dukang distillers holdings limited · named after du kang ... seasonality of quarterly sales ......
TRANSCRIPT
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3QFY2014 (Jan’14 – Mar’14) Results Presentation
DUKANG DISTILLERS HOLDINGS LIMITED
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CORPORATE PROFILE
FINANCIAL HIGHLIGHTS
GROWTH STRATEGIES
INVESTMENT MERITS
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Corporate profile
B
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Brand origin of Dukang
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Famous baijiu with a history dating back > 2,000 years
Named after Du Kang (杜康) who lived in the Xia Dynasty (21st – 16th century B.C.)
• Forefather of baijiu in China
Frequently cited by numerous famous poets & personalities
• Cao Cao (曹操) (a central figure in the Three Kingdom Period) said in his poem《短歌行》
“对酒当歌,人生几何, 譬如朝露,去日苦多。
慨当以慷,忧思难忘,何以解忧,唯有杜康。”
Premier Zhou Enlai called for the revival of Dukang baijiu
“复兴杜康,为国争光”
• Yichuan Dukang Group was set up in 1968
• Ruyang Dukang Group Co was established on the original site of Du Kang’s brewery in 1972
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Yu Shang Jiu
Siwu Old Cellar 1949
New Laojiao Zhencang
Jin Yu Zun
Zone 12 Cellar Jiuzu Dukang Series
Classic Huagui Guohua Dukang Series
5 Star Zhonghua Dukang Series
Lao Dukang Lao Dukang Series
Wide range of products
Well-established baijiu brand since 1949
Targets mid-to-mass market
Nationally famous baijiu brand
Targets mid-to-high end market
5
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Established brand awareness
6
China Well-Known Trademark (2005)
China Intangible Cultural Heritage (2008)
Dukang’s brand synonymous with market leadership in product quality and brand identity
National awards won include:
China Time-honored Brand (2005)
Top 10 Chinese Wine Brands (2001)
Star Enterprise Of The National Wine Industry (1994)
Henan Well-Known Trademark (2008)
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Financial highlights
C
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8
3QFY14 sales declined 44.8% yoy
Note: Financial Year End - 30 June
455.1 535.6 413.7
64.3 23.0
199.1 169.1
105.4
25.5 1.1
455.9
635.8 994.1
311.4 297.5
315.6
486.1
893
237.4
30.6
0
500
1,000
1,500
2,000
2,500
FY11 FY12 FY13 3Q13 3Q14
RM
B (
mil)
Turnover
Siwu Regular Siwu Premium Luoyang Dukang Regular Luoyang Dukang Premium
1,425.7
1,826.6
2,406.2
352.2
638.6
3Q14: Jan – Mar 2014
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37.1%
41.3%
4.4% 17.2%
FY2013
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Enlarged sales contribution from 「Dukang」 brand
Note: Financial Year End - 30 June
Luoyang Dukang Premium Luoyang Dukang Regular Siwu Premium Siwu Regular
26.6%
34.8% 9.3%
29.3%
FY2012
8.7%
84.5%
0.3%
6.5% 3Q2014
3Q14: Jan – Mar 2014
37.2%
48.8%
4.0% 10.1%
3Q2013
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93.0 155.6 154.5
51.8 55.6
170.2 144.2 165.6 87.9
167.6
64.3 93.9 62.2 57.8 23.0
41.5
76.5 65.4
15.7 19.8
56.9 58.6 33.8
17.2
33.8
25.5 28.9
16.9 10.8 1.1
44.6
124.0 177.8
109.3 102.4
182.8 215.2
135.4
173.4
310.2
311.4 199.1
188.5 258.1
297.5 31.4
86.5
117.4
80.4 64.6
130.1 172.7
118.7
128
226.7
237.4
300.9
121.8 76.1
30.6
0
100
200
300
400
500
600
700
800
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14
RM
B (
mil)
Seasonality Of Quarterly Sales
Siwu Regular Siwu Premium Luoyang Dukang Regular Luoyang Dukang Premium
10
3Q14 sales for「Dukang」remained resilient
Note: Financial Year End - 30 June
406.5
242.5
453.4
590.7
540.0
257.2
515.1
442.5
210.5
738.3
638.6 622.8
389.4
3Q14: Jan – Mar 2014
402.8
352.2
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Sales volume & average selling price
11
208 553 643 633 422 730 907 593 679 1,136 1,234 1,531 648 432 180
151.0 156.4 182.6
126.8 153.1
178.2 190.4 200.2
188.5 199.6 192.4 196.5 188.0 176.2 170.0
0.0
50.0
100.0
150.0
200.0
250.0
300.0
0
500
1,000
1,500
2,000
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14
Luoyang Dukang Premium
Total Sales Volume (tonnes) ASP (RMB/kg)
1,332 3,378 4,768 3,575 3,004 5,380 6,265 3,960 5,027 8,615 9,455 6,233 6,107 8,976 9,610
33.5 36.7 37.3
30.6 34.1 34.0 34.3 34.2 34.5
36.0 32.9 31.9 30.9 28.8 31.0
0
10
20
30
40
-
2,000
4,000
6,000
8,000
10,000
12,000
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14
Luoyang Dukang Regular
Total Sales Volume (tonnes) ASP (RMB/kg)
(Tonnes) (RMB/Kg)
(Tonnes) (RMB/Kg)
Note: Financial Year End - 30 June 3Q14: Jan – Mar 2014
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276 530 431 108 148 467 495 210 137 268 202 233 142 87 9
150.4 144.3 151.7 145.4 133.8 121.8 118.4
160.9
125.5 126.1 126.2 124.0 119.0 124.1 122.2
0.0
50.0
100.0
150.0
200.0
0
200
400
600
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14
Siwu Premium
Sales Volume (tonnes) ASP (RMB/kg)
4,285 7,169 6,491 2,258 2,357 7,129 6,218 6,635 4,343 7,852 3,195 3,827 2,852 2,933 2,313
21.7 21.7 23.8 23.1
23.6 23.9 23.2 25.0
20.2 21.3 20.1
24.5 21.8
19.7
9.9
0.0
10.0
20.0
30.0
40.0
0
2,000
4,000
6,000
8,000
10,000
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q2014
Siwu Regular
Sales Volume (tonnes) ASP (RMB/kg)
(Tonnes) (RMB/Kg)
(Tonnes) (RMB/Kg)
Sales volume & average selling price
12 Note: Financial Year End - 30 June 3Q14: Jan – Mar 2014
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19.3 32.5 40.9
13.7 15.8 44.6 35.6 34.8
20.6 40.9
15.5 19.6 17.2 15 5.2
20.8
37.8 36.4
8.9 10.8
31.5 31.3
16.0
9.1
20.2
15.1 13.2 8.2 5.3 0.5
12.7
38.9
59.6
34.6 32.4
59.3 67.6
42.7 60.5
105.2
112.6
67.5 63.1 79.5
16.3
14.6
42.3
58.1
41.4 34.0
69.0 95.1
63.8 70.9
125.7
130.8
156.9
60.4 42.2
97
0
50
100
150
200
250
300
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14
RM
B (
mil)
Quarterly Gross Profit
Siwu Regular Siwu Premium Luoyang Dukang Regular Luoyang Dukang Premium
13
3Q14 gross profit declined 51.4% yoy
Note: Financial Year End - 30 June
67.4
151.5
195.1
98.6 93.0
204.4
229.6
157.3 161.1
292.0
274.0
257.2
148.9 141.9
3Q14: Jan – Mar 2014
119.0
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14
20.8% 20.9%
26.5% 26.5% 28.4%
26.2% 24.7%
21.0% 23.4% 24.4% 24.1%
20.9%
27.6% 26.0%
22.4%
50.0% 49.4%
55.7% 56.5% 54.5% 55.4% 53.4%
47.3%
53.0%
59.8% 59.3%
45.7% 48.3%
48.8% 47.4%
31.6% 34.9% 33.9%
36.2% 33.9% 33.5%
30.8% 32.6%
53.7% 55.4%
55.4% 55.1%
52.1% 49.6%
55.5% 53.3%
0%
10%
20%
30%
40%
50%
60%
70%
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14
Gross Profit Margins
Siwu Regular Siwu Premium Luoyang Dukang Regular Luoyang Dukang Premium
Gross profit margins for 「Dukang」and「Siwu」brand
Note: Financial Year End - 30 June
50.4% 46.4% 48.9% 49.5% 51.5%
52.7% 53.0%
28.5% 28.5% 31.4% 33.5% 31.7%
31.6% 32.5%
3Q14: Jan – Mar 2014
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18.1 36.3 45.9 29.5 19.4 35.6 97.4 71.9 39.4 50.6 78.8 88.4 66.6 83.8 67.3
8.6% 8.2% 8.9% 11.5%
8.0% 6.6%
16.5% 15.9%
9.7% 6.9%
12.3% 14.2%
17.1%
20.8% 19.9%
0%
5%
10%
15%
20%
25%
0
20
40
60
80
100
120
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14
A&P expenses and A&P as a percentage of sales
A&P A&P as a % of sales
15
(RMB ‘Mil) %
Investments to enhance brand value
China National Sugar and Alcoholic Commodities Fair
Peony Cultural Festival
TV Ads
Luoyang Dukang National Trade Fair
3Q14: Jan – Mar 2014
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168.0 218.1 389.7 102.6 7.5
11.8% 11.9%
16.2% 16.1%
2.1%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
0
50
100
150
200
250
300
350
FY11 FY12 FY13 3Q13 3Q14
(%
)
RM
B (
mil)
Net Profit & Margin
Profit attributable to equity holders Net Profit Margin
16
3Q14 earnings declined 93.0% yoy
Year Analysis Quarterly Analysis
3Q14: Jan – Mar 2014
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17
13.4 60.8 75.2 18.6 36.6 94.4 62.4 18.6 63.9 144 102.6 79.3 30.5 10.0 7.5
6.4%
13.7% 14.6%
7.2%
15.1%
17.5%
10.6%
5.4%
15.7%
19.5%
16.1%
12.7%
7.8%
2.5% 2.1%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
0
20
40
60
80
100
120
140
160
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14
(%)
RM
B (
mil)
Quarterly Net Profit & Margin
Net Profit Net Profit Margin
3Q14 net profit margin declined 14.0 percentage points to 2.1%
Note: Financial Year End - 30 June 3Q14: Jan – Mar 2014
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RMB (mil) As at 31 Mar 2014 As at 30 Jun 2013
Total Equity 2003.0 1,954.9
Total Assets 2461.6 2,455.7
Inventories 559.5 343.0
Cash & Equivalents 549.5 757.6
Total Liabilities 458.6 500.8
Bank Borrowings 186.0 84.0
Gearing Net Cash Net Cash
18
Healthy financial position
Note: Financial Year End - 30 June
RMB (mil) 3Q14 3Q13
Net cash used in from operating activities (112.9) 30.9
Net cash generated investing activities 0.8 50.7
Net cash used in from financing activities (3.2) 22.8
Net decrease in cash and cash equivalents (115.3) 104.4
3Q14: Jan – Mar 2014
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19
No. of days 3Q14 FY13
Accounts Receivable Turnover 3 5
Accounts Payable Turnover 59 61
Inventory Turnover 300 114
Turnover ratios
Notes: Accounts Receivable Turnover = Trade receivables as at end of quarter x 365 days 4 x Revenue for the quarter Accounts Payable Turnover = Trade and bills payables as at end of quarter x 365 days 4 x Cost of sales excl. consumption tax for the quarter Inventory Turnover = Inventories as at end of quarter x 365 days 4 x Cost of sales excl. consumption tax for the quarter
Note: Financial Year End - 30 June 3Q14: Jan – Mar 2014
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Growth strategies
D
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Our vision
21 Geographical Reach
Scal
e o
f O
pe
rati
on
s
Top-tier brand in Henan Province by 2013 Top-tier brand in the PRC by 2015
Henan Province (Luoyang and Zhengzhou)
Neighbouring Provinces
National
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Three-pronged growth strategies
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2. Strengthen distribution
network
3. Improve capacity and utilisation
1. Enhance brand value
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1. Enhance brand value
Premium positioning of Jiuzu Dukang "千年老窖万年糟,酒好全凭窖池老” – grain alcohol
from older fermentation pools make better quality baijiu
Jiuzu Dukang retails under four categories distinctly characterized by age of fermentation pools, aged between 20 to 50 yrs
Made a 8.8% contribution to Group sales in 3Q2013 (FY2013: 22.4%)
Endorsement as official baijiu to serve foreign dignitaries Being ranked amongst first-tier baijiu brand elevates
「Dukang」 brand equity
Baijiu Cultural World Tour To promote baijiu and Chinese culture in other parts
of Asia.
Excellent platform to showcase the quality and variety of 「Dukang」 baijiu to both existing and potential partners
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2. Strengthen distribution network
No. of distributors *
Siwu Luoyang Dukang
2012 2013 Mar 2014 2011 2012 2013 Mar 2014
Henan Province 69 69 64 114 144 88 136
The rest of China 0 0 5 56 83 82 84
*None of the top 5 distributors accounts for more than 10% of sales
Super Market Restaurant Specialty Store Flagship Store Dennis Department Stores
Present at “China National Sugar and Alcoholic Commodities Fair”
Host the annual “Dukang National Trade Fair” on 18 May
Streamline distribution network of Siwu and expand distribution network of Luoyang Dukang
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3. Improve capacity & utilisation
700
2,200 2,410 2,300
700
2,200
2,410
2,300
700
2,200 2,200
355
2,196
2,446 2,403
802
2,313 2,368 2,301
624
2,311 2,364
51%
100% 101% 104%
115%
105% 98% 100%
89%
105% 107%
0%
20%
40%
60%
80%
100%
120%
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14
Grain Alcohol of Luoyang Dukang*
Quarterly Capacity Output Utilisation Rate
(Tonnes) %
25
*Annual capacity of 7,610 tonnes from 2,968 of fermentation pools ** Fermentation period of 60 days for Luoyang Dukang Note: Financial Year End - 30 June 3Q14: Jan – Mar 2014
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Thank You “何以解憂,唯有杜康。”
Contact details: Ngo Yit Sung Corporate & IR Manager, Dukang Distillers Holdings Ltd Tel: +65 8111 4885 (Singapore) + 886 989 260 687 (Taiwan) Email: [email protected] Jasmine Leong IR Consultant, Financial PR Pte Ltd Tel: +65 6438 2990 (Singapore) Email: [email protected]
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