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2013 Annual ResultsPeak Sport Products Co., Limited (1968.HK)March 2014
Disclaimer
This presentation is prepared by Peak Sport Products Co., Limited (the “Company”) solely forinformation purposes and is not to be construed as a solicitation of an offer to buy or sell anysecurities of the Company in any jurisdiction. Information is given in summary form and does notpurport to be complete. This presentation is prepared without taking into account the investmentobjectives, 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 basisfor making an investment decision.
This presentation may contain forward looking statements which are based on currentexpectations of the Company’s management about future events and past performance. Theseexpectations 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 ofsubjective judgment and assumptions as to future events which may or may not be correct. Pastperformance is no guarantee of future performance. Therefore, there is no assurance that actualresults or performance will not differ materially from future results or performance expressed orimplied by the forward looking statements.
Information in this presentation is made only as at the date of this presentation unless otherwisestated and subject to change without notice. None of the Company’s directors, employees oragents undertakes any obligation to correct or update information in this presentation as a result ofnew information, future events or otherwise.
2www.peaksport.com
Agenda
4Corporate Background
7Financial Review
17Business Operations
26Future Strategies
30Questions and Answers
www.peaksport.com 3
Shane Battier
Corporate Background
Corporate BackgroundBrand History
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
www.peaksport.com 5
Corporate BackgroundShareholding Structure
Peak Shoes Peak Jiangxi Peak China
100% 100% 100% 100%
Peak Xiamen Peak ShandongPeak Sports
100%100%
100%
68.4% 31.6%
Other Investors
Peak Sport ( the listed company )
Peak Investment
Peak Hong Kong
100%
100%
Outside China
In China
Peak USA
As at 31 December 2013
Xu’s Family
www.peaksport.com 6
Tony Parker
Financial Review
Financial ReviewKey Financials
(RMB million) 2013 2012 Change
Turnover 2,612.9 2,902.9 -10.0%
Gross profit 926.6 1,058.2 -12.4%
Operating profit 403.3 414.0 -2.6%
244.3 310.6 -21.3%Net profit
Gross profit margin 35.5% 36.5% -1.0 pts
Operating profit margin 15.4% 14.3% +1.1 pts
Net profit margin 9.3% 10.7% -1.4 pts
Basic earnings per share (RMB cents) 11.64 14.80 -21.3%
Diluted earnings per share (RMB cents) 11.64 14.80 -21.3%Total dividend per share (HKD cents)( Final: 6 cents (normal); 2 cents (special) )( Interim: 2 cents (normal); 6 cents (special) )
16.00 10.00 +60.0%
Dividend payout ratio 108.8% 55.0% +53.8 pts
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Financial ReviewKey Financials
(As a percentage of turnover) 2013 2012 Change
Advertising & promotion expenses 10.7% 14.0% -3.3 pts
Staff costs 13.9% 12.1% +1.8 pts
Research & development expenses 2.3% 1.6% +0.7 pts
2013 2012 Change
Effective tax rate 37.4% 23.4% +14.0 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 year end date) 31 Dec 2013 31 Dec 2012
Current ratio 4.6 4.7
Gearing ratio (1) 18.6% 12.2%
Net asset value per share (RMB) 1.96 1.95
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Financial ReviewWorking Capital
(Days) 31 Dec 2013 30 Jun 2013 31 Dec 2012
Avg inventory turnover days (2) 81 85 80
Avg trade and bills receivable turnover days (3) 135 151 127
Avg trade and bills payable turnover days (4) 45 45 48
(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 numberof 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 turnoverand 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 salesand multiplied by the number of days for the period / year.
As at the period / year end date
For the period / year ended
(RMB million) 31 Dec 2013 30 Jun 2013 31 Dec 2012
Inventories 365.7 340.2 386.4
Trade and bills receivable 906.9 938.6 1,021.5
Trade and bills payable 241.8 215.2 172.1
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Financial ReviewNet Cash & Operating Cash Flow
(RMB million) 31 Dec 2013 30 Jun 2013 31 Dec 2012
Net cash flow generated from operating activities +506.8 +224.7 +180.5
(RMB million) 31 Dec 2013 31 Dec 2012 Change
Cash & bank deposits (including pledged deposits) 3,280.7 2,762.7 +18.7%
Less: Bank loans (766.2) (496.2) +54.4%
Net cash & bank balances 2,514.5 2,266.5 +10.9%
Net Cash & Bank Balances
For the period / year ended
As at the year end date
Operating Cash Flow
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Financial ReviewTurnover by Market Segment
Europe 4.8%
20.4%N. America 1.6%
S. America 1.7%Eastern 26.6%
Southern 31.7%
79.6%Northern 21.3%
FY2013(FY2012: 86.6%)
(FY2012: 13.4%)
388.2 532.6
2,514.72,080.3
China Overseas
17.3%
37.2%
2012 2013 2012 2013
China79.6%
Overseas20.4%
Market Segment Analysis
By China Region By Overseas Region
Africa 2.5%
Asia 9.5%Australia 0.3%
For the year ended 31 December 2013
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Financial ReviewTurnover by Product Category
RMB(million)
(%) ofTurnover
RMB(million)
(%) ofTurnover
ChangeIn (%)
Footwear 1,044.3 40.0 1,348.0 46.4 -22.5
Apparel 1,508.5 57.7 1,481.0 51.0 +1.9
Accessories 60.1 2.3 73.9 2.6 -18.7
Total 2,612.9 100.0 2,902.9 100.0 -10.0
10.0%
2013 2012
Turnover Changes
www.peaksport.com
2010 2011 2012 2013
4,249.44,646.9
2,902.9 2,612.9
13
Financial ReviewSales Volume & Average Unit Selling Price (ASP)
Revenue (RMB million) 1,044.3 1,348.0 -22.5
Volume (million pairs) 11.6 15.1 -23.2
ASP at wholesale level (RMB) 90.0 89.3 +0.8
Footwear
Revenue (RMB million) 1,508.5 1,481.0 +1.9
Volume (million pieces) 24.7 24.7 Flat
ASP at wholesale level (RMB) 61.1 60.0 +1.8
Apparel
2013 2012 Change (%)
2013 2012 Change (%)
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0%
20%
40%
20%
25%
30%
35%
40%
0
400
800
1200
1600
2000
2010 2011 2012 2013
0%
20%
40%
Gross Profit 12.4%
Gross Profit Margin 1.0 pts
1,159.7 1,616.3
35.5%38.0% 39.4%
38.0%38.9%
38.1%40.0%
1,616.31,832.5
Gross Profit Margin
(RMB million)
1,058.2
36.5%
36.0% 37.1%35.2% 35.6%
For the year ended 31 December 2013
926.6
Financial ReviewGross Profit & Gross Profit Margin
www.peaksport.com
Overall Gross Profit / Gross Profit Margin
Footwear - Gross Profit Margin Apparel - Gross Profit Margin
15
Net Profit Margin 1.4 pts
Net Profit 21.3%
0%
5%
10%
15%
20%
25%
0
200
400
600
800
1000
2010 2011 2012 20130%
5%
10%
15%
20%
25%
0
200
400
600
800
1000
2010 2011 2012 2013
23.5%20.2%
998.1938.1
414.0
14.3%
Operating Profit 2.6 %
(RMB million) (RMB million)
Operating Profit Margin Net Profit Margin
19.4%16.7%
822.3777.7
Operating Profit Margin 1.1 pts
For the year ended 31 December 2013 vs. the year ended 31 December 2012
310.6
10.7%
15.4%
403.3244.3
9.3%
www.peaksport.com
Operating Profit / Margin Net Profit / Margin
Financial ReviewProfitability
16
Galina Voskoboeva
Alla Kudryavtseva
Business Operations
Teams
Players
Peak has the rights to display PEAK signage at home stadiums of Houston Rockets, Miami Heat and San Antonio SpursEndorsed NBA players are required to wear PEAK athletic shoes during all kinds of events and tournaments
12 Endorsed Players in 11 NBA
Teams as at 31 December 2013
League Peak is the Official Marketing Partner of NBA in China
www.peaksport.com
1. Andrew Nicholson2. Anthony Morrow3. C.J. Watson4. Carl Landry5. Chase Budinger6. George Hill
7. Jason Richardson8. JaVale McGee9. Kyle Lowry10. Samuel Dalembert11. Shane Battier12. Tony Parker
NBA – the world’s most recognized basketball league
18
Marketing & SponsorshipsAssociation with NBA
National Basketball Teams
New Zealand Slovenia Lebanon Jordan
SerbiaLebanonAustralia New Zealand Iceland CameroonMontenegroCôte d'Ivoire Germany
FIBA
Stanković Continental Champions’ Cup
www.peaksport.com
Basketball Tournament Organizers National Olympic Committees
Iran
19
Marketing & SponsorshipsBasketball & Other Promotion Partners
Tennis Running
Exclusive supplier of apparel & footwear in the Asia-Pacific Region
Women’s Tennis Association
26 International Tennis Spokespersons
- “悦跑 (E-Running)”, a series of innovative running products
- Promotion partners included CCTV, GuangdongSport TV, internet media and sports magazines
www.peaksport.com 20
Marketing & SponsorshipsOther Focuses: Tennis & Running
2013 Peak Team China Tour
2013 Tour of Qinghai Lake International Cycling Race
2013 Stanković Continental Champions’ Cup
It was an annual international highway cycling race held in China, attracting top
cyclists around the world
Our NBA spokespersons visited more than 10 cities in China
Peak sponsored the US Team in 27th Summer Universiade in Kazan
It was an annual international basketball tournament for national
teams held in China
2013 NBA Nation
It was an interactive event promoting basketball held across 10 cities in
China
WTA Tour
It included 8 tennis tournaments held in 5 countries
USA University Sports Federation
www.peaksport.com 21
Marketing & SponsorshipsSponsored Events
Distribution ChannelSales Fair & Same Store Sales
Distribution Model in China
Product Season Growth Sales Fair
Date
2014Q1 N/A 24 Jul 2013
2014Q2 High single-digit* 5 Nov 2013
2014Q3 Mid-teens 24 Feb 2014
2013 Growth
Q1 0%
Q2 0%
Q3 Low single-digit
Q4 Low single-digit
Sales FairOrder Bookat wholesale
prices
Same Store Sales
at retailprices
Peak66 Exclusive
Distributors asat 31 December 2013 Retailers Consumers
* Based on the comparison with the actual sales (derived from sales fair orders and replenished orders) for the same quarter in 2013.www.peaksport.com 22
Distribution ChannelAuthorized Retail Outlets in China
Total number of authorized retail outlets in China 6,012 6,483
- Flagship 20 21
- Basic 3,626 3,938
- Department Store or Shopping Mall 2,303 2,455
- Basketball Specialty 63 69
Total retail floor area (sq. m) 541,607 561,865
Average floor area per retail outlet (sq. m) 90.1 86.7
1st tier 3.8%
2nd tier 12.6%3rd tier 83.6%
No. of Outlets by Type of City
31 Dec 201231 Dec 2013
As at31 Dec2013
Northern 30.4%Eastern 34.3%
Southern 35.3%
As at31 Dec2013
No. of Outlets by Region
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Production Volume
Fengze (Fujian Province) 2.4m pairs 2.0m pieces
Shang’gao (Jiangxi Province) 4.6m pairs 0.3m pieces
Hui’an (Fujian Province) 2.4m pairs 6.8m pieces
Self-Production Volume 9.4m pairs 9.1m pieces
Total Production Volume (self-produced + outsourced) 13.1m pairs 23.2m pieces
ApparelFootwear
Outsourced 28.2%FY2013(FY2012: 35.8%)
Outsourced 60.8%
Self-produced 39.2%
FY2013(FY2012: 63.3%)
(FY2012: 36.7%)
Footwear Apparel
Self-produced 71.8%(FY2012: 64.2%)
FY2013 Production Volume
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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 623 new footwear, 1,439 new apparel and 349 new accessory products
For the year ended 31 December 2013
R&D Facilities and Capabilities
www.peaksport.com 25
Côte d’Ivoire
Serbia
IranAustralia
MontenegroGerman Icelandic Lebanese
New Zealand Cameroon
Peak sponsors the national basketball federations of the following countries:
Future Strategies
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 professionalism of the products under the Peak brand
Continue to allocate a significant portion of resources to new endorsements and maintenance of existing ones
Enhancement of the professionalism of the Peak Brand
www.peaksport.com 27
Future Strategies
Still place emphasis on basketball, running and tennis sectors, consistently looking 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 kids wear
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
Improvement of product functionality and variety
www.peaksport.com 28
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
Optimization of Distribution Channels
DistributorsRetail Outlets
www.peaksport.com
Continue to optimize the distribution channelsand expect the total number of retail outlets in China to remain at approximately 6,000 in 2014
Strive to bolster store profitability and efficiency
29
George Hill
Questions & Answers
IR Contact:Email: [email protected]: www.peaksport.com
Thank You
Peak’s New Year advertisement video showing in
the New York Times Square
