Corporate Presentation. Presentation Outline 1.Company Overview 2. Highlights 3.Financial Review...
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Transcript of Corporate Presentation. Presentation Outline 1.Company Overview 2. Highlights 3.Financial Review...
Corporate PresentationCorporate Presentation
Presentation OutlinePresentation Outline
1. Company Overview
2. Highlights
3. Financial Review
4. Outlook
5. Company Growth Strategies
6. Q&A
Company OverviewCompany Overview
Company OverviewCompany Overview
Vision
Time Watch Investments Ltd’s vision is to be a leading, global player in the timepieces industry. It strives to achieve international brand standards whilst delivering sustainable, superior returns to its shareholders.
Mission
Time Watch aims to be a leading manufacturer, trader and retailer of top international watch brands by building on its fully integrated value chain and delivering premium quality products. It seeks to work in partnership with its stakeholders to build a valuable, rewarding and socially responsible firm
Company OverviewCompany Overview
Vertically integrated model from manufacturer, trader and retailer
Leading Watch Retailer in the PRC
Established, large sales network of over 600 outlets in shopping malls in over 35 cities strong barriers to entry
Owns “Tian Wang”, one of PRC’s top 3 watch brands & “Balco”, one of PRC’s famous foreign brands
Ability to pump new brands into existing network to further fortify growth opportunity
Has extensive room both for organic growth as well as “vertical integration” growth
OEM Watches’ sector include branded watches: Police, Aigner, Swiss Military, Marie Claire, Jacques Lemans etc.
Trading Substantially Below Its Peers, Undervalued High-Growth Stock
Market Presence in PRCMarket Presence in PRC
Over 600 outlets in over 35 cities
Stores present in all colored regions except Qinghai & Tibet
Business ModelBusiness Model
Trading of WatchMovements
Manufacturing & Retailing
OEM Manufacturing
3 core areas of businesses
Manufacturing Bases Manufacturing Bases
Existing: 40 000 pieces per month
Future: Able to increase to 100 000 pieces if necessary
Time Watch Acquired 2 Manufacturing Bases in July 06
51% of East Base (HONG KONG)
51% of Tick Tack (SWITZERLAND)
Combined Production capacity of 60,000 watches per month / more than 700,000 watches per year
Production Capacity
Creating Value for …Creating Value for …
Vertically-integrated Business Model
One-Stop Service provider from Designing, ManufacturingAssembling, Trading, distribution and retail
High Barriers Of Entry
Have better control over product quality
Achieve a competitive cost structure
Continually enhance vertical integration
to further improve its profit & profit margin
HighlightsHighlights
Performance Highlights
Strong Performance across retail segment on back of
strong retail sales in the PRC
Optimistic Outlook, Target at least 20% sales growth for next few years
Maiden contributions from Zijingshan mall rental rebates, new sales of
“POLICE” branded watches, sunglasses and accessories expected in FY 2008
Improved Liquidity & Coverage (Lower Debt Ratio)
Final Dividend payout of HK$0.30 or 2.6% dividend yield per share
11 months contribution from OEM Manufacturing Base Tick Tac & East Base
Recent DevelopmentsRecent Developments
6 March 2007Placement agreement at the issue price of S$0.33 with OCBC Securities Pte Ltd; UOB Asset Management to take up approximately 11% of the shares
22 January 2007 Proposed issue of SGD 5 million convertible bond from OCBC Bank
5 January 2007 Proposed share consolidation of every 50 issued ordinary shares into 1 ordinary share
3 May 2007 Time Watch Acquires ZijingShan Shopping Mall at RMB 96 million
3 May 2007 Time Watch Chairman Buys 1.5million Shares
FY2007 Financial ReviewFY2007 Financial Review
Financial Highlights – FY2007Financial Highlights – FY2007
Financial Highlights FY2007 FY2006%
Change
Revenue (HK$'000) 855,859 721,730 19%
Cost of Sales (HK$'000) 674,667 606,892 11%
Gross Profit (HK$'000) 181,192 114,838 58%
Gross Profit Margin 21% 16% 31%
Net Profit (Loss) as reported (HK$'000) 83,061 (50,378) N/A
Earnings per Share (HK cts) as reported 21 -15 N/A
For Reference
Exceptional items – Gain (Loss) (HK$'000) 27,981 (83,499) N/A
Net Profit (Loss) from ordinary activities (HK$'000) 45,371 35,192 29%
Earnings per Share (HK cts) on ordinary activities 13 11 18%
Financial Ratios
2007 2006 +/-
HK$M HK$M
EBITDA(LBITDA) 112.5 -38.6 N/A
Equity attributable to equity holders 203 68 199%
Total assets 533.5 266.4 100%
Profitability / Coverage
Return on average shareholders' funds 54% N/A N/A
Long term debts/total assets 15% 18% -14%
Current assets/current liabilities ratio (times)
1.6 1.5 7%
Average inventory/turnover (%) 16% 15% 8%
Net Profit Growth Trend
Surged from a loss of HK$50m in FY 2006 to HK$83 m in FY 2007
Excluding:HK$83m in goodwill written off in FY
2006 & Revaluation gain on property of
HK$28m in FY2007 Strong watch sales
New store sales
Efficiencies of scale
Effective cost control
Net Profit= 29% Y-O-YNet Profit= 29% Y-O-Y
35799
(50,378)
83,061
-60000
-40000
-20000
0
20000
40000
60000
80000
100000
HKD'000
FY2005 FY2006 FY2007
Net Profit
11 months contribution in FY 2007 results
Revenue Growth TrendRevenue Growth Trend
Revenue- Strong Growth
CAGR= 13.9% Increased 19% Y-O-Y
10% increase in point of sales (“POS”) to 615 points
Sales from each existing POS increased by 20%
19%
Y-O-Y
KEY REVENUE DRIVER 1 :Manufacturing & Retail
KEY REVENUE DRIVER 2 :OEM Manufacturing
Business Segmental Business Segmental Revenue Contribution Revenue Contribution
% Contribution to Revenue
Manufacturing & Retail Sales,
22%
Trading Watch movement, 78%
FY 2006 Manufacturing & Retail Sales - 22%
Trading Watch Movement - 78%
FY 2007 Manufacturing,& Retail Sales - 21% Trading Watch Movement - 53%
OEM Manufacturing – 26%
% Contribution to Revenue
Manufacturing & Retail Sales, 21%
Trading Watch movement, 53%
OEM of Watches, 26%
Business Divisions Business Divisions Net Profit Contribution Net Profit Contribution
% Contribution to Net Margin
OEM of Watches, 22%
Trading Watch movement, 6%
Manufacturing & Retail Sales, 72%
FY 2006 Manufacturing & Retail Sales - 75%
Trading Watch Movement - 25%
FY 2007 Manufacturing,
& Retail Sales - 72% Trading Watch Movement - 6%
OEM Manufacturing – 22%
% Contribution to Net Margin
Manufacturing & Retail Sales, 75%
Trading Watch movement, 25%
Business DivisionsReturn on Net Assets Employed
% Contribution to Return on Net Assets Employed
Trading Watch movement, 9%
OEM of Watches, 42%Manufacturing & Retail
Sales, 45%
FY 2006 Manufacturing & Retail Sales – 34%
Trading Watch Movement -24%
FY 2007 Manufacturing,
& Retail Sales - 45% Trading Watch Movement - 9%
OEM Manufacturing – 42%
% Contribution to Return on Net Asset Employed
Manufacturing & Retail Sales, 34%
Trading Watch movement, 24%
Resources diverted away from Trading Watch Movement due to lower profit margins
Gross Profit Growth TrendGross Profit Growth Trend
Gross Profit- 58% increase Y-O-Y; 25.5% CAGR FY 05-07
91606
114838
181192
0
50000
100000
150000
200000
HKD'000
FY2005 FY2006 FY2007
Gross Profit
CAGR= 25.5%
Gross Profit
Substantial Increase
of 58% from
HK$115m to HK$181m
58%
Y-O-Y
Gross Profit Margin Growth Trend
Gross Profit Margin- 31% GrowthAttributable to:
1. Successful Cost Reduction • Strategies To Lower
Production Losses• Stricter Cost Control
2. Economies of Scale from • New dustless production line
in Shenzhen plant commencingoperations this year
3. Overall Higher Quality Products
Net Cash
14713
22,677
48,814
0
10000
20000
30000
40000
50000
HKD'000
FY2005 FY2006 FY2007
Net Cash
Increased more than 100%- War Chest to support Expansion Activities
Due primarily to a placement of shares by UOB Asset Management of HK$56m
2.3xDebt Ratio improved
72% to 58.3%
Directors prudently managed debt
position
Debt ratio= Total Debt/ Total Asset
Stock PerformancePeer Comparison
EPS PE MC
Xinyu Hengdeli 0.045 98.52
HKD 11379.01
M
FJ Benjamin 0.32 14.07 SGD 213M
Peace Mark 0.303 41.55
HKD 12952.52
M
Shenzhen Fiyta N.A 71.03HKD 4611.67M
Sincere (HK) 0.072 7.67 HKD 315.87M
Time Watch 0.21 5.6 SGD 86M
Information Correct as of 23 Aug 07
OutlookOutlook
Positive Outlook in the PRCPositive Outlook in the PRC
Euromonitor market research report dated August 2006
“The growth in demand for medium-price products and those of famous brands, associated with the
fashion element of quartz watches, will grow the fastest, reflecting rising consumer expectations and spending power.”
On the Chinese Watch market, on medium-priced products:-
Sales of Watches Total Volume Sales of Watches Total Volume – Historic and Forecast– Historic and Forecast
0.00
20,000.00
40,000.00
60,000.00
80,000.00
100,000.00
120,000.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Year
'000
un
its
Source: Euromonitor International Report “Watches in China” August 2006
Sales of Watches Total Sales – Sales of Watches Total Sales – Historic and ForecastHistoric and Forecast
0
1
2
3
4
5
6
7
8
9
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Year
RM
B b
illi
on
s
Source: Euromonitor International Report “Watches in China” August 2006
Company Growth StrategiesCompany Growth Strategies
Short-Term Growth StrategiesShort-Term Growth Strategies
57 points of sales (POS) opened in this financial year 57 points of sales (POS) opened in this financial year
Same POS growth = 20%
New POS contribution = 10%
Target 20% - 30% Retail Segment Growth
Market Penetration
To obtain sole distributorship in the PRC and retail internationally-
renowned brands such as “POLICE” to target younger, trendier yuppies
Maiden Contributions from Zijingshan Department Store in Zhenzhou, Henan Province expected HY 08
Flagship Store, Branding Anchor & Widening Revenue base
Penetration into South East Asian MarketSetting up of Singapore outlet as a launch pad into the rest of South East Asian markets e.g. Malaysia and Indonesia
Going ForwardGoing Forward
Increase reach & explore new business opportunities
Further increase presence in the PRC
Possibilities in expanding into other markets-Either organically or through mergers and acquisitions
Develop its business to increase revenue streams,
continue identifying opportunities to expand portfolio
Continue to use its network of selling points
to capture new opportunities
Upgrade & redesign showrooms & showcases to maintain image, optimizing its product mix & raising brand awareness
Summary
Strong Performance across retail segment on
back of strong retail sales in the PRC
Maiden contributions from Zijingshan mall
rental rebates, new sales of “POLICE”
branded watches, sunglasses and
accessories expected in FY 2008
Improved Liquidity & Coverage (Lower Debt Ratio)
Final Dividend payout of HK$0.30 or 2.6% dividend yield per share
11 months contribution from OEM Manufacturing Base Tick Tac & East Base
Target 20%-30% Retail Sales Growth
Market Penetration
Flagship Store, Branding Anchor & Widening Revenue base
Penetration into South East Asian Market
Well-Poised for Expansion Next Growth Phase
Q&AQ&A
Thank You
www.timewatch.com.sg