Li Ning Company Limited · HKEX:2331
Li Ning — IPO Roadshow (2004)
39 slides from Li Ning's IPO roadshow presentation, 2004
Slide 1: Corporate Presentation
jy Li Ning Company Limited SHAR A a Global Coordinator, Bookrunner, Lead Manager and Sponsor = DBS Corporate Presentation
Slide 2: Agenda
Agenda Company Background PRC’s Branded Sporting Goods Industry Li Ning’s Key Strengths Future Plans and Strategies Financial Performance 1
Slide 3: Company Background
Company Background 2
Slide 4: About LI-NING
About “LI-NING” A leader in PRC’s fast-growing sporting goods industry with: One of PRC’s best known brands Extensive distribution network Effective marketing/ sponsorship strategy Solid financials with strong earnings growth 3
Slide 5: Business Overview
Business Overview Sales and marketing of LI-NING branded sports products: Product design, marketing, and research development Retail sales Supply chain management and distribution Product portfolio includes: Sports footwear Sports and leisure apparel Sports accessories Sales and marketin
Slide 6: Vision, Mission & Core Values
Vision, Mission & Core Values Vision Creating and providing quality sporting goods for people pursuing a healthy lifestyle and enjoy sports Mission Core Values Becoming the leader in the Passionate pursuit of: China’s sports industry and Excellence operator and owner of Professionalism international
Slide 7: Shareholding Structure
Shareholding Structure Mr. Li Ning Senior Other founding Tetrad CDH Public and his family management shareholders (Note 2) (Note 3) (Note 4) members team (Note 1) 42.719% 9.977% 3.575% 15.185% 3.544% 25.000% Li Ning Company Limited Sales, marketing and Licensing of distribution of the international
Slide 8: PRC's Branded Sporting Goods Industry
PRC’s Branded Sporting Goods Industry 7
Slide 9: Fast Growing Retail Industry
Fast Growing Retail Industry GDP Per Capita & Total GDP & Retail Sales Annual Disposable Income Per Capita of Consumer Goods in the PRC of Urban Households in the PRC RMB Billion RMB Total GDP 10,000 GDP Per Capita 12,000 CAGR: Retail Sales of Consumer Goods Disposable Income Per Capita - Urban Hous
Slide 10: Urbanisation & Consumption Patterns in the PRC
Urbanisation & Consumption Patterns in the PRC 1991 2002 Distribution of total retail sales (%) Cities 48% 63% Counties 16% 12% Other smaller administrative regions 36% 25% Per capita annual disposal income 7,703 1,701 among urban households (RMB) (CAGR:14.7%) Per capital annual net income of rural
Slide 11: Active Participation in Major Sports Events
Active Participation in Major Sports Events The PRC is a major global competitor at the No. of Olympic Games Medals leading international sporting events: Won by PRC Athletes Li Ning Company has sponsored 30 70 out of the 80 gold medal winners 60 Bronze Over 80 Gold medals won in Summer Olympic
Slide 12: Promising Outlook for the PRC's Branded Sporting Goods Market
Promising Outlook for the PRC’s Branded Sporting Goods Market Market analysis Sales channels Growth 1st-tier cities Shopping centers and Stable (Beijing, Shanghai & Guangzhou) department stores 2nd-tier cities Franchised retail outlets Rapid (urban population above 1 million) 3rd-tier cities Franchi
Slide 13: LI NING's Key Strengths
LI NING’s Key Strengths 12
Slide 14: Competitive Strengths
Competitive Strengths A leading sports brand in the PRC Unique market Extensive position and distribution and diversified product retail network range Abundant Professional sports marketing management team and sponsorship with motivated resources corporate culture 13
Slide 15: The Leading Sports Brand in the PRC
The Leading Sports Brand in the PRC Established by Mr. Li Ning in 1989 Dominant player in PRC’s branded sporting goods industry LI-NING is one of the leading sports brands: Most “easy-to-purchase” Offers the best “value for money” One of the top tier brands in terms of customer satisfaction, p
Slide 16: Abundant Sports Marketing & Sponsorship Resources
Abundant Sports Marketing & Sponsorship Resources Official partner of the Chinese Olympic Committee LI-NING brand has sponsored and will continue to sponsor the Chinese National teams in the Summer Olympic Games: 25th Barcelona Olympic Games, 26th Atlanta Olympic Games, 27th Sydney Olympic Games a
Slide 17: Abundant Sports Marketing & Sponsorship Resources
Abundant Sports Marketing & Sponsorship Resources 16
Slide 18: Effective Marketing & Promotion Activities
Effective Marketing & Promotion Activities Marketing and promotional expenses: TV commercials, print media, sponsorship, outdoor advertisements and outlet design Historical spending (2001-2003): 9-13% of total turnover Future budget: 13-15% of total turnover LI-NING’s advertising slogan “Anyth
Slide 19: Comprehensive Marketing & Promotion Campaigns
Comprehensive Marketing & Promotion Campaigns Various mediums, ranging from television commercials, print media to indoor and outdoor advertisements in the PRC, utilised to convey the brand image and product information to customers 18
Slide 20: Extensive Distribution & Retail Network
Extensive Distribution & Retail Network Turnover Breakdown in 2003 Nationwide Sales Network (By Region) 77 Heilongjiang KAPPA 3.1% Beijing & Shanghai 7.8% 27 90 International Jilin Inner Mongolia markets 100 8 21 24 2.9% Beijing 82 11 34 Liaoning Xinjiang 18 Gansu Hebei 89 5 8 Tianjin 48 15 13 North
Slide 21: Diversified Retail Formats
Diversified Retail Formats Franchised stores Turnover Breakdown in 2003 • Distributorship covering most of the cities in the PRC with an aggregate of 2,207 franchised LI-NING and KAPPA retail outlets International markets Retail store Directly-managed retail stores sales 2.9% • 110 directly-managed
Slide 22: Diversified Retail Formats
Diversified Retail Formats Unified outlet design Interior design and store layout 21
Slide 23: Unified & Efficient Retail Management
Unified & Efficient Retail Management Standard brand management All retail outlets must adhere to LI-NING’s guidelines on renovation, marketing and promotions, operations and customer services, as well as its retail rules and procedures All retail outlets are operated under the supply chain manage
Slide 24: Excellent Capabilities in Product Development and Design
Excellent Capabilities in Product Development and Design Extensive experience in R&D and product development Professional R&D team of more than 50 people European design consultants to assist product development Leveraging on overseas design capabilities and a design centre to be set up in Hong
Slide 25: Diversified Product Range
Diversified Product Range Offers a comprehensive and one-stop-shop quality sporting goods Provide wide range of specialised products include soccer, basketball, golf series, etc. Footwear Sportswear Outdoor/ casual wear Accessories 24
Slide 26: World Class Supply Chain Management
World Class Supply Chain Management Comprehensive supply chain management Centralised procurement and procurement policy Majority of products are outsourced to independent contract manufacturers in the PRC Supply of raw materials Over 70 raw materials suppliers and over 60 contract manufacturers
Slide 27: Experienced Management Team
Experienced Management Team Mr. Li Ning – Chairman & Executive Director 14 years of experience in relevant industries Responsible for overall corporate strategies, Mr. Chen Yi Hong planning and business development – Executive Director 20 years of experience in relevant industries Mr. Zhang Zh
Slide 28: Future Plans & Strategies
Future Plans & Strategies 27
Slide 29: Future Strategies
Future Strategies Fortify sales channels and distribution infrastructure Roll out plan for Open over 1,000 retail outlets from 2004 to 2006 new retail outlets Total Improve store locations and launch flagship stores in 1st-tier cities 2004 2,800 2005 3,200 Modernise and upgrade store image 200
Slide 30: Future Strategies
Future Strategies Strengthen brand awareness and loyalty Launch specialised footwear series for soccer, basketball, tennis, etc. Conduct advertising campaigns to increase mass appeal Capture business opportunities emerging from the 2008 Beijing Olympic Games Enhance supply chain management A
Slide 31: Financial Performance
Financial Performance 30
Slide 32: Turnover Growth
Turnover Growth Turnover Gross Margin RMB’M 1,400 55% 1,276.2 1,200 1,000 958.0 50% 47.5% 800 734.9 44.9% 45% 600 400 40% 200 39.1% 0 35% 2001 2002 2003 2001 2002 2003 Rapid financial growth Stable growth in profit margin Turnover for 2003 reached Benefited from economies of scale RMB1.28 billio
Slide 33: Encouraging Net Profit & Margin
Encouraging Net Profit & Margin Net Profit Net Margin RMB’M 140 Not less than 8.0% 122.5 120 7.5% 7.4% 100 94.0 80 7.0% 66.9 7.0% 6.8% 60 49.6 40 6.5% 20 0 6.0% 2001 2002 2003 2004F 2001 2002 2003 F: Profit forecast Net profit in 2003 was RMB94.0 million, representing Y-o-Y growth of 40.5% Profit fo
Slide 34: Stringent Controls on Operational Efficiency
Stringent Controls on Operational Efficiency Inventory and trade receivable controls Inventory managed at a healthy level Stringent and prudent provision policy Trade payable policy Secure more favourable terms from suppliers Sustainable cash growth from operating activities Well-managed cas
Slide 35: Profit & Loss Statement
Profit & Loss Statement 2001 2002 2003 2004＊ (RMB’ M) Turnover 734.9 958.0 1,276.2 Footwear (%) 39.2 36.5 34.8 Apparel (%) 52.5 52.2 51.6 Accessories (%) 8.3 11.3 13.6 Gross profit 287.2 429.9 605.9 Operating profit 65.2 103.3 119.1 Profit before taxation 59.1 96.0 114.6 Net profit 49.6 66.9 94.0 No
Slide 36: Balance Sheet
Balance Sheet 2001 2002 2003 (RMB’ M) Fixed and non-current assets 91.6 86.5 89.5 Inventories 180.0 228.8 296.2 Accounts receivables 58.0 83.0 120.1 Cash and cash equivalents 111.9 127.7 224.5 Accounts payables 65.5 127.9 171.6 Short-term bank borrowings 144.1 131.0 85.0 Shareholders equity 148.7 21
Slide 37: Use of Proceeds
Use of Proceeds (HK$M) Expanding and improving the coverage of distributorship and retail network 95 Brand promotional and marketing activities 105 Establishing basic product research capabilities, developing new products series and setting up design and development centre in 15 Hong Kong Improving
Slide 38: Open Forum
Open Forum 37
Slide 39: Disclaimer
Disclaimer This document does not constitute, or form part of any offer for subscription or sale of, or solicitation of any offer to subscribe for or sale of any securities of Li Ning Company Limited (the “Company“), nor shall it be construed as the invitation of any such offer, nor shall it form th