슬라이드 1 - COWAY IR · 2010-04-06 · Robust demand for well-being living products. Strong...

Key investment highlights Transparent Management Value Innovation Change and Challenge

4

Solid sales and maintenance by CODY network

Robust demand for well-being living products

Strong brand power with dominant position

Ongoing revenue and profit increasing based on broad and solid customer base

Strong cash flow generation from rental business

Management policy in enhancing shareholders’ value

Transparent Management Value Innovation Change and Challenge

6

Establishment

20051994

2008

19901998 2001

1989

Entered water purifier business

First air cleaner production and

salesLaunched water

purifier rental service

Listed on KRX

Woongjin Coway is an integrated product and rental service provider focusing on high-endhealth and environmental products

Our History

Acquired Woongjin

Chemical Co., Ltd.

Merged with Woongjin Coway

Development

2010

StartingCosmeticsBusiness

Starting Industrial

Water treatmentBusiness


7

* No. of outstanding shares: 77,124,796

Company Name Stake DescriptionWoongjin Coway(Thailand) Co.,Ltd. 99.9% Thai subsidiary

Coway Japan Corporation 49.0% Japanese subsidiary

Woongjin Coway(China) Living Goods Co., Ltd. 100.0% Chinese

subsidiary

Woongjin Coway(M)SDN.,BHD. 70.0% Malaysian

subsidiary

Woongjin Coway USA Inc. 100.0% US subsidiary

Woongjin Chemical Co., Ltd. 40.1% Filter & TextileBusiness

Ownership structure and Subsidiaries

Ownership structure Subsidiaries [As of Dec. 31, 2009]

44.1%

31.6%

19.5%3.4%

1.4%1.4%

Woongjin Holdings

Others

Other related parties

Treasury Stock

Foreign investors

Company Name 2008 2009 YoYWoongjin Coway(China) Living Goods Co., Ltd. 1,897 14,054 640.8%

Woongjin Coway(M)SDN.,BHD. -227

Woongjin CowayUSA Inc. -3,399 -3,317

Woongjin Chemical Co., Ltd. 2,251 4,313 91.6%

Equity method gain(loss) [Unit : KW mn]

9


* Source: Gallup research(2H 2009), National Statistics Office, Japanese industry press

Product Market Share Korean Penetration

Saturation Rate(E)

Market Competition

52.3% 30.0% 55%~60%

48.4% 12.1% 50%~60%

49.9% 8.2% 45%~50%Coway : 49.9%

Company S : 5.0%Company L : 16.0%

Coway : 48.4%Company N : 20.5%Company D : 8.1%

Coway : 52.3%Company C : 11.1%Company A : 7.5%

Water Purifier

Air Purifier

Bidet

Demand of well-being living products is robust with significant room for growth

Woongjin Coway’s products

0%

5%

10%

15%

20%

25%

Company U Company S Company H Company PWJ Coway


Product Top of mind brand

Water Purifier 84.1%

Air Purifier 64.7%

Bidet 85.9%

Woongjin Coway enjoys a dominant market position due to unparalleled brand recognition

Top position as an environment company

No.1 Brand recognition in Korea

* Source: Gallup research(2H 2009) 10

May – Aug. 2009

Award:• Korea Sustainability

Management Evaluation, Green Safety Mgmt.Awards

• Fair Trade Commission, 2009 CCMS (Customer Complaints Management System) Certification

Sept. 2009

Award:• Korean Standards Association,

CS center KS mark acquired

• IECQ, HSPM(Hazardous SubstanceProcess Management) Mark

Oct. 2009

Award:• Bidet, Acquired TR mark• Ministry of Environment/Presidential

Committee on Green Growth, the Prime Minister Awards at 2009 Low Carbon Green Growth Expo

• Korea Federation of Advertising Associations, 2009 Korea AD Award

Nov. – Dec. 2009

Award:• KMAC, 2009 The Management

Grand Awards• Korea Consumption Culture

Association, 2009 Korea Consumption Culture Grand Awards

• Ministry of Knowledge Economy, WorldClass Product of Korea

13.5%

8.3% 4.0% 3.5%

20.2%Jan. Feb Mar. Apr. May Jun. July Aug. Sep. Oct. Nov. Dec.


Revenue components & portion

1. Rental program 1. Rental program 2. Outright sale2. Outright sale 3. Membership program3. Membership program

Product+Maintenance service (5 yrs) Product sale only Maintenance service only

*Note 1 : There are two ways to enroll in membership program : rental contract expiration(5 years) or purchasing in lump-sum 2 : % of revenue contribution is accumulated yearly / Rental and membership fees are quoted from Dec.2009

Strong revenue stream with the solid income structure

COGS components & portion

Parts and installation Maintenance fee Depreciation expense

Rental COGSRental COGS Membership COGSMembership COGS

Parts Maintenance fee

(unit : KRW bn)

Monthly rental fee : Approx. W22,200

ASP : Approx. W542,300

Monthly membership fee : Approx. W14,100

(unit : KRW bn)

2008 20090

2,000

4,000

6,000

8,000

10,000

12,000

77.6%1,012 1,059

75.0%

0

200

400

600

800

2008 2009

4.6%

60.579.05.6%

0

500

1,000

1,500

2,000

2008 2009

10.4%136.4 138.0

9.8%

110

1000

2000

3000

[23.0%]

[38.2%]

[38.8%]

2009

73.273.2

112.4

108.9108.9

[24.8%]

[38.2%]

[37.0%]

283.1

2008

65.265.2

108.2

109.7109.7

294.5

0

100

200

300

400

500

[33.1%]

[66.9%]

42.3

2009

14.514.5

27.8

[34.3%]

[65.7%]

40.2

2008

13.313.3

26.9

12


Meet Break Even Point within 1st yearMeet Break Even Point within 1st year

Cash inflow▶ Registration fee

(W90,909)▶ Rental fee

(W32,000)

Cash outflow▶COGS (W152,536)▶Installation (W22,408)▶Filter and A/S parts (W124)▶Sales Commission (W94,000)▶Other variable cost (W3,017)

Ⅰ. 1st Month : About W149,000 LossⅠ. 1st Month : About W149,000 Loss

Ⅱ. 1st year : About W98,000 GainⅡ. 1st year : About W98,000 Gain

-200,000

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

Cash flow

Yr 1 Yr 2 Yr 3 Yr 4 Yr 5

Cash flow

(Unit : KRW)

1st Month

Illustrative cash flow structure of rental business

Hypothetical cash flow structure of rental business (Standard water purifier model : CP-07BLO)

Cash inflow▶ Registration fee

(W90,909)▶Rental fee

(W384,000)

Cash outflow▶COGS (W152,536)▶Maintenance commission (W30,000)▶Installation (W22,408)▶Filter and A/S parts (W9,493) ▶Sales commission (W130,300)▶Other variable cost (W32,626)

Mandatory usage period : 24mthMandatory usage period : 24mth

* Note : 1, Registration and rental fee do not include value added tax(VAT) 2. Cash outflow includes only variable cost s3. Consult with appendix for detail information(P.28)

13


Sales Organization

Outright Sales(stores)

E-mart 49LOTTE Mart 51

Home plus 1

Rental House148

Sales only

CI*2,058

Sales &Maintenance

CODY11,826

Door to Door(personnel)

(Unit : person)

[As of Dec. 31, 2009]W* : Sales division managing rental and outright sales

Sales and maintenance service▶Coway’s unique rental sales strategyExpand cross-sell ratio▶Product Per Customer : 1.52units(As of Dec. 31, 2009)Leverage allowing the company penetrating into new businesses

Woongjin Coway’s unique CODY agent system enables the company to expandmarketability and cross selling opportunities that eventually increase customers base

Outstanding distribution channel supported by an extended sales network

Number of CODY agents

0

2,000

4,000

6,000

8,000

10,000

12,000

'03 '04 '05 '06 '07 '08

7,7458,561

9,43410,751

10,30010,661

’09

11,826

W*1,922

Rental House152

0%

1%

2%

0%

1%

2%

14


Rental Membership (unit : 000 account)

CAGR 5.7% ('05~'09)

Rental Membership Total Ratio

Water Purifier 1,987 665 2,652 56.0%

Bidet 951 42 993 21.0%

Air Purifier 628 61 689 14.5%

[As of Dec. 31, 2009]

Continuous growth and stable cash flow generation occurring from broad customer base

All ProductsAll Products

Water PurifierWater Purifier

Rental and Membership subscribers and Cancellation trend

Subscribers (Rental + Membership) Rental cancellation trend (monthly base)

(unit : 000 account)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

3,7884,157 4,355 4,472

2005 2006 2007 2008

3,217

2009

4,736

571659

3,478

711

3,612

799

3,639

838

2007 2008 2009

0.98%1.15% 1.09%

2007 2008

0.64% 0.84% 0.90%

2009

3,898

15


Scheme of Alliance Program 36 partners

Strategic Alliance Program

No. of ‘payFree’ Card

186,02246,947

7,392

333

120,146

1,107,671

19,647

100,499

0

5

10

15

20

25

30

35

16


Sales break down (unit : USD mn)

Export Items / Areas breakdown

Subsidiaries OEM Dealers

WP APBidet Others

Overseas business

Global OEM contracts

Long-term revenue target (unit : KW bn)

Asia EuropeN.America Others

0

200

400

600

800

1000

6.519.2

44.655.8

86.0

'06 '07 '08 ‘09 '10(E)

[44.6%]

[6.2%]

[49.2%]

[20.2%]

[43.3%]

[36.5%]

43.53

+8.8%+8.8%

2008 2009

17.8517.85

2.47

19.6919.69

40.018.818.81

18.84

15.8815.88

2009(Item)

2009(Item)

20.0%20.0%

63.9%63.9%

3.4%3.4%12.7%12.7%25.8%25.8%

2009(Area)

2009(Area)

23.6%23.6%39.8%39.8%

10.8%10.8%&

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Water treatment business historyTransparent Management Value Innovation Change and Challenge

GE UF Agency

Providing industrial UF

11.2bn KW revenue

Woongjin ChemicalWoongjin Chemical

Selling water treatment business division(30/06/08)

Woongjin ChemicalWoongjin Chemical

Public sewage areaReceiving order of Yonginsewage treatment(11bn KW)

16bn KW revenue

Woongjin CowayWoongjin Coway

Expanding public sewage areaReceiving order of 48K ton water treatment at LCD factory(10.6 bnKW)

27.1bn KW revenue

Woongjin CowayWoongjin Coway

Existing business + M&AExisting business : public sewage /industrial waste water treatmentM&A field : biochemical water treatmentReceiving order of Busan(Su-young bay) sewage treatment(16bn KW)

80bn KW revenue- Existing business : 40 bn KW- Business added by M&A : 40 bn KW

Total Water Solution ProviderTotal Water Solution Provider

07 08 0910

18

Water treatment business mid-long term planTransparent Management Value Innovation Change and Challenge

Revenue plan Business portfolio

Becoming a water treatment specialist accompanying with engineering & package capabilities and solutions

2009

27.1

2010 2011 2012

80

150

240

[Unit : bn KW]

ChinaChina

• MBR

• BOT

IndiaIndia

• EPC / BOT

• RO SKID

Overseas PKG

Overseas PKG

• Water supply for community

• Fresh water unit• Ship/special use

Water supply Water supply Industrial waste water Water facilityWater facility

Package Package O&MO&M Ultra pure water Ultra pure water

M&AExisting water treatment biz.

19

Cosmetics business highlightsTransparent Management Value Innovation Change and Challenge

Utilize Coway’s core competence and enter into cosmetics business with minimal cost

Customer - Utilization of existing 3 million customers

▶ More than 3mn existing customers with mostly female 30ish to 40ish ; Major customers in prestige cosmetics market

Channel - Door to Door sales organization

▶ In-depth know-how in D2D sales organization☞ Utilize existing sales only org. ☞ Leverage out CODY network for promotion(Sample delivery, etc.)

▶ High profitability in D2D channel☞ Around 20% OP margin in D2D channel at domestic top two companies

Product - High functional products

▶ 24% CAGR in high functional cosmetics market(‘04~’08)▶ Quality R&D center possession

Production - Outsourcing

▶ Outsourcing to special production corporates

Experience - Managed ‘Coreana cosmetics’ in Korea and success in China

▶ Coreana : Ranked at 2nd in M/S with 300bn KW revenue in 2000▶ 72% CAGR in revenue growth at cosmetics business in China('04~'09, China subsidiary)

20

Cosmetics business growth strategyTransparent Management Value Innovation Change and Challenge

Becoming top 3 players by 2014

Growth strategyGrowth strategy

Stabilization StageStabilization StageGrowing StageGrowing StageInitial StageInitial Stage

2010 ~ 2011 2012 ~ 2013 2014 ~

Specialized in highfunctional cosmeticsSpecialized in high

functional cosmetics Total cosmetics companyTotal cosmetics company Total Beauty &Healthcare company

Total Beauty &Healthcare company

Target on 200bn KW in 2014

2010

10

2011 2012 2013 2014

4080

130

[Unit : bn KW]

200

22


EBITDA (unit : KRW bn)

EPS (unit : KRW )

Sales (unit : KRW bn)

Operating Profit (unit : KRW bn)

Sales & Profit trend

0

300

600

900

1200

1500

Margin

0

90

180

270

360

450

0

50

100

150

200

250

Margin

0

800

1600

2400

1,314 1,412

2008

2008

190 204

14.5%14.5% 14.5%14.5%

2008

373384

28.4%28.4%27.2%27.2%

20092009

2009

1,530

2010(E)

228

2010(E)

14.9%14.9%

420

2010(E)

27.4%27.4%

2008 2009 2010(E)

1,7342,034

2,226

ROE

23%23% 24%24%

23


Cash and Debt (Unit : KRW bn)

CAPEX (Rental asset and Other capital expenditure) (Unit : KRW bn)

Debt Cash and cash equivalents Net debt *Net Debt ratio: 29.5%

Rental asset Equipment&Other

* Note : Temporary Net debt increase due to share buyback(1.35mn treasury shares purchased) and short term borrowings owing to M&A with Woongjin Happyall & Cuchen

Other financial information

0

50

100

150

200

250

300

0

30

60

90

120

150

180

168

168

50

2008 2009 2010(E)

2007 2008

29

1128383

168

82 8686

2009

69

270

201201

148

42

179

94

Focus on enhancing

Shareholder value

Focus on enhancing

Shareholder value

24


DPS (Payout ratio) Dividend yield

Strong cashflow generationStrong cashflow generationDividend payout ratioDividend payout ratio

Increase company transparencyIncrease company transparencyShare buyback & cancellationShare buyback & cancellation

Focusing on enhancement of shareholders’ value

2004 : 5 million share buyback2005 : 3 million shares cancelled

(purchased in 2004)2007 : 3 million share buyback2009 : 1.35 million share buyback

Woongjin Group’s Transformation into the holding company structureActive IR performance▶Hold quarterly earnings release IR event▶Regular domestic & overseas NDR

EBITDA

2007 2008 2009

1,010(50%)

780(50%)

870(50%)

2.6%2.6%3.4%3.4%

2.7%2.7%

2007 2008 2009(E)

373 384420

(KRW) (KRW bn)

26


2007 2008 2009

Sales 1,213.1 1,314.4 1,411.9

Growth 8.5% 8.4%* 7.4%

Cost of Sales 384.7 407.2 460.2

%of sales 31.7% 31.0% 32.6%

Gross profit 828.4 907.2 951.7

Gross profit margin 68.3% 69.0% 67.4%

Selling and administrative expenses 667.1 717.1 747.5

Operating income 161.3 190.1 204.3

Operating income margin 13.3% 14.5% 14.5%

Other incomes (expenses) -5.6 -5.3 -1.5

Income before income taxes 155.7 184.8 202.7

Income before income taxes margin 12.8% 14.1% 14.4%

Income taxes 39.4 55.7 49.4

Net income 116.3 129.1 153.3

Net income margin 9.6% 9.8% 10.9%

(Unit : KRW bn)

Income statement

27


2007 2008 2009Cash and cash equivalents 29.0 82.0 69.2Trade accounts and notes receivable, net 129.0 158.1 198.6Inventories 57.8 58.0 54.6Other current assets 179.8 177.5 187.1Total current assets 395.6 475.6 509.5PPE(Property, Plant, and Equipment ),net 388.7 356.4 418.2Intangible assets, net 74.1 64.9 141.1Other non-current assets 77.7 174.5 201.9Total assets 936.1 1,071.4 1,270.7Trade accounts and notes payable 25.8 34.2 29.2Short-term borrowings 92.0 107.8 119.7Accounts payable-other 77.1 83.7 103.6Current portion of debenture 0 0 120.0Other current liabilities 198.2 173.1 169.3Total current liabilities 393.1 398.8 541.8Long-term borrowings 0 60.0 30.0Other non-current liabilities 14.5 16.0 18.2Total liabilities 407.6 474.8 590.0Total stockholders' equity 528.5 596.6 680.7Total liabilities and stockholders' equity 936.1 1,071.4 1,270.7

Balance sheet (Unit : KRW bn)

28


Cash Inflow 1st Month Year 1 Year 2 Year 3 Year 4 Year 5Registration fee 90,909 90,909Rental fee 32,000 384,000 384,000 339,273 339,273 339,273Subtotal 122,909 474,909 384,000 339,273 339,273 339,273

Cash Outflow 1st Month Year 1 Year 2 Year 3 Year 4 Year 5Manufacturing cost 152,536 152,536Maintenance commission 30,000 30,000 30,000 30,000 30,000Installation (Outsourcing) 22,408 22,408Filters and A/S parts 124 9,493 23,118 13,258 19,353 13,258Sales commission 94,000 130,300 3,300Other variable cost 3,017 32,626 32,948 33,380 33,082 32,995Subtotal 272,085 377,363 89,366 76,638 82,435 76,253

Net cash flow -149,176 97,546 294,634 262,635 256,838 263,020Accumulated cash flow -149,176 97,546 392,180 654,815 911,653 1,174,673

* Note : 1, Registration and rental fee is exclusive of value added tax(VAT) 2. Cash outflow includes only variable cost in sales3. Other variable cost : MRO(Maintenance, Repair and operating), A/S fee, etc.

*Avg. usage period of Water purifier : 4years

Product: CP-07BLO (Water Purifier) (Unit : KRW)

Cash flow demonstration (Profit analysis per product unit)

29


3Q ’09 4Q ’09 4Q ’08 QoQ YoY

Water Purifier 121,368 103,408 102,766 -14.8% +0.6%

Bidet 60,143 72,428 70,740 +20.4% +2.4%

Air Purifier 36,434 72,918 57,958 +100.1% +25.8%

Water Softener 19,297 21,369 28,628 +10.7% -25.4%

Food Waste Disposal 18,596 3,908 2,106 -79.0% +85.6%

Others 35 18 40 -48.6% -55.0%

Total 255,873 274,049 262,238 +7.1% +4.5%

New rental account acquisition for each item (Unit : EA)

New rental account acquisition (unit : 000)

New rental account acquisition

0

200

400

600

800

1,000

1,200

1,400

2001 2002 2003 2004 2005 2006 2007 2010(E)

511

975 972 961 9761,030 1,114

1,200

2008

1,045

2009

1,189

슬라이드 1 - COWAY IR · 2010-04-06 · Robust demand for well-being living products. Strong...

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Transcript of 슬라이드 1 - COWAY IR · 2010-04-06 · Robust demand for well-being living products. Strong...