spirit of 3 apples cosmax, inc. ir(eng 15. 3q).pdf · | 2-1. environment analysis (2) high growth...

Spirit of 3 Apples

Cosmax, Inc.

(KS 192820)

3Q. 2015

1. Business Overview

1) VISION

2) Business Introduction (Consolidated basis)

3) Factory and Item Status

4) Current Production Capacity

5) Business Goal

6) 3Q. 2015 Earnings (Consolidated and Individual)

7) BS & IS

| OUR SPIRIT

HONESTY

- Respect

- Integrity

BEAUTY

- Environment Management

-CSR (Corporate Social Responsibility)

DIFFERENCE

-Creativity

- Innovation

- Professionalism

3

2013

2014

2015

2017

Korea Brand Shop

Chinese New Big Customer

Accelerating Growth of China,

Southeast and US

Global No.1 Beauty ODM Company

Guangzhou

Total sales US$1.3 Billion

Growth Engine Growth Preparation

Indonesia Factory Operation and Stabilization

Guangzhou Factory Operation and Stabilization

US Factory Operation

China Expansion in Other Regions

2022

| 1-1. VISION

4

| 1-2. Business Introduction

화장품 ODM 사업 건강기능식품 사업

Global Beauty ODM No.1 Company

Korea

Cosmetics

ODM Business

Indonesia

Cosmetics

ODM Business

China

Cosmetics

ODM Business

US

Cosmetics

ODM Business

5

9,000 m² Skin

COSMAX Korea Factory unit I

4,800 m² Make-up Powder

COSMAX Korea Factory unit 2

COSMAX Korea Factory unit 3

5,200 m² Make-up

COSMAX China Shanghai

24,000 m² Skin/Make-up / Hair care

27,000 ㎡ Skin/Make-up

COSMAX China Guangzhou

Cosmetic ODM Facilities : 3 Domestic, 2 China, 1 Indonesia, 1 US factory units

Skin-Care Products

Milk lotion, Toner, Cream, Eye Cream, Essence etc.

Make-Up Products

Lipstick, Mascara, Powder, Make-up Base, etc.

Hair-Care Products

Shampoo, Hair Gel, Hair Conditioner ,etc. 14,000 ㎡ Skin/Make-up

COSMAX Indonesia Jakarta

| 1-3. Business Introduction – Factory and Item Status

29,750 ㎡ Skin/Make-up

COSMAX US Ohio, Solon

6

DOMESTIC

190M unit

200M 40M

100M 40M

<TOTAL CAPA >

Around 570M (unit)

Only in the field of cosmetics. In JANUARY. 2015 only

| 1-4. Business Goal (K-IFRS Consolidated 2014)

2014 sales growth 23%

(Unit: mil KRW)

7

400,000

350,000

300,000

250,000

200,000

0 2013 2014 2015(E)

2013 2014

Amount Growth

Rate Amount

Growth Rate

Sales 314,940 388,373 23.3%

Operation Profit 31,848 28,643 -10.1%

Ordinary Income 26,238 26,189 -0.2%

Net Profit 20,376 19,295 -5.3%

※ Cosmax has no previous data becasue it is the new established company bulied in March 1st, 2015.

But to help you understanding, denoted 2013 and 2014 data (based on Jan.1 to Dec.31)

| 1-5. 3Q earning 2015 (Consolidated) (1)

(Unit: mil KRW)

3Q. 2015 total Sales 397.6 Bill KRW. Operation Profit 30.9 Bill KRW

8

3Q. 2015 3Q.2014 Amount Growth (%)

Sales

Quarterly 132,940 91,268 41,672 45.7%

Ytd 397,623 279,114 118,509 42.5%

Operating profit

Quarterly 9,457 4,873 4,584 94.1%

Ytd 30,909 24,363 6,546 26.9%

Ordinary Profit

Quarterly 7,358 4,541 2,817 62.0%

Ytd 26,142 21,898 4,244 19.4%

Net profit

Quarterly 5,044 3,443 1,601 46.5%

Ytd 18,476 17,280 1,196 6.9%

Major sales growth factor: Contributed by 107% sales increase in COSMAX CHINA BUSINESS.

Major profit changes factor: Cosmax Korea and Cosmax China are maintaining steady rate of profit,

establishment of branches in USA and Indonesia caused expenses which is the

primary factor of profit change.

| 1-6. 3Q earning 2015 (Affiliated Companies)(2)

(Unit: mil KRW)

9

COSMAX (Korea) : Steady rise of customer, production and export increase. Increased corporte tax rate 24.2%

COSMAX Shanghai & Guangzhou : Steady rise of customer and sales. Stabilized Guangzhou branch make higher

sales growth than Korea and maintain business profits.

COSMAX USA : Incurred loss due to increase of labor cost as starting plant operation, and cost for R&I

구분

Sales (Ytd) Net Income (Ytd)

3Q. 2015 Growth

rate 3Q. 2014 3Q. 2015

Growth rate

3Q. 2014

Cosmax (Korea) 272,007 28.5% 211,623 18,958 31.0% 14,469

China Consolidated

(Shanghai+Guangzhou) 153,583 78.7% 85,930 10,279 62.8% 6,314

Cosmax Indonesia 1,287 141.5% 533 -2,646 70.1% -1,556

Cosmax USA 482 - -7,959 -2,089

Cosmax icure 698 - -166 -

Cosmax

Herb Scent Garden - - -125 -87

| 1-7. B/S & P/L (K-IFRS Consolidated)

Condensed B/S Condensed I/S

Factors 3Q. 2015 2014

Working Capital 242,811 177,986

Cash and cash equivalents 12,556 10,501

Inventories 77,995 57,690

Etc. 152,260 109,795

Total Asset 174,338 147,716

Financial Asset (Long Term) 3,872 3,590

Property, plant and equipment

156,043 132,356

Intangible Asset 5,505 3,314

Etc. 8,918 8,456

Total Asset 417,149 325,702

Current Liabilities 267,033 199,293

Non-current Liabilities 51,096 45,874

Total Liabilities 318,128 245,167

Capital 4,500 4,500

Capital Surplus 59,805 59,782

Accumulated other comprehensive income

4,753 1,014

Retained Earning 30,894 15,728

Other Capital -697 -256

Total Shareholders’ Equity 99,021 80,534

Factors 3Q. 2015(total) 3Q. 2014(total)

Sales 397,623 226,971

COGS 328,634 187,680

Gross Profit 68,989 39,291

SG & A expense 38,080 19,233

Operating Profit 30,909 20,058

Financial Income 164 98

Other Income 4,024 1,556

Finance Costs 4,136 2,688

Other Costs 4,818 1,266

Ordinary Income 26,142 17,759

Income Tax Expense

7,666 4,017

Net Income 18,476 13,742

(Unit: mil KRW) (Unit: mil KRW)

10

※ The above information have been calculated by K-IFRS standard ※ 1Q. 2014(1. MARCH ~ 31. MARCH) / 2014 (MARCH ~ DECEMBER)

2. Korea Cosmetics ODM Business

1) Environment Analysis

2) Company Overview and Executives

3) Customer Overview

4) Core Competence

- R&D POWER

- The Biggest Production Capacity

- Wide Relationship with Global Brand Customers

| 2-1. Environment Analysis (1)

Generalization of Outsourcing

Separation of Production and Distribution

Restructuring of the Cosmetics Market

Integration of Production and Distribution

Generalizing outsourcing by big

distributors and traditional companies

Emergence and growth

of the big distributors

The downfall of the

traditional companies

during IMF crisis

Traditional

cosmetics

industry

The Separation of Production and Distribution

12

| 2-1. Environment Analysis (2)

High Growth Barrier

Only 20 companies achieve over KRW 10

billion in sales

The whole market is oligopoly comprising

2 companies, Cosmax and others, which

dominates over 50% of market share R&D

Exist severe disparities in the production

infrastructure and others

Low Entrance Barrier, High Growth Barrier

Low Entrance Barrier

400~ 300 OEM / ODM cosmetic

companies in domestic market

The market size is estimated at around

KRW 1 trillion that is over 10% of the

production performance

ODM/OEM

Market

13

| 2-2. Introduction Company Overview and Executives

◆ Established Nov. 1992

◆ President & CEO Kyung-soo, Lee

◆ Paid-in Capital W4,5bn(as of April. 2014)

◆ No. of Employees 620

Position Name Job description Career

CEO & Chairman K. S. Lee Group header Dae-Woong Pharmaceutical Co. Ltd. (Marketing Director)

Founder of Cosmax, Inc

CEO & President J. C. Kim Production Executive

Manager LG Household & Health Care CPO

R&I President H.C. Ryu R&I

Executive manager Enprani Cosmetic CEO

China business

President K. Choi

China Business

Executive manager Dae-Woong Pharmaceutical Co. Ltd.

Establishing professional management system in each field of planning, production, marketing, personnel and general affairs

14

| 2-3. Customer Overview

Overseas Companies

Domestic Companies

15

| 2-4. Core Competence (1)

The highest level institute to develop a best-in- class products –Cosmax R&I Center

• Total of 54 patent applications

• 2,352 functional cosmetics approved

95%

95% of the products are being

manufactured under it’s own internal

formula

• Developed many functional ingredients

* Dec, 2014

16

• Dec, 2014, one day production capacity × annual average operation

days (25days per month, 10.5hours one shift)

Skin Care

Current Production 65% of total capacity

Available 35% of Total capacity

Pressed powder

Lipcare Powder

Mascara

Capacity (192,400 unit) Output (124,000 unit)

120,000

100,000

80,000

60,000

40,000

20,000

0

* Unit : 1,000ea

140,000

160,000

170,360

* Unit : 1,000 unit

Annual

Quantity

93,600

34,800

15,600

48,000

192,400

Area No.

of Lines

Monthly

Quantity

Skin 22 7,800

Lip 21 2,900

Mascara 4 1,300

Powder 29 4,000

Total 76 16,000


The most flexible production facilities in Korea

17


Country Item Client Remarks

World-Wide Make-Up L'Oreal

(L Brand) Signed order in. 2011


(S Brand) Signed order in Jun. 2007

World-Wide Skin-Care Mary Kay Signed order in Aug. 2005


(M Brand) Signed order in Feb. 2004

World-Wide Skin-Care J&J Signed order in Oct. 2003

Supply Contract Status with Major Overseas Companies

※ Consultation with global companies In now.

18

3. Overseas Cosmetic ODM Business

1) Overseas Expansion

2) China Business Overview

3) Indonesia Business Overview

4) US Business Overview

| 3-1. Overseas Expansion

EUROPE

ASIA

N. AMERICA

S. AMERICA

OCEANIA

AFRICA

CHINA KOREA

K-BEAUTY worldwide export (75 countries )

Cosmax Indonesia

(2011)

Cosmax Guangzhou

(2011)

Cosmax China

(2004)

Cosmax USA

(2012)

Cosmax

(1992)

20

| 3-2. China Business Overview (1)

Cosmax China

Founded in Nov. 2004

1568 Chenqiao Road, Shanghai Comprehensive Industrial Zone

100% Cosmax share

3F, B1

(Floor space :11,000㎡

Building Site:11,000㎡)

Skincare, Make up ,etc.

Annual capacity : 200M

Guangzhou Cosmax


Conghua Guangzhou City of Guangdong Province.

100% Cosmax China share

3F

(Floor space :11,000㎡

Building Site :26,640㎡)



21

2014 Current Capacity : China total Production Capacity 240M


[ Unit : 1 bill KRW ]

22

250

400 580

822 1,131

Successful localization in China (80% of total sales is from local clients)

Clients include leading companies in the areas of door-to-door sales, home shopping, brand shops, discount stores, etc


Clients

23


Core Competence

• 30 researcher

(10% of all employees)

• Independent R&D Center

operated by Cosmax China

• Real time introduction of

new formula and

ingredients

R&D Power Shanghai, Guangzhou

Dual Production System Successful localization Service differentiation

• Entering the Center of China

Cosmetic

• One of the Largest

production capacity

• Local Customer oriented

strategy (80%)

• New Product Road Show

• 3 years quality warranty

24

Start Preparations Take off Extension Long-Term

Vision

2002~2004

•China Market

Survey

•Analysis Local

Condition

2004~2007

•Secured

Shanghai leased

factory

•Started Sales

2008~2011

•Secured new

Shanghai

factory

•Expanded

production

capacity

2012~2014

•Shanghai,

Guangzhou

•Set Guangzhou

Corp.

•Dual production

process

2015 ~

•All Regions

•North, western

•Expanding

Production

Facilities

1 2 3 4 5


25

Growing together with L’oreal

The highest growth after china

The Milestone of ASEAN market expansion

Technology and product based high quality service

Indonesia No.1 → ASEAN No.1

| 3-3. Indonesia Business Overview

PT. Cosmax Indonesia


Jakarta, Indonesia

2F

(Floor Space :11,000㎡,

Building Site :13,870㎡)



<Cosmax Indonesia>

26

| 3-4. USA Business Overview

Growing together with Loreal

Secure new local customers in North and South America

The milestone of EU market expansion

Competitive advantage in formula and production Cosmax USA

29,750㎡



New Jersey Office

560 Sylvan., Englewoods Cliffs,

New Jersey 07632-3119

Ohio Factory

30501 and 30601-30701

Carter Street, Solon, Cuyahoga

County, Ohio

1st year KRW 10 billion

Achieve the Goal

<COSMAX USA>

27

4. Cosmaxbti Overview

1) Cosmaxbti Overview

2) Nutribiotech

3) Cosmax Bio

| 4-1. Outline of split process / holding co. transformation

COSMAX BTI

(Holding Company)

044820

COSMAX Bio

(62%)

COSMAX (Operating. 25.6%)

192820

3AC

(51%)

China

USA

Indonesia

29

Nutribio Tech

(41%)

| 4-2. NutriBiotech

NutriBiotech

Founded in Jan. 2002

Icheon-Si, Gyeonggi-Do

41% Cosmaxbti share

Health functional products ODM.

beauty capsules, Diet, etc.

Powder products / Overseas Marketing

31

15.5 21.7

30.8 38.4

48.0


| 4-3. COSMAX BIO

COSMAX BIO

Founded in Dec 1984

Wangahm-dong,

Jechun-si, Chungbuk

62% Cosmaxbti share

Health functional products ODM.

vitamin, omega-3, chewable tablets,

beauty capsules, Diet, etc.

Various products / PARTNERS WITH VARIOUS CHANNELS

30 30

26

42

55 58 55


Thank you.

PR-IR Team Manager

Dae-Gyu Lim 82-31- 789-3080 / [email protected]

Disclaimer

This document has been prepared by COSMAX., Inc. & COSMAXbti., Inc. (“The Company”)

This document is provided for the convenience of investors only, and any estimation in this document has been made based on

the company’s own forecast. They may differ from the actual result due to the changes of business environment.

No representation or warranty, expressed or implied, is made and no reliance should be placed on the accuracy, fairness or

completeness of the information presented. The company, its affiliates, advisers or representatives accept no liability whatsoever

for any losses arising from information contained in the document.

This document does not constitute an offer or invitation to purchase or subscribe for ant shares or the Company, and no part of

this document shall form the basis of relied upon in connection with any contract or commitment.

This document may not be taken by you. The contents of this document may not be reproduced, redistributed or passed on,

directly or indirectly, to any other person or published, in whole or in part, for any purpose.

mailto:[email protected]

spirit of 3 apples cosmax, inc. ir(eng 15. 3q).pdf · | 2-1. environment analysis (2) high growth...

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