Experience Beyond Food Zen Corporation Group Public Company Limited - - PowerPoint PPT Presentation

Zen Corporation Group Public Company Limited Opportunity Day 18th March 2020

Experience Beyond Food

Agenda

• 1. Overview
• 2. FY-2019 Financial Performance
• 3. 2020 Outlook

2

Overview

Agenda 1

Improvement in 4Q19 but Tough Start in 2020

4

• Despite slowing economy, Q4 revenue growth 15%
• Revenue growth +15% YoY by branch expansion, delivery and retail
• SSSG -3%, improved from Q3 but December high season was slower than usual
• 1-time allowance for 2 branch closures of 8 Mn, strategic move to improve future profit
• ZEN has clear focus in 2020 but Covid-19 presents major disruption
• Corona virus has emerged at time where economy already slowing down
• The recovery will depend on how soon the virus can be contained
• ZEN group to open fewer new equity stores in 2020, reduce investment and risk
• Increase profitability of existing branches, renovate older branches
• Focus on franchise business, Khiang to open ~100 stores with support from regional partners
• Reduce our costs and improve internal efficiency with upgraded IT

• People reduce the risk of infection by avoiding in crowed area such shopping mall
• Alert from various media to avoid uncooked food e.g. Sushi

5

Coping with Covid-19 situation

1.6% 2.6% 4.2% 5.5% 5.7% 7.0% 1Q19 2Q19 3Q19 4Q19 Jan-20 Feb-20

Delivery Sales ratio

Impact from Covid-19

Increase store cleanliness measure Ensuring cleanliness standards for imported raw materials Adjust the menu to suit the situation, focusing on cooked food Increase online sales channels, focusing on delivery Maintain profits from cost management

Coping with Covid-19

Preventative Actions Covid-19

79.7 80.8 82.2 80.4 81.1 77.8 73.6 69.4

7

12.5% 6.5% 3.9%

• 2.3%
• 4.4%
• 1.3%
• 10.0%
• 3.0%

25.7% 19.9% 18.6% 7.8% 1.8% 4.4% 3.3% 15.0% 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

Consumer Confidence index

❑ SSSG ❑ TSSG

1Q19-4Q19

• CCI improves prior to general election but then resumes

downward trend on political uncertainty and poor economic results e.g. export slowdown

• Jan-Feb sales also impacted by air pollution in Bangkok
• 2Q19 improves but impact by fire at Central World in April
• 3Q-4Q consumer confidence continues to slide to lowest

in 4 years 1Q18-4Q18

• Rising CCI, marketing promotions and product innovation drives SSSG in

1Q18-2Q18

• CCI peaks in 3Q18 and then changes to downward trend, tourism

impacted by negative incidents e.g. boat sinks

Consumer Confidence Continues to Slide

ZEN SSSG in 4Q19 was -3% from Weak ‘High Season’

Development of Khiang Continues

8

Community Mall Format at Khiang Cherry Mall DELCO Format

at Khiang Saladang

6 Formats of Khiang

Gas Station Format at Khiang PPT Phrannok Standalone Format at The Curve Onnut17 Food Court Format at Khiang Food Patio Central Bangna OP Format at Khiang Lotus Srinakarin

1st Khiang restaurant

DEC18

1Q19

2 Outlets

2Q19

15 Outlets

3Q19

32 Outlets

FY 2019

49 Outlets

49 Khiang Branches Opened as of December 2019

9

Gas Station Standalone Community Mall Food Court DELCO

• ปตท. เจษฎาบดินทร ์

(นนทบุรี)

• ปตท. นวมินทร ์
• พรานนก-พุทธ

มณฑลสาย4 OB

• ปตท. พระราม2

กม.35

• ปตท. บางกรวย-ไทร

น้อย (นนทบุรี)

• ปตท. บ้านกล้วย ไทร

น้อย

• ปตท. พุทธมณฑล

สาย3

• ปตท. ฉลองกรุง
• ปตท. พุทธสาคร OB
• ปตท. สมุทรสาคร
• ปตท. สระบุรี แก่ง

คอย

• ปตท. สระบุรี วังน้อย
• ปตท. วังน้อย โรจนะ
• ปตท. โรจนะอุทัย
• ปตท. แก่งคอย
• ปตท. ประชาอุทิศ90
• ปตท. พุทธมณฑล

สาย4

• ปตท. Retail รังสิต

คลอง7

• ปตท. เจ้าคุณทหาร
• ปตท. บางแค

กาญจนาภิเษก

• ปตท. บางนาตราด

กม.34

• ปตท. สินชัยกาญจน์

ศีขรภูมิ

• ปตท. พระยาสุเรนทร ์
• ท่าพระอาทิตย์
• บางพูน (ปทุมธานี)
• The Curve อ่อนนุช
• HO อ่อนนุช17
• ตะวันนา
• เขียง นิมมานเหมิ

นทร ์เชียง ใหม่

• เขียง ถ. หมื่นด้าม

พร ้ าคต เชียง ใหม่

• เขียง อารีย์สัมพันธ์

ซอย 5

• เขียง พญาไท
• เขียง สัมมากร

สุขาภิบาล 3 (DELCO)

• เขียง บาง

ใหญ่ คลอง ถนน

• เชอร ์รี่ มอลล์ คลอง

หลวง (ปทุมธานี)

• Canopy บางบอน
• Mille Malle
• เขียงทอง เซ็นทรัล

พัทยาบีช

• Food Patio CPN

บางนา

• เซ็นทรัลวิลเลจ

สุวรรณภูมิ ฟู ้ ดวิลเลจ

• เซ็นทรัล แจ้งวัฒนะ
• Im China Town
• RCA พระราม9
• ศาลาแดง
• โลตัส พระราม4
• โลตัส พัฒนาการ
• โลตัส ศรีนครินทร ์
• โลตัส พระราม1
• เมโทรมอลล์ เพชรบุรี

Open Plan

Khiang Shophouse Model Provides High Opportunity

10

Shophouse model requires small investment with high potential

• Location in shophouse in CBD or high-traffic location
• Invest < THB 1 million
• Daily sales THB 20-30k
• Organise delivery with local riders
• Payback within 1 year

4Q19 Marketing Promotions & Activities

11

Delivery sales aggressively grow in 2019 with professional partners and 4-digit call center number Delivery sales aggressively grow in 2019 with professional partners and 4-digit call center number

THB Million THB Million

2.8 3.1 3.4 4.2 10.5 18.3 30.3 42.5

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

Delivery sales aggressively grow in 2019 with professional partners and 4-digit call center number

THB Million

12

Delivery Grows 8x in 2019

Commercial Retail Business Grows 4x in 2019

13

Traditional Trade

• General Market
• Souvenir Shop
• Export

International

Modern Trade

• Gourmet Market

(The Mall Group) 15 branches

Modern Trade

• Makro

Wholesales 115 branches

Modern Trade

• Tesco Lotus

1500 branches

Modern Trade

• Tops

Supermarket 200 branches

Modern Trade

• Big C

Supercenter 800 branches

1.5 1.4 1.6 2.7 3.4 6.9 8.2 9.8

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

THB Million

New Brand Din’s Opened in December

High Potential and Will Expand in 2020

✓ Din’s Neo-Taiwanese restaurant with more than 10 Branches in Japan ✓ ‘The Flying Xiao Long Bao’ restaurant with reasonable price ✓ Easy to expand both equity and franchise model (Shop, food court, kiosk) ✓ First branch @ Samyan Mitrtown, and will expand in 2020

= Establishing the New

鼎

(Din)

14

FY-2019 Financial Performance

Agenda 2

Business Group Structure and Revenue Structure

16

• I. Restaurant

Business

• II. Franchise

Business

• III. Other Food Related Business
• Retail Products
• Delivery & Catering

Business Groups Revenue Structure

* FY2019 data Retail, 0.9% Restaurant, 85.9% Delivery , 2.6% Raw Material Sales, 6.2% Franchise Fees, 2.8% Other Income, 0.9% Franchise, 9.1%

Type of Business Brand Equity Franchise Total Outlets Japanese Restaurant 48

• 48

25 3 28 23 1 24

Other Japanese

10

• 10

3

• 3

Thai Restaurants

Thai Traditional

29 148 177

Thai Street Food

36 13 49 Total 174 171 345

Opened 100 New Branches in 2019

New Brand Khiang Opened 49 Branches

17

FY-2019 Total Revenue and Net Profit

18

738 855 2,965 3,144

500 1,000 1,500 2,000 2,500 3,000

4Q18 4Q19 FY2018 FY2019

Total Revenue

31 19 140 106

20 40 60 80 100 120 140 160

4Q18 4Q19 FY2018 FY2019

Net Profit

THB Million

17 123

YoY +6.1%

• Total revenue of FY-2019 increased by 6.1% YoY, driven by restaurant sales including delivery and retail business
• Net profit of THB 114 Mn (excl.1-time), dropped 7.1%; Net margin decreased from 4.1% to 3.6%

YoY -24.2% Excl.one-time -7.1%

8 114

YoY -40.3% Excl.one-time -14.9%

8 27

(excl.1-time) (excl.1-time)

Net margin 4.3% 2.2% 4.7% 3.4% Excl.1-time 4.3% 3.1% 4.1% 3.6%

(excl.1-time)

YoY +15.8%

39 60 56 69 59 71 69 72 229 268

Franchise Fee and Merchandise Sales

YoY +4.8% 670 668 694 659 662 684 703 758 2,686 2,806

Restaurants & Delivery Revenue

YoY +15.0%

711 729 751 731 724 757 782 840

2,922 3,103 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 FY18 FY19

YoY +6.2% 2 1 2 3 3 7 8 10 7 28

Commercial Retail

All Businesses Show Growth in 2019

19 THB Million

Revenue from Main Businesses

YoY +15.0% YoY +4.5% YoY +17.2% YoY +293% YoY +263%

36% 24% 16% 5% 8% 3% 2% 6%

Merchandise and Retail Sales Franchise Fee

*FY2019 data

343 364 372 402 1,402 1,481

47.4% 48.2% 47.6% 47.8% 48.0% 47.7%

10% 15% 20% 25% 30% 35% 40% 45% 50% 55%

• 100

100 300 500 700 900 1,100 1,300 1,500 1,700 1,900

1Q19 2Q19 3Q19 4Q19 FY2018 FY2019

Gross Profit and Gross Profit Margin

20

Gross Profit

YoY +5.6%

• In 2019 the Group adjusted the accounting classifications of Costs of Sales of Food and Beverages and Selling

Expenses to be more suitable and in line with other companies in the same industry.

• Gross Profit of FY-2019 increased by 5.6% YoY, and Margin slightly dropped from 48.0% to 47.7%
• The cost of food and beverages for core brands was well-controlled

198 215 230 259 799 902

27.4% 28.4% 29.5% 30.8% 27.3% 29.1%

0% 5% 10% 15% 20% 25% 30% 35% 200 400 600 800 1,000 1,200 1,400

1Q19 2Q19 3Q19 4Q19 FY2018 FY2019

Selling and Distribution Expenses

21

Selling and Distribution Expenses

YoY +12.9%

• In 2019 the Group adjusted the accounting classifications of Costs of Sales of Food and Beverages and Selling

Expenses to be more suitable and in line with other companies in the same industry.

• Some branch expenses fixed e.g. Rent, Depre, portion of staff expenses which impacted by negative SSSG
• Increased marketing spend in 2H19 compared to 1H19; increased delivery resulted in higher commission to partners

GA Expenses

22

Staff & Benefit, 74% Rent and Utilities, 7% Depreciation, 5% Others, 14%

GA Expenses Breakdown

• GA expense showed improvement in 4Q19 as the company implemented more effective cost control
• FY19 GA expense % increased from 15.4% to 15.8% but if exclude 1-time items in 4Q19, FY19 would be 15.5%
• Going forward expect to further drive down % GA through effective use of IT to improve efficiency

* FY2019 data

115 118 127 130 449 490

15.8% 15.6% 16.2% 15.5% 15.4% 15.8%

• 10%
• 5%

0% 5% 10% 15% 20% 100 200 300 400 500 600

1Q19 2Q19 3Q19 4Q19 FY2018 FY2019

General Admin Expenses

YoY +9.2%

Financial Ratios Improve

Liquidity Ratios Greatly Improved after IPO

23

0.32 1.24

Dec 18 Dec 19 1,095 610 469 1,434 2.34 0.43

• 8.00
• 7.50
• 7.00
• 6.50
• 6.00
• 5.50
• 5.00
• 4.50
• 4.00
• 3.50
• 3.00
• 2.50
• 2.00
• 1.50
• 1.00
• 0.50

0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 500 1,000 1,500 2,000 2,500

Dec 2018 Dec 2019 Liabilities Equity D/E Ratio

Current Ratio Debt to Equity

2020 Outlook

Agenda 3

Clear Focus for 2020

25

Outlook

• More conservative equity expansion with 15-20 new equity branches
• Improve profit of existing branches and renovate some older branches
• Go ahead with expansion by franchise, especially Khiang with regional

partners (80-100 branches)

• Control costs and improve efficiency with use of IT