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June 2017
DISCLAIMER This presentation is being distributed against the signature of a Non Disclosure Agreement and is strictly confidential.This presentation may not be reproduced, summarized or disclosed, in whole or in part, without the prior written authorization of GCF, and by accepting this presentationyou hereby agree to be bound by the restrictions contained herein.
This presentation is based on publicly available information and/or data provided by GCF’s client which have not been independently verified by GCF. Any estimates and projections contained herein involve significant elements of subjective judgment and analysis, which may or may not be correct. Neither GCF nor any of its affiliates, or anyof its direct or indirect shareholders, or any of its or their respective members, employees or agents provides any guarantee or warranty (express or implied) or assumes any responsibility with respect to the authenticity, origin, validity, accuracy or completeness of the information and data contained herein or assumes any obligation for damages, losses or costs (including, without limitation, any direct or consequential losses) resulting from any errors or omissions in this presentation.
This presentation was prepared by GCF (GEREJE Corporate Finance) exclusively in the frame work of an agreement for the benefit of its clients in connection with the possible Transaction. GCF has duly and professionally challenged all information & data provided by our clients, including past & existing figures, assumptions of the Business Plan as well as the professionalism of the management team / shareholders.
The economic valuations and proposed deal structuring contained in this presentation are fair and based on current market practices, which may change significantly over a short period of time. Changes and events occurring after the date hereof may, therefore, affect the validity of the informations contained in this presentation and GCF assumes no obligation to update and/or revise this presentation or the information and data upon which it has been based.
GCF designates the companies, whilst legally they are independent entities, sharing GCF corporate identity, logo, documents, working methodology & ethical rules.All GCF offices are working as an integrated group of companies under the governance of a written agreement for the interest of the clients. GCF legal entities are privatelyowned and independent structures.
GEREJE Advisory Asia Pte Ltd (Singapore) is MAS (Monetary Authority of Singapore) Exempt Corporate Finance Advisor & GEREJE Corporate Finance SAS (France) isregistered with the AMF (The French Financial Markets Authority) respectively - ORIAS n° 13004146 - member of ACIFTE as Conseil en Investissement Financier (Financial Investment Advisor).
© Copyright 2017 GEREJE Corporate Finance. All rights reserved
Private & Confidential -
Asian growing appetite for luxury western brands, coupled with the critical need for European luxury brands to enter the fast growing Asian markets offers strong potential synergies
› 2016 - 2017
› Buccellati acquired by Gangsu Gangtai Group
› Multiple EV Sales: 6.6x
› 2014
› Rotary Watch (CH) acquired by CitychampWatch & Jewelry Group
› Multiple: EV/EBITDA 10x
› February 2013
› Sonia Rykiel acquired by Fung Brands (HK)
› Multiple: N/A
› April 2016
› SMCP Group (FR) Acquired by Shandong RUY (CN)
› Multiple: N/A
› June 2013
› Sunseeker (UK) acquired by Dalian Wanda (CN)
› Multiple: EV/EBITDA 10.6x
› 2011
› Annick Goutal acquiredby Amorepacific Co, Ltd
› Multiple: EV/Sales 1.5x
Source: GCF Research & Analysis
4
Private & Confidential -
› 2017
› Kate Spade acquired by Coach
› Multiple EV Sales: 1.7x
› 2017
› Rimowa acquired by LVMH
› Multiple EV/Sales: 2.0x
› 2017
› Maison Francis Kurdjianacquired by LVMH
› Multiple EV/Sales: 2.2x
› 2017
› Breitling acquired by CVC
› Multiple EV Sales: 2.1x
› 2017
› Younique acquired by Coty
› Multiple EV/Sales: 2.5x
› 2017
› Burberry (3% stake) acquired by Albert Frère
› Multiple: N/A
Source: GCF Research & Analysis
5
Private & Confidential -
Luxury goods players have been generally prudent on the M&A front in the past five years
› The weight of industry players in total deals has been significantly in 2013-2015 below the long-term average: 56% (versus 70%)
130110
9177
57 53 4166
43
48
46
3749
3631
30
173158
137
114106
89
72
96
0
20
40
60
80
100
120
140
160
180
2003 2006 2010 2012 2013 2014 2015 2016
Industry Buyers Financial Buyers
Source: Pambianco, Mergermarket, Exane
6
Private & Confidential -Source: Pambianco, Mergermarket, Exane
7
Over the past decade, the Textile & Apparel industry represented over 1/3 of the total M&A deals
Private & Confidential -
The goodwill in terms of valuation is higher in the luxury industry compared to other sectors
Price Earnings (P/E) Ratios
EV/EBITDA Multiples (2016)
24,1 24,5
17,0 16,0
2015 2016
Luxury Industry CAC 40
8,5
11,6
Argos Mid-Market Luxury industry
Source: GCF Research & Analysis, Company reports, EY Report
8
Yoox
Hermès
KeringMoncler
Richemont
LVMH
Prada Chow Tai Fook
Safilo
0,0x
5,0x
10,0x
15,0x
20,0x
25,0x
0,0% 5,0% 10,0% 15,0% 20,0% 25,0%
› The analysis shows a strong correlation between the EBITDA Multiple & the sales Growth.
› Sales development is a strong driver of VALUE CREATION
EV
/EB
ITD
A 2
01
6
CAGR 2016-2018E
Private & Confidential -
A real luxury conglomerate consists of a mega-brand / cash cow surrounded by a galaxy of smaller businesses and brands
› Note : Bubble size is proportionate to EBIT (EURm)
Source: Pambianco, Mergermarket, Exane
9
Louis Vuitton (50% of Group EBIT)
Hennessy
Cartier(75% of the
Group EBIT)
Gucci (65% of the Group EBIT)
Moët &Chandon
Bulgari
TagHeuer
Fendi
LoroPiana
Cartier
Givenchy
Kenzo
VC&A
SpecialistWatch makers
Others
YSL BV
Puma
OtherLuxury
Richemont
LVMHKering
Private & Confidential -
The Ratio Net Debt/ EBITDA is at an all-time low
› The history has taught the players in this industry to be prudent and to : • Stick to bolt-on acquisitions: Acquisitions on small brand with growth potential• Buy low, sell high: avoid the high peak valuation such as Loro Piana for LVMH
-3,0x
-2,0x
-1,0x
0,0x
1,0x
2,0x
3,0x
4,0x
5,0x
6,0x
Kering Cucinelli Luxottica LVMH Hugo Boss Tod's Prada Ferragamo Moncler Swatch Hermès Burberry Richemont
Net Debt /EBITDA 2016 Max 20Y Min 20Y
10
Source: GCF Research & Analysis, Company reports, Exane Report
Private & Confidential -
Luxury industry shows a U-Curve relationship between EBITDA Margins and entry price points – sweet spot at USD 250
› The art is in choosing an entry price (and all of the marketing mix execution) that allows brands to maximise revenues, whilemaintaining desirability over time.
11
Source: GCF Research & Analysis, Company reports, Exane Report
Ralph LaurenZegna
ArmaniHugo Boss
CoachMichael Kors
HermèsGucci
Louis Vuitton
Bottega Veneta
Prada
Dolce & Gabbana
Tod's
Brunello Cucinelli
Saint Laurent
Valentino
0%
5%
10%
15%
20%
25%
30%
35%
40%
0 50 100 150 200 250 300 350 400 450
Entry Price (in USD)
EB
ITD
A %
(2
01
2 –
20
15
ave
rag
e)
Private & Confidential -
The population with access to modern cosmetics is expected to grow by 50% over the next 20 years, boosted by the rapid rise of the urban middle class in the new markets.
› A strong industry in Europe:• W. Europe per capita expenditure ~EUR 150/year vs. ~EUR 30/year in growing Asia• W. Europe is at the forefront of patented cosmetics formulations
12
Source: GCF Research & Analysis, World Bank Data, Euromonitor
Europe
EUR 58B
Middle East and Africa
EUR 14B
Latin America
EUR 52B
ASEAN
EUR 9.7B
China
EUR 24B
India
EUR 7.4B
-10%
-5%
0%
5%
10%
15%
20%
25%
0% 2% 4% 6% 8% 10% 12% 14% 16%His
tori
cal
CA
GR
(2
01
1 –
20
15
)
Forecasted CAGR (2016 – 2020)
Global Cosmetics Market in 2016 Historical vs. Forecasted CAGR
N. AmericaEUR 41B
Private & Confidential -
In 2017, Global Jewelry & Timepieces is forecasted to reach USD 43B (+4,5% vs 2016).
› China market remains resilient despite the economic slowdown & government’s crackdown on gifting, accounting for ~67% of Growing Asia’s Jewelry & Timepieces Market.
› Women’s Luxury jewelry saw the best performance in 2016.
• Driven mainly by the wedding boom in China.
• Customary for parents in China to give newly wedded couples jewelry.
2 641
401 378 163 124
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
China India Thailand Malaysia Philippines Indonesia
Luxury Jewellery & Timepieces Market Value
in Growing Asia 2016 (USD M)7 769
13
Source: GCF Research & Analysis, World Bank Data, Euromonitor
Private & Confidential -
Global Wine Market worth EUR 238 B in 2016Emerging Asia* accounting for 8% of total value
› Growth in Western Europe & North America hampered
• European credit crisis affecting major wine consuming countries; Portugal, Italy, Spain
› Booming Asia to drive growth in the wine industry
• Expected to be worth EUR 15 B in 2016, 11% of global value in 2016 (8% today)
14
Western Europe
EUR 46 B
North America
EUR 20 B
Eastern Europe
EUR 15 B
MENA
EUR 3 B
Latin America
EUR 8 B
0%
2%
4%
6%
8%
10%
12%
14%
0% 2% 4% 6% 8% 10% 12% 14% 16%
His
tori
cal
CA
GR
(2
00
8-2
01
2)
Forecast CAGR (2013-2020)
Global Wine Market
Historical vs. Forecast CAGR by Regions
Booming Asia EUR 9 B
Source: GCF Research & Analysis, World Bank Data, Euromonitor
Private & Confidential -
The company built up over years a stock of contemporary artworks from internationally acclaimed artists and emerging artists valued at EUR 4.0M
› Retail prices range: from EUR 5K up to EUR 100K
› > 1,000 artworks sold every year
› Database of over 20,000 high potential buyers
16
Paintings Sculptures Photographs
MR. BRAINWASH CIPRE MENDJISKY
Private & Confidential -
The founders managed successfully the opening of 14 Galleries throughout Europe as well as recurring Exhibitions
2004
GenevaSaint-Tropez Crans MontanaVerbierForte del MarmiGstaadParis Saint-Tropez (2)Beirut*
2006 2007 2014201320112009
GenevaSaint-Tropez Crans MontanaVerbierForte del MarmiGstaadBeirut*Dubai*
GenevaSaint-Tropez Crans MontanaVerbierForte del MarmiPorto Cervo*
GenevaSaint-TropezCrans MontanaVerbier
GenevaSaint-Tropez Crans Montana
GenevaSaint-Tropez Geneva
1 2 3 4 5 6 8 11
GenevaSaint-Tropez (1)Crans MontanaVerbierGstaadParis Saint-Tropez (2)Pietra SantaVeniseSaint Tropez (3)MarbellaBeirut*
2015-2016
14
2017
GenevaSaint-Tropez (1)Crans MontanaVerbierGstaadParis Saint-Tropez (2)Pietra SantaVenise (2)Saint Tropez (3)MarbellaBeirut*MiamiAix-en-ProvenceCannes
17
Private & Confidential -
Saint-Tropez Gallery Crans Montana Gallery
Beirut Saifi Village DUBAI MARINA ART FESTIVAL -Curated by BEL AIR FINE ART
18
Private & Confidential -
In any project the level of your personal & financial commitment will be key to attract investors
Friends, Family
Business angels
Seed/ Hybrid Fund
Expansion Capital
Exit IPO / Trade Sale
Venture Capital
Grants
Capital needs
Maturity / Time
PRE-SEED SEED START-UP EARLY-GROWTH SUSTAINED GROWTH
High Risk
Low Risk
20
Private & Confidential -
It is key to understand the investors’ investment strategies before investing time & resources in contacting them
21
INVESTORS’Investment Strategy
&
Criterias
Sector focus
Synergies
with
portfolio
Investment
horizon
Ticket
&
Company size
Active / Passive
investors
Mino
vs Majo
Geographical
focus
Expected
IRR
Private & Confidential -
Whatever you company maturity is, raising funds takes time and the most important is to be motivated and INVESTOR READY
Phase 1 Phase 3Phase 1 Phase 2 Phase 3
› Financial Analysis (Historical results + BP)
› Indicative Valuation calculation
› Possible structuring of the deal
› Approach of the potential Investors / Buyers
› Management of the Confidentiality (Collection of
NDAs)
› Optimisation of the Negotiations
› Signature of LOIs
› Legal documentations & Closing
A – Analysis & Structuring
› Preparation of an Investment Memorandum to
the attention of the pot. Investors / Buyers
B – Preparing a complete set of documents
Approaches & Negotiations Closing
22
Private & Confidential -
There are multiple approaches for a firm valuation. A coherent selection of methodologies is required to optimise the fair value of the firm.
23
Selection of methodologies is based on the typologies, the industry of the company, the coherence of the data, etc..
Intrinsic methodologies Comparative methodologies
Net Asset Value Asset-based approach used to
determine what the means required to recreate the business
DCFApproach based on the capacity
of the firm to generate future free cash flow
Estimation of a terminal value Application of adjustments and
retreatments
Trading comparablesApproach based on the selection of a sample of transactions in the
peer group industry
Comparable companiesApproach based on the metrics
of other peers in the same industry
Application of multiples to company’s aggregate
Application of multiples to company’s aggregate
1 2 3 4
Private & Confidential -
Private placement of Equity /Debt/Convertibles Owners need to consider a number of points before deciding on Strategy
24
1. Construction of a Business Plan Model based on track records & existing benchmarks
2. Selection of the right Partners / Investors (‘Smart Money’)
› Private Investors, Family Offices, Institutional, Strategic..
4. Selection of the right Investment Mechanism & Structuring
› Equity or Debt? Or a combination which allows owners to be reimbursed with equity should they meet certain KPIs
› Full amount at once (for ease of mind & operation) or in tranches (at potentially higher future valuations)
› Challenge the BP assumptions & Use of Funds
› Raise the right amount of capital & Minimize the dilution for the existing Shareholder
› Credibility of the valuation through business cases & comparable transactions
3. Selection of the right Markets
Private & Confidential -
26
Private & Confidential -
27
Origination & Execution
› Paris
› Singapore
Origination
› Bangkok
› Genève
› Hong Kong
Our Strategic Partners
› Paris : WITAM MFO
› Middle East: Mavericks
› Japan: AMDG
› Singapore : RHT Strategic Advisory
Private & Confidential -
› Founded GEREJE in 2006
› 20 years in Asia
› Advised small, mid & large cap, family
offices, HNWI
› External teacher at ESSEC
› Executive MBA at ESSEC
› Joined GEREJE in 2007
› 10 years exp. cross border M&A
› Specific expertise on Buy Side
transactions
› Draft the legal documents
› MSc in Management, ESCEM
› Joined GEREJE in 2010
› 9 years exp. cross border M&A
› Specific expertise in financial modeling
and post transactions follow-up
› MSc in Corporate Finance, SKEMA
28
Private & Confidential -
› 20y in Asia & inv. banking
› Former Head of APAC, Jefferies Hong
Kong
› Former Head of Futures APAC,
NEWEDGE HK
› Serial entrepreneur, owner of a F&B
retail chain
› 15y in Asia & Middle East
› Advised small, mid cap & MNCs
› Specific expertise in Luxury & Lifestyle
› DESS & Edhec Bus. School
› Joined GEREJE in 2011
› Sell-side transactions expert
› Former President of the CFA in
Thailand
› BBA, Major Finance & Banking
29
Private & Confidential -
30
› > 6 years experience in Wealth
Management and Retail Banking (BNP,
Cholet Dupont)
› Former Director of Investor Relations
WiSEED
› Specific expertise in Asset
Management, Investors relationship
› MS in Financial Engineering, EBS Paris
› Former M&A Analyst at Baker Tilly Intl
& Neuflize OBC (ABN Amro Bank NV)
› Former Equity Research Analyst for a
French Fund
› Former Credit Analyst at BNPP
› MS Financial Analysis, NEOMA BS
› Former M&A Analyst at Avolta
Partners
› Former Coverage Analyst at BNPP
› Former Junior Consultant for a luxury
brand
› MS in Corporate Finance & Strategy,
EM Lyon BS
Private & Confidential -
31
Fund raising mandate – Capital development
Structure a solid & realistic business plan in order to maximize the
valuation forward and raise the capital needed (Equity, Debt,
Convertible Shares)
Buy mandate / Acquisition / Joint Ventures
Optimizing external cross-borders expansion strategies. Global Know-
how, Local Approach
Initial Public Offering ‘IPO’ – Deal structuring
Local Markets Approach and Implementation Assistance. Detailed
realistic business plans, project presentations and commercial
valuations to maximize forward value & optimize Transaction
Structuring
Partial or Total Sell mandate
Managing and Optimizing a sell process leveraging on our
structuring experience, valuation expertise & international network
Private & Confidential -
32
Private & Confidential -
33
Fintech
Asia, Small cap
USD 10M Fundraising
On-going
Digital Media
US, Small cap
USD 5M Fundraising
On-going
Internet of Things
Asia, Venture
USD 30M Fundraising
On-going
Trading
Asia, Small cap
Sell-out
On-going
Big Data
Europe, Small cap
EUR 5M Fundraising
On-going
Chocolate Brand
Europe, Small cap
EUR 5M Fundraising
On-going
Fintech
Asia, Small cap
EUR 6M Financing
On-going
Amphibious Tender
Europe, Small cap
Fundraising
On-going
Underwear concept
Europe, Seed
Fundraising
On-going
Dairy
Europe, Large cap
Screening
On-going
T.I.C Industry
Europe, Large cap
Acquisition
On-going
Engineering
Europe, Small cap
Acquisition
On-going
Private & Confidential -
34
Art Galleries
Europe, Mid cap
USD 10M Fundraising
2016 - 2017
RE - Promotion
Europe, Mid cap
EUR 4M Fundraising
2016 - 2017
RE - Crowdfunding
Europe, Small cap
EUR 5M Debt
2016 - 2017
Catamarans
Asia, Small cap
EUR 2.6 Fundraising
2016
SaaS, F&B
Asia, Small cap
Fundraising
2016
Menswear
Europe, Small cap
Fundraising
2016
Equestrian Wear
France, Small cap
Capital Increase
2016
Premium Fruit Juices
Europe, Mid cap
Valuation Report
2016
Education
Asia, Small cap
Sell-out
2016
Animal Health
Europe, Large cap
Market Screening
2015
Luxury furniture
Europe, Mid cap
Valuation report
2015
Medical Equipment
Asia, Large cap
USD 5M Fundraising
2015
French ranking 2016: http://www.fusacq.com/buzz/classement-banques-affaires-conseils-levees-de-fonds-2016,00,3,12015 -> http://www.magazine-decideurs.com/classements/classement-2015-des-meilleures-banques-d-affaires-en-france-operations-inferieures-a-20m
Private & Confidential -
35
Private & Confidential -
36
Private & Confidential -
37
Transaction
Excellence
TrackRecord
OurProprietaryDatabases
Sector& countryexpertise
Reactivityand
Proactivity
Optimizinginvestments
Solution driven
CrossBorder
Expertise
Execution capability in Europe and Asia, ensuring
24/7 reactivity
MNC’s & SME’s
44 LOI signed (55%)
24 closings (30%)
The highest level of objectivity, discretion,
ethics and reactivity
>500 firms, PE funds, HNWI, family offices in
our “in-house” databases in Europe & AsiaMulticultural team possessing solid
cross border expertise
Tailor-made services outside the
box thinking
All the advantages of an international
M&A firm with a “boutique” culture
Private & Confidential -
38
Execution
Excellence
Each assignment is managed by one Team leader to optimize the process
We rely on our own proprietary research to process high value strategic & financial intelligence using the latest communication tools
Our mandates are on an exclusivity basis only,including fixed and success fee
Our mandates are tailor-made
We manage 100% of the Transaction coordinating the Process with the law firms, auditors for our
client’s benefit
We deliver a weekly report in line with our mandates Milestones to optimize the momentum
Private & Confidential -
According to World Airlines Awards, 4 of the top 10 best airlines are Asian
› Singapore Airlines, N2 worldwide
› Other top Asian Airlines: Cathay Pacific Airways (Hong Kong), All Nippon Airways (Japan), EVA Air (Taiwan), Garuda Indonesia(Indonesia), Hainan Airlines (China), Thai Airways (Thailand), Asiana (South Korea)
Source: World Airlines Awards, Business Insider-2015
40
Private & Confidential -
Since 2014, there are more Starwood hotels on China’s Hainan Island than in the Hawaiian Islands
Mandarin Oriental, Hainan, China
Source: GCF Research, Top Hotels Analytics
41
Private & Confidential -
2011 Design Award for the Marina Bay Sand in Singapore with 2,560 hotel rooms, 74 000 m² of retail arcade, & a 150 m² outdoor pool
Source: Design Awards
42
Private & Confidential -
LOUIS VUITTON opened its first “Maison” in mainland China in Shanghai on July 2012
7 of the 10 largest shopping malls in the world are in Asia!
Louis Vuitton Shanghai, opened in 2012
Louis Vuitton Singapore, opened in 2011
Hanjie Wanda Square shopping mall, Wuhan, China
43
Private & Confidential -
QEELIN is a China jewelry brand co-founded in 2004 by a French & a Chinese
QEELIN reached EUR 30M sales in 2012 before being acquired by KERING
› QEELIN was in 2015 the fastest growing luxury brand within KERING’s portfolio
Source: FT
44
Private & Confidential -
HERBORIST: The first Chinese Cosmetics brand to succeed in Asia & in Europe,
reviving the Chinese medical herb culture in 300 European points of sale
Source: Cosmetics Business
45
Private & Confidential -
In 2014, 300 jets and 200 luxury yachts in Greater China
expect to grow to 500 within 5 years
GULFSTREAM BOMBARDIER DASSAULT
SUNSEEKER AZIMUT
Source: Hurun Research
46
Private & Confidential -
The number of Asian Millionaires is forecasted to almost x2 by 2020
› Wealth of HNWI in Asia Pacific = +33% between 2012 and 2015 (from USD 12 T to 16 T)
64
2320
165 151 212
0
500
1000
1500
2000
2500
Malaysia China Hong Kong Indonesia Singapore
2015 2020
+107%
+74%In number of persons
Asian’s Millionaires evolution by Country
Source: Hurun Research
47
Private & Confidential -
Chinese middle class consumption will reach 9,985 by 2030 (vs. 859 in 2009 +12 % CAGR)
Evolution of the size of the Middle Class By Regions (global share)
North
America
18%
Europe
36%
Central
and
South
America
10%
Asia
Pacific
28%
Sub-
Saharian
Africa
2%
Middle
East and
North
Africa
6%
2009
North
America
10%
Europe
22%
Central
and
South
America
8%
Asia
Pacific
53%
Sub-
Saharian
Africa
2%
Middle
East and
North
Africa
5%
2020
North
America
7%
Europe
14%
Central
and
South
America
6%
Asia
Pacific
66%
Sub-
Saharian
Africa
2%
Middle East
and North
Africa
5%
2030
Source: Bain & Co
49
Private & Confidential -
Affluent and Upper middle class urban households will reach > 230 M in 2025+ 17% CAGR
Urban Households in China (millions)
Total Urban Households
226 280 328 373
% In “Affluent” or”Upper Middle Class”
9% 34% 57% 67%
81
124
15
6
2010
59
111
76
10
2015
48
73
141
18
2020
49
59
182
38
2025
Affluent > $34k
Uppermiddle class
$16k-$34k
Mass middle class
$9k-$16k
Poor < $9k
Class Average annual Income ($US)
Source: McKinsey
50
Private & Confidential -
Affluent and Upper middle class urban households will reach > 230 M in 2025+ 17% CAGR
Nominal private consumption, 2020($ trillions)
12,4
4,2
1,32,4 1,8 1,8 1,3
2,6
2,3
1,6
0,4 0,5 0,3 0,4
0
2
4
6
8
10
12
14
16
U.S. China India Japan Germany UK France
Private consumption, 2015 Consumption growth, 2015- 2020
Source: BCG Research
51
Private & Confidential -
With a growth of 17% compared to 2014, Mainland China is the 3rd largest luxury goods market after the US and Japan
Personal Luxury Goods Market – Top countries (2015 – B EUR)
New
York
27
Tokyo
9 Beijing
6 Milan
5
Paris
13London
12Munich
4
Seoul
8Dubai
3
6,8
Moscow
3
78,6
20,0
17,917,2 17,0
15,5
11,810,8
8,1
3,2
US Japan MainlandChina
Italy France UK Germany S. Korea Middle East Hong Kong Russia
Source: Fondazione Altagamma
52
Private & Confidential -
Gift giving by men and by women increased 15% and 24% respectively. And gift giving for Elderly and children increased 11% and 15% respectively
Best Brand for Gifting by Men
0% 5% 10% 15% 20%
Samsung
Tiffany
Bulgari
Hermes
Chanel
MontBlanc
Moutai
Dior
Cartier
Gucci
LV
Apple
0% 2% 4% 6% 8% 10% 12%
Bulgari
Dior
Gucci
Hermes
Tiffany
Cartier
Apple
LV
Chanel
Best Brand for Gifting by Women
Source: Hurun Research
53
Private & Confidential -
The global luxury market exceeded €1 trillion in 2015, posting overall growth of 5% driven by cars, hospitality and fine arts
Worldwide Luxury Market, 2015 (EUR B)
253
405
17664
45 40 32 21 7 2 1045
Personal
luxury
goods
Luxury cars Luxury
hospitality
Fine wines
and spirits
Fine food Fine art Designer
furniture
Private jets Yachts Luxury
cruises
Total 2015
Growth 1-2% 8% 7% 3% 4% 6% 4% -1% -1% 4% 2014-2015(Constantexchange rates)
5%
Source: Bain & Co
54
Private & Confidential -
Jewelry and shoes are the fastest growing items within personal luxury goods category
Worldwide Market Shares
Women’s ready-to-wear
Shoes
Jewelry
Men’s ready-to-wear
Leather goods
Watches
Fragrances
+3%
+6%
+8%
+1%
+5%
+0%
+2%
+14%
+16%
+18%
+13%
+14%
+7%
+11%
2013-2014 2014-2015
30%
50%
65%
75%
81%
87%
93%
100%
+2% +15%
CAGR
Cosmetics
Source: Bain & Co
55
Private & Confidential -
By 2020, the share of middle class in Tier 3 & 4 cities is expected to reach 39%, up from 18% in 2002
Shares (in %) of middle class by city Tiers
3 815
31
43
45
40
16
2002 2022
Tier 1
Tier 2
Tier 3
Tier 4
Source: McKinsey
56
Private & Confidential -
Given the anti extravagance measures & the growing level consumers sophistication, new affordable brands entered successfully the Chinese market
Number of stores of selected affordable luxury brands in China, as of May 2015
2008
2011
2011
2004
Men’s and womenwear, shoes, handbags, accessorries
Women wear, shoes, handbags, accessorries
Women wear, shoes, handbags, acessories, kids wear, stationery
Men’s and women wear, maternity wear, shoes, bags, food & beverages
1,000-1,500
220-270
320-500
270-490 280-560
350-690 ±180
280-700
430-760 330-500 n/a
n/a
Brand Origin In China since
ProductsWomen’s
leather Bag(in EUR)
Women’s leatherflat shoes(in EUR)
Number of stores
Women’s skirt(in EUR)
122
45
22
11
Source: Companies
57
Private & Confidential -
In 2014, Chinese consumers spent abroad 3x more than they spent locally
Luxury Shopping destinations, 2014
› Hefty import tariff, consumption tax and VAT on imported goods as well as higher pricing strategies have made prices of luxury products sold in China much higher than in other countries
› Other reaons: Product authenticity, a greater variety of choice and shopping experience
European ChineseAmerican
Regional Local Overseas
Source: Hurun Research
58
Private & Confidential -
France, Japan and Australia are the preferred destination of young Chinese luxury travelers
Most popular International Travel Destinations for Chinese
#5 U.S.35%
#10 Canada29%
#11 U.K.27%
#14Germany22%
#1 France40%
#7 Switzerland32%
#7 Italy32%
#6 Maldives 34%
#12 Singapore26%
#15 Thailand18%
#3 Australia38%
#4 New Zealand36%
#2 Japan39%
#13 South Korea25%
#9 U.A.E 31%
Source: Hurun Research
59
Managing Director