WW Holding (8442 TT) · participation, rising popularity of sports leagues and the number of sports...
Transcript of WW Holding (8442 TT) · participation, rising popularity of sports leagues and the number of sports...
WW Holding (8442 TT)Investor Presentation
Apr 2019
• The information contained in this confidential document ("Presentation") has been prepared by WW Holding (the "Company"). It has not been fully
verified and is subject to material updating, revision and further amendment.
• While the information contained herein has been prepared in good faith, neither the Company nor any of its shareholders, directors, officers,
agents, employees or advisers gives, has given or has authority to give, any representations or warranties (express or implied) as to, or in relation
to, the accuracy, reliability or completeness of the information in this Presentation, or any revision or supplement thereof, or of any other written or
oral information made or to be made available to any interested party or its advisers (all such information being referred to as "Information") and
liability therefore is expressly disclaimed. Accordingly, neither the Company nor any of its shareholders, directors, officers, agents, employees or
advisers takes any responsibility for, or will accept any liability whether direct or indirect, express or implied, contractual, tortious, statutory or
otherwise, in respect of, the accuracy or completeness or injury of the Information or for any of the opinions contained herein or for any errors,
omissions or misstatements or for any loss, howsoever arising, from the use of this Presentation or the information.
• Neither the issue of this Presentation nor any part of its contents is to be taken as any form of commitment on the part of the Company to proceed
with any transaction and the right is reserved by the Company to terminate any discussions or negotiations with any prospective investors. In no
circumstances will the Company be responsible for any costs, losses or expenses incurred in connection with any appraisal or investigation of the
Company. In furnishing this Presentation, the Company does not undertake or agree to any obligation to provide the recipient with access to any
additional information or to update this Presentation or to correct any inaccuracies in, or omissions from, this Presentation which may become
apparent.
• This Presentation should not be considered as the giving of investment advice by the Company or any of its shareholders, directors, officers,
agents, employees or advisers. Each party to whom this Presentation is made available must make its own independent assessment of the
Company after making such investigations and taking such advice as may be deemed necessary. In particular, any estimates or projections or
opinions contained herein necessarily involve significant elements of subjective judgment, analysis and assumptions and each recipient should
satisfy itself in relation to such matters.
• This Presentation includes certain statements that may be deemed “forward-looking statements”. All statements in this discussion, other than
statements of historical facts, that address future activities and events or developments that the Company expects, are forward-looking
statements. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable
assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in
the forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include
market prices, continued availability of capital and financing, general economic, market or business conditions and other unforeseen events.
Prospective Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments
may differ materially from those projected in forward-looking statements.
2
Disclaimer
31% 27% 21%
25% 30%26%
20% 22%
18%
14% 11%
11%
9% 10%
9%
0% 1%
15%
2016 2017 2018
Non-leather Bags Leather BagsSports Protectives Sport GlovesSport Accessories Luggage & Suitcases
Who we are and why invest in us?
3
We are a global leading sports protectives & accessoriesand handbags & luggage producer focusing on ODM forglobal sports and fashion & lifestyle brands.
Our key strengths lie in our strong R&D capability,particularly in fulfilling and customizing according to ourcustomers’ needs and expectations and overcomingbarriers to commercialization and mass production.
As a result, we are able to develop a diversified customerbase but at the same time, achieves a prime vendorposition. Based on our estimates, we supplied up to 70%and 80% of Nike’s sports protective products and gloves,respectively. We also supply up to 40% of TUMI’s bagsand luggage products.
We see huge growth opportunities globally in sportsaccessories and fashion & lifestyle products, thanks togrowing popularity of sports/outdoor activities andaffordable luxury.
We will continue to seek growth by moving/expandingour production facilities to Southeast Asia and broadenour product offerings to better meet the needs of ourexisting and potential new customers.
Our topline and bottomline have been negativelyimpacted by our production migration in the past twoyears, however, as we are completing our migration, wehave already started to deliver strong topline and marginimprovement.
WW Holding consolidated sales breakdown
WWHoldingModel
SportsProtective Gear & Accessories
PurseHandbags & Luggage
Company Background
4
Company Milestones
5
Foundation & Structuring
1998-2006
Corporate Expansion2006-2017
Rationalization of Production2015 - 2018
1998 - Formerly Honour Rich Limited in Dongguan, Wilson Group Holdings Limited has its origin in Dongguan of Guangdong Province, China, and has been engaged in the production of high-end boutique bags since 1998.
2003 – Nike onboarded 2004 - Established Dongguan
Wellpower Sporting Goods, mainly for the production of sports protective gear and accessories.
2006 - Established a new production site in Huaian, Jiangsu Province.
2006 – Kipling, Tumi, Decathlon on boarded
2008-09 - Under Armour and JR286 onboarded
2011-13 – Nike: Best Stable Supplier Award, Best Innovative Product Award, Best Supplier Award.
2013-15 – JR286: Best Product Quality Award, Best Supplier Award.
2014 – Longchamp onboarded
2014 – Renamed the company to WW Holding Inc.
2014 – Merged with Wilson Group Holdings Limited.
2016 – Armani and Hugo Boss onboarded.
2016 – IPO in Taiwan with ticker 8442 TT.
2016 - Established Wilson Leather (Thailand) Co.
2016 - Established Wilson Leather (Cambodia) Co.
2016-17 – Gradually expanded more of our production from China to Southeast Asia.
2017 - Established Global Worth Investment Holding and Global Vibrant Trading Limited as the holding arm for our luggage business.
2017 – Acquired TWT Manufacturing Co., Ltd in Thailand – a major supplier to Tumi bags and luggage.
Consolidate Leadership Position2018 - Beyond
Consolidate leadership
position
Our Products
6
Non-leather boutique bags Luggage & suitcasesLeather boutique bags
Sports protectives Sports accessoriesSports gloves
Our Production Sites & Company Structure
7
• Sports goods production• Production line: 15• Workers: 696
• Handbags and backpacks• Production line: 22• Workers: 1,203
• R&D center• Boutique leather bags and
Sports goods production• Production line: 58• Workers: 3,822
• Boutique bags production• Production line: 21• Workers: 1,244
• Luggage production• Production line: 13• Workers: 1,367
Xingguo, JiangxiHuian, Jiangsu
Taiwan
Dongguan, Guangdong
Thailand
Phnom Penh, Cambodia
• Headquarter• Financial and R&D center
8, 479 Employees129 Production lines2 Business segments1 Common goal
*As of Dec 2018 *All companies are 100% owned
WW Holding Inc.
GLOBAL WORTH INVESTMENT HOLDING
LTD.
TWT Manufacturing
Co. Ltd.
GLOBAL VIBRANT TRADING LIMITED
WILSON GROUP HOLDINGS
LIMITED(SAMOA)
WILSON GROUP HOLDINGS
LIMITED
Hong Sheng Leather
(Dongguan)
Guangdong AnGaea
Wilson Leather (Cambodia)
WILSON HOLDINGS (HK)
LIMITED
Wilson
(Jiang Su)
NICE-BAG
(Huai’an)
NICE-BAG
(Jiang Su)
WELLPOWER COMMERCE
HOLDING CO., LTD.
Wellpower
(Dongguan)
Wellpower
(jiangxi)
Our Primary Customers
8
Our Competitive Strengths
9
Strong R&D Capability Broadest SKUs in Our Categories
Diversified Customer Base with Prime Vendor Position
Regional Deployment of Production Bases
Our Core Strengths
Our Competitive Strengths
10
Strong emphasis on research and design Design is the heart and soul of our business We have a team of 308 dedicated designers and
R&D personnel who develop the most functional and fashionable products for our customers.
In many cases, we generate product design ideas for our customers.
For example, Time Magazine ranked NIKE’s Muslim sports Hijab as one of the top25 “Best Inventions” of 2017, which was designed and manufactured by us.
A one-stop shopping for our customers We cover up to 90% of all kinds of bags and
luggage SKUs for our customers to choose from. The same goes to our sports protectives and accessories business. In total, we cover up to 22k SKUs.
We have a firewall between showrooms for each customer and will never sell any of our customers’ product designs to another.
The established trust in our company allows us to supply to major global brand customers (despite themselves being competitors).
Our Competitive Strengths
11
Diversified customer base with prime vendor position Besides strong R&D capability, our ability to
fulfill and customize according to our customers’ needs and expectations along with overcoming barriers to commercialization and mass production have won us prime vendor position in many of our customers’ supply chain.
Based on our estimates, we supplied up to 70% and 80% of Nike’s sports protective products and gloves, respectively. We also supply up to 40% of TUMI’s bags and luggage products.
Regional deployment of production bases Production bases in multiple regions in China
and Southeast Asia allow us to support different customers to supply into respective domestic markets faster than peers while obtaining a higher margin.
This also allows us to diversify and mitigate our political and financial risks in the case of government/ trade policy changes or currency fluctuations.
Customer ProductEst. MktShare
TUMI
Business Bags 20%
Luggage 50%
Women Bags 70%
NikeSports Gloves 80%
Sports Protectives 70%
DecathlonShinguards 60%
Skate Protectives 70%
Longchamp Nylon Bags 40%
Kipling Nylon Bags 30%
Our Competitive Strengths
12
Handles & Grips
Wheels
Zipper
Body & Parts
Strength
Safety
Durability & Resilience
Endurance
1. Product Safety2. Colorfastness to Crocking3. Colorfastness to Water/Water Repellency4. Colorfastness to Perspiration5. Colorfastness to UV Fading6. Oil Resistance7. Clean Ability8. Finish Adhesion9. Abrasion Resistance10. Bally Flex11. Stiffness12. Tensile Strength13. Tear Strength14. Seam Strength15. Break/Pipiness
TUMI vs. Other Brands
Production Steps
Number of Parts
Accuracy Tolerance
Length of training for skilled labor
150
1 millimeter
18-24 months
40-60
120 50
5 millimeters
3 months
vs.
vs.
vs.
vs.
16. Shrinkage17. Dimensional Stability18. Salt Spray19. Mini-Tumble20. Operational Forces21. Zipper Crosswise Strength22. Zipper Puller Tensile Strength23. Environmental Cycle24. Handle Jerk/Strap Jerk25. Drop Test26. Tumble Test27. Telescoping Handel Free Fall/Impact28. Telescoping Handle Cycling29. Mileage Cycle30. Customized tests as required
Environmental Cycle Test Machine
Drop and TumbleTest Machine
Salt Spry Test Machine
For TUMI, products are put through 30 unique tests
Why we are chosen – TUMI as an example
Industry Trends & Outlook
13
According to various research institutes, the globalsports protective equipment market is expected togrow at a CAGR of 3.5% - 4.7% from 2016-2026.
The growth is mainly driven by an increase in sportsparticipation, rising popularity of sports leagues andthe number of sports events, combined with agrowing consumer awareness of safety duringsports activities.
Based on our estimates, we have roughly 10%market share in the global sports protectiveequipment market and 20% market share in theglobal sports gloves market (based on FOB prices).
0.6
0.7
0.8
0.9
1.0
2016 2017 2018E 2019E 2020E 2021E 2022E
Global Sports Gloves Market
4
6
8
10
2016 2017 2018E 2019E 2020E 2021E 2022E
Global Sports Protective Equipment Market
Factor & Equilibrium Allied Market ResearchKBV Research Transparency Market ResearchAverage
Sports Protectives Industry
14
(USD/Bn) (USD/Bn)
Source: Index Markets Research
0%
4%
8%
12%
20
40
60
80
100
2005 2009 2013 2017
Sports events market revenueCAGR
CAGR(%)2005-2009
2009-2013
2013-2017
Football 8% 9% 5%U.S. sports 5% 5% 4%Tennis 2% 5% 3%Golf 3% 2% 4%Other 11% 9% 9%Total 6% 7% 5%
*US Sports include NFL,MLB, NBA, NHL, NASCAR, NCAA
Global Sports Events Revenue(USD/Bn)
Source: A.T. Kearney Analysis
340
380
420
460
2016 2017 2018E 2019E 2020E 2021E
Global Luxury Goods
40
50
60
70
80
2017 2018E 2019E 2020E 2021E 2022E 2023E
Global Luxury Bag Market KD Market Insights QY Research
10
14
18
22
26
2016 2017 2018E 2019E 2020E 2021E 2022E 2023E
Global Travel Bags Market
Global Luxury Bags and Travel Bags Industry
15
(USD/Bn)
Source: KD Market Insights, QYResearch
(USD/Bn)
Source: BBG
(USD/Bn)
Source: Global Opportunity Analysis and Industry Forecast
According to Bloomberg research, the global luxury market is gradually rebuilding, and is expected to grow at 3% CAGR from 2016-2021.
China’s economic recovery, along with loosening of anti-extravagance measures, along with product designs and innovations, are rebuilding demand.
Beauty products, small leather goods and accessories, and travel bags and luggage are among the fastest-growing categories at the more-accessible price points.
-10%
-5%
0%
5%
10%
15%
80
90
100
110
120
130
140
2012 2013 2014 2015 2016 2017
ASEAN FDI inflow outgrew China in 2016-17
China Southeast Asia
China Growth Rate Southeast Asia Growth Rate
Non-tech manufacturing gradually moving away from China
16
Source: National Bureau of Statistics of China
(USD/Bn)
Source: World Investment Report
30,000
40,000
50,000
60,000
70,000
80,000
2010 2011 2012 2013 2014 2015 2016 2017
China workers base salary(CNY/dollar)
0.0
0.2
0.4
0.6
0.8
1.0
1.2
19
90
19
95
20
00
20
05
20
10
20
15
20
20E
20
25E
20
30E
20
35E
20
40E
20
45E
20
50E
20
55E
20
60E
20
65E
20
70E
20
75E
20
80E
20
85E
20
90E
20
95E
21
00E
0-14 15-64 65 and above
(Billion)
Source: United Nations & National Bureau of Statistics of China
Chinese working age population to plateau from 2015
0 100 200 300 400
Myanmar
Cambodia
Vietnam
Malaysia
Thailand
Philippines
Indonesia
China
Monthly minimum wage level in Asia
(USD)
Source: Bank of Tokyo Mitsubishi UFJ
Our Goals & Strategies
17
Our Group Vision and Goals
18
Weaving Sports & Fashion in Innovation
World Class Team and Infrastructure to Build Scale
Optimize cost structure
Sufficient capacities and flexibilities
Strengthen resilience to down cycles
New brands of customers
An expanding products portfolio
Strategic M&As
Re-deploy capital towards higher margin business to increase return
Operational Excellence
Accelerating Growth
To become the global no. 1 supplier for premiumsports accessories and fashion & lifestyle products
Increase Shareholder Value
Our Growth Strategies
19
Objectives
Levers
1
2
3
4
Strengthening the core
New brands of customers
Expand along value chain
Mergers & acquisitions
Completes production migration to Southeast Asia
Increase automation level
Increase wallet share in existing customers
New customers acquisitions through product capacity expansion
Expand our sports offerings to medical-and industrial-grade protectives
Expand our offerings in bags and accessories categories
Explore acquisitions that enhance vertical integration
Explore acquisitions of original product manufacturing companies
Continue to expand in product offerings
Accelerate growth and return
Organic growth through customer acquisition
1. Strengthening the Core
20
We are better positioned to serve our customers after realignment of our production capabilities
# of plant workers
Auto CuttingTraditional
Progress of Auto Cutting for Ankle Sock
Need to move the cutting mold and material after each cutting
Two layers cut at the same time 1 Worker does 1500 pairs/day
Auto adjust material position after each cutting
4 layers cut at the same time 1 Worker does 2000 pairs/day
Progress of Auto Stitching
Auto StitchingTraditional Worker holds the foam and backer
and sleeve Small sleeve opening would impact
stitching efficiency 70 seconds needed per piece
Only need to fix the foam backer and sleeve on the machine
35 seconds needed per piece
1203 1203
0
500
1000
1500
2017 2018
Huian plants
696 696
500
550
600
650
700
750
2017 2018
Xingguo plant
1177
1367
1000
1100
1200
1300
1400
2017 2018
Thailand plant
1000
1244
0
500
1000
1500
2017 2018
Cambodia plant
47353822
0
2000
4000
6000
2017 2018
Dongguan plants
2. Expand the Value Chain
21
We firmly believe the key to our success lies in the products that we offer to our customers
Marathon Jackets
Belts & Leather
Accessories
Medical Support/Gloves
Medical Support Socks
Sports, Medical, Industrial Protectives
& Fashion, Lifestyle
Products
Specialty Sports Bags
Diaper/Baby Bags
Sports Hats & Beanies
Industrial/Safety Vests
3. New Brands of Customers
22
Our goal is to emerge as a trusted partner to the top global sports and lifestyle brands
Growing new brands
Sports protective
s
Gloves
Accessories
Bags
Equipment
Women Bags
Men Bags
Luggage, Travels
Belts
Accessories
Growing wallet share in existing customers
Global brands Boutique brands
A balanced portfolio & target markets to ensure the highest profitability
Luxury
Premium
Sports & Designer
Fast Fashion
Casual & Mass
0%
1%
2%
3%
4%
5%
6%
7%
0
500
1000
1500
2000
2500
2016 2017 2018
TMT's net profit and margin
Net Profit Net Margin (RHS)
4. Mergers and Acquisitions
23
We have a strong M&A track record and we are return-focused
Our three priorities for M&As
1. Contributes to vertical
integration
2. Must be an original product manufacturing
company
3. Return-focused
Our acquisition of TWT (Thailand) in 4Q17 as an example (a major supplier to TUMI)
10
13
0
2
4
6
8
10
12
14
2017 2018
Production lines
1177
1367
1000
1100
1200
1300
1400
2017 2018
Factory workers(USD ‘000)
Financial Performance
24
0
100
200
300
400
500
600
700
Sep
-15
Dec
-15
Mar
-16
Jun
-16
Sep
-16
Dec
-16
Mar
-17
Jun
-17
Sep
-17
Dec
-17
Mar
-18
Jun
-18
Sep
-18
Dec
-18
0
5
10
15
20
25
Gross Margin %
-40
-30
-20
-10
0
10
20
30
40
50
60
Revenue growth (YoY%)
-15
-10
-5
0
5
10
Operating Margin %
We are making a strong recovery as we complete our transition
25
Revenues are returning…
…and maintain at double digit growth
Our margin took a hit but is recovering
Consolidated Monthly Revenue (NT$m)
Our margin took a hit but is recovering
Income Statement
26
NT$m 2013 2014 2015 2016 2017 2018YoY (%)
2014 2015 2016 2017 2018
Revenue 4,167 4,841 5,211 4,904 4,795 6,030 16.2 7.6 (5.9) (2.2) 25.8COGS 3,342 3,862 4,168 4,054 4,064 5,117 15.6 7.9 (2.7) 0.2 25.9Gross Profit 825 979 1,043 850 731 914 18.7 6.5 (18.5) (14.0) 25.0Operating Expenses (676) (725) (791) (724) (706) (833) 7.3 9.0 (8.4) (2.5) 17.9
Operating Profit 149 254 252 125 25 81 70.0 (0.5) (50.3) (80.2) 225.9Non Operating Income/(Loss) (52) 5 65 29 (20) 21 - 1159.1 (56.1) - -
Pretax Income 97 259 318 154 4 102 165.9 22.7 (51.5) (97.1) 2177.7Tax Expenses (24) (62) (78) (41) (43) (10) 163.7 24.9 (46.7) 4.3 (76.6)
Net Income to Parent 18 173 240 113 (39) 91 877.1 38.8 (53.1) - -Basic EPS (NT$) 1.42 4.18 5.46 2.51 (0.78) 1.83 194.4 30.6 (54.0) - -Key Financial Ratios (%)Gross Margin 19.8 20.2 20.0 17.3 15.2 15.2Operating Expense Ratio 16.2 15.0 15.2 14.8 14.7 13.8Operating Margin 3.6 5.2 4.8 2.6 0.5 1.3Effect Tax Rate 24.2 24.0 24.5 26.9 969.0 10.0Net Margin 0.4 3.6 4.6 2.3 (0.8) 1.5
Balance Sheet
27
NT$m 2013 2014 2015 2016 2017 2018YoY (%)
2014 2015 2016 2017 2018
Total Assets 2,586 2,922 3,075 3,228 4,010 4,181 13.0 5.2 5.0 24.2 4.3Cash 156 572 524 682 572 383 266.2 (8.4) 30.1 (16.1) (33.1)AR & NR 608 518 599 595 889 1055 (14.8) 15.7 (0.7) 49.5 18.6Inventories 605 605 640 567 737 890 0.0 5.7 (11.4) 29.9 20.8Fixed Assets 691 666 672 757 1,159 1,014 (3.7) 1.0 12.6 53.1 (12.5)
Total Liabilities 1,721 1,865 1,838 1,853 2,804 2,906 8.4 (1.4) 0.8 51.4 3.6AP & NP 395 351 342 324 457 521 (11.3) (2.4) (5.3) 41.1 13.9
Total Equity 866 1,057 1,237 1,375 1,205 1,275 22.1 17.0 11.2 (12.3) 5.8Key Financial Ratios A/R Turnover Days - 41.9 38.6 43.8 55.7 58.0Inventory Turnover Days - 56.4 53.8 53.6 57.8 57.2A/P Turnover Days - 34.8 29.9 29.6 34.6 34.4Cash Conversion Days - 63.5 62.4 67.8 78.9 80.8ROE (%) - 24.9 20.9 8.6 (3.0) 9.8ROA (%) - 6.3 8.0 3.6 (1.1) 3.0Net debt (cash)/Equity (%) - 32.3 20.0 17.3 69.8 88.1
Notes:
1. Our net debt to equity ratio grew significantly from 2017 to 1H18 was due to increased borrowings for our capacities build-up and M&A in Southeast Asia. As we are completing our production migration we expect the ratio to lower starting from 2019 and gradually normalizing to 2015-2016 level.
Dividend Payout and Capex
28
Notes:
1. WW Holding became listed on TAIEX on Nov 8, 2016.
2. Cash yield is calculated based on WW Holding’s closing share price on Apr 1, 2019.
3. We did not pay a dividend in 2018 due to losses in 2017. However we returned to profitability in full-year 2018 and hence has planned to resume our cash dividend payout in 2019.
(NT$m) 2014 2015 2016 2017 2018Net profit 173 240 113 -39 91Dividend Paid 43.9 131.8 110.0 - 75DPS (NT$) 1.0 2.6 2.2 - 1.5Payout ratio (%)
25.4% 54.9% 97.7% - 82.0%
Dividend yield 1.5% 4.6% 3.8% - 2.2%Capex 36 96 241 122 143Capex/Sales 0.7% 1.8% 4.9% 2.5% 2.3%
29
WW Holding (8442 TT)Thank You !
www.ww-holding.com.tw
For more information,
please visit our website