李宁有限公司 2008 年度 ? ? 推 介 -...
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20082008Annual Results Annual Results PresentationPresentation
March 2009March 2009
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AgendaAgenda
Major Achievements in 2008
Financial Highlights
Business Review
Future Outlook & Strategies
Open Forum
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Major Achievements Major Achievements in 2008in 2008
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Established Li Ning SportsScience R&D CentreProduct innovation
Store expansion reached targetSignificant same store salesgrowth
Li-Ning Industrial Park
Streamliningof the Supply Chain
Major Achievements in 2008Major Achievements in 2008
Olympics-related marketingcampaign a successMulti-brand strategy
Product Design and R&DBranding
Sales NetworkExpansion
Successful Conclusion of the Five-year Plan
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Five Years of Steady GrowthFive Years of Steady Growth
RevenueRMB Mil Profit Attributable to Equity HoldersRMB Mil
Basic EPSRMB cents Operating Cash FlowsRMB Mil
6,690.1
4,348.7
3,180.5
1,878.12,450.5
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2004 2005 2006 2007 2008
721.3
473.6
294.8
122.4186.8
0
100
200
300
400
500
600
700
800
2004 2005 2006 2007 2008
69.63
45.83
28.65
13.7818.25
0
10
20
30
40
50
60
70
80
2004 2005 2006 2007 2008
699.0
392.9
293.4
134.4 138.6
0
100
200
300
400
500
600
700
800
2004 2005 2006 2007 2008
CAGR: 55.8%
CAGR: 49.9% CAGR: 51.0%
CAGR: 37.4%
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Financial HighlightsFinancial Highlights
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Financial HighlightsFinancial Highlights
2008 2007 Change(RMB Mil) For the year ended 31 Dec
Revenue 6,690.1 4,348.7 53.8%
Gross profit 3,220.4 2,082.8 54.6%
Operating profit 960.2 609.9 57.4%
EBITDA 1,070.5 681.8 57.0%
Basic EPS (RMB cents) 69.63 45.83 51.9%
Special Dividend 28.90 9.13 216.5%
Full-year dividend per ordinary share(RMB cents) 49.67 22.85 117.4%
Including: Final Dividend 11.14 7.96 39.9%
Profit attributable to equity holders 721.3 473.6 52.3%
Interim Dividend 9.63 5.76 67.2%
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Revenue AnalysisRevenue Analysis bybyProduct CategoriesProduct Categories
Stable Growth of Footwear Products as a proportion of Total Revenue%
12.1% 8.6%7.6% 6.2% 5.1%
43.6%41.9%39.3%29.0% 34.4%
49.5%
53.3%52.3%
46.3%52.7%
5.0%2.4%0.4%4.7%5.6%
0%
20%
40%
60%
80%
100%
2004 2005 2006 2007 2008
LI-NING BrandApparel
LI-NING BrandAccessories
Other Brands
LI-NING BrandFootwear
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Northern RegionNorthern Region
Eastern RegionEastern Region
Southern RegionSouthern Region
International Market
Domestic Market
40.9% 61.1%
40.2% 50.4%
18.1% 27.7%
LILI--NING Brand Revenue Analysis NING Brand Revenue Analysis by Geographyby Geography
0.8% 59.1%
99.2% 49.6%
% of total revenue revenue growth
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9.6%11.1%
12.7%14.0% 14.4%
10.8%
6.5%7.6%
9.3%10.9%
0%
5%
10%
15%
20%
2004 2005 2006 2007 2008
Healthy Profit MarginsHealthy Profit Margins
Margin of Profit Attributable to Equity Holders
Operating Margin
Gross profit margin ofLI-NING brand products 2008 2007 Change
For the year ended 31 Dec
LI-NING Brand Footwear 45.6% 46.0% -0.4p.pLI-NING Brand Apparel 51.7% 49.3% 2.4p.pLI-NING Brand Accessories 51.4% 51.4% 0p.pLI-NING Brand Overall 48.9% 48.0% 0.9p.p
Gross Profit Margin%
46.5%46.0%
47.4%47.9% 48.1%
44%
45%
46%
47%
48%
49%
50%
2004 2005 2006 2007 2008
Operating Margin &Margin of Profit Attributable to Equity Holders%
GP Margin
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Key Financial IndicatorsKey Financial Indicators
2008 2007 ChangeFor the year ended 31 Dec
Inventory Turnover (days) 61 70 -9
Avg. Trade Receivable Turnover (days) 48 53 -5
Avg. Trade Payables Turnover (days) 69 69 0
Cash Conversion Cycle (days) 40 54 -14
R&D Expenses (as % to revenue) 2.7% 3.2% -0.5 p.p.
A&P Expenses (as % to revenue) 17.5% 16.0% +1.5 p.p.
Human Resource Cost (as % to revenue) 7.1% 7.5% -0.4 p.p.
Effective tax rate (%) 21.7% 23.4% -1.7 p.p.
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* Including fixed deposits and restricted deposits
**Excluding acquisition expense
2008 2007 Change
For the year ended 31 Dec
Cash and Cash Equivalents* 893.7 861.1 3.8%
Current Liabilities 2,086.8 977.4 113.5%
Total Liabilities to Total Assets Ratio 51.8% 37.3% 14.5 p.p.
CAPEX** 260.4 243.1 7.1%
Return on Equity (full-year) 39.6% 30.1% 9.5 p.p.
HealthyHealthy Financial PositionFinancial Position
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Business ReviewBusiness Review
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Olympics strategy
Let the Game Begin
Hero’sAssembly
— Hero VansA letter to all
athletes in the worldSponsored gear
for Olympics
Flagshipstores with
Olympics theme
Return ofHeroes
One team
The four Chinesenational teams
delivered stunningperformances
Beijing Olympicspromotion
programmetargeting major
shopping centresin China
Cooperation withthe CCTV-5
Olympic flamereached Mount
Everest
Protectingthe Olympic
flame together
Successful Olympics IntegratedSuccessful Olympics IntegratedMarketing CampaignsMarketing Campaigns
The Group’ssponsored national
teams achievedexcellent results
Reborn
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Other Marketing CampaignsOther Marketing Campaigns
Basketball• Continued the cooperation with NBA players, including O’Neal and
Hayes• Newly signed NBA player – Baron Davis, point guard of LA Clippers• China University Basketball Association (CUBA)• Nation-wide junior secondary school basketball events
Tennis• Official partner of the Association of Tennis Professionals (ATP)
in China• Launched a promotion programme during the Shanghai Tennis
Masters Cup, “Li Ning – ATP FEEL IT”
Women’s fitness• Cooperated with Beijing’s Nirvana Yoga, which promises the
biggest growth potential in the fitness market in China
Indoor sports• In November 2008, “Badminton World Federation Super Series
– LI-NING China Open 2008” was held in Shanghai• In the same month, Ms. Wang Chen, the Group’s sponsored
female badminton player, was crowned the winner of theHong Kong Badminton Championship
Football• Chinese University Football League
(CUFL)
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Strong emphasis on product design, research and development• Design, research and development centres in mainland China, Hong Kong and Portland, Oregon in
the United States• Continued to work with reputable educational institutions and professional bodies in conducting
research and development• Li Ning Sports Science R&D Centre commenced operations
Combine technological innovation with stylish design and Chinese experience• Collaborated with Michelin for the development of sports footwear products• A number of LI-NING brand basketball shoes were granted various awards from widely recognised
competitions, including “iF China Industrial Design Award” and “China Innovative Design Red Star Award”. It was also named the “Most Successful Product Design” by Fortune Magazine
• “LI-NING BOW”• “JIONG” footwear• AT DRY SMART technology
Product Research and DevelopmentProduct Research and Development
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Continued to expand its sales channel coverage, especially in second- and third-tier cities
Strengthened retail capabilities and enhanced overall service quality to improve same store sales growth
Actively identified appropriate locations for establishment of flagship stores, especiallyin host cities for the Beijing Olympic Games
Continuously carried out store upgrades and launched fifth-generation stores
Effective Sales Channel ManagementEffective Sales Channel Management
Number of stores 2008-12-31 2007-12-31
LI-NING brand 6,245 5,233
Other brands* 672 443
*Including AIGLE, Z-DO and Lotto
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Flexible and Effective Supply Chain Flexible and Effective Supply Chain ManagementManagement
Continuously refine and improve supply chain and inventory management
Hosted four large scale trade fairs of LI-NING brand and a total of five trade fairs of AIGLE and Z-DO brands
Cost savings by continuous enhancement in the procurement process and efficiency
Collaborate with core suppliers in moving production base to inner citiesin order to save costs
Establish a logistics centre in Central China to improve logistics efficiency
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Other BrandsOther Brands
Stronger retail level support with special emphasis on consumercommunications
Fine tune product mix to cater the tastes andpreferences of the Chinese market
Collaborate with hypermarkets on upgrading the salesinformation management
Adopt a fast and responsive supply chain to streamline productionand logistics
Product focuses on classic and evergreen style in order to meetbasic sports lifestyle needs
Completed the acquisition in July 2008
Focus on table tennis equipment
Leverage on the Group’s strengths in product design for footwearand apparel and supply chain management to complete DoubleHappiness’s product offering
Exclusive license for 20 years in China
Adopt a business-driven approach
Target the sports fashion market
Leverage on the Group’s supply chain and distributionmanagement expertise
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Future Outlook Future Outlook and Strategiesand Strategies
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OutlookOutlook
Business EnvironmentMacro-economic uncertainties in 2009 add pressure on the business environment
The sporting goods industry enters into a new cycle of growth after the conclusion of the Beijing Olympic Games, growth rate will slow down on a relative basis On the back of the global financial crisis, the Chinese economy is facing various challenges. Increased uncertainties cloud the prospects of the marketAggressive discounting as a result of inventory pile-up
Growth in China’s sporting goodsindustry remains robust:
Lifestyle change creates immenseopportunities for the sector
• Increase in per-capita income• Growing group of health-conscious
consumers• Urbanization
Growing popularity of sports tournament and the broadcasting coverage of major events continues to expand
Sporting goods industry in China:
Notable geographical difference, 2nd –and 3rd
-tier cities have the greatest potentialsSports lifestyle segment has a higher growth potential than professional sports segmentUnlike the U.S. and Europe, indoor sportslike badminton and table-tennis are very popular sports in China
Upside Factors
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Brand Reinvention andBrand Reinvention andProduct InnovationProduct Innovation
BrandReinvention
Further establish our capabilities inimplementing product-driven integratedmarketing strategy
Revamp brand’s DNA to clearly define theGroup’s positioning and target consumers
Tap into more market segments and seekmore sports marketing resources that arein sync with our objectives and strategies
LI-NING brand remains the core brand
Multi-brand strategy serves as a meansto achieve stable growth and complementour business
Enhance product research, developmentand design capability
Product Innovation
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Strengthen distribution management to enhance overall efficiency• Improve the monitoring and collection of
operating data and intelligence at the retail level• Focus on same store sales growth• Broaden presence in second- and- third tier
cities• Better distribution service to meet the needs
of local customers
Streamline the supply chain to mitigate risks• Cost savings in procurement and logistics as
the supply chain moves to inner cities • Flexible supply chain management, shorten
production time to mitigate risks• Overall enhancement in the supply chain by
catering to the needs of our multi-brand portfolio• Gear the supply chain for international
expansion
Store Expansion PlanBy End of No. of Stores
2009 7,000
2010 7,800
2011 8,600
2013 Over 10,000
Distribution and Supply Chain Distribution and Supply Chain ManagementManagement
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International ExpansionInternational Expansion
2009-2013: preparation stage, focus more on developing capabilities for international expansion:
• Talent• Supply chain • Product design• Branding• The expansion mode
By 2018: become oneof the world’s top 5sports brands, withrevenue contribution of 20%from international business
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Q&AQ&A
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Investor RelationsInvestor Relations
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Investor Relations DepartmentTel : +86 21 2326 7366Email : [email protected]
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