1
March 2009
Annual Results Announcement
2008
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Agenda
Financial Highlights
Business Review
Strategies and Plans
Open Forum
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Financial Highlights
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Financial Highlights
(RMB '000) 2008 2007 Change (%)
Turnover 4,822,596 3,655,613 +31.9%
Gross profit 1,149,072 813,860 +41.2%
Profit attributable to equity holders
699,380 406,882 +71.9%
Basic EPS (RMB cents) 56 cents 33 cents +69.7%
Final dividend (HK cents) 20 cents 16 cents +25.0%
For the year ended 31 December
Dividend payout ratio: 32.1%
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Sustainable Turnover & Profit Growth
406.9
699.4
2007 2008year ended 31 Dec
RMB Mn
Profit Attributable to Equity Holders
4,822.6
3,655.6
2007 2008year ended 31 Dec
RMB Mn
Turnover
yoy:+31.9
%
yoy:+31.9
%
yoy: +71.9%
yoy: +71.9%
Satisfactory growth in turnover :- Continuous and significant increase in the sales of
sports wear- Successful expansion into the global distribution market- Acceleration of the exploration of the domestic market
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Growing Margins
1149.1
813.9
600
800
1,000
1,200
1,400
2007 2008
21.5%
22.0%
22.5%
23.0%
23.5%
24.0%
GP GPMyear ended 31 Dec
Gross ProfitGross Profit
Improving gross profit margin:- Effective adjustment in product mix- Further enhancement of production efficiency
Net profit margin increased by 3.4 pct, due to- One-off gain: RMB128.2 million recorded from the forward currency contracts- Strong organic growth: NP increased by 43.2% if excluding the one off gain
from the forward currency contract
699.4
406.9
200
300
400
500
600
700
800
2007 2008
10.0%
11.0%
12.0%
13.0%
14.0%
15.0%
NP NPMyear ended 31 Dec
Net ProfitNet Profit
RMB Mn
22.3%
23.8% 14.5%
11.1%
RMB Mn
582 。7
NP excl one off gain
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Turnover Breakdown by Products
For the year ended 31 Dec2008 2007 Change
RMB'000 % RMB'000 % RMB'000 %
By products
Casual wear 2,398,304 49.7% 2,248,981 61.5% 149,323 6.6%
Sports wear 2,042,315 42.3% 1,165,198 31.9% 877,117 75.3%
Lingerie 248,929 5.2% 147,920 4.0% 101,009 68.3%
Other knitting products 133,048 2.8% 93,514 2.6% 39,534 42.3%
Total 4,822,596 100% 3,655,613 100% 1,166,983 31.9%
Significant growth in sports wear contribution was attributable to continuous increase in OEM operation for renowned sports brands (Adidas, Nike and Puma) as a result of increasing proportion of high-end products.
Increase in sales of casual wear as a result of improving product quality, and shorten delivery turnover
Substantial Growth in sports wear and lingerie wear has enriched the Group’s product portfolio
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Stable growth contribution by Japan market
The European market and other markets (Hong Kong, Korea and Australia) recordedimpressive growth as a result of successful market diversification strategy and global market demand from certain customers
Declining contribution by the US market as affected by economic turbulence
Growth in domestic sales was driven by increasing demand of high-end sports apparel from renowned brand names
Turnover Breakdown by Regions
year ended 31 Dec
2008 2007 Change
RMB'000 % RMB'000 % RMB'000 %
Japan 2,437,304 50.5% 2,178,725 59.6% 258,579 11.9%
Europe 751,442 15.6% 515,602 14.1% 235,840 45.7%
United States 261,079 5.4% 298,830 8.2% (37,751) (12.6%)
Other countries 455,497 9.5% 268,112 7.3% 187,385 69.9%
Domestic market 917,274 19.0% 394,344 10.8% 522,930 132.6%
Total 4,822,596 100% 3,655,613 100% 1,166,983 31.9%
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Healthy Financial Position
2008 2007
Inventory turnover days 71 72
Debtor turnover days 31 26
Creditor turnover days 29 38
For the 12 months ended 31 Dec
2008 2007
Gearing ratio (debt to equity) (%) 29% 32%
Cash and Cash Equivalent (RMB Mn)
238 233
Net assets (RMB Mn) 2,873 2,481
Total assets (RMB Mn) 4,321 3,904
For the 12 months ended 31 Dec
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Business Review
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Strengthened Management in Lean Manufacturing
For the year ended 31 December
2005 2006 2007 2008
Weaving and knitting (in tons)
30,782 35,247 43,749 53,016
Dyeing and finishing(in tons)
38,003 43,610 53,363 61,568
Printing and embroidery(in thousand pieces of fabric)
30,966 63,792 68,915 106,310
Cutting and sewing(in thousand pieces of apparel)
77,699 95,446 112,446 138,063
Continuous measures on technological reform, equipment upgrade and technology optimization have reduced our consumption on energy and water resource throughout our manufacturing process
Effectively controlled its production cost by enhancing its internal control
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Casual wear customers
Prominent progress on our strategy to fine-tune the customer base. Two renowned sports wear customers, ADIDAS and NIKE, account for [33]% (2007: 25%) of Group’s total turnover, with trend showing strong sales growth, effectively reduced Group’s reliance on single client.
Growing contribution by lingerie, with growing number of lingerie customers.
More Reasonable Customer Base
Sports wear customers
Lingerie and other customers
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Rational Layout of the Sales Markets
Further consolidated and developed strengthen Japan market Japan
Further consolidated and developed strengthen Japan market Japan
Continuous rapid growth momentum of the domestic market, as a result of [increasing demand for renowned sports brand wear]
Continuous rapid growth momentum of the domestic market, as a result of [increasing demand for renowned sports brand wear]
Significant growth in the sales to other markets, which include Korea, Hong Kong, China and Australia due to [increasing demand for high end textile products]
Significant growth in the sales to other markets, which include Korea, Hong Kong, China and Australia due to [increasing demand for high end textile products]
Rational layout of sale markets lowered the
influence of a single market on
the Group’s operation
Rational layout of sale markets lowered the
influence of a single market on
the Group’s operation
Removal of quotas system for China’s textile imports by EU in 2008, resulting in a strong sale growth of 45.7% from that market
Removal of quotas system for China’s textile imports by EU in 2008, resulting in a strong sale growth of 45.7% from that market
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Strategies and Plans
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Optimization of Vertical Integration & Expansion of Production Capacity
Expansion of production capacity
Optimization of vertical integration
Seek for other opportunities for the construction of new plant
Optimize each production procedure, and strengthen the coordination and cooperation
expand our garment production capacity by improving the efficiency of the existing equipment
Ensure the full utilization of the productivity of the factories, further improvement of the production efficiency and completion of the new garment factory
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Enhancement of R&D & Focusing on higher-end textile products
Increase the investments in product research and development and promote high-end development of products
Fully leverage on the competitive edges of the Group in fabric developments achieve optimal performance in sales of sports wear and lingerie
Consolidate the competitiveness of its products in the consumer market by adhering to product diversification and improving the product quality
Pls provide pics of some new (higher-
end) textile products
Casual wearCasual wearSports wearSports wear
Lingerie wearLingerie wear
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Enhancement of Customer Service &Optimization of Structure of Production Base
Ningbo
Quzhou
Anhui
Cambodia
Better ancillary services, including shortening the delivery turnover of the products and providing examination services of the products
Focus on the production procedures with high added value, technology intensive, high resource consumption and high requirements to the ancillary facilities in the coastal area
Shift certain of the cutting and sewing procedures to the labour intensive central area
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Europe
Asia (incl the PRC, HK &
Korea)
US
Expansion into global distribution markets
Consolidate and further develop the market in Japan
Concentrate on the development of the distribution market in the PRC
Achieving a balanced development in the EU, the US, Korea and Australia
Australia
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Mission
The Most Competitive Knitwear Manufacturer In
the World
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Open Forum