GOME Retail Holdings Limited · HKEX:493
GOME Retail — Investor Presentation (July 2004)
25 slides from GOME Retail's investor presentation, July 2004
Slide 1: Corporate Presentation
By Corporate Presentation July 2004
Slide 2: Company Presentation
Company Presentation 1. Company Profile and Overview 2. Industry Overview 3. Business Operations 4. Financial Performance 5. Company Highlights 2
Slide 3: Company Background on GOME Group
1. Company Background on GOME Group 1993 2003 • Unified the name “GOME • Y2003 total Electrical Appliances” to sales: RMB develop into a retail chain 17.8 billion Present 1987 1999 • No. 1 electrical appliances retailer (1) in China • 1st electrical • Expanded • 135 self operated outlets in 37 citie
Slide 4: Ranking of GOME Group by Sales
1. Ranking of GOME Group by Sales No.1 electrical appliances and consumer electronics retailer in China 2002 2003 (1) Number of (1) Sales Sales Number of (3) (3) (RMB billion) % of total outlets (RMB billion) % of total outlets GOME Group 10.9 2.8% 109 17.8 4.1% 139 (2) GOME Appliance 7.7 2.0% 47 10
Slide 5: Our Mission Statement
1. Our Mission Statement “Competitive pricing from high volume, customer service comes first” 5
Slide 6: Company Presentation
Company Presentation 1. Company Profile and Overview 2. Industry Overview 3. Business Operations 4. Financial Performance 5. Company Highlights 6
Slide 7: Growth of Electrical Appliances
2. Growth of Electrical Appliances Sales for traditional electrical appliances(*Note 1) and new generation digital products (*Note 2) have been growing at approximately 13% and 17% per annum between Y2000 and Y2003 AV Regrigerator & Washing machine CAGR (RMB bn) Air-conditioner Telecommunication pdt
Slide 8: Fragmented Market and Increasing Market Share
2. Fragmented Market and Increasing Market Share GOME Group is gaining market share at the expense of other retailers 35% 4.0% GOME 4.0% 30% Group 30% 25% 2.8% 25% 3.0% 20% 1.8% 2.5% 2.0% 15% 2.0% GOME Appliance 10% 1.0% 1.3% 5% 4.0% 2.5% 0.0% 0% Y2001 Y2002 Y2003 Best Buy Dixons GOME GOME Group App
Slide 9: Strong Bargaining Power Over Suppliers
2. Strong Bargaining Power Over Suppliers Manufacturers outnumbering well-developed retail chains, making it a “buyer’s market” ! National market leader, with strong brand and extensive sales network - Relatively few competitors - Top 5 suppliers only 30% of total purchases Fragmented market Regiona
Slide 10: Company Presentation
Company Presentation 1. Company Profile and Overview 2. Industry Overview 3. Business Operations 4. Financial Performance 5. Company Highlights 10
Slide 11: GOME Appliance: A total of 96 retail outlets in 22 cities
3. GOME Appliance: A total of 96 retail outlets in 22 cities Outlets in GOME Appliance are more established and profitable, relative to outlets remaining in GOME Group Location Number of outlets Beijing 16 Chengdu 6 Chongqing 8 Dongguan 2 Foshan 1 Fuqing 1 Fuzhou 3 Guangzhou 6 Huizhou 1 Jinan 5 Kunm
Slide 12: Main Products by Categories
3. Main Products by Categories Digital and computer products and telecommunication products have been the fastest-selling products in past 2 years " 100% 5% 8% 10% Digital and Computers 90% 14% 11% 11% Small electrical 80% 5% appliances 14% 70% 17% Telecommunication 18% 60% 17% 12% 15% Air-condition
Slide 13: Virtuous Cycle
3. Virtuous Cycle Obtain better terms from suppliers to offer the lowest price in each location to increase market share $ # % % & Advertisement Promotional Activities 13
Slide 14: Retail Formats
3. Retail Formats Three different retail formats to target different markets Number Number of of outlets outlets Number Number of of new new outlets outlets Usable Usable area area June 2004 2004 2005 2006 Traditional Traditional 3,000 3,000 to to 6,000 6,000 96 96 24 24 35 35 35 35 retail outlets r
Slide 15: Company Presentation
Company Presentation 1. Company Profile and Overview 2. Industry Overview 3. Business Operations 4. Financial Performance 5. Company Highlights 15
Slide 16: Revenue and Net Profit
4. Revenue and Net Profit Strong revenue growth driven by network expansion and same stores sales growth ' RMB mln RMB mln CAGR = 55% CAGR = 229% 10,000 9,346 350 294 8,000 300 275 6,619 250 6,000 5,256 CAGR = 40% 200 3,873 150 130 4,000 2,918 106 2,078 100 2,000 50 25 39 - - Y2001 Y2002 Y2003 Q1 Q1
Slide 17: Gross Profit Margin
4. Gross Profit Margin Rising gross profit margin due to increasing bargaining power with suppliers Re-negotiation of contracts with 10% suppliers in last 12 months: 9% 8.6% 8.7% - more competitive pricing 8% 7.2% 7.0% 7% 6.4% 5.9% - more favourable payment terms 6% from suppliers 5% 4% - increase i
Slide 18: Other Operating Income
4. Other Operating Income Increasing “other operating income” to diversify income stream *+ , ( ) Promotion income Mgt fee for promotion 4.0 3.7 Air-conditioner installation fee Display space leasing fee 3.4 3.5 Product listing fee Others 3.0 9% 3.0 5% % of total sales 2.5 9% 2.0 1.5 1.3 1.2 52% 11%
Slide 19: Cost Structure
4. Cost Structure Management continues to focus on internal costs control ) Historical increase in costs due to 7% 0.4% 0.5% - expansion of sales network 0.3% 0.4% 6% 0.2% 0.3% 1.0% 1.4% - increase in management personnel 0.8% 1.1% 5% 1.1% 0.9% due to segregation of management departments 4% 3% 5.2%
Slide 20: Net Profit Margin Growth
4. Net Profit Margin Growth Net profit margin has increased to 5.6% in Jan-May 2004 from 2.9% in Y2003 ' Increasing net profit margin due to: - increasing gross profit margin 6.0% 5.6% - higher other operating income 5.0% 4.5% - continuous cost control 4.0% - declining effective tax rate as a 2.9% 3
Slide 21: Working Capital
4. Working Capital Strong operating cash flow (RMB 1,687 m in 2003) due to strong working capital management - Operation funded by suppliers’ credit and acceptance drafts: 120 106 - 60% of products uses 4-6 months of acceptance drafts 100 80 70 Efficient inventory control due to newly 64 (days) impl
Slide 22: Company Presentation
Company Presentation 1. Company Profile and Overview 2. Industry Overview 3. Business Operations 4. Financial Performance 5. Company Highlights 22
Slide 23: Company Highlights
5. Company Highlights Significant Sustainable No. 1 Market Competitive Market Leader Potential Advantages Experienced Robust Well- Management Financial positioned Team Performance for Growth 23
Slide 24: Disclaimer
Disclaimer The material that follows is a presentation of general background information about the Company’s activities at the date of the presentation. It is information given in summary form and does not purport to be complete. It is not intended to be relied upon as advice to potential investors.
Slide 25: Thank You
Thank You 25
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