Investor Presentation Forward-Looking Statements 2 Certain - - PowerPoint PPT Presentation

2017 Interim Results

Investor Presentation

Forward-Looking Statements

Certain statements contained in this presentation maybe viewed as forward- looking statements. Such forward-looking statements represent the Company’s expectations or beliefs concerning future events and involve known and unknown risks and uncertainty that could cause actual results, performance or events to differ materially from those expressed or implied in such statements.

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Financial Review Motor Business Review & Outlook Consumer Products Review & Outlook Key Initiatives

1H2017 Results | Agenda

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REVENUE (HK$’M)

Financial Review | 2017 Half Year Results

PROFIT ATTRIBUTABLE TO SHAREHOLDERS (HK$’M)

20,121 23,044 1H2016 1H2017 220 232 1H2016 1H2017

↑ 14.5% ↑ 5.5%

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65.2% 34.7% 0.1%

Motor Business Consumer Products Business Others

Financial Review | Revenue by Business Segment

REVENUE BY BUSINESS SEGMENT

76.2% 23.7% 0.1% 1H2017 1H2016

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59.7% 30.0% 10.3%

Mainland China Hong Kong and Macao Other Markets

Financial Review | Revenue by Market

REVENUE BY MARKET

65.6% 27.1% 7.3% 1H2017 1H2016

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Financial Review | Earnings and Dividend

For the six months ended 30 June 2017

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1H2017 1H2016 1H2017 1H2016

5.2% 4.5% 4.9% 4.0%

Return on Equity (Annualised) Return on Capital Employed (Annualised)

Financial Review | Earnings and Dividend

HK$’M 1H2017 1H2016 % Basic earnings per share (HK cents)

12.66 12.01 5.4%

Interim dividend per share (HK cents)

5.05 4.75 6.3%

HK$

30 June 2017 31 Dec 2016

% Net asset value per share

5.31 5.05 5.1%

For the six months ended 30 June 2017

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HK$’M 30 June 2017 31 Dec 2016 Non current assets 8,846 8,694 Current assets 16,322 16,721 Current liabilities 10,628 10,431 Non-current liabilities 4,819 5,740 Net assets 9,721 9,244 Non-controlling interests 490 512 Shareholder funds 9,231 8,732

Financial Review | Financial Position

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HK$’M 30 June 2017 31 Dec 2016 30 June 2016 Cash and bank deposits 1,713 1,160 2,068 Total debt 7,019 7,424 8,305 Net debt 5,306 6,264 6,237 Shareholders’ funds 9,231 8,732 9,018 Total capital 14,537 14,996 15,255 Net gearing ratio 36.5% 41.8 % 40.9%

Financial Review | Net Gearing

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Financial Review | Consolidated Cash Flow Statement

1H2017 1H2016 Change Net cash generated from operating activities 871 1,788 (917) Net cash (used in)/from financing activities (530) 1,324 (1,854) Net cash from/(used in) investing activities 252 (2,232) 2,484 Dividend paid to shareholders of the Company (68) (117) 49 Net increase in cash and cash equivalents 525 763 (238)

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Financial Review Motor Business Review & Outlook Consumer Products Review & Outlook Key Initiatives

1H2017 Results | Agenda

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Motor Business

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Motor Business Sales, distribution and servicing of motor vehicles Motor Related Business Vehicle repair, used car sales, parts trading, vehicle rental, motor financing, auto insurance, yacht sales, and engineering projects

Motor Business | Performance Highlights

SEGMENT REVENUE (HK$’M)

SEGMENT RESULT FROM OPERATIONS (HK$’M)

11,264 11,504 2,873 2,619 1,191 918 1H2016 1H2017

Mainland China HK & Macao Others

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SEGMENT MARGIN

141 275 306 151 100 70 1H2016 1H2017

Mainland China HK & Macao Others

1.3% 10.7% 8.4% 2.4% 5.8% 7.6%

Mainland China HK & Macao Others 1H2016

15,328 15,041 547 496

↓9.3% ↓1.9%

1H2017

↑1.1 pt ↓4.9 pt ↓0.8 pt

76.5% 17.4% 6.1%

Mainland China HK & Macao Other Markets

Motor Business | Revenue by Market

REVENUE BY MARKET

73.5% 18.7% 7.8% 1H2017 1H2016

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Motor Business | Mainland China

• Revenue increased despite unit sales

dropped due to brand portfolio upgrades

• Improved profitability from:
• Upgraded brand portfolio
• Inventory and promotion controls
• Customer loyalty initiatives
• Motor-related business grew due to:
• +41% in commission income from

motor financing

• +191% finance leasing portfolio
• Enhanced cross selling incentives

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OPERATION REVIEW

+6.7%

Segment Revenue (RMB) Segment Result from Operations (RMB)

+104%

↓ ↓

+2.1% (HKD) +95.0% (HKD)

90% 10%

Motor Business | Mainland China

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Motor Brands 4S Shops Showrooms Audi 6

• Bentley

7

• Chevrolet

3

• Ferrari / Maserati

3

• Honda

11 4 Isuzu / Qingling 4 2 Lexus 8 1 Mercedes Benz 4

• Nissan

4

• SGM Buick

5

• Toyota

22 7 Others 2 1 Total June 30, 2017 79 15

90% 10%

New car sales After-sales service

1H2016 1H2017 Dealership Sales Share (RMB)

DEALERSHIPS SALES (RMB)

+7.4%

New Cars Sales Revenue (RMB)

+3.8%

After-sales service revenue (RMB) After-sales serviced units

>520k

Motor Business | Mainland China

• Expand dealership network
• Build finance lease portfolio
• Promote cross selling
• Optimize vehicle brand portfolio
• Manage promotions, inventory and

service satisfaction

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OUTLOOK

Motor Business | Mainland China

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Recent 4S Dealership Acquisition in Eastern China

• Increased luxury brand exposure

and market penetration

• 2 Mercedes-Benz dealerships
• 1 Audi dealership
• Authorisations for 3 Mercedes-

Benz dealerships

Motor Business | Hong Kong and Macao

• Market distortion from an EV

subsidy and new diesel regulations

• DCH sales were further

impacted by model launch and changeover timings

• Profitability was additionally

impacted by:

• Yen appreciation
• Stock provisions
• Timing of principal

incentives payments

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• 8.8%

Segment Revenue (HKD) Segment Result from Operations (HKD)

• 50.7%

↓ ↓

OPERATION REVIEW

Motor Business | Hong Kong and Macao

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CIVIC TYPE R

Motor Business | Hong Kong and Macao

• Ongoing CRM activities:
• Service centre enhancements
• Faster vehicle service turnaround
• Extended service hours
• Sales improvement after model changes
• Margin improvements from better Yen forwards
• Pipeline of engineering and fleet projects
• New projects under tender
• 11 Princess yachts scheduled for 2H2017
• 2018 contract for 130ft Princess M class super-

yacht

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OUTLOOK

Motor Business | Hong Kong and Macao

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M-Class Super Yacht

Motor Business | Hong Kong and Macao

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Optare 19-Seater (Wheelchair Accessible)

Motor Business | Other markets

• Vehicle range extension

at Taiwan assembly plant

• Focus on launch of new Euro VI

models in Singapore

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OPERATION REVIEW OUTLOOK

• 22.9%

Segment Revenue (HKD)

• 30.0%

↓ ↓

Segment Result from Operations (HKD)

• Taiwan revenue decreased due to:
• Audi dealership market exit
• Reduced demand for coaches from

tourism decline

• Entry of new players in CV market
• Singapore revenue decreased due to:
• Expiration diesel replacement

incentives

• Slowdown in construction
• High COE Prices
• Segment result decreased due to Euro V

inventory clearance in Singapore

Financial Review Motor Business Review & Outlook Consumer Products Review & Outlook Key Initiatives

1H2017 Results | Agenda

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The consumer product segment is comprised of (i) food distribution, trading, manufacturing, retail and home brand development (ii) fast moving consumer goods (FMCG) distribution, (iii) electrical products distribution, (iv) healthcare distribution and (iv) logistics solutions. The company distributes over 1,000 brands in a diverse range of channels across mainland China, Hong Kong, Macao, Taiwan, Singapore, Thailand, Malaysia, Japan, Indonesia, the Philippines and Brunei.

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Consumer Products Business

Logistics solutions Electrical products distribution Healthcare products distribution Food and FMCG Distribution, trading, manufacturing, brands and retail

Consumer Products Business | Performance Highlights

SEGMENT REVENUE (HK$’M) SEGMENT RESULT FROM OPERATIONS (HK$’M)

1,932 2,244 2,574 4,306 272 1,444

1H2016 1H2017

Mainland China Hong Kong and Macao Other Markets

• 56
• 44

119 143

• 6

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1H2016 1H2017

Mainland China Hong Kong and Macao Other Markets

↑ 67.3% ↑ 112%

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4,778 7,994 57 121

1H2016 1H2017

28.1% 53.9% 18.0%

Mainland China HK & Macao Other Markets

Consumer Products | Segment Revenue by Market

SEGMENT REVENUE BY MARKET

40.4% 53.9% 5.7% 1H2017 1H2016

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• LF Asia China consolidation
• Tighter credit and inventory controls
• Under-performance of key brands

Consumer Products Business | Mainland China Food and FMCG

• Stock-clearing discounts
• Closure of loss-making units
• Infrastructure and resource integration
• Continue turnaround measures
• Review partnerships and M&A
• pportunities

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• 1.0%

Segment Revenue (RMB) Segment Result from Operations (RMB)

• 64.5%

OPERATION REVIEW OUTLOOK

↓ ↓

• 5.6% (HKD)
• 57.5% (HKD)

• Segment revenue increased due to LF

Asia consolidation

• Segment result from operations

declined due to decreases in food trading and manufacturing, despite food retail improvement

Consumer Products Business | HK & Macao Food and FMCG

OPERATION REVIEW

• Distribute more premium,

healthy foods

• Expand into non-traditional

channels

• Extend “Cheer” brand with

breakfast cereals and dairy

• Roll out new food retail

concept

• Optimise store portfolio
• Upgrade manufacturing

facilities

• Continue product extensions

and optimisation

↓

+43.4%

Segment Revenue (HKD) Segment Result from Operations (HKD)

• 27.0%

OUTLOOK

↓

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HOFEX

Consumer Products Business | HK & Macao Food and FMCG

Consumer Business Products | Other Markets Food and FMCG

Brunei Thailand Singapore Malaysia Philippines Indonesia Myanmar Japan

• Enhance operational efficiencies
• Focus on higher value categories

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OPERATION REVIEW OUTLOOK

• New platform for growth in Southeast Asia

from LF Asia acquisition

• Line expansion and facility upgrade in

Malaysia manufacturing

New Markets

for DCH

+

OUTLOOK

Consumer Products Business | Electrical Products Distribution

• Expand the project-based business
• Deepen relationships with principals
• Diversify product offerings
• Extend traditional/ online channels
• Launch a new lifestyle store concept

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↓

+5.4%

Segment Revenue (HKD)

↓

Segment Result from Operations (HKD)

• 11.4%
• Increased warehousing costs
• Lower margin from growth in project-

based sales

• Promotions due to competitor discounting
• Favourable product and brand portfolio
• Healthy property market for project

sales

• Successful launch of lifestyle audio

products in China OPERATION REVIEW

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Launch of “the Crossover” at 7F, Hopewell Centre, Wanchai

Consumer Products Business | Electrical Products Distribution

Consumer Products Business | Logistics Solutions

• Continue productivity

enhancements and integration

• Commence operation of the

Hengqin logistics centre in 1Q2018

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• Stable segment revenue
• Cost control initiatives underway:
• Improve the infrastructure

utilisation

• Develop cold chain capabilities
• Leverage LFA and intergroup

synergies

↓ -0.7%

Segment Revenue (HKD)

↓

Segment Result from Operations (HKD)

+100%

OPERATION REVIEW OUTLOOK

Consumer Products Business | Healthcare Products Distribution

• Solid performance in Greater China:
• Steady performance in Hong Kong,

good growth in Macao but partly offset by supply constraints in mainland China

• Growth in Southeast Asia:
• Operational investment
• Expansion in Thailand and the

Philippines

• Expand into new categories

and markets

• Invest in infrastructure in

Hong Kong and Thailand

• Develop innovative Home-

Health services

• Grow with market

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OPERATION REVIEW OUTLOOK

New Business

+

for DCH

Financial Review Motor Business Review & Outlook Consumer Products Review & Outlook Key Initiatives

1H2017 Results | Agenda

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Key Initiatives | Strategic Growth

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Group Synergies Market Opportunities Solid Foundations

POSITIONED FOR STRATEGIC GROWTH

Key Initiatives | Dealership Acquisition

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ACQUISTION OF MERCEDES AND AUDI DEALERSHIPS

Key Initiatives | Investment in Argyle

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INVESTMENT IN ARGYLE

THANK YOU