DUKANG DISTILLERS HOLDINGS LIMITED · Named after Du Kang ... Seasonality Of Quarterly Sales ......

3QFY2014 (Jan’14 – Mar’14) Results Presentation

DUKANG DISTILLERS HOLDINGS LIMITED

CORPORATE PROFILE

FINANCIAL HIGHLIGHTS

GROWTH STRATEGIES

INVESTMENT MERITS

Corporate profile

B

Brand origin of Dukang

4

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

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

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)

Financial highlights

C

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

37.1%

41.3%

4.4% 17.2%

FY2013

9

Enlarged sales contribution from 「Dukang」 brand


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

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


10

3Q14 sales for「Dukang」remained resilient


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

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


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


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

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


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


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

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


RM

B (

mil)

Quarterly Gross Profit


13

3Q14 gross profit declined 51.4% yoy


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

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%


Gross Profit Margins


Gross profit margins for 「Dukang」and「Siwu」brand


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

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


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

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

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


(%)

RM

B (

mil)

Quarterly Net Profit & Margin

Net Profit Net Profit Margin

3Q14 net profit margin declined 14.0 percentage points to 2.1%


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


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

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


Growth strategies

D

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

Three-pronged growth strategies

22

2. Strengthen distribution

network

3. Improve capacity and utilisation

1. Enhance brand value

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

23

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

24

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

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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mailto:[email protected]:[email protected]:[email protected]:[email protected]

DUKANG DISTILLERS HOLDINGS LIMITED · Named after Du Kang ... Seasonality Of Quarterly Sales ......

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