cultivating brands . embracing technological...
TRANSCRIPT
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2017 Annual Results Investor Presentation 26th June 2017 | Hong Kong
Cultivating Brands Embracing Technological Advancement .
Stock Code 2633
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Agenda
• Welcoming Remarks and Key Events After IPO
• M&A – Rationales & Approach
• Key Elements of Our Growth Strategy
• How Our Businesses Performed in FY2017
• Financial Results and Highlights
• Outlook
• Q&A
SPEAKERS:
Derek Sum, Chairman and CEO
Raymond Yim, Executive Director
Victor Lau, VP – Finance and Investor Relations
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Key Events After IPO
Main Board
09/2016
Medipharma
11/2016
Synco
11/2016
Ho Chai Kung Brand
01/2017
HKIB
12/2016
Saplingtan & Shiling
Oil
03/2017
Gold Medal Award Geneva
Invention
04/2017
Hong Ning Hong
05/2017 06/2017
IPO M&A Operation R&D M&A M&A R&D M&A MSCI
MSCI HK Micro-cap
Index
Incorporate
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Merger & Acquisition
Rationales & Approach
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Rationales of “M&A”
保濟丸
唐太宗 活络油
飛鷹 活絡油
VICKMANS
APT PHARMA
EURO- PHARM
JEAN MARIE
SYNCO
CAMBODIA MYANMAR VIETNAM
HONG NING HONG
十靈丹 十靈油
何濟公 MEDI-
PHARMA KAREN
PHARMA
MARCHING
UPLL
NEOCHEM
兜安氏 藥膏
秀碧 除疤膏
CHINA MACAU
JAPAN SINGAPORE THAILAND MALAYSIA INDO- NESIA
AUSTRALIA
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Defend & Attack
Assets on the chessboard are networked
Putting the right asset in the right place
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IMPA
CT
TIME
Create chemistry effect through shared data and customer reach
Add dimensions to our portfolio
Generate profit and cash flow
Generate synergies
Catalyzing and paving way for next strategic move
Gain access to new markets and broaden geographic reach
Build long term values for Jacobson
Goals of “M&A”
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How To Approach “M&A”
“M&A” strategy has to be in sync with business strategies
2 Market intelligence & people network are the keys to making a sensible “M&A” move
3 “M&A” is an integral part of a bigger corporate plan, not a stand-alone strategy
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We Remain Focused…
Vision-Driven
Culture – Challenge & Commit
Strategic Focus
Strategic Focus
Pursue continued growth in revenues, horizontally and vertically
Build an expandable platform of proprietary brands to boost revenue and deepen geographic reach
Pursue product differentiation to give us edge to compete and gain market shares
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Key
Elements of Our Growth Strategy
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Sharpen Product Portfolio
Sustained investment in R&D
Enter early with off-patent molecules (e.g. Entecavir, Rosuvastatin, Celecoxib, UDCA, Mesalazine)
Focus on Sales & Marketing Excellence
Cultivate strong brands to attain growing revenue stream and market reach
Strengthen Customer Relationship Management
Succeed on M&A
Key Elements of Our Growth Strategy
“Integration” is the key to success
Have people ready and committed to take on the challenges
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How
Our Businesses Performed in FY2017
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How We Performed…
Po Chai Pills sales in Hong Kong grew by +22.3% Proprietary Medicines:
Revenue grew by
+13.9% to HK$158.4M
Sales of Puji Pills materialized from new China distributors since March 2017
Solid revenue performance of Ho Chai Kung
Performance Growth Drivers
Solid growth of +15.9% in revenue and +30.7% in adjusted profit
Generic: Revenue grew by
+16.2% to HK$1,097.6M
Public Sector grew by
+13.6%
Private Sector grew by
+17.4%
Expanded market shares and price inflation for respiratory and GI products in retail
Strong sales momentum for respiratory and cardiovascular products
Secured contracts for Losartan, Mesalazine, UDCA & Bisacodyl Suppository
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Financial
Results and Highlights
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(HK$’m) FY2017 FY2016 Changes
Revenue 1,256.0 1,083.9 +15.9%
Gross Profit 556.9 487.8 +14.2%
Adjusted Profit Attributable to Shareholders
201.9 154.5 +30.7%
Dividend – Interim and Final (HK cents) 2.2 N/A
EPS - Basic and Diluted
(HK cents/shares) 11.39 11.13
Key Financial Data
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944.8 1,097.6
139.1
158.4
0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
1,300
2016 2017
Generic Drugs Proprietary Medicines
Revenue increased by 15.9% to HK$1,256.0 million
• Increase in revenue of $152.8 million in Generic Drugs Segment (87%) and HK$19.3 million in Proprietary Medicine Segment (13%)
• Significant increase in revenue contributing from revenue of both public and private sectors. With the previous acquisition of Medipharma, remarkable profit was contributed to the private sector
For the year ended 31 March
(HK$ ’M)
1,083.9
1,256.0
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Revenue
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487,755 556,888
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
550,000
600,000
2016 2017
(HK$ ’000)
For the year ended 31 March
Gross Profit increased by 14.2% to HK$556.9 million • Contributed by the
increase in revenue of $172.1 million while offset by the increase in production cost
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Gross Profit
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145.6 179.3
8.9
22.6
0
20
40
60
80
100
120
140
160
180
200
220
2016 2017
Net Profits One-off expenses
(HK$ ’M)
201.9
154.5
Adjusted profit
attributable to the
shareholders increased by
30.7% to HK$201.9 million
• The increase in profit
attributable to
shareholders reflected
the increase in profit
from operations offset
by the additional
finance costs and
income tax
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For the year ended 31 March
Profit Attributable to Shareholders
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(HK$’000) FY2017 FY2016
Total Assets Less Current Liabilities 1,911,578 1,005,215
Cash and Cash Equivalents 359,685 82,925
Inventories 261,313 196,915
Trade and Other Receivables 201,470 209,957
Net Gearing Ratio 32.6% 37.3%
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Key Balance Sheet Data
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Outlook
For Future Growth
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Management Response Opportunity
Hong Kong & emerging markets in SEA offers room of growth
Accelerate product development
Strengthen our “First-to-opportunity” position
Deploy dedicated resources for export markets
E-commerce in China presents a viable avenue for OTC Products
Realign resources to actively exploit online marketing and e-commerce avenues for customers in China
Pockets of “M&A” emerge every now and then
Establish clear M &A agenda
Aim for synergies and strategic fit
Continue our success on “Buy & Build” model
Outlook – Better Positioned For Future Growth
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Thank You
Cultivating Brands Embracing Technological Advancement
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Q & A
Cultivating Brands Embracing Technological Advancement
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Appendix
Cultivating Brands Embracing Technological Advancement
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Year ended 31 March
2017 2016
HK$’000 (audited)
HK$’000 (audited)
REVENUE 1,255,957 1,083,856
Cost of sales (699,069) (596,101)
GROSS PROFIT 556,888 487,755
Other income 11,740 (465)
Selling and distribution expenses (145,350) (133,807)
Administrative and other operating expenses (188,036) (167,963)
Profit from operations 235,242 185,520
Finance costs (13,996) (2,523)
PROFIT BEFORE TAX 221,246 182,997
Income tax (39,986) (30,335)
PROFIT FOR THE PERIOD 181,260 152,662
Item that may be reclassified to profit or loss:
Exchange differences on translation of financial statements of operations outside Hong Kong (1,845) (2,355)
Other comprehensive income (1,845) (2,355)
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 179,415 150,307
Attributable to:
Equity shareholders of the Company 179,328 145,610
Non-controlling interests 1,932 7,052
TOTAL PROFIT FOR THE PERIOD 181,260 152,662
Earnings per share attributable to equity shareholders of the Company
- Basic and diluted (HK cents) 11.39 11.13
Annual consolidated statement of profit or loss and other comprehensive income
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As at 31 March 2017
As at 31 March 2016
HK$’000 (audited)
HK$’000 (audited)
NON-CURRENT ASSET Property, plant and equipment 1,007,672 815,323 Leasehold land 48,839 51,418 Intangible assets 1,056,801 426,681 Non-current assets 20,420 27,710
Deferred tax assets 2,423 1,469
Total non-current assets 2,136,155 1,322,061 CURRENT ASSET Inventories 261,313 196,915 Trade and other receivables 201,470 209,957 Current tax recoverable 11,444 10,192 Cash and cash equivalents 359,685 82,925 Total current assets 833,912 499,989 CURRENT LIABILITIES Trade and other payables 108,141 104,585 Bank loans 937,486 439,335 Obligations under finance leases 149 692 Amounts due to the Controlling Parties - 36,202 Dividend payables - 224,800 Current tax payable 12,713 11,221 Total current liabilities 1,058,489 816,835 NET CURRENT ASSETS/(LIABILITIES) 224,577 316,846 Total assets less current liabilities 1,911,578 1,005,215 Non-current liabilities Obligations under finance leases 373 522 Deferred tax liabilities 138,887 48,548
139,260 49,070 Net Assets 1,772,318 956,145 EQUITY Equity attributable to equity shareholders of the Company Share capital 18,156 13,125 Reserves 1,731,247 893,757 Non-controlling interests 22,915 49,263 Total equity 1,772,318 956,145
Annual consolidated statement of financial position
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Cultivating Brands Embracing Technological Advancement
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