COSMETICS INDUSTRY IN EMERGING ASIA* - INVESTMENT OPPORTUNITIES & TRENDS Antoine ALEMANY, Senior Associate
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COSMETICS INDUSTRY
IN EMERGING ASIA*
INVESTMENT
OPPORTUNITIES & TRENDS
Antoine ALEMANY,
Senior Associate
BEYOND BEAUTY PARIS – September 12, 2012
* Emerging Asia = China + India + ASEANTABLE OF CONTENTS
GEREJE Corporate Finance for BEYOND BEAUTY PARIS – September 12, 2012
q Cosmetics industry in Emerging Asia
2
q Synergies & differences in approaching ASEA, India & China
q About GEREJE Corporate FinanceCOSMETICS INDUSTRY IN EMERGING ASIA MARKET OVERVIEW GEREJE Corporate Finance for BEYOND BEAUTY PARIS – September 12, 2012
A BOOMING INDUSTRY IN EMERGING ASIA
GEREJE Corporate Finance for BEYOND BEAUTY PARIS – September 12, 2012
The global market for Cosmetics* = EUR 240 Bn in 2012
with Emerging Asia enjoying the most dynamic growth forecast (12%)
Global Cosmetics* market in 2012
Historical vs. Forecasted CAGR
Historical CAGR (2006 – 2011)
20% India
Latin America
EUR 5,5 Bn
EUR 41 Bn
15%
MEA
EUR 11 Bn China
10% 4
Europe N. America EUR 19 Bn
EUR 55 Bn EUR 40 Bn
5% ASEAN**
EUR 8,2 Bn
0%
0% 2% 4% 6% 8% 10% 12% 14% 16%
-5%
Forecasted CAGR (2012 – 2016)
q Consumer Expenditure Key drivers:
§ Modern Trade will represent 60% of total trade by 2018 (vs 50% in 2012)
§ China is the N1 growing market for E-commerce: x4 between 2011 and 2016
* Cosmetics= colour cosmetics, skin care, sun care and hair care
* ASEAN: = Vietnam, Thailand, Indonesia, Malaysia, Singapore, Philippines,
Source ; GCF Research and Analysis, World Bank data, Euromonitor, Reportlinker reportDRIVER – MODERN RETAILING
Increasing access to credit facilities in Emerging Asian Countries, coupled with
Modern Trade development, will boost consumer spending
Number of credit cardholders (in M) Shift from Traditional
in South & South East Asia* to Modern Trade
250 CAGR
100%
+14.5%
Taiwan
25%
200 India 50%
Indonesia 5
150 Philippines
50%
Malaysia
100 Thailand 75%
50%
Singapore
50
0%
0 2004 2014
2009 2013E Traditional Trade Modern Trade
q Low Household Debt
§ ASEAN + India total household debt = USD 863 Bn = 21x lower than in Europe
Source: GCF Research & Analysis Department, MPRA, EuromonitorINVESTMENT LANDSCAPE
GEREJE Corporate Finance for BEYOND BEAUTY PARIS – September 12, 2012
China, India and ASEAN present 3 total different competitive landscapes
Turnover
(In EUR M) Number of companies in 2010
500< X
100< X< 500
50 < X < 100
China Asean India
10 < X < 50 6
0
5
10
15
20
25
30
35
40
45
CHINA INDIA ASEAN
The largest market The youngest market The hidden market
- 2 local companies in the top 5 - ~20 local companies with
- 2 local Companies in the top 15 - MNCs commitment is low significant markets shares and
- Strong M&A activity from MNCs (e.g: L’ OREAL: € 200 M sales sales between € 10 to 50M
(e.g. L’OREAL/MININURSE, vs € 1.8 Bn in China) - Access to China and India
J&J/ DABAO and COTY/TJOY)
→ Burgeoning market → Mature local firms looking
→ Strong foreign presence for partners to grow overseas
• lack of infrastructure (road
→ Low market share available → Highest consumption per
to market concern)
• low modern trade capita rate in emerging AsiaSYNERGIES & DIFFERENCES
IN APPROACHING
ASEAN, INDIA & CHINA
2 Giants: China & India / 1 Hidden: ASEAN
A Challenging and Evolving Investment Environment
GEREJE Corporate Finance for BEYOND BEAUTY PARIS – September 12, 2012ASEAN, THE GATEWAY TO EMERGING ASIA
GEREJE Corporate Finance for BEYOND BEAUTY PARIS – September 12, 2012
3 Giants of 3.2 Bn inhabitants started economic revolution at different times but
are expected to keep booming in the 21st Century
INDIA FDI Inflow CHINA FDI Inflow
in EUR Bn in EUR Bn
+10% 150
+15% 54
60.0 Ranking of the busiest airports 150 CAGR
CAGR
in emerging Asia in 2011
40.0 (passengers in M) 100
20.0 50 71
18 22
0.2 0.2 0.3 1 2
0.0 1. BEIJING (77) 0 8
1984 1989 1993 2007 2015f 1984 1989 1993 2007 2015f
N°2
Largest
Popula1on
N°1
Largest
Popula1on
7. SHANGHAI (41)
N°12
Largest
GDP
N°2
Largest
GDP
6. GUANGZHOU (45)
9. DEHLI (35) 2. HK (53) ASEAN FDI Inflow
in EUR Bn
8. MUMBAI (30)
4. BANGKOK (48)
+5% 73
80 CAGR
60
5. SINGAPORE (47) 40 50
3. JAKARTA (52) 20 11
2.5 6.5
0
1984 1989 1993 2007 2015f
N°3
Largest
Popula1on
Globally
N°8
Largest
GDP
Globally
Source: GCF Research & Analysis Airports Council International Data Centre, PRC Ministry of Commerce, .aseansec.org3 GIANTS, > 60 MARKETS
GEREJE Corporate Finance for BEYOND BEAUTY PARIS – September 12, 2012
2 well known Giants (India & China), 1 hidden (ASEAN)
Necessity to ensure a local approach of each state, province or country
CHINA
1,3 Bn inhabitants
22 Provinces +
9
5 autonomous regions
~10 of main Langages
> 80 dialects
INDIA
1,2 Bn inhabitants
28 States +
7 Union Territories
∼22 official Langages
ASEAN
0,6 Bn inhabitants
10 Countries
12 official Langages
Source: CIA FactbookHOUSEHOLD SPENDING POWER IN MEGACITIES*
GEREJE Corporate Finance for BEYOND BEAUTY PARIS – September 12, 2012
Main cities in EM are catching up in household spending power
Middle Income Households in China and India x4 between 2011 and 2025
Number of households (in Mn) with annual incomes >USD$20K**
in megacities in 2011 & 2025e
16.1
China: Beijing, Shanghai
3.3
10
8.0
India: Dehli, Mumbai, Kolkata
2.3
6.1
France: Paris
5.2
5.9
Germany: Rhein-Ruhr
5.2
0 5 10 15 20
2025e 2011
* Megacity: Population > 10 Mn
** In PPP term
Source: CGF Research & Analysis, McKinsey, Morgan StanleyDOING TRANSACTIONS IN ASIA
GEREJE Corporate Finance for BEYOND BEAUTY PARIS – September 12, 2012
DOs DON’Ts
• Everything is possible, nothing is simple • Never expect willing sellers and do not
heavily rely on written documents
• Define clear business goals and strategies,
be ambitious for yourself & for the local • Many ASIAS: Do not consider Asian
partner countries as a homogeneous block: India is 7
countries, China as many Provinces
• Patience is a VERTUE: Spend time building
relationship, favor face-to-face discussions • Valuations are higher than in Europe,
analyze the sharp growth history, weigh in
visible and intangible assets, the high value of 11
• Communication matters
- Phone calls should be preferred to mails management…and think forward!
- Out of the office contact is fairly important
• Do not take anything at face value:
• Family matters, friendship as well: Make “no problem” means “no deal”
friends first, do business later “yes but” means “NO”
• Think about the best structure : Weigh • No business and politics at diner
relative benefits of joint venture or asset deal
against 100% acquisition • Do not underestimate the constraints of the
bureaucracy, the lack of know how of the
• Clarify domestic accounting & tax issues modern corporate finance rules, the difficulty
to analyse financial statements and legal
• Government contacts & network matters as documents
many industries are heavily regulated
Source: GCF Research & AnalysisGEREJE Corporate Finance
ADDED VALUE
GEREJE Corporate Finance for BEYOND BEAUTY PARIS – September 12, 2012ABOUT GEREJE Corporate Finance
GEREJE Corporate Finance for BEYOND BEAUTY PARIS – September 12, 2012
We are a Euro-Asian M&A firm with a “boutique” culture providing
both strategic and financial advisory services ensuring
excellence of execution thanks to our 100% in house offices and team
Origination & Execution Origination
§ Paris § Bangkok (Rep. office)
§ Singapore § Berlin (Affiliate)
§ Shanghai
§ Mumbai
13OUR SERVICES
GEREJE Corporate Finance for BEYOND BEAUTY PARIS – September 12, 2012
The quality of our services relies in our own in-house teams in Europe and
Asia enabling us to manage the entire transaction process, thereby ensuring
efficiency, confidentiality and tangible results
q Buy mandate / Acquisition / Join Ventures
§ Optimising our client business model through external growth strategies
q Fund raising / Equity placements
14
§ Mainly in the context of business development strategies through organic and external
growth
q Valuations
§ Reconciling of on 3 standard methods of transaction, comparables multiples and DCF
aggregated within related commercial and competitive environment
q Sell mandate
§ Similar in essence to fund raising process but involve specific assets transfer / HR
consideration / legal & tax aspectsOUR ADDED VALUE
GEREJE Corporate Finance for BEYOND BEAUTY PARIS – September 12, 2012
Execution capability both in
Europe and Asia, ensuring
24/7 reactivity
Reactivity
and
Proactivity
All the advantages of Cross MNC’s such as DANONE,
an international M&A Border Track BEL or KORRES
firm with a Record over 70% LOI signed
Expertise 15
«boutique» culture Over 60% of closing
Transaction
Excellence To accelerate companies
Tailor-made Solution Optimising
services & outside Your growth and market
driven
the box thinking Investments shares in emerging Asia
Multicultural team possess Our Over 5000 firms and over
Sector
solid and an in depth Proprietary 500 PE, HNWI, family offices
& country in our « in-house » database
expertise in cosmetics and
expertise Databases
emerging Asia in Europe and AsiaOUR PROVEN METHODOLOGY
GEREJE Corporate Finance for BEYOND BEAUTY PARIS – September 12, 2012
Each assignment is managed by
one Team leader to optimize the process
We rely on our own proprietary
We deliver a weekly report
research to process
in line with our mandates
high value strategic & financial
Milestones to optimize
intelligence using the latest
the momentum
communication tools 16
Execution
Excellence
We manage 100% of the
Our mandates are on an
Transaction coordinating the
exclusivity basis only, include
Process with the law firms,
fixed and success fee
auditors …for our client benefit
Our mandates are tailor made
structured in 3 phases consisting in
(1) a preparation / documentation optimization,
(2) the approach, negotiation & LOI and
(3) the final offer & closingCONTACTS
For further information, please contact:
Antoine ALEMANY, Senior Associate
aalemany@gerejecorpfinance.com
17
www.gerejecorpfinance.comDISCLAIMERS
The information contained in the presentation has been provided collated from publicly available sources or other sources that GCF (GEREJE
CORPORATE FINANCE) deems reliable. GCF makes no representation warranty or undertaking, express or implied, and consequently shall
not accept any responsibility of any kind whatsoever with respect to the accuracy or completeness of the Information and / or the information
contained in it or any further information applied in connection with the matters described in it.
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GCF designate the companies, whilst legally they are independent entities, sharing GEREJE corporate identity, logo, documents, working
methodology & ethical rules.
18
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clients. GCF offices are privately owned and independent structures. GEREJE Advisory Asia Pte Ltd Singapore is formerly known as “Arpels”
Advisory Pte ltd.
GCF solely offers advisory services in connection with corporate financial transactions or evaluations. In no way whatsoever does GCF itself
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© Copyright 2012 GEREJE Corporate Finance
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