Opportunity Day 2017 Year End Performance Review 19 March 2018 - PowerPoint PPT Presentation

Opportunity Day 2017 Year End Performance Review 19 March 2018

Table of contents Background and Business 1 2 Key Financial Performance 3 2018 Outlook Q&A 4 CONFIDENTIAL │ PAGE 3

Our journey since 2010 has seen us become a leading skincare company in Thailand 2017 • Launched 8 more products of NAMU LIFE SNAILWHITE in facial skin care and body care • Started to produce small size products (Sachet) selling through leading convenience stores • Investment from NHTPEC , a private equity fund managed by Morgan Stanley • Listed on the Stock Exchange of Thailand • Founded Do Infinite Dream Co., Ltd to be IHQ for the Company’s international business • 2016 Launched 4 more products of NAMU LIFE SNAILWHITE and expanded into body cleansing • Started production in the new plant located in Rojana Industrial Park in October 2016 • Implemented SAP • Increased share capital to THB 225 mn, focusing on international expansion • Founded Namu Life Plus Co., Ltd to be the Company’s local distribution arm 2015 • Launched 3 more products of NAMU LIFE SNAILWHITE and expanded into sunscreen and cleansing products • Invested in land with factory located in Rojana Industrial Park and started to renovate new plant 2014 • Launched 3 more products of NAMU LIFE SNAILWHITE and expanded into body care product • Expanded into modern trade and export to China, Hong Kong, Myanmar and Cambodia • Increased share capital from THB 1 mn to THB 10 mn for business expansion • Founded NAMU LIFE Brand and launched the first product, “SNAILWHITE SECRETION FILTRATE 2013 MOISTURE FACIAL CREAM ” • Main distribution channels are online (Line, Facebook and Instagram) and traditional trade • 2010 - 2012 Founded Do Day Dream PLC. to focus on OEM Business of skin care products with registered and paid-up capital THB 1 mn at par value of THB 100 each CONFIDENTIAL │ PAGE 4

Vision, Mission and Core Values Do Day Dream PLC. is a fast growing skincare manufacturer and distributor in Bangkok, Thailand. Formed in 2010, the company has reached THB 1.67 bn sales in 2017 , within 6 years , or just 4 years after the launch of NAMU LIFE SNAILWHITE . Our customers include retail customers, local distributors and international distributors in several countries in Asia. TO BE 1 OF TOP 3 MARKET LEADERS IN THE ASIAN BEAUTY INDUSTRY VISION WE CREATE HEALTHY SKIN FOR EVERYONE TO BE TRULY BEAUTIFUL IN THEIR OWN UNIQUE WAY MISSION DYNAMIC Robust growth while always being adaptive DIFFERENT Fresh and uniquely innovative CORE VALUES DEVELOP Commitment to continuous improvement for sustainability and stability CONFIDENTIAL │ PAGE 5

Extensive product portfolio covering five categories of skincare 1 2 3 4 5 6 Facial Skin Care Body Care Facial Cleansing Sunscreen Body Cleansing Giftset • • • • • Facial Cream Body Booster Cleansing Sunscreen Crème Body Wash • • • • SYN-AKE MIST Body Booster Whipp Soap Sunscreen CC SPF 30/ PA+++ • • Mask Shot Essential Toner • • Concentrate Facial Cream Namu Facial Jelly Wash • Miracle • Royal Jelly Facial Cream • Day Cream • Overnight Firming Mask • 7 Days Mask Sheets • Gold Facial Cream CONFIDENTIAL │ PAGE 6

Table of contents Background and Business 1 Key Financial Performance 2 2018 Outlook 3 Q&A 4 CONFIDENTIAL │ PAGE 7

Key financial metrics Sales (THB mn) The Company has diversified away from Facial skin care products as they continuously introduced new and innovative products. The Company also shown balanced sales by distribution channels among modern trade, traditional trade and export. In addition, consignment sales has significantly decreased with only sales through Watson, EVEANDBOY, Central and Robinson remain as consignment sales 2014 2016 2017 3% 4.3% 4.3% 4% 4.6% 3.2% 0.8% 8% 1,674 3.8% Product Group /1 4% 2.8% 4% 1,237 92.5% 83.1% 77.7% 77% 955 Facial Skin Care Body Care Facial Cleansing Body Cleansing Sunscreen Others /2 0.3% 0.9% Distribution Channels /1 11.3% 438 19.1% 35.7% 29.7% 30.0% 28.7% 29.9% 23.1% 46.6% 6.0% 3.9% 11.8% 34.8% 31.3% 27.3% 2014 2015 2016 2017 Modern Trade Traditional Trade Export Distribution Partner /3 Others /4 Note: / 1 Calculated based on sales before discount amounting to THB 1,012 mn, THB 1,291 mn, THB 1,713 mn in 2015, 2016 and 2017, respectively / 2 Others product group comprises of giftset, selling of packaging to related company, food supplement and OEM business /3 Distribution partner mainly distribute to traditional trade /4 Others comprise of sale from welfare of employee and retail customer who purchased lower than THB 100,000 /year CONFIDENTIAL │ PAGE 8

Sales breakdown by region Sales breakdown by region Unit :THB mn 1,674 1,237 955 1,161 1,091 775 513 180 146 2015 2016 2017 Domestic Export Sales 98% 99% 70% 11% 30% 50% 2016 2017 2022F CONFIDENTIAL │ PAGE 9

Comparison of overseas sales between 2016 and 2017 (THB mn) Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year Where will the 251% 2018 baseline be? Growth 280% 513 Growth 362% 201 Growth 353% 146 Growth 47% Growth 93 146 55 53 37 2017 Baseline 32 21 2016 Baseline 2016 2017 1Q16 1Q17 2Q16 2Q17 3Q16 3Q17 4Q16 4Q17 • Total export sales in 2017 is THB 513 mn , increase 251% from THB 146 mn in 2016 • Quarterly sales increased YoY • Goal is to increase base sales quarterly to minimize short-term fluctuations • We only represented less than 0.05% of China market size . Fluctuations could happen in quarters because of the following: – Surge in sales usually happens when there is a new Chinese-specific product launch or a capture of a new customer – Tourists coming in to Thailand can have reverse correlation to export sales by quarter – In 2017, we launched Overnight Facial Mask in Q2 and acquired a new customer in Q3 CONFIDENTIAL │ PAGE 10

Growth of overseas sales in 4Q17 is less than the other quarters ? (THB mn) Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year 251% Growth 51 280% 3 Growth 20 362% 1 Growth 14 353% 6 Growth 47% Growth 14 93 6 55 53 37 32 21 2016 2017 1Q16 1Q17 2Q16 2Q17 3Q16 3Q17 4Q16 4Q17 • DDD expects to receive CFDA for key products in early 2018 • CFDA requires some adjustments of the packages, expected to be complete within March/April 2018 • DDD group is currently arranging overseas sales structure which enables tax reduction . The creation of the new overseas structure (IHQ) should be fully complete in March/April 2018 • DDD decides to optimize the tax expenses and wait for new CFDA-approved packages • No new Chinese-specific product launched in 4Q17. Sales for a single day (11/11) occurred in 3Q17 CONFIDENTIAL │ PAGE 11

Cost of good sold (THB mn) COGS to sales significantly decreased from 2015 thanks to economies of scale and better bargaining power with the suppliers which result in lower average cost of raw material and packaging 56.7%  Significant portion of COGS attributable 535 to raw materials and packaging  2015 - 2017 total COGS increased by 51 2 approximately 24% CAGR in the last three years in accordance with sales 375 36.4%  2015 - 2017 COGS as a % of sales 16 31.9% continuous drop due to ability to 1 18 6 3-Year Target : negotiate with key suppliers resulting in 28% - 32% 348 lower average cost together with 30.3% economies of scale and more efficient 10 459 10 production.  2017 y-o-y COGS increased by 42.7% 344 318 primarily as sales revenue increased  However, 2017 COGS as a % of sales 223 slightly increase due to expanding sales of body wash product, a product in a highly competitive segment 2014 2015 2016 2017 Raw material and Packaging Freight Labor Depreciation Others % of Sales Note: / 1 Others comprise mainly of utility expenses CONFIDENTIAL │ PAGE 12

Selling & administrative expenses (THB mn) Selling & Administrative Expense has shown significant increase correlated with increase in sales activity. The increased was mainly attributable by advertising and promotional expenses and employee cost 43.2%  Selling and administrative expenses 724 37.8% Target : 38% 35.7% mainly comprise advertising and 35.3% 81 promotional expenses and employee 14 expenses  2015 - 2017 total selling and 119 administrative expenses increased by 42% CAGR due to heavy spending on 442 advertising to promote products as well as 53 361 additional employees to support business 7 expansion 22 71 30  Advertising and promotional expenses 25 slightly dropped in 2016 due to lower 511 advertising activity in 4Q2016 155  2017 y-o-y advertising and promotional 7 311 9 284 3 expense increased 67.4% as the Company spent heavily to promote new 136 product launched during the year 2014 2015 2016 2017 While comparing with AMORE and LOREAL, they spent a lot on marketing, with 50 – 60% Advertising and Promotional Employee costs Freight Others % of Sales SG&A in 2016. Note: / 1 Others comprise mainly of depreciation and amortization expenses, rental, miscellaneous expenses , tax and other services and other selling and administrative expenses CONFIDENTIAL │ PAGE 13

Media spending by type in 2017 Media spending by type in 2017 In 2017, marketing communication strategy Other, 3% was to create exposure on radio, TV, print as well as out-of-home media advertising in Online, 16% prime locations. TV, 42% OOH, 39% CONFIDENTIAL │ PAGE 15