlights
Business Review
Strategies and Plans
Open Forum
1
Financial Highlights
2
Financial Highlights
For the year ended 31 December
(RMB '000)
2008
2007
Change (%)
Turnover
4,822,596
3,655,613
+31.9%
Gross profit
1,149,072
813,860
+41.2%
Profit attributable to equity
holders
699,380
406,882
+71.9%
Basic EPS (RMB cents)
56 cents
33 cents
+69.7%
Final dividend (HK cents)
20 cents
16 cents
+25.0%
Dividend payout ratio: 32.1%
3
Sustainable Turnover & Profit Growth
Turnover
RMB Mn
Profit Attributable to Equity Holders
4,822.6
year ended 31 Dec
699.4
406.9
3,655.6
2007
RMB Mn
2008
2007
year ended 31 Dec
2008
Satisfactory growth in turnover :
- Continuous and significant increase in the sales of sports wear
- Successful expansion into the global distribution market
- Acceleration of the exploration of the domestic market
4
Growing Margins
Net Profit
Gross Profit
1,400
RMB Mn
23.8%
1,200
1149.1
1,000
22.3%
24.0%
800
23.5%
700
23.0%
22.5%
RMB Mn
14.5%
14.0%
699.4
600
500
11.1%
582。7
400
800
813.9
22.0%
600
21.5%
2007
GP
GPM
2008
300
13.0%
12.0%
11.0%
406.9
200
year ended 31 Dec
15.0%
10.0%
2007
NP
2008
NP excl one off gain
year ended 31 Dec
NPM
Improving gross profit margin:
-
Effective adjustment in product mix
Further enhancement of production efficiency
Net profit margin increased by 3.4 pct, due to
-
One-off gain: RMB128.2 million recorded from the forward currency contracts
Strong organic growth: NP increased by 43.2% if excluding the one off gain from the
forward currency contract
5
Turnover Breakdown by Products
Significant growth in sports wear contribution was attributable to continuous
increase in OEM operation for renowned sports brands (Adidas, Nike and Puma)
as a result of increasing proportion of high-end products.
Increase in sales of casual wear as a result of improving product quality, and
shorten delivery turnover
Substantial Growth in sports wear and lingerie wear has enriched the Group’s
product portfolio
For the year ended 31 Dec
2008
2007
Change
RMB'000
%
RMB'000
%
RMB'000
%
Casual wear
2,398,304
49.7%
2,248,981
61.5%
149,323
6.6%
Sports wear
2,042,315
42.3%
1,165,198
31.9%
877,117
75.3%
Lingerie
248,929
5.2%
147,920
4.0%
101,009
68.3%
Other knitting products
133,048
2.8%
93,514
2.6%
39,534
42.3%
3,655,613
100%
1,166,983
By products
Total
4,822,596
100%
31.9%
6
Turnover Breakdown by Regions
Stable growth contribution by Japan market
The European market and other markets (Hong Kong, Korea and Australia) recorded
impressive growth as a result of successful market diversification strategy and global market demand
from certain customers
Declining contribution by the US market as affected by economic turbulence
Growth in domestic sales was driven by increasing demand of high-end sports apparel from renowned
brand names
year ended 31 Dec
2008
2007
Change
RMB'000
%
RMB'000
%
RMB'000
%
2,437,304
50.5%
2,178,725
59.6%
258,579
11.9%
Europe
751,442
15.6%
515,602
14.1%
235,840
45.7%
United States
261,079
5.4%
298,830
8.2%
(37,751)
(12.6%)
Other countries
455,497
9.5%
268,112
7.3%
187,385
69.9%
Domestic market
917,274
19.0%
394,344
10.8%
522,930
132.6%
3,655,613
100%
1,166,983
Japan
Total
4,822,596
100%
31.9%
7
Healthy Financial Position
For the 12 months ended 31 Dec
2008
2007
Inventory turnover days
71
72
Debtor turnover days
31
26
Creditor turnover days
29
38
For the 12 months ended 31 Dec
2008
2007
Gearing ratio (debt to equity) (%)
29%
32%
Cash and Cash Equivalent (RMB Mn)
238
233
Net assets (RMB Mn)
2,873
2,481
Total assets (RMB Mn)
4,321
3,904
8
Business Review
9
Strengthened Management in Lean Manufacturing
For the year ended 31 December
2005
2006
2007
2008
Weaving and knitting (in tons)
30,782
35,247
43,749
53,016
Dyeing and finishing
(in tons)
38,003
43,610
53,363
61,568
Printing and embroidery
(in thousand pieces of fabric)
30,966
63,792
68,915
106,310
Cutting and sewing
(in thousand pieces of apparel)
77,699
95,446
112,446
138,063
Continuous measures on technological reform, equipment upgrade and
technology optimization have reduced our consumption on energy and
water resource throughout our manufacturing process
Effectively controlled its production cost by enhancing its internal
control
10
More Reasonable Customer Base
Casual wear customers
Sports wear customers
Lingerie and other customers
Prominent progress on our strategy to fine-tune the customer base. Two
renowned sports wear customers, ADIDAS and NIKE, account for [33]% (2007:
25%) of Group’s total turnover, with trend showing strong sales growth,
effectively reduced Group’s reliance on single client.
Growing contribution by lingerie, with growing number of lingerie customers.
11
Rational Layout of the Sales Markets
Further consolidated and developed
strengthen Japan market Japan
Removal of quotas system for China’s
textile imports by EU in 2008, resulting in a
strong sale growth of 45.7% from that
market
Continuous rapid growth momentum of the
domestic market, as a result of [increasing
demand for renowned sports brand wear]
Rational layout of
sale markets
lowered the
influence of a single
market on the
Group’s operation
Significant growth in the sales to other
markets, which include Korea, Hong Kong,
China and Australia due to [increasing
demand for high end textile products]
12
Strategies and Plans
13
Optimization of Vertical Integration &
Expansion of Production Capacity
Optimize each production procedure, and
strengthen the coordination and
cooperation
Optimization of
vertical integration
expand our garment production capacity
by improving the efficiency of the existing
equipment
Expansion of
production capacity
Ensure the full utilization of the
productivity of the factories, further
improvement of the production efficiency
and completion of the new garment
factory
Seek for other opportunities for the
construction of new plant
14
Pls provide pics of
Enhancement of R&D &
some new (higher-end)
Focusing on higher-end textile products textile products
Increase the investments in product research and development and promote high-end
development of products
Fully leverage on the competitive edges of the Group in fabric developments  achieve
optimal performance in sales of sports wear and lingerie
Consolidate the competitiveness of its products in the consumer market by adhering to
product diversification and improving the product quality
Casual wear
Sports wear
Lingerie wear
15
Enhancement of Customer Service &
Optimization of Structure of Production Base
Better ancillary services,
including shortening the
delivery turnover of the
products and providing
examination services of the
products
Focus on the production
procedures with high added
value, technology intensive,
high resource consumption and
high requirements to the
ancillary facilities in the coastal
area
Shift certain of the cutting and
sewing procedures to the
labour intensive central area
Anhui
Ningbo
Quzhou
Cambodia
16
Expansion into global distribution markets
Consolidate and further develop the market in Japan
Concentrate on the development of the distribution market in the PRC
Achieving a balanced development in the EU, the US, Korea and
Australia
US
Europe
Asia (incl the PRC,
HK & Korea)
Australia
17
Mission
The Most Competitive
Knitwear Manufacturer In
the World
18
Open Forum
19