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Yue Yuen Industrial 2020 1Q Results
14 May 2020
Disclaimer Yue Yuen and Pou Sheng have taken every reasonable care in preparing this presentation. However, please be reminded that the
information, materials, opinions and statements contained or referred to in this presentation are all provided on an "as is" basis.
None of the aforesaid information, materials, opinions and statements constitutes or will be viewed as investment advice or an
offer, or a solicitation, recommendation or suggestion by Yue Yuen or Pou Sheng to deal in any investment products including
securities, or other financial products and instruments.
If there is any forward-looking statements contained or referred to in this presentation, these forward-looking statements are
based on current expectations and assumptions, of which many are beyond our control. In addition, these statements are subject
to a number of risks, uncertainties and factors and if any of these risks or uncertainties materialize, or if underlying expectations
not occur or assumptions prove incorrect, actual results, performance or achievements of Yue Yuen and/or Pou Sheng may vary
materially from those described explicitly or implicitly in the relevant forward-looking statement. Neither Yue Yuen nor Pou Sheng
intends or assumes any obligation, to update or revise these forward-looking statements in light of any difference from those
anticipated.
Yue Yuen and Pou Sheng including their respective subsidiaries, associated or affiliated companies, or any of their respective
directors, employees, agents, representatives or associates accepts no liability for and shall not be responsible or liable for any
loss or damage of whatever kind or nature, directly or indirectly, arising from action taken, or not taken, in reliance on, or
resulting from access to or use of the aforesaid information, materials, opinions and statements (including forward-looking
statements, if any) contained or referred to in the presentation.
2
Retail Sales – Shoes, Apparel, Commissions from Concessionaire Sales & Others 36.0% (1Q19: 39.4%)
Company Profile Founded in 1988, and listed on the HKEX in 1992 (551.HK)
Core Businesses:
Footwear manufacturing – Predominately athletic and casual / outdoor shoes
Pou Sheng (3813.HK) – Sportswear retail & sports services in the Greater China Region
A yield play with solid performance – committed to driving return and value for shareholders
1Q20 Revenue by Business Segments
1Q20 Total Revenue US$ 1,969.5 million
* Revenue from Texas Clothing Holding Corp. (“TCHC”) Group, which was disposed on May 31, 2019
3
Soles, Components & Others
4.7% (1Q19: 4.5%)
Athletic Shoes
52.5% (1Q19: 41.0%)
Casual / Outdoor Shoes
5.3% (1Q19: 9.3%)
Sports Sandals 1.5% (1Q19: 1.5%)
Apparel Wholesale*
N/A (1Q19: 4.3%)
No. of Employees
Total: 345,200
Yue Yuen Pou Sheng
310,600
34,600
331 390 535 519
307 301
8,013 8,435 8,481
9,121
9,695 10,105
2014 2015 2016 2017 2018 2019
Profit attrib. to ownersRevenue
2019 Financial Performance Overview
Source: Company audited financial statements and management accounts * FY19 Dividend: HK$1.10/share; FY18 : HK$1.50/share 4
USD 10,105.4 mn
Profit Attrib. to Owners
Revenue
USD 300.5 mn
322.4 mn pairs
ASP (USD)
Volume
$17.24
HK $1.10 per share
Dividend Payout Ratio
Dividend*
76%
17.53 17.25 16.88 16.87
16.53 17.24
307
318
322 325
326 322
2014 2015 2016 2017 2018 2019
Avg. selling price
74% 65%
56% 61%
101%
76%
1.15 1.20
1.40 1.50 1.50
1.10
2014 2015 2016 2017 2018 2019
Payout ratio*Volume HK$ per share*
Our Growth Strategy
5
Speed
Sustainability
Flexibility
Innovation
Quality
Design
OEM / ODM
Material
Process
Equipment
Apparel
Accessories
Footwear
Retail
World’s Leading Sporting Goods
MFG Platform
Values
5
Directions
4
Segments
3
End to End Platform
2 1
Corporate Social Responsibility
6
Our Focus on Sustainability
Compliance
Education
Implementation
Communication
ESH & ESG
Risk Control
Employee Relations
The social compliance program of Pou Chen Group (comprising Pou Chen Corporation and Yue Yuen) obtained accreditation from Fair Labor Association (FLA) in June, 2018, as a result of our efforts and commitments in promoting workplace standards, responsible production as well as factory condition improvement.
The Only FLA Accredited Footwear OEM/ODM Globally
Pou Chen and Yue Yuen are constituents of world-famous Environmental, Social and Governance (ESG) indexes, including the FTSE4Good Emerging Index and the MSCI World ESG Leaders Index.
A Top-ranking Responsible Investment Target
1Q 2020
Group and Operation Highlights
Key Financial Highlights for 1Q 2020
8
Group
* TCHC Group recorded revenue of US$108.0 million, representing 4.3% to group revenue in 1Q19 and was disposed on May 31 2019 ** Compared to MFG Gross Profit Margin in 1Q19 excluding TCHC Group
Revenue
US$ 1,969.5 mn -20.6%*
Operating Loss
US$ (18.5) mn
N/A
MFG GP Margin
15.7% -2.5pp**
Shoe Volume
71.5 mn pairs
-12.5%
ASP
US$ 16.36 per pair
+4.1%
Retail Revenue
RMB 4,947 mn -25.0%
OP Margin
-0.9%
-6.3pp
Same Store Sales Growth
-32.5% -40.9pp
Loss Attrib. to Owners
US$ (56.3) mn
N/A
1,034.9
104.1
30.4
708.1
N/A
92.0
1,017.2
229.9
36.7
976.1
108.0
111.5 1Q20 1Q19
Y-o-Y Revenue by Product Category
9
(US$’ mn)
Casual/Outdoor Shoes
Sports Sandals
Athletic Shoes
88%
9% 3%
* TCHC Group (disposed on May 31, 2019) ** Soles, Components & Others
Athletic Shoes
Casual/Outdoor Shoes
Sport Sandals
Retail
Apparel Wholesale*
Others**
1.7%
54.7%
17.2%
27.5%
17.5%
1Q20 Total Revenue US$1,969.5 mn 1Q19 Total Revenue US$2,479.4 mn
1Q20 Shoe Revenue by Product Categories
Shoe Rev: US$ 1,169.4 mn (-8.9% YoY)
1Q20 Manufacturing Revenue by Destination
10
US 28.3% 1Q19: 32.1% YoY: -20.2%#
Europe 28.1% 1Q19: 28.3% YoY: -10.1%#
Mainland China 17.4%
1Q19: 14.2% YoY: +10.9%# Others*
26.1% 1Q19: 25.4%
YoY: -7.1%#
# YoY changes in revenue amount * Others include Rest of Asia, South America, Canada, Australia and Other Area
1Q20 MFG Revenue: US$ 1,261.4 mn 1Q19 MFG Revenue: US$ 1,395.3 mn
11
25% 13% 9%
42%
43% 44%
32% 41% 43%
1% 3% 4%
0%
20%
40%
60%
80%
100%
2015 2016 2017 2018 2019 1Q19 1Q20
Others
Indonesia
Vietnam
China
3.8%#
6.8%#
10.8%#
39.1%#
Shoe Volume 1Q20: 71.5 mn pairs 1Q19: 81.7 mn pairs
Shoe Volume by Region
# YoY changes in volume amount * Others include Bangladesh, Cambodia, Myanmar, etc.
-12.5%#
YY Group Financial Highlights
12
(US$’000)
1Q 2020 1Q 2019 Y-o-Y
Revenue 1,969,468 2,479,385 -20.57%
Gross Profit 415,896 624,710 -33.43%
Gross Profit Margin 21.12% 25.20% -4.08pp
Operating (Loss) Profit (18,511) 124,195 N/A
Operating (Loss) Profit Margin -0.94% 5.01% -5.95pp
(Loss) Profit attrib. to Owners (56,281) 75,494 N/A
(Loss) Profit attrib. to Owners Margin -2.86% 3.04% -5.90pp
Non-recurring (Loss) Profit attrib. to Owners (20,198) 6,245 N/A
Recurring (Loss) Profit attrib. to Owners (36,083) 69,249 N/A
Source: Company accounts Please refer to the announcement on the HKEX website for the unaudited consolidated income statements of 1Q2020 & 1Q2019 For more details, please refer to Appendix
YY Group Financial Ratios
13
Source: Company accounts (figures rounded) ^ Depreciation on rights-of-use assets (“ROUA”) was US$42.9mn and US$29.2 mn in 1Q20 and 1Q19 respectively * Total borrowings and net borrowings exclude lease liabilities. Lease liabilities was US$ 373.1 mn as at Mar 31, 2020 # Total Debt to Equity and Net Debt to Equity (including lease liabilities) would be 56.0% and 32.2% as at Mar 31, 2020 respectively
(US$’mn) 1Q 2020 1Q 2019
Depreciation & Amortization^ 134.4 116.1
EBITDA 114.2 237.7
Capital Expenditure 69.8 86.9
Product Development 48.3 51.2
31 March 2020 31 March 2019
Total Borrowings* 2,100.3 2,170.8
Net Borrowings* 1,049.7 1,240.6
Total Borrowings to Equity # 47.6% 46.5%
Net Borrowings to Equity # 23.8% 26.6%
Quick Ratio (X) 1.1 X 1.1 X
Current Ratio (X) 1.9 X 1.9 X
1Q 2020 1Q 2019
Total Borrowings to EBITDA (X) annualized 4.6 X 2.3 X
Net Borrowings to EBITDA (X) annualized 2.3 X 1.3 X
TB=2,468,277-104,876-192,588=2,170,813 NB=1,538,044-104,876-192,588=1,240,580 TB/EQ=2,170,813/4,667,676=46.5% NB/EQ=1,240,580/4,667,676=26.57% Quick Ratio=(4,683,857-1,877,834)/2,465,709=1.13 Current Ratio=4,683,857/2,465,709=1.89
TB/EBITDA=2,170,813/(237,711*4)=2,170,813/950,844=2.28 NB/EBITDA=1,240,580/950,844=1.30
982.1 1,050.6
-69.8
YY Group Sources and Uses of Fund
14
Beginning Cash Jan 1, 2020
Ending Cash Mar 31, 2020
(US$’mn)
+222.0 -18.6
Tax
Cash from Operations
Interest Borrowing
Others Net Borrowings Raised
Lease Liabilities Repayment and Interest
-42.6 -27.4 -15.7 +20.6 CAPEX
Solid Free Cash Flow of US$133.6mn
YY Group ROE & ROA Trend
15 Remark: ROE = Profit attributable to owners of the company/ (Total Equity - Minority Interests); 1Q and half year data is on LTM basis ROA = Net Profit / Total Asset; 1Q and half year data is on LTM basis
(%)
6.4 5.8
6.5 7.6
7.4 6.6
5.3
4.1
4.4
4.0
2.4
9.9
8.7
9.4
11.3 11.3 12.1
10.0
7.4
8.0
7.3
4.2
1H15 FY15 1H16 FY16 1H17 FY17 1H18 FY18 1H19 FY19 1Q20
ROA ROE
YY Group GPM Analysis
16 Remark: GPM information is YTD basis
(%)
FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 1Q20
18.7 18.9 18.9 19.7 19.8 20.2 20.3 20.9 21.0 20.8 20.7 21.0
18.7 18.8 19.3 19.5 18.2 18.0 18.2 18.5
15.7
22.3 22.6 22.7 23.4 24.4 24.7 24.8 25.1 25.0 25.4 25.4 25.8 25.2 25.0 25.0 25.2 25.2 25.1 24.8 24.9
21.1
30.9 32.2 32.5
33.3 34.9 35.6 35.8 35.5
33.6 34.6 34.5 35.0
33.8 33.5 33.1 33.5 33.9 34.5 34.2 34.1
30.7
1Q 1H 9M 12M 1Q 1H 9M 12M 1Q 1H 9M 12M 1Q 1H 9M 12M 1Q 1H 9M 12M 1Q
MFG Group PS
Group excl. PS Note:
The figures in the following slides cover the core manufacturing and other operations of the consolidated entity of Yue Yuen Group, and are for analytical purposes only (prepared using the management accounts).
(US$’000) MFG only MFG+TCHC
1Q 2020 1Q 2019 Y-o-Y 1Q 2019 Y-o-Y*
Revenue 1,261,402 1,395,331 -9.60% 1,503,265 -16.09%
Gross Profit 198,178 253,666 -21.87% 294,104 -32.62%
Gross Profit Margin 15.71% 18.18% -2.47pp 19.56% -3.85pp
Operating (Loss) Profit -12,470 62,613 N/A 71,386 N/A
Operating (Loss) Profit Margin -0.99% 4.49% -5.48pp 4.75% -5.74pp
(Loss) Profit attrib. to Owners -41,551 52,396 N/A 57,836 N/A
(Loss) Profit attrib. to Owners Margin
-3.29% 3.76% -7.05% 3.85% -7.14pp
Group excl. PS Financial Highlights
18 * Compare to Group Results with TCHC Group in 1Q19 Source: Company management accounts For more details, please refer to Appendix
3.75
-3.29
Manufacturing – Net Profit Margin
19
-2.47
-1.37
1Q19 Net Profit Margin
+0.75
+0.27
-3.10
+1.05
1Q20 Net Profit Margin
Hedging Fair Value & Realized
Other Income & Expenses FX Gain
Others
(%)
Material, Labor & Overhead
SG&A exclude Factory Adjustment
Gains from Disposal of A&JV
Share of results of A&JV
+0.21 Factory Adjustment
-2.38
COVID-19 Impact Operating Deleveraging & Capacity Adjustment
Supply Chain disruption
Manufacturing – COGS Decomposition and Y-o-Y
20
Factory Temporary Closure • Government lockdown • Social distancing
COVID-19 Impact
Deleveraging • L+OH up 3.9 pp & GPM dropped 2.5pp
Low Utilization • Total utilization : 79% • China utilization: 69%
Shipment Delays • Shoe volume was 71.5mn
pairs, dropped 12.5%
* Cost of labor includes cost of direct labor and indirect labor
Amount (Y-o-Y)
Labor*
4.7%
13.2%
Overhead
1Q20 1Q19
% of Revenue % of Revenue
21.9%
14.8%
Material
Gross Profit
15.4% 14.5%
30.3% 35.1%
36.1% 34.7%
18.2% 15.7%
Manufacturing - GP Margin Trend
21
(%)
FY 2015 FY 2016 FY 2017 FY 2018 FY 2019
19.7% 20.9% 21.0% 19.5% 18.5%
* TCHC became subsidiary of the Group on April 7, 2017 and was then disposed on May 31, 2019
GP Margin % - Group excl. PS (including MFG and TCHC*)
2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19
21.6 21.6 22.7 20.1 19.9 21.4 21.3 19.6 18.7
18.7
19.1
18.9
21.9
19.8
20.5 20.5
22.8
21.0 20.7 20.4
21.8
18.7
18.9
20.2 20.3
18.2 17.9
18.5 19.2
15.7
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20
Gross Profit Margin (MFG only)
Manufacturing - OP Margin Trend
22
(%)
* TCHC became subsidiary of the Group on April 7, 2017 and was then disposed on May 31, 2019
OP Margin % - Group excl. PS (including MFG and TCHC*)
2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19
7.1 8.0 8.4 6.0 4.7 5.2 6.5 4.7 3.7
FY 2015 FY 2016 FY 2017 FY 2018 FY 2019
5.5% 7.6% 7.7% 5.5% 4.1%
5.3
6.1
3.7
6.8
5.9
7.5
6.7
9.8
6.9
7.2 7.8
8.6
5.7 4.8 4.8
6.7
4.5 3.6 3.6
4.6
-1.0
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20
Operating Profit Margin (MFG only)
Group excl. PS Financial Ratios
23
MFG only MFG+TCHC
(US$’mn) 1Q 2020 1Q 2019 1Q 2019
Depreciation & Amortization 69.9 67.6 71.5
EBITDA 56.0 127.8 140.5
Capital Expenditure 60.3 74.0 75.2
31 Mar 2020 31 Mar 2019 31 Mar 2019
Total Borrowings* 1,578.1 1,592.8 1,707.7
Net Borrowings* 765.0 765.3 877.2
Total Borrowings to Equity # 43.4% 42.2% 44.1%
Net Borrowings to Equity # 21.0% 20.3% 22.6%
1Q 2020 1Q 2019 1Q 2019
Total Borrowings to EBITDA (X) annualized 7.0 X 3.1 X 3.0 X
Net Borrowings to EBITDA (X) annualized 3.4 X 1.5 X 1.6 X
Return on Owner’s Equity LTM 3.4% 5.7% 6.0%
Return on Asset LTM 1.9% 3.3% 3.4%
Source: Company management accounts (figures rounded) * Total borrowings and net borrowings exclude lease liabilities. Lease liabilities was US$ 12.5mn as at Mar 31, 2020 # Total Debt to Equity and Net Debt to Equity (including lease liabilities) would be 43.7% and 21.4% as at Mar 31, 2020 respectively
TB=1,745,931-10,654-
27,604=1,707,673 TB=1,606,528-2,442-
11,296=1,592,790 NB=915,433-10,654-
27,604=877,175 NB=779,076-2,442-
11,296=765,338 TB/Equity=1,707,673/3,874,32
8=44.07% TB/Equity=1,592,790/3,774,77
6=42.19% NB/Equity=877,175/3,874,328=
22.64% NB/Equity=765,338/3,774,776=
20.27%
TB/EBITDA=1,707.7/(140.5*4)=1,707.7/562=3.03
TB/EBITDA=1,592.8/(127.8*4)=1,592.8/511.2=3.11
NB/EBITDA=877.2/562=1.56 NB/EBITDA=765.3/511.2=1.49
Working Capital Days
Manufacturing Operation Efficiency
Trade Receivable Days
Inventory Days
Trade Payable Days
24 1Q19 1Q19
55
57
31
81
50
57
29
78
FY19 1Q20
64
59
33
90
Pou Sheng International Note:
The figures in the following slides are based on Pou Sheng’s management accounts and announcements, and Pou Sheng adopts RMB as its
reporting currency
Agenda
01 Financial Highlights p28-32
02 Business Update – Brick & Mortar p34-37
03 Business Update – Omni-channel p39-41
04 Summary and Outlook p43-44
Distinguished Partners and Sports Services
27
VISION MAKE SPORTS YOUR LIFE!
Products Sports Events Sports Services
Pou Sheng Financial Highlights
28
RMB'mn US$'000
1Q 2020 1Q 2019 Y-o-Y 1Q 2020 1Q 2019 Y-o-Y
Revenue 4,947 6,597 -25.01% 708,066 976,120 -27.46%
Gross Profit 1,521 2,234 -31.92% 217,718 330,606 -34.15%
Gross Profit Margin 30.75% 33.87% -3.12pp 30.75% 33.87% -3.12pp
SG&A (1,635) (1,953) -16.28% (233,742) (288,282) -18.92%
Operating (Loss) Profit (44) 356 N/A (6,326) 52,637 N/A
Operating (Loss) Profit Margin -0.89% 5.39% -6.28pp -0.89% 5.39% -6.28pp
(Loss) Profit attrib. to Owners of PS (165) 192 N/A (23,685) 28,390 N/A
(Loss) Profit attrib. to Owners Margin -3.34% 2.91% -6.25pp -3.34% 2.91% -6.25pp
Source: Based on Pou Sheng’s announcement on the HKEX website for the unaudited consolidated income statements of 1Q2020 & 1Q2019 For more details, please refer to Appendix
Pou Sheng GP Margin Trend
29
(%)
FY 2015 FY 2016 FY 2017 FY 2018 FY 2019
33.3% 35.5% 35.0% 33.5% 34.1%
30.9
33.4
33.2
35.8
34.9
36.3
36.2
34.8
33.6
35.6
34.5
36.3
33.8 33.3
32.2
34.6
33.9
35.2
33.5
33.9
30.7
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20
Gross Profit Margin
Pou Sheng OP Margin Trend
30 * The figures have been restated due to the application of merger accounting
(%)
FY 2015 FY 2016 FY 2017 FY 2018 FY 2019
4.1% 5.7% 4.1% 4.3% 5.4%
3.5
5.8
4.3
2.9
6.6 7.2
5.5
3.5
4.5
6.1
2.9 2.8
4.6 4.9
3.0
4.5 5.4
6.2
4.9
5.2
-0.9
1Q15*2Q15*3Q15*4Q15* 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20
Operating Profit Margin
Pou Sheng Financial Ratios (in RMB)
31
(RMB’mn) 1Q 2020 1Q 2019
Depreciation of PPE & Amortization 163.0 131.0
Depreciation of ROUA 287.8 170.3
EBITDA 392.0 660.9
EBITDA minus Depreciation of ROUA 104.2 490.6
Capital Expenditure 66.4 78.7
31 March 2020 31 March 2019
Total Borrowings* 3,704 3,181
Total Borrowings to Equity # 49.1% 43.9%
1Q 2020 1Q 2019
Total Borrowings to EBITDA (X) annualized 2.4 X 1.2 X
Return on Owner’s Equity LTM 6.4% 8.4%
Return on Asset LTM 3.1% 4.0%
Source: Internal analysis report (figures rounded) * Total Borrowings exclude lease liabilities. Lease liabilities were RMB 2,557.5 mn and 1,743.1 mn as at Mar 31, 2020 and Mar 31, 2019 respectively. # Total Debt to Equity (including lease liabilities) would be 83.0% (1Q2019: 68.0%) as at Mar 31, 2020.
Working Capital Days
Operation Efficiency
32
Trade Receivable Days
Inventory Days
Trade Payable Days
Based on RMB
1Q19 1Q19
144
24
18
150
150
21
15
156
FY19 1Q20
192
25
17
200
* Calculation of inventory days and working capital days are based on annualized figures
* *
Agenda
01 Financial Highlights p28-32
02 Business Update – Brick & Mortar p34-37
03 Business Update – Omni-channel p39-41
04 Summary and Outlook p43-44
1Q19 1Q20
B2B B2C
Pou Sheng Retail Strategy
7
84%
16%
1Q20 Revenue by Channel Mix
Pou Sheng is one of the largest retailers and sports services providers for world renowned sportswear brands in the Greater China region
Brick & Mortar Retail Omni-channel
• Mono-Brands Stores: 5,796 stores
• Multi-Brands Stores: 86 stores
B2C Channel: • 3rd party platforms: T-Mall, JD,
Vipshop, etc. • WeChat stores (+ExP services) • Shopping mall platforms
34
Directly Operated Stores:
1Q19 1Q20
Directly Operated Stores Sub-Distributors
78% 79%
22%
21%
72%
28%
81%
19%
Pou Sheng Store Performance
35
Total store
Number of Stores
Directly Operated (Own-Store)
Sub-Distributor (Franchisee)
As at March 31, 2020 As at December 31, 2019 Net New Store +/(-)
5,883 1 5,882
3,950 90 3,860
9,833 -91 9,742
Pou Sheng Retail Coverage PS retail channel covers more than 300 cities in the Greater China
> 300 stores 100- 300 stores <100 stores
36
Pou Sheng Same Store Sales Growth (SSSg)
37
(%)
FY 2017 FY 2018 FY 2019
5.3% 7.4% 5.0%
1.9% 5.6%
1.5%
12.0%
10.1% 2.2%
8.9%
8.7% 8.4% 4.2%
6.0%
1.9%
-32.5%
1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20
Same Store Sales Growth
Agenda
01 Financial Highlights p28-32
02 Business Update – Brick & Mortar p34-37
03 Business Update – Omni-channel p39-41
04 Summary and Outlook p43-44
Pou Sheng Product Sharing Platform (PSP) Logistics of omni-channel will be facilitated through all-rounded channels: RDC, YYsports.com, 3rd party online platform, 27-Zone inventory sharing and Direct B&M
12.12
YY Sports app
YY Sports app
6.18 11.11
365-day O2O, earlier sales, higher price, via PSP
Products
RDC: Regional Distribution Center Direct B&M : Directly operated Brick and Mortar Stores 39
3rd party platforms ExP services WeChat stores
PSP
B&M1 …..
B&Mn
Warehouse 1,2,3,4
Pou Sheng Product Sharing Platform (PSP) Participation rate: more than 60% Direct B&M stores participate PSP at 1Q2020
40
PSP Contribution - Top 6 Regions
Participating PSP Regions Regional Warehouse
Taicang
Kunshan
Dongguan
New Service Hub to Enhance Omni-channel Capability
“Omni Contacts” “Convenient”+“FUN” “Attractive Sport Packages”
ExP Collection Grow Your ExP
Offline
Online
Mono Brand Stores
Next Store
28% 27% 29% 33% 31%
28% 27% 26% 27% 29%
13.9% 12.3% 12.3% 14.0% 12.9% 11.7% 10.9% 9.5% 9.1% 8.7%
307 294 291 293 280 301 308 356
347 337
26-Apr 27-Apr 28-Apr 29-Apr 30-Apr 1-May 2-May 3-May 4-May 5-May
L2 TTL CR%
L2 Merchandise CR%
L2 Traffic
1+364 ExP+
1,816 1,859 1,911 1,974 2,076
2,515 2,797 2,853 2,960 3,068 4.4% 4.4% 4.5% 4.5% 4.4%
3.9% 4.0% 4.3%
4.5% 4.5%
26-Apr 27-Apr 28-Apr 29-Apr 30-Apr 1-May 2-May 3-May 4-May 5-May
L3 Merchandise CR%
L3 Traffic
41
Agenda
01 Financial Highlights p28-32
02 Business Update – Brick & Mortar p34-37
03 Business Update – Omni-channel p39-41
04 Summary and Outlook p43-44
Pou Sheng Contingency Plans and Accelerated New Initiatives During COVID-19
43
• Timely cash inflow by shipment cuts, inventory takeback, effective promotions
• Cost saving by government subsidies, rental negotiations, SG&A cuts
• Extended cash outflow by extended payments to brands, delayed CAPEX
Contingency Plans
• Accelerated growth via “Product Sharing Platform”
• Effective new channel by WeChat stores
• Initial operating results of Sports Services Store in line with expectations
New Initiatives
Future Target: Profitable Growth Future Target
• Total revenue growth in mid-teens, with omni-channel contributing 20% of total revenue • More in-season sales and more effective off-season products sales through various 3rd party channels • Integrating the Service Hub model into our strong brick and mortar stores foundation • Turnaround of emerging brands and licensee brands • Operating margin improving by 2 percentage points
“Creating Value-added Services and Quality Experiences to Customers”
44 Retail Network
Omni-Channel
Next
Store
Appendix
Shareholding Structure
46
Pou Chen (9904.TT)
Yue Yuen Industrial (Holdings) Ltd. (551.HK)
62.19%
51.11%
* As at March 31, 2020
100%
Manufacturing and Others Pou Sheng (3813.HK)
Company Milestones
47 Started first overseas production in south China
Established production bases in Vietnam
Established production bases in Mexico
Established production bases in eastern and inland China
Began operations at the new headquarters in Taichung, Taiwan
Established production bases in Bangladesh & Cambodia
Established production bases in Myanmar
1988
1992
1994
1998
2001 2002
2006
2008 2009
2014 2015
Expanded into retail business in China Became sole licensee for Hush Puppies in Taiwan
Pou Sheng International listed on HKEX (3813.HK)
Became sole licensee for Pony in Taiwan & China
2012 Ms. Tsai Pei Chun, Patty appointed as CEO of Pou Chen Group
Yue Yuen Industrial listed on HKEX (551.HK) Established production bases in Indonesia
Yue Yuen Industrial founded
2019
Parent Pou Chen Group is accredited by FLA 2018 Parent Pou Chen Group’s 50th Anniversary
Recorded RMB 22 bn revenue. Sales channels over 9,000
Omni-channel contributed ~12% of total sales in 2019
Became sole licensee for Rockport footwear and GEOX in China
2016
Revenue crossed the US$10 bn mark
Yue Yuen
Pou Sheng
1Q19 1Q20
976.12
1,503.27
708.07
1,261.40
2,479.39
1,969.47
1Q19 1Q20
Revenue & Profit Attributable to Owners
48
Revenue In US$’mn
Profit Attrib. to Owners In US$’mn
Pou Sheng
Group excl. PS
The above figures of Pou Sheng exclude profit attributable to “Non-YY” shareholders (i.e. 1Q20: 37.8% minority interests; 1Q19: 37.8% minority interests)
Pou Sheng
Group excl. PS
-20.6%
-27.5%
-16.1%
17.66
57.83
(14.73)
(41.55)
75.49
(56.28)
YY Group Financial Highlights
49 Source: Company accounts Please refer to the announcement on the HKEX website for the unaudited consolidated income statements of 1Q2020 & 1Q2019
1Q 2020 1Q 2019 Y-o-Y
US$'000 % US$'000 % + / -
Revenue 1,969,468 100.00 2,479,385 100.00 -20.57%
Cost of Sales (1,553,572) -78.88 (1,854,675) -74.80 -16.23%
Gross Profit 415,896 21.12 624,710 25.20 -33.43%
SG&A (419,155) -21.28 (472,802) -19.07 -11.35%
Other Income & Expenses, net (15,252) -0.78 (27,713) -1.12 -44.96%
Operating (Loss) Profit (18,511) -0.94 124,195 5.01 N/A
Finance Cost (20,721) -1.05 (24,526) -0.99 -15.51%
Share of Results of A&JV 4,900 0.25 4,710 0.19 +4.03%
Other Gains and Losses (20,198) -1.03 6,245 0.25 N/A
Income Tax (10,763) -0.55 (22,550) -0.91 -52.27%
(Loss) Profit for the Period (65,293) -3.32 88,074 3.55 N/A
(Loss) Profit attrib. to Owners (56,281) -2.86 75,494 3.04 N/A
Group excl. PS Financial Highlights – MFG and TCHC
50 * Compare to Group Results with TCHC Group in 1Q19 Source: Company management accounts
1Q 2020 1Q 2019 Y-o-Y*
US$'000 % US$'000 % + / -
Revenue 1,261,402 100.00 1,503,265 100.00 -16.09%
Cost of Sales (1,063,224) -84.29 (1,209,161) -80.44 -12.07%
Gross Profit 198,178 15.71 294,104 19.56 -32.62%
SG&A (185,413) -14.70 (184,520) -12.27 +0.48%
Other Income & Expenses, net (25,235) -2.00 (38,198) -2.54 -33.94%
Operating (Loss) Profit (12,470) -0.99 71,386 4.75 N/A
Finance Cost (10,929) -0.87 (15,924) -1.07 -31.37%
Share of Results of A&JV 7,265 0.58 4,314 0.29 +68.41%
Other Gains and Losses (20,198) -1.60 6,245 0.42 N/A
Income Tax (5,124) -0.41 (8,296) -0.55 -38.24%
(Loss) Profit for the Period (41,456) -3.29 57,725 3.84 N/A
(Loss) Profit attrib. to Owners (41,551) -3.29 57,836 3.85 N/A
Group excl. PS Financial Highlights – MFG only
51 Source: Company management accounts
1Q 2020 1Q 2019 Y-o-Y
US$'000 % US$'000 % + / -
Revenue 1,261,402 100.00 1,395,331 100.00 -9.60%
Cost of Sales (1,063,224) -84.29 (1,141,665) -81.82 -6.87%
Gross Profit 198,178 15.71 253,666 18.18 -21.87%
SG&A (185,413) -14.70 (152,730) -10.94 +21.40%
Other Income & Expenses, net (25,235) -2.00 (38,323) -2.75 -34.15%
Operating (Loss) Profit (12,470) -0.99 62,613 4.49 N/A
Finance Cost (10,929) -0.87 (14,510) -1.04 -24.68%
Share of Results of A&JV 7,265 0.58 4,314 0.31 +68.41%
Other Gains and Losses (20,198) -1.60 6,245 0.45 N/A
Income Tax (5,124) -0.41 (6,377) -0.46 -19.65%
(Loss) Profit for the Period (41,456) -3.29 52,285 3.75 N/A
(Loss) Profit attrib. to Owners (41,551) -3.29 52,396 3.76 N/A
Group excl. PS Financial Highlights – MFG only
52 Source: Company management accounts
FY 2019 FY 2018 Y-o-Y
US$'000 % US$'000 % + / -
Revenue 6,000,573 100.00 5,881,494 100.00 +2.02%
Cost of Sales (4,893,539) -81.55 (4,732,467) -80.46 +3.40%
Gross Profit 1,107,034 18.45 1,149,027 19.54 -3.65%
SG&A (674,076) -11.23 (658,261) -11.19 +2.40%
Other Income & Expenses, net (188,398) -3.14 (167,405) -2.85 +12.54%
Operating Profit 244,560 4.08 323,361 5.50 -24.37%
Finance Cost (53,894) -0.90 (52,670) -0.89 +2.32%
Share of Results of A&JV 51,837 0.86 39,620 0.67 +30.84%
Other Gains and Losses 19,273 0.32 (17,956) -0.31 N/A
Income Tax (46,066) -0.77 (51,866) -0.88 -11.18%
Profit for the Period 215,710 3.59 240,489 4.09 -10.30%
Profit attrib. to Owners 215,562 3.59 240,038 4.08 -10.20%
Pou Sheng Financial Highlights (in RMB)
53
1Q 2020 1Q 2019 Y-o-Y
RMB’mn % RMB’mn % + / -
Revenue 4,947 100.00 6,597 100.00 -25.01%
Cost of Sales (3,426) -69.25 (4,363) -66.13 -21.48%
Gross Profit 1,521 30.75 2,234 33.87 -31.92%
SG&A (1,635) -33.05 (1,953) -29.62 -16.28%
Other Income & Expenses, net 70 1.41 75 1.14 -6.67%
Operating (Loss) Profit (44) -0.89 356 5.39 N/A
Finance Cost, net* (67) -1.35 (57) -0.86 +17.54%
Share of Results of JV (17) -0.34 2 0.04 N/A
Income Tax (39) -0.79 (96) -1.46 -59.38%
(Loss) Profit for the Period (167) -3.37 205 3.11 N/A
(Loss) Profit Attrib. to Owners of PS (165) -3.34 192 2.91 N/A
Source: Based on Pou Sheng’s announcement on the HKEX website for the unaudited consolidated income statements of 1Q2020 & 1Q2019 * Finance Cost in 1Q20 grew by 17.5% due to the increase of interest expense on lease liability (1Q20: 30.9 mn 1Q19: 19.9 mn)
SG&A 1,635,532=1,635mn
Finance Cost 66,422=67mn -67/4,947=-1.354%=-1.35% Share of Results of JV=16,522=17mn -17/4,947=-0.343%=-0.34% Income Tax 39,400=39mn -39/4,947=-0.788% -167/4,947=-3.375=-3.37% 配合USD -165/4,947=-3.335%=-3.34%
Pou Sheng Financial Highlights (in USD)
54
1Q 2020 1Q 2019 Y-o-Y
US$’000 % US$’000 % + / -
Revenue 708,066 100.00 976,120 100.00 -27.46%
Cost of Sales (490,348) -69.25 (645,514) -66.13 -24.04%
Gross Profit 217,718 30.75 330,606 33.87 -34.15%
SG&A (233,742) -33.01 (288,282) -29.54 -18.92%
Other Income & Expenses, net 9,698 1.37 10,313 1.06 -5.96%
Operating (Loss) Profit (6,326) -0.89 52,637 5.39 N/A
Finance Cost, net* (9,507) -1.35 (8,430) -0.86 +12.78%
Share of Results of JV (2,365) -0.33 396 0.04 N/A
Income Tax (5,639) -0.80 (14,254) -1.46 -60.44%
(Loss) Profit for the Period (23,837) -3.37 30,349 3.11 N/A
(Loss) Profit Attrib. to Owners of PS (23,685) -3.34 28,390 2.91 N/A
Source: Internal analysis report (figures rounded); various accounting reclassification and adjustments are made to some of the figures when consolidating Pou Sheng numbers into the Yue Yuen Group in order to comply with the requirements of accounting standards * Finance Cost in 1Q20 grew by 12.8% due to the increase of interest expense on lease liability (1Q20: 9.8 mn 1Q19:8.6 mn )
9,507/708,068=1.342% =1.35%
-23,685/708,068=-3.345% =-3.34% 配合RMB
Pou Sheng Financial Highlights (in RMB)
55
FY 2019 FY 2018 Y-o-Y
RMB’mn % RMB’mn % + / -
Revenue 27,190 100.00 22,677 100.00 +19.90%
Cost of Sales (17,915) -65.89 (15,078) -66.49 +18.81%
Gross Profit 9,275 34.11 7,599 33.51 +22.06%
SG&A (8,181) -30.09 (6,913) -30.49 +18.34%
Other Income & Expenses, net 377 1.39 281 1.24 +34.16%
Operating Profit 1,472 5.41 967 4.26 +52.22%
Finance Cost, net* (239) -0.88 (144) -0.64 +65.97%
Share of Results of JV 1 0.01 (1) -0.00 N/A
Other Losses (9) -0.03 - N/A N/A
Income Tax (345) -1.27 (261) -1.15 +32.18%
Profit for the Year 880 3.24 561 2.47 +56.86%
Profit Attrib. to Owners of PS 833 3.06 543 2.39 +53.41%
Source: Based on Pou Sheng’s announcement on the HKEX website for the audited consolidated income statements of FY2019 & FY2018 * Finance Cost in FY19 grew by 66.0% due largely to the RMB 101.1 mn effects of the application of HKFRS16
Pou Sheng Financial Highlights (in USD)
56
FY 2019 FY 2018 Y-o-Y
US$’000 % US$’000 % + / -
Revenue 3,932,965 100.00 3,421,657 100.00 +14.94%
Cost of Sales (2,591,280) -65.89 (2,275,156) -66.49 +13.89%
Gross Profit 1,341,685 34.11 1,146,501 33.51 +17.02%
SG&A (1,178,146) -29.96 (1,038,884) -30.37 +13.40%
Other Income & Expenses, net 49,397 1.26 38,270 1.12 +29.07%
Operating Profit 212,936 5.41 145,887 4.26 +45.96%
Finance Cost, net* (34,598) -0.88 (21,665) -0.64 +59.70%
Share of Results of JV 158 0.01 (140) -0.00 N/A
Other Losses (1,378) -0.03 - N/A N/A
Income Tax (49,840) -1.27 (39,452) -1.15 +26.33%
Profit for the Year 127,278 3.24 84,630 2.47 +50.39%
Profit Attrib. to Owners of PS 120,533 3.06 81,913 2.39 +47.15%
Source: Internal analysis report (figures rounded); various accounting reclassification and adjustments are made to some of the figures when consolidating Pou Sheng numbers into the Yue Yuen Group in order to comply with the requirements of accounting standards * Finance Cost in FY19 grew by 59.7% due largely to the US$14.6 mn effects of the application of HKFRS16
Thank you
Q&A