2019 Interim Results Briefing Aug 19, 2019
Forward-Looking Statements This document has been prepared by Dah Chong Hong Holdings Limited (“the Company”) solely for general information purposes and is not, and should not be construed as, an offer or solicitation of an offer to buy or sell any securities or financial instruments or to provide any investment services or advices. This document contains statements that constitute “forward -looking statements” . While these forward-looking statements represent our judgments and future expectations concerning the development of our business, various known and unknown risks, uncertainties and other factors could lead to actual developments and results to differ from our expectations. Information and opinions contained herein have been compiled in good faith by the Company, but no representation or warranty, expressed or implied, is made as to their accuracy or correctness. All opinions and estimates contained in this document are provided in good faith but without legal responsibility and are subject to change without notice. The Company or any of its subsidiaries or affiliates, nor any of its or their officers or persons accepts any responsibilities or liability whatsoever from any actions or claims arising from any use or interpretation of information contained herein. This material may not be reproduced or redistributed or transmitted to any other person or incorporated in any way into another document or other material without the prior consent of the Company. 2
2019 Interim Results I Financial Highlights Revenue Basic earnings per share -2.7% -33.0% HK$23,821 million 9.97 HK cents Profit attributable to Total dividend per share shareholders -16.2% -31.6% 4.23 HK cents HK$188 million 3
2019 Interim Results I Key Financial Data Financial Position (HK$’M) 30 Jun 19 31 Dec 18 Chg. Current Assets 16,385 16,208 +1.09% Non-Current Assets 14,570 11,055 +31.80% Current Liabilities 11,305 12,092 -6.51% Non-Current Liabilities 9,425 4,378 +115.28% Net Assets 10,225 10,793 -5.26% Net Asset Value Per Share (HK$) 5.42 5.72 -5.24% Liquidity Analysis (HK$’M) 30 Jun 19 31 Dec 18 Chg. Cash and Bank Deposits 1,638 1,093 +49.86% Total Debt 7,469 6,971 +7.14% Net Debt 5,831 5,878 -0.80% Total Capital 15,579 16,160 -3.60% Net Gearing Ratio 37.4% 36.4% +1ppt 4
2019 Interim Results I Revenue Revenue by Segment Revenue by Geography 0.1% 23.3% 0.1% 32.7% 25.7% 33.1% 74.2% 66.9% 1H 2018 1H 2018 67.3% 76.6% 1H 2019 1H 2019 Consumer Motor Hong Kong and Mainland Products Others Business China Other Markets Business 5
Consumer Products Business 6
Consumer Products Business I Overview Revenue by Geography Net Profit by Geography (HK$’M) (HK$’M) 6,280 53 -44 5,548 27 1,028 915 146 129 3,501 -103 3,451 -185 1,751 -5 1,182 1H 2018 1H 2019 1H 2018 1H 2019 Mainland China Hong Kong Other Markets Mainland China Hong Kong Other Markets and Macao and Macao 7
Consumer Products Business I Mainland China In mainland China, DCH operates a food and FMCG distribution and trading network that covers more than 30 major cities and regions. Our operations also extend into electrical products and healthcare distribution. 8
Consumer Products Business I Mainland China • Ongoing operational enhancements in the Revenue FMCG distribution business with portfolio -32.5% optimization and reduced losses • Significant improvement in net profit in HK$1,182 million logistics due to ongoing efficiency improvements and consolidation Net Loss Improvement • Focus on lifestyle products, digital 44.3% channels and property installation in electrical products business HK$(103) million • Repositioning towards medical devices and OTC in Healthcare 9
Consumer Products Business I Mainland China Operational enhancements continued with new opportunities in higher value categories including alcoholic beverages and food service 10
Consumer Products Business I Hong Kong and Macao In Hong Kong, DCH operates an end-to-end supply chain including distribution, commodity trading, food processing, own brands and more than 50 retail stores with comprehensive logistics services. We also distribute, service and retail appliances and audio-visual products while our healthcare distribution business serves world-leading pharmaceutical companies. 11
Consumer Products Business I Hong Kong and Macao • Revenue Economic slowdown and weakened consumer sentiment -1.4% • Reduced revenue and profit in food and FMCG HK$3,451 million distribution with stable margin due to expansion in higher value categories • Net Profit Healthcare distribution increased in revenue with the opening of the Auriga centre while -11.6% profit decreased during the transition HK$129 million • Electrical products business was stable as a property project in Macao offset a weak retail sales • Logistics business increased in profit and revenue by driving synergy and enhancing utilisation 12
Consumer Products Business I Hong Kong and Macao FMCG distribution continued to develop higher value categories including pet food, milk powder and personal care with product expansion in the own brands business 13
Consumer Products Business I Hong Kong and Macao Food processing focused on automation and deepening food service penetration with new recipe development PHOTO 14
Consumer Products Business I Hong Kong and Macao In food retail, we continued to optimise our store network, category mix and shopping environments, with a total of 52 stores including new concepts, DCH Finest and DCH x ZStore 15
Consumer Products Business I Hong Kong and Macao Logistics increased support to internal businesses and enhanced warehouse efficiency, building infrastructure to support development across the Greater Bay Area 16
Consumer Products Business I Hong Kong and Macao While the appliance retail market declined, new warehouse efficiencies and a pre-installation project for a residential property development in Macao resulted in stable performance 17
Consumer Products Business I Hong Kong and Macao In the healthcare business, the newly opened Auriga Centre resulted in increased market share by meeting unique needs of pharmaceutical companies and attracting new principals 18
Consumer Products Business I Other Markets DCH operates healthcare and food and FMCG distribution businesses in Japan, Singapore, Thailand, Indonesia, Taiwan, Malaysia, Brunei and the Philippines, supported by a food and beverage contract manufacturing facility in Malaysia. 19
Consumer Products Business I Other Markets Revenue • Business streamlining in Singapore and -11.0% East Malaysia was completed and resulted in a turnaround in net profit HK$915 million • Manufacturing delivered stable revenue and profit with increased production in higher value categories and improved Net Profit operational efficiencies HK$27 million • Revenue was stable in the healthcare vs. 2018 Net loss of business with a decline in net profit related to generic drug policies in Thailand HK$5 million and portfolio restructuring in Singapore 20
Consumer Products Business I Other Markets Leveraging our regional presence while implementing specialised services including emergency delivery, localised RFID inventory and precision climate control 21
Motor Business 22
Motor Business I Overview Revenue by Geography Net Profit by Geography (HK$’M) (HK$’M) 18,170 18,242 3,399 3,542 604 486 232 215 14,843 14,628 372 271 1H 2018 1H 2019 1H 2018 1H 2019 Mainland China Hong Kong and Other Markets Mainland China Hong Kong and Other Markets 23
Motor Business I Mainland China Mainland China motor is DCH’s largest segment with 91 4S shops and 29 authorised showrooms retailing a diverse portfolio of more than 20 motor brands. We also offer motor services including leasing, financing, parts sales, auto insurance agency and used car sales. 24
Motor Business I Mainland China DCH gained market share with 11.5% increase in unit sales while the mainland China market declined by 12.5% Mainland China Market DCH Monthly Vehicle Unit Sales (‘000) Monthly Vehicle Unit Sales ↓ 12.4% ↑11.5% 56,204 units 12.3 million units 2,809 2,656 11,727 2,520 10,957 10,629 2,367 2,319 10,166 2,288 2,274 10,017 2,056 8,929 8,792 1,981 8,588 1,913 8,003 7,904 1,718 1,482 5,566 5,334 JAN FEB MAR APR MAY JUN JAN FEB MAR APR MAY JUN 2018 2019 2018 2019 25
Motor Business I Mainland China Toyota 4S shops operated by DCH delivered an outstanding performance, increased in market share and became local market leaders Zhanjiang Shenzhen Meizhou Kunming City 4S Shop Zhanjiang Shenye Xingye Meizhou Kunming Junhua Toyota Toyota Shenye Lianya Unit 6 sales ranking NATIONAL against LEADER peers Up from Up from Up from Maintain Up from #12 in 2018 #10 in 2018 #2 in 2018 #1 position #2 in 2018 26
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