2019 Interim Results Briefing Aug 19, 2019 Forward-Looking - - PowerPoint PPT Presentation

2019 Interim Results Briefing

Aug 19, 2019

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

• ffer 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
• r 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

• r incorporated in any way into another document or other material without the prior

consent of the Company.

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Forward-Looking Statements

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2019 Interim Results I Financial Highlights

Revenue

• 2.7%

HK$23,821 million

Profit attributable to shareholders

• 31.6%

HK$188 million

Basic earnings per share

• 33.0%

9.97 HK cents

Total dividend per share

• 16.2%

4.23 HK cents

4

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 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%

2019 Interim Results I Key Financial Data

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67.3% 32.7%

Mainland China

76.6% 23.3% 0.1% 66.9% 33.1%

Revenue by Segment

74.2% 25.7% 0.1%

Revenue by Geography

Hong Kong and Other Markets Motor Business Consumer Products Business Others

1H 2018

1H 2019

1H 2018

2019 Interim Results I Revenue 1H 2019

Consumer Products Business

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Consumer Products Business I Overview

1,751 1,182 3,501 3,451 1,028 915 1H 2018 1H 2019

Revenue by Geography

(HK$’M)

Mainland China Hong Kong and Macao Other Markets

• 185
• 103

146 129

• 5

27

Net Profit by Geography

(HK$’M)

Mainland China Hong Kong and Macao Other Markets

1H 2018 1H 2019

• 44

53 6,280 5,548

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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.

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Consumer Products Business I Mainland China

Revenue

• 32.5%

HK$1,182 million

Net Loss Improvement

44.3%

HK$(103) million

• Ongoing operational enhancements in the

FMCG distribution business with portfolio

• ptimization and reduced losses
• Significant improvement in net profit in

logistics due to ongoing efficiency improvements and consolidation

• Focus on lifestyle products, digital

channels and property installation in electrical products business

• Repositioning towards medical devices and

OTC in Healthcare

10

Consumer Products Business I Mainland China

Operational enhancements continued with new opportunities in higher value categories including alcoholic beverages and food service

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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.

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• Economic slowdown and weakened consumer

sentiment

• Reduced revenue and profit in food and FMCG

distribution with stable margin due to expansion in higher value categories

• Healthcare distribution increased in revenue

with the opening of the Auriga centre while profit decreased during the transition

• 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 Revenue

• 1.4%

HK$3,451 million

Net Profit

• 11.6%

HK$129 million Consumer Products Business I Hong Kong and Macao

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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

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PHOTO

Consumer Products Business I Hong Kong and Macao

Food processing focused on automation and deepening food service penetration with new recipe development

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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

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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

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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

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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

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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.

Consumer Products Business I Other Markets

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Consumer Products Business I Other Markets

Revenue

• 11.0%

HK$915 million

Net Profit

HK$27 million

• vs. 2018 Net loss of

HK$5 million

• Business streamlining in Singapore and

East Malaysia was completed and resulted in a turnaround in net profit

• Manufacturing delivered stable revenue

and profit with increased production in higher value categories and improved

• perational efficiencies
• Revenue was stable in the healthcare

business with a decline in net profit related to generic drug policies in Thailand and portfolio restructuring in Singapore

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Consumer Products Business I Other Markets

Leveraging our regional presence while implementing specialised services including emergency delivery, localised RFID inventory and precision climate control

Motor Business

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Motor Business I Overview

14,628 14,843 3,542 3,399 1H 2018 1H 2019

Revenue by Geography

(HK$’M)

Mainland China Hong Kong and Other Markets

372 271 232 215 1H 2018 1H 2019

Net Profit by Geography

(HK$’M)

Mainland China Hong Kong and Other Markets

18,170 18,242 604 486

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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.

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Motor Business I Mainland China

2,809 1,718 2,656 2,319 2,288 2,274 2,367 1,482 2,520 1,981 1,913 2,056

JAN FEB MAR APR MAY JUN

Mainland China Market Monthly Vehicle Unit Sales (‘000) 2018 2019

10,629 5,566 8,792 8,588 8,929 7,904 11,727 5,334 8,003 10,017 10,166 10,957

JAN FEB MAR APR MAY JUN

DCH Monthly Vehicle Unit Sales 2018 2019

↓12.4% ↑11.5%

56,204 units 12.3 million units DCH gained market share with 11.5% increase in unit sales while the mainland China market declined by 12.5%

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Motor Business I Mainland China

City 4S Shop Zhanjiang Shenzhen Meizhou Kunming Zhanjiang Junhua Shenye Toyota Xingye Toyota Meizhou Shenye Kunming Lianya Unit sales ranking against peers

Up from #12 in 2018 Up from #10 in 2018 Up from #2 in 2018 Maintain #1 position Up from #2 in 2018

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NATIONAL LEADER Toyota 4S shops operated by DCH delivered an outstanding performance, increased in market share and became local market leaders

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Motor Business I Mainland China

• The mainland China motor market continued

to decline at 12.4% in year-on-year in unit sales amidst economic slowdown

• DCH revenue was stable while unit sales

increased by 11.5% due to an expanded network and retail strategies to maintain market share

• After sales revenue and profit increased
• Profit fell 27% as a result of lower selling

prices, the roll out of China 6 emission standards and 4S shop expansion costs

• Continued growth in the motor related

business including motor financing, used car trading and motor leasing Revenue

+1.5%

HK$14,843 million

Aftersales Revenue

+8.3%

584,592 units serviced

Net Profit

• 27.2%

HK$271 million

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Motor Business I Mainland China

4S Shops by Brand At Dec 31 2017 At Dec 31 2018 New Shops 1H 2019 At Jun 30 2019 New Shops 2H 2019 Audi 7 7 7 1 Bentley 7 7 7 1 Ferrari / Maserati / Alfa Romeo 3 5 5 Lexus 8 9 9 Mercedes Benz 6 6 6 1 Buick 5 5 5 Chevrolet 3 3 3 Honda 11 12 12 Nissan 3 3 3 Toyota 21 22 22 Lynk & Co 1 2 3 3 Isuzu / Qingling 4 6 6 Man 1 1 Haima 1 1 1 Others 1 1 1 Total

80 88 3 91 6

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Motor Business I Mainland China

To support long term growth, we are strengthening supporting businesses including motor financing, leasing and used car trading

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Motor Business I Mainland China

Motor leasing grew in revenue in profit with an expanded fleet of service vehicles and opportunities to capture growth in domestic tourism with over 300 RVs available for lease

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In Hong Kong and Macao, DCH is the dealer and distributor of 16 vehicle brands with motor related businesses including motor maintenance, leasing, used car sales, parts trading, aviation services, engineering projects and the distribution of luxury yachts. DCH is also the distributor and authorised dealer of Isuzu vehicles in Singapore, Taiwan and Myanmar with supporting services including aftersales, motor leasing and a semi-knocked down assembly facility.

Motor Business I Hong Kong and Other Markets

32 5,166 3,398 1,768 4,397 3,068 1,329

Total Passenger Vehicles Commerical Vehicles

DCH Hong Kong Unit Sales 2018 2019

24,056 16,618 7,438 20,572 14,406 6,166

Total Passenger Vehicles Commerical Vehicles

Hong Kong Market Unit Sales 2018 2019

↓14.5% ↓14.9% ↓13.3% ↓9.7% ↓17.1% ↓24.8%

Motor Business I Hong Kong and Other Markets

DCH passenger vehicles outperformed the market as the commercial truck segment faced pressure from industrial slowdowns and changes in emission standards

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Motor Business I Hong Kong and Other Markets

• In Hong Kong, economic uncertainty impacted

consumer sentiment and resulted in 14.5% unit sales contraction

• DCH revenue and profit declined with above-

market performance in passenger vehicles

• Commercial vehicle sales were impacted by the

roll out of Euro VIc emission standards and the end the government replacement scheme

• In Singapore, sales improved following the 2018

delivery of Euro VI vehicles

• In Taiwan, DCH gained market share with

additional models at our semi-knock down facilities Revenue

• 4.0%

HK$3,399 million

Net Profit

• 7.3%

HK$215 million

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Motor Business I Hong Kong and Other Markets

In April of 2019, the next generation Nissan Leaf was launched in Hong Kong with a 350km range and immediately became the market leader

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Motor Business I Hong Kong and Other Markets

6 yacht deliveries VIP network development Free check up for aftersales

SSSSSSSS

Princess Yachts benefited from a strong sales pipeline following effective brand building, new service development and an expanded sales network to book record high revenue and net profit

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Motor Business I Hong Kong and Other Markets

In Singapore, sales and profit improved after EURO VI vehicle delivery and in Taiwan, we have gained in market share, revenue and profit with additional models at our local assembly facilities in Taiwan

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Strategic Approach

• Maintain market share
• Improve efficiencies through scale
• Upgrade IT capabilities
• Strengthen supporting businesses

such as motor leasing and used car sales

• Enhance the service experience

through customer lifecycle management

• Drive synergy and optimise

productivity by integrating supply chains

• Nurture the right business streams

including high value categories, food service and corporate accounts

• Manage increasing pressure from e-

commerce and digital channels

• Develop opportunities in the Greater

Bay Area

Motor Business Consumer Business

38 For more information, please contact:

ir@ir.dch.com.hk