2017 annual results presentation - dch.com.hk · forward-looking statements certain statements...

2017 Annual Results

Presentation

Forward-Looking Statements

Certain statements contained in this presentation maybe viewed as forward-

looking statements. Such forward-looking statements represent the Company’s

expectations or beliefs concerning future events and involve known and unknown

risks and uncertainty that could cause actual results, performance or events to

differ materially from those expressed or implied in such statements.

Financial Review

Motor Business Review & Outlook

Consumer Products Review & Outlook

Key Initiatives

2017 Annual Results | Agenda

Financial Review | 2017 Annual Results

46,462 50,506

2016 2017

REVENUE (HK$’M) PROFIT ATTRIBUTABLE TO SHAREHOLDERS (HK$’M)

511

802

2016 2017

↑ 8.7% ↑ 56.9%

Financial Review | Revenue by Business Segment

67.4%

32.5%

0.1%

Motor Business Consumer Products Business Others

REVENUE BY BUSINESS SEGMENT

70.2%

29.7%

0.1%

2017 2016

Financial Review | Revenue by Market

61.2%

28.7%

10.1%

Mainland China Hong Kong and Macao Other Markets

REVENUE BY MARKET

63.2%

27.8%

9.0%

2017 2016

Financial Review | ROE & ROCE

HK$’M 1H2017 1H2016 %

Return on equity 4.9% [-]% pt

Return on capital employed 4.0% [-]% pt

2017 2016 2017 2016

8.5% 6.6% 5.7% 5.0%

Return on Equity Return on Capital Employed

For the year ended 31 December 2017

Financial Review | Earnings and Dividend

For the year ended 31 December 2017

2017 2016 %

Basic earnings per share (HK cents) 43.71 27.89 56.7%

Interim dividend per share (HK cents) 5.05 4.75 6.3%

Final dividend per share (HK cents) 11.90 3.69 222%

Total Dividend 16.95 8.44 101%

HK$ 2017 2016 %

Net asset value per share 5.80 5.05 14.9%

Financial Review | Financial Position

HK$’M 2017 2016

Non current assets 11,026 8,694

Current assets 16,225 16,721

Current liabilities 11,589 10,431

Non-current liabilities 4,950 5,740

Net assets 10,712 9,244

Non-controlling interests 567 512

Shareholders’ funds 10,145 8,732

HK$’M 2017 2016

Cash and bank deposits 1,138 1,160

Total debt 6,927 7,424

Net debt 5,789 6,264

Shareholders’ funds 10,145 8,732

Total capital 15,934 14,996

Net gearing ratio 36.3% 41.8 %

Financial Review | Net Gearing

Financial Review | Consolidated Cash Flow Statement

2017 2016 Change

Net cash generated from operating activities 2,005 2,234 (229)

Net cash used in investing activities (611) (1,999) 1,388

Net cash (used in)/from financing activities (1,391) 151 (1,542)

Dividend paid to shareholders of the Company (103) (204) 101

Net (decrease)/increase in cash and cash equivalents (100) 182 (282)

2017 Results | Agenda

Financial Review



Key Initiatives

Consumer Products Business | Performance Highlights

SEGMENT REVENUE (HK$’M) SEGMENT RESULT FROM OPERATIONS (HK$’M)

4,794 4,711

7,235 8,810

1,802

2,887

2016 2017

Mainland China Hong Kong and Macao Other Markets

-89

-198

356 309

15

54

2016 2017Mainland China Hong Kong and Macao Other Markets

↑ 18.6% ↓ 41.5%

13,831

16,408 282

165

2016 2017

Consumer Products | Segment Revenue by Market

28.7%

53.7%

17.6%

Mainland China HK & Macao Other Markets

2017 SEGMENT REVENUE BY MARKET

34.7%

52.3%

13.0%

2017 2016

• IMSA China consolidation • Under-performance of key brands

• Stock-clearing discounts • Divest loss-making units • Infrastructure and resource integration

• Continue turnaround measures

• Review partnerships and M&A opportunities

Segment Result from Operations (HKD)

OPERATION REVIEW

OUTLOOK

-10.2% Segment Revenue (HKD)

+17.4% ↓

↓

(reduced losses)

Consumer Products Business | Mainland China Food and FMCG

• Earnings impacted by food trading and one-off costs incurred for manufacturing relocation

• After consolidation of IMSA business we combined into a very major Hong Kong and Macao distributor

OPERATION REVIEW

• Distribute more premium, healthy foods

• Expand into non-traditional channels

• Further develop the “Cheer” brand

• Enhance customer shopping experience

• Mobile payments

• Enhance efficiencies and synergies

• Extend product range

↓

+13.7% Segment Revenue (HKD)


-14.1%

OUTLOOK

↓

Consumer Products Business | HK & Macao Food and FMCG


FMCG Distribution


Cheer brand development


Food Retail


Food manufacturing

Consumer Business Products | Other Markets Food and FMCG

Brunei

Japan

Thailand

Singapore

Malaysia

Philippines Indonesia

Myanmar

Japan

• Enhance operational efficiencies

• Focus on higher value categories

Result from Operations ↓

-100%

OUTLOOK

• New platform for growth in Southeast Asia from LF Asia acquisition

• Line expansion and facility upgrade in Malaysia manufacturing

↓



-166.7% ↓

OPERATION REVIEW

• Solid performance in Greater China: • Steady performance in Hong Kong,

good growth in Macao but partly offset by supply constraints in mainland China

• Growth in Southeast Asia: • Operational investment • Expansion in Thailand and the

Philippines

• Expand into new categories and markets

• Invest in infrastructure in Hong Kong and Thailand

• Develop innovative Home-Health services

• Favourable market dynamics

OPERATION REVIEW OUTLOOK

+ ↓


↓ Segment Result from Operations (HKD)

+113.4%

Consumer Products Business | Healthcare Products Distribution


Auriga Rebranding

• Solid performance in Greater China: • Steady performance in Hong Kong,

good growth in Macao but partly offset by supply constraints in mainland China

• Growth in Southeast Asia: • Operational investment • Expansion in Thailand and the

Philippines

• Expand into new categories and markets

• Invest in infrastructure in Hong Kong and Thailand

• Develop innovative Home-Health services

• Favourable market dynamics

OPERATION REVIEW OUTLOOK

+ ↓



+113.4%



DCH Auriga Health Centre

Consumer Products Business | Logistics Solutions

• Continue productivity enhancements and integration

• Commence operation of the Hengqin logistics centre in 2018

• Stable segment revenue

• Segment revenue increased due to restructuring and consolidation in mainland China

• Cost control initiatives underway: • Improve the infrastructure

utilisation • Develop cold chain capabilities • Leverage IMSA and intergroup

synergies

↓ -0.4% Segment Revenue (HKD)


+90.9%

OPERATION REVIEW

OUTLOOK

excluding one-offs

Consumer Products Business | Logistics Solutions

Hengqing Logistics Facilities

OUTLOOK

• Expand project development business

• Lifestyle electronics ↓



-59.6% • Increased warehousing costs • Unfavourable weather and competitive

discounting in seasonal products

• Healthy property market for project sales

• Successful launch of lifestyle audio products in China

OPERATION REVIEW

• Online-to-offline sales experience

Consumer Products Business | Electrical Products Distribution


Lifestyle Audio


Property development Projects


The Crossover by Gilman


Financial Review



Key Initiatives

Motor Business | Performance Highlights

24,555

26,219

5,664 5,684

2,379 2,170

2016 2017Mainland China HK & Macao Others

356

888

549

422

152

204

2016 2017Mainland China HK & Macao Others

1.4%

9.7%

6.4%

3.4%

7.4%

9.4%

Mainland China HK & Macao Others

20

16

20

16

20

17

20

17

↑ 43.2% ↑ 4.5%

SEGMENT REVENUE (HK$’M) SEGMENT RESULT FROM

OPERATIONS (HK$’M) SEGMENT MARGIN

20

16

32,598 34,073

1,057

1,514

20

17

↑2.0 pt

↓2.3 pt

↑3.0 pt

Motor Business | Revenue by Market

76.9%

16.7%

6.4%

Mainland China HK & Macao Other Markets

REVENUE BY MARKET

75.3%

17.4%

7.3%

2017 2016

Motor Business | Mainland China

• Revenue increased due to brand portfolio upgrades and acquisition of new dealerships in Zhejiang province

• Improved profitability from • Upgraded brand portfolio • Pricing management and Inventory

controls • Enhanced performance-based

incentives

• Motor-related business grew due to: • +33% in commission income from

motor financing • +44% finance leasing portfolio • Enhanced cross selling incentives

OPERATION REVIEW



+149.4% ↓

↓

90.5%

9.5%

90.5%

9.5%

New car sales After-sales service


Motor Brands 4S Shops Showrooms

Audi 7 --

Bentley 7 --

Chevrolet 3 --

Ferrari / Maserati 3 --

Honda 11 4

Isuzu / Qingling 4 2

Lexus 8 1

Mercedes Benz 6 --

Nissan 3 --

SGM Buick 5 --

Toyota 21 7

Others 2 --

Total Dec 31, 2017 80 14

DEALERSHIPS SALES (RMB)

+8.3% New Cars Sales Revenue (RMB)

+7.5% After-sales service revenue (RMB)

After-sales serviced units

+5.5%, 1.1 million

2016 2017

Dealership Sales Share (RMB)


• Expand dealership network

• Grow the motor related business • Expand the used car business • Promote cross selling

• Optimize vehicle brand portfolio

OUTLOOK

Motor Business | Hong Kong and Macao

• Market distortion from an EV subsidy and new diesel regulations

• DCH unit sales +2.7% due to:

• Strong 2H model launches

• Macao replacement purchases

• Profitability declined against 2016 impacted by: • Discounting to secure

market share • Yen exchange rates


OPERATION REVIEW


-23.1% ↓

↓


ISUZU: Awarded for 38th Consecutive Year of Market Leadership


• Market distortion from an EV subsidy and new diesel regulations

• DCH unit sales +2.7% due to:

• Strong 2H model launches

• Macao replacement purchases

• Profitability declined against 2016 impacted by: • Discounting to secure

market share • Yen exchange rates


OPERATION REVIEW


-23.1% ↓

↓


• Improve customer relationship management

• Secure commercial vehicle market share

• Build the motor related business

• Build online to offline connectivity

OUTLOOK

• Enhance aftersales and maintenance services


2018 Model Launches

New / Facelift model

Honda

Nissan

Audi

Infiniti

Bentley Continental GT

Stepwgn Jazz

GTR and LEAF eNV200 EV

QX30

A8 A7

QX50

A6

CR-V

Motor Business | Other markets

• Vehicle range extension at Taiwan assembly plant

• Focus on launch of new Euro VI models in Singapore

OPERATION REVIEW

OUTLOOK


• Taiwan revenue decreased due to Audi dealership market exit

• Singapore revenue decreased due to:

• Expiration diesel replacement incentives

• Slowdown in construction

• Segment result improved after Audi

dealership exit

-8.8% Segment Revenue (HKD)

+34.2% ↓

↓


Financial Review



Key Initiatives

Key Initiatives | Strategic growth

Improve Operational Efficiency

Invest in Growth

Build a Performance Culture

POSITIONED FOR STRATEGIC GROWTH

THANK YOU

Appendix | Management Team

Mr. Jijing ZHANG

Chairman & Non-executive Director • Holds various management position in CITIC Pacific, CITIC Mining International, CITIC Pacific China, CITIC Group, CITIC Securities

Company Limited, China CITIC Bank corporation Limited, CITIC Resources Holdings Limited, CITIC Limited respectively

Mr. Frank LAI

CEO & Executive Director • Former executive director, CFO & company secretary of China Resources Beer

• Former executive director, non-executive director, CFO and company secretary of China Resources Microelectronics Limited; CFO of Eagle Brand Holdings Limited

• Former executive director & CFO of Logic International Holdings Limited (now known as China Resources Gas Group Limited)

• Holds a Bachelor of Commerce degree from the University of Western Australia and a graduate diploma in Business and Administration from the Curtin University of Technology of Western Australia. He is a member of the Hong Kong Institute of Certified Public Accountants and a fellow member of CPA Australia

Ms. Kitty Fung

CFO & Executive Director • Over 25 years of hands-on and diversified working experience in renowned MNCs and well known local organizations across consumer

products/ fast moving consumer goods, manufacturing, publishing, banking and retails industries in the United States, Greater China and Asia Pacific regions

• Holds a Master of Business Administration and is a certified public accountant of the Hong Kong Institute of Certified Management Accountant and certified management accountant in the United States. She is also a chartered financial analyst of the CFA Institute.

Mr. Wu Ying Ha

CCO & Corporate Director • Over 21 years experience in corporate management, especially in human resources and administration.

• Former vice president of CITIC Resources Holdings Limited, being responsible for human resources and administrative management of CITIC Resources Group

• Former assistant general manager and general manager of Human Resources & Administration of CITIC United Asia Investments Limited

• Former manager of General Manager Office and assistant general manager of International Tour Department of China Travel Service (Holdings) Hong Kong Limited

• Holds a Master´s degree in Business Administration from Southeastern University, Washington, D.C.

Appendix | Management Team

Mr. Victor Lau

Head of Motor Group & Executive Director • Joined the Group in February 1973 and was appointed as a Director of Dah Chong Hong in January 2003.

• Over 30 years experience in the motor vehicle businesses of Hong Kong and the PRC

• Manages both commercial vehicles and passenger cars

• Champions the Isuzu distributorship business in the PRC, Hong Kong, Taiwan and Macao for the Group.

Mr. Alex Lee

Deputy Head of Motor Group & Executive Director • Joined the Group in June 1999 and appointed as Executive Director of DCH with effect from 1 March 2017.

• Obtained a Bachelor of Engineering (Mechanical Engineering) degree from the Hong Kong Polytechnic University and received a Master in Business Administration degree from the Chinese University of Hong Kong.

• A member of The Hong Kong Institute of Engineers. He has more than 20 years experience in the motor industry.

Ms. Betty Leung Head of Hong Kong Food Business & Corporate Director • Manages food commodity trading, food manufacturing and processing, food retailing and food agency distribution.

• Over 30 years sales and marketing experience in sales, marketing, advertising and buying across different parts of the supply chain including manufacturing, distribution and retailing in the consumer product industry.

• The Chairlady of the Hong Kong Suppliers Association

Mr. Timothy Collins

Chief Executive Officer, DCH Auriga • Over 25 years experience in the FMCG industry. From 1991 to 2003, he held multiple roles across Australia and Asia for Cadbury

Schweppes.

• Manages healthcare products business and focuses on guiding DCH Auriga (formerly known as LF Asia) into a new era of growth

• Joined LF Asia in 2004 and became CEO in 2015. He has been essential to the company's development, leading the expansion of market coverage across Asia and orchestrating the sale of LF Asia to DCH in 2016.

2017 annual results presentation - dch.com.hk · forward-looking statements certain statements...

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