MC GROUP Public Company Limited (MC) 2Q 2013 - Investor Presentation - - PowerPoint PPT Presentation

MC GROUP Public Company Limited (“MC”)

2Q 2013 - Investor Presentation 15 Aug 2013

Agenda

Pages Overview 2 2Q 2013 Key Achievements 8 CONFIDENTIAL Financial Results 12 Going Forward 19

1

Overview

2

Our Vision and Mission

Our Vision To be ...

a leading apparel & lifestyle business in Asia with various brands to serve different lifestyles.

CONFIDENTIAL

3

We are …

committed to maximize stakeholder value and customer delight via best fit quality products, affordable prices, accessible channels and passionate services.

Our Mission

Our History

Launched “McLady” Launched BISON

• Appointed sales agents in

Myanmar in Apr 2012 and in Laos in Dec 2012 Over 100 Mc Shops and Expanded to Int’l Market

2012

2008

2013

# 1

Market Share in Thailand

CONFIDENTIAL

4

1975 Launched “Mc ” PKG Established 1994

• Opened first Shop

at Tesco Lotus Salaya Branch 1st Mc Shop New Brands / Business (Feb 2013) (Apr 2013) (Jun 2013) (Jun 2013) 2005 2008

Overall Industry Outlook

Consistent growing apparel market in Thailand Sizable Market with sustainable growth High growing jeans market in Thailand

Total Jeans Market Size 11,416 MB in 2012

76%

24%

Branded Jeans 8,666 MB Non Brand Jeans 2,750 MB

5.2%

Historical Growth

in 2011

303,009 MB

Apparel Market Size

in 2011

Apparel market grew in tandem with GDP

CONFIDENTIAL

5

Source : Thailand Management Association (TMA) 8,666 MB 2,750 MB

15%

Historical Growth Growth Rate

4.5-5.5%

Forecasted GDP Growth

in 2013 by NESDB

Number 1 Market Share for Jeans in Thailand

38.4%

2 3

27.5% 11.6% Others

Mc Jeans Leading jeans market share in Thailand

1

CONFIDENTIAL

• 38-year presence in Thailand
• 38.4% of total branded jeans market in Thailand
• Overcome other international and local competitors with quality focus and unique design

that fits local customers’ shapes and bodies.

4

10.5% 12% Others Source: MC GROUP Sales Intelligence Team – data as of 30 June 2013

6

Results Highlights: Net Profit Increase 19%

Sales Revenue Gross Profit

639 766

400 600 800 1,000 1H 2012 1H 2013

+ 20%

1,129 1,315

800 900 1,000 1,100 1,200 1,300 1,400 1H 2012 1H 2013

+ 17%

CONFIDENTIAL

7

Net Profit EBITDA

1H 2012 1H 2013 1H 2012 1H 2013

288 344

200 250 300 350 400 1H 2012 1H 2013

+ 19%

369 428

250 300 350 400 450 1H 2012 1H 2013

+ 17%

2Q 2013 Key Achievements

8

2Q 2013 Key Achievements

Successfully opened additional 17 locations in 2Q 2013 to have a total of 547 locations nationwide at the end of the quarter. 547 Branches Nationwide + 7 POS in Southeast Asia

407 POS

• 2. Modern Trade

140 Shops

• 1. Free Standing Shops
• Growing from expansion of modern

trade

7 POS

• 3. Southeast

Asia

• Growing from opening shops in

existing and new modern trade.

• 6 POS in

Myanmar

Cover 73 Provinces in Thailand

CONFIDENTIAL

9

trade existing and new modern trade.

108

Shops Upcountry

32

Shops Bangkok

Fairy Plaza Myanmar

• 1 POS in Laos

2Q 2013 Key Achievements

Launched 2 new brands - expanding our product assortments to better serve market demands of different target groups.

Brand: Mc Mini Launched: April 2013

• Expand MC clientele

base to start from 6 Brand: Blue Brothers Launched: June 2013

• Tap into premium

jeans market to

CONFIDENTIAL

10

base to start from 6 years old

• Products are sold in Mc

Jeans shops jeans market to compete with international premium brands

• Currently sold at a

pop-up shop located in Siam Center

2Q 2013 Key Achievements

Expanded to online platform with the launched of www.WoWme.co.th – shopping online website with flash sales concept. The product offerings through the website will not be limited only to brands under MC GROUP but also other fast growing product categories from other brands.

CONFIDENTIAL

11

Financial Results

12

1H 2013 Sales Revenue Increases 17%

Sales revenue continues to grow attributable to the company’s effort in distribution channels expansion, even though consumers’ purchasing power has soften in 2Q

• 2013. Free standing shop sales contribution continues to increase.

600 700 800 900 544 585 598 829 673 643

THB millions

+10% YoY +17% YoY

THB millions

600 800 1,000 1,200 1,400 1,129 1,315

CONFIDENTIAL

13

• 100

200 300 400 500 1Q 2012 2Q 2012 3Q 2012 4Q 2012 1Q 2013 2Q 2013 Free standing shop Modern trade Other Free standing shop Modern trade Other

26% 71%

1H 2012 1H 2013

• 200

400 600 1H 2012 1H 2013

36% 64%

With MC’s commitment to meet market demands of different lifestyles, the company continues to expand its product offerings by introducing new brands - one of the factors helps maintaining strong average sales per store despite slowdown in consumers spending.

Average Sales Per Store

THB millions

5.15 6.14

6 8

CONFIDENTIAL

14

Note: Average sales per store for the period. Figures are calculated based on free standing shops and modern trade sales revenue, gross of GP. Excluded sales from international markets and other source (i.e., exhibition etc.)

3.92 2.89 2.94

• 2

4 2010 2011 2012 1H 2012 1H 2013

Gross Profit Increased While Margins is Maintained

Gross profit margin improved significantly in the last couple of years as a result of lean process management, economies of scale and changes in fashion trend and will be maintained at the current levels.

48% 57% 56% 57% 55% 59% 58% 57% 58%

1,400 1,600 1,800 2,000 50% 60% 70%

CONFIDENTIAL

15

530 870 313 326 338 452 394 372 639 766 41%

• 200

400 600 800 1,000 1,200 10% 20% 30% 40% 50%

FY2010 FY 2011 1Q 2012 2Q 2012 3Q 2012 4Q 2012 1Q 2013 2Q 2013 1H 2012 1H 2013 Gross Profit Gross Profit Margin

+14% YoY +20% YoY

(THB millions)

Maintain High EBITDA and Net Profit Margins

Increase in gross profit margins mostly are able to flow through to EBITDA and net profit.

208 481 181 188 180 243 219 209 369 428 16% 27% 33% 32% 30% 29% 33% 33% 33% 33%

• 200

400 600 800 1,000 1,200 0% 10% 20% 30% 40%

FY2010 FY 2011 1Q 2012 2Q 2012 3Q 2012 4Q 2012 1Q 2013 2Q 2013 1H 2012 1H 2013

+17% YoY +11% YoY CONFIDENTIAL

16

Net Profit Net Profit Margin EBITDA EBITDA Margin

105 299 139 149 145 174 180 163 288 344 8% 16% 26% 25% 24% 21% 27% 25% 26% 26%

• 200

400 600 0% 10% 20% 30%

FY2010 FY 2011 1Q 2012 2Q 2012 3Q 2012 4Q 2012 1Q 2013 2Q 2013 1H 2012 1H 2013

(THB millions) (THB millions)

+10% YoY +19% YoY

FY2010 FY 2011 1Q 2012 2Q 2012 3Q 2012 4Q 2012 1Q 2013 2Q 2013 1H 2012 1H 2013

Strong Key Performance Ratios

693 841 642 816 536 3,699 841 3,699 89% 78% 78% 95% 107% 31% 82% 30%

• 1,000

2,000 3,000 4,000 5,000 6,000 0% 20% 40% 60% 80% 100% 120% 1Q 2012 2Q 2012 3Q 2012 4Q 2012 1Q 2013 2Q 2013 1H 2012 1H 2013

Total assets and total shareholders equity grew significantly driven mainly by the IPO proceed in 2Q 2013.

CONFIDENTIAL

17

1Q 2012 2Q 2012 3Q 2012 4Q 2012 1Q 2013 2Q 2013 1H 2012 1H 2013 1,678 1,722 1,940 2,013 1,911 5,022 1,722 5,022 36% 35% 32% 35% 37% 19% 36% 20%

• 1,000

2,000 3,000 4,000 5,000 6,000 7,000 8,000 0% 10% 20% 30% 40% 50% 60% 1Q 2012 2Q 2012 3Q 2012 4Q 2012 1Q 2013 2Q 2013 1H 2012 1H 2013

Total Assets ROA

(1) (2)

Shareholders Equity ROE

Note: (1) ROE shown are annualized and calculated using the period net income divided by average shareholders’ equity for the

• period. (2) Similarly, ROA shown are annualized and calculated using the period net income divided by total assets for the period.

Dividend Payment

Earnings Per Share Dividend Per Share (1)

(THB)

0.23 0.20 0.43

• 0.10

0.20 0.30 0.40 0.50 1Q 2013 2Q 2013 YTD

(THB)

0.225 0.125 0.35

• 0.100

0.200 0.300 0.400 0.500 1Q 2013 2Q 2013 YTD

CONFIDENTIAL

18

Note: (1) Calculated assuming total shares outstanding of 800 million at par value of THB 0.50 per share(2) Dividend yields shown are annualized and calculated based on closing price on13 Aug 2013 at THB 12.9

Dividend Yield (2) Payout Ratio

7.0% 3.9% 5.4% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 1Q 2013 2Q 2013 YTD 100% 61% 81% 0% 25% 50% 75% 100% 1Q 2013 2Q 2013 YTD

Going Forward

19

In The Second Half of 2013

Mobile unit - the new way to shop – provide customers convenience and allow MC to tap into new group of consumers Penetrate overall jeans market and extend to larger pool of apparel market Upcoming line / brand

Product Line Extension Expand Sales

1 2

CONFIDENTIAL

20

Sales Channels to 601 + adding mobile units Expansion to ASEAN Countries

Business Strategy 3

Myanmar Laos Capture high growing markets in Southeast Asia Current Markets New Markets Indonesia Malaysia

MC has increased its target to have a total of 601 locations nationwide by year-end from its original target of 584. Moreover, the company target to

• pen another 100+ new locations for the next 3 years.

Modern Trade

Raise Distribution Channels Target For 2013

547 571 601 530 511

100+ 100+ 100+

CONFIDENTIAL

21

Shops 2Q 2013 4Q 2013 129 157 4 6 7 10

• 1

(# of free standing shops)

4Q 2012 1Q 2013 2Q 2013 3Q 2013 4Q 2013 2014 2015 2016

CAPEX Plan

Continued stores expansion and supporting infrastructure.

(THB millions)

250 300 350 400 450

CONFIDENTIAL

22

Stores expansion IT Infrastructure R&D and Design Center New Distribution Center

• 50

100 150 200 2013 2014F 2015F 2016F

Thank you

23

Appendix

24

Appendix: MC GROUP Structure

Registered Capital 400 MB Paid-up Capital 400 MB

MC GROUP PLC (“MC”) Manages MC Group’s C hannel B rand D esign D istribution S ourcing I nventory

CONFIDENTIAL P.K. Garment (Import-Export) Co., Ltd. (“PKG”) Mc Jeans Manufacturing Co., Ltd. (“MJM”) WoWme Limited (“WOWME”) Winnerman Co.,

• Ltd. (“WNM”)

MC INTER LIMITED (“MCI”)

99.99% 99.97% 79.97%1/ 99.97% 99.97% Paid-up Capital 250 MB Paid-up Capital 1 MB Paid-up Capital 1 MB Paid-up Capital 1 MB Paid-up Capital 1 HKD

• Manufactures jeans

and clothing under factories with BOI

• Offers famous Thai and

foreign brands products and services through online platform

• www.wowme.co.th
• Provides services

and manages sales force and warehouse workforce for MC

• Incorporated for the

future business and investment abroad

• Not yet commercially
• perated

(As of 28 Feb 2013)

• Manufactures jeans

and clothing under factories without BOI

Note : 1/ 20% Held by key management of WoWme

25

Appendix: MC GROUP Board of Directors

• Ms. Sunee Seripanu
• Director
• Executive Committee

Member 1

• Mr. Pichai Karnjanarporn

Chairman of the Board

• Mrs. Pratana Mongkolkul
• Director
• Chairperson of the

Executive Committee 2 3 CONFIDENTIAL

26

• Mr. Virach Seripanu
• Director
• Executive Committee

Member

• Nomination and

Remuneration Committee Member

• Mr. Somchai Apiwattanapron
• Director
• Chairman of the Audit Committee
• Chairman of the Nomination and

Remuneration Committee

• Chairman of the Risk Management

Committee

• Mr. Supasak Chirasavinuprapand
• Director
• Audit Committee Member
• Nomination and Remuneration

Committee Member

• Risk Management Committee
• Mrs. Jamnan Siritan
• Director
• Audit Committee Member
• Risk Management Committee

4 6 5 7

Appendix: MC GROUP Management Team

• Ms. Sunee Seripanu
• Chief Executive Officer
• Chief of Operational

Excellence (Acting) 1

• Mr. Virach Seripanu
• Chief Operating Officer

2 CONFIDENTIAL

27

4 6 3 5

• Ms. Kantima Lerlertyuttitham
• Deputy Chief Operating Officer
• Ms. Yupin Luisiri
• Chief Information Technology

Officer

• Ms. Sangkae Hanvanich
• Executive Vice President, Sales
• Ms. Peyanuch Prepraemvatana
• Senior Vice President, Finance

and Accounting

Appendix: Portfolio of Brands

Current Brands in MC GROUP’s Portfolio

Jeans & Casual wear: Kids Premium Jeanswear: Men Simple Fashion Jeanswear: Men / Women Jeans & Street wear : Women

• Casual and classic style for all occasions

at affordatble prices

• Apparel for men and women
• Basic fashion women jeanswear and

streetwear

• Target female age 18-25
• New line of clothing for kids around 6-12

years old

• To launch products i.e. jeans, trousers, T-

shirt, shirt and jacket for boys around 6- 12 years old

• Offer premium quality jeanswear with

uniqueness in style, design, pattern and ways of wearing.

April 2013 Since 1975

“ Reaching consumers of all ages and groups”

CONFIDENTIAL

• Basic Jeanswear and Casual wear
• Value for money with good quality and

fineness

• 3% of total MC Sales with 83% growth in

2012

28

Jeans & Casual wear : Men Fashion : Women

• Target female age 18-25
• 18% of total MC Sales with

45% growth in 2012

• New line to fashionable clothing and other

products for women i.e. perfume

• Target female at 18-25 who love fashion,

shopping and socializing with high purchasing power and tendency to buy new clothes frequently. ways of wearing.

• The brand was introduced in June 2013

Since 2005 Since 2005 Feb 2013 Jun 2013

• Offer quality jeans for women who are

looking for a pair of jeans that support and flatter their body shape.

• The line will be launched in 2nd half of 2013

Upcoming

Jeanswear : Women over 40 Basic fashion for Everyone: Value-for-money

2H 2013 2H 2013

• Clean, classic clothing and accessories for

kids, men and women. Everyday wear for everyone.

• The brand will be launched in 2nd half of

2013

Appendix: Brand Positioning / Segmentation

Premium Mid-Price Jeans Casual

Basic / classic style for both men and women

CONFIDENTIAL

29

Mid-Price Value for Money

20 10 30 40

Age group

20 10 25

Appendix: Distribution Channels

MC GROUP offers its products and services through;

Alternative Channels Free standing shop

1

• Exhibition booths in major exhibitions
• r festivals
• Mobile units
• Sales agents in foreign countries

3

• Our free standing shops are located mainly

in commercial centers or in plaza sections

• f department stores

Non-conventional channels that help expand the reach to customers. These channels include CONFIDENTIAL

30

Points of Sales in Modern Trade

2

• Consists of points of sales or sales counters in

department stores both retain chains and local department stores as well as superstores throughout the country such as Central, Robinson,The Mall, Big C and Tesco Lotus. Fairy Plaza

(Rayong)

www.wowme.co.th

• The website was premiered in

June 2013

• Product offerings will not be

limited only to brands under MC but also other fast growing product categories from other manufacturers and brands

(Songkla, Pattani) (Khon Kaen) (Nakhon Ratchasima ) (Lampang)

Online Channel

4

Appendix: Our Retail Network by Geographies

1

72.0% 26.7%

Bangkok 148 Branches

Number of Point of Sales by Geographies

Total 554

Upcountry 399 Branches

• Free standing shop

108 Shops

• Modern Trade

291 POS

72.0% 26.7%

As of 30 June 2013

Upcountry Bangkok Metropolitan Region

CONFIDENTIAL

31

26.7%

Bangkok 148 Branches

554 Branches

2

26.7% Overseas 7 POS

3

• Modern Trade

7 POS

• Myanmar

6 POS

• Laos

1 POS

1.3% Overseas

1.3%

• Free standing shop

32 Shops

• Modern Trade

116 POS

554 Branches

Total

100%

Appendix: Peers Comparison (Distribution Channels)

Leading Number of Branches in Thailand

140 22 38

• 407

138 101 122

• 547

160 139 122

• McJeans

Lee Levi's Hana Wrangler Big John

Modern Trade Free Standing Shops

รวม

n/a n/a

1

CONFIDENTIAL

399 89 88

• 148

50 34

• 547

160 139 122

• McJeans

Lee Levi's Hana Wrangler Big John

Bangkok Upcountry

รวม

32

Leading Number of Branches in upcountry in Thailand

n/a n/a n/a

1

Appendix: Peers Comparison (EBITDA & Net Profit Margins)

30.4% 30.3% 30.1% 24.5% 20.8% 15.6% 15.5% 15.4% 12.9% 11.7% 9.8% 5.1% 3.3% MC BEAUTY KAMART ZARA H&M VF CORP GAP UNIQLO BGT SABINA LEVI'S ICC ESPRIT

Highest EBITDA margin compared to our peers

1

17.3% Average

Source : Bloomberg

CONFIDENTIAL

33 29.1% 23.4% 22.6% 14.8% 14.0% 10.0% 7.7% 7.3% 7.1% 4.6% 4.2% 3.0% 2.9% KAMART MC BEAUTY ZARA H&M VF CORP UNIQLO GAP ICC SABINA BGT LEVI'S ESPRIT Source : Bloomberg

High net profit margin compared to peer group

2

11.6% Average 23.4%

Note: Based on 2012 financial results