Interim Results 361 Degrees International Limited Stock code: 1361.HK August 2021
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Interim Results 361 Degrees International Limited Stock code: 1361.HK August 2021
Financial Review
Operational Review
Contents
Brand Building
Industry Outlook
Appendix
Q&A
Disclaimer
These presentation slides have been prepared by 361 Degrees International Limited (the “Company”) solely for us
during its presentation held in connection with its interim results for the 6 months ended 30 June 2021 and may not
be reproduced or redistributed. In particular, these presentation slides should not be transmitted into the United
States or distributed in the United States and they should not be distributed to any U.S. person (as defined in
Regulation S under the United States Securities Act of 1933, as amended (the “Securities Act”)).
The information contained in this presentation is intended solely for your personal reference. Such information is
subject to change without notice, its accuracy is not guaranteed, and it may not contain all material information
concerning 361 Degrees International Limited. The Company makes no representation regarding, and assumes no
responsibility or liability for, the accuracy or completeness of, or any errors or omissions in, any information
contained herein.
In addition, the information contains projections and forward-looking statements that reflect the Company’s current
views with respect to future events and financial performance. These views are based on current assumptions
which are subject to various risks and which may change over time. No assurance can be given that future events
will occur, that projections will be achieved, or that the Company’s assumptions are correct. It is not the intention to
provide, and you may not rely on this presentation as providing, a complete or comprehensive analysis of the
Company's financial or trading position or prospects.
This presentation does not constitute an offer or invitation to purchase or subscribe for any securities or financial
instruments or to provide any investment service or investment advice, and no part of it shall form the basis of or be
relied upon in connection with any contract, commitment or investment decision in relation thereto.
3
361°Unlocked a Future Success with Passion and
One Extra Degree of Effort in the Sports Market
With prominent advantages in the sports industry, China’s
domestic brands’ structural competitive advantages prevailed
Focused on core brand with “professional sports and
fashion” as dual drivers
New retail effects substantially enhanced brand strength
4
Financial
Review
Aaron GORDON
International
Basketball Superstar
Revenue
Revenue Revenue Mix
(RMB mn)
Footwear
37.6%
41.0%
Apparel
Kids' Sportwear 1H 2020
3,237 3,107 44.4% RMB2,686 mn
3,017
2,798 2,686 Accessories 42.0%
Others 1.1% 14.9%
16.0%
1.0%
1H2017 1H2018 1H2019 1H2020 1H2021
1.1%
0.9%
Footwear Apparel Kids’ Sportwear
Revenue (RMB mn) Revenue (RMB mn) Revenue (RMB mn)
498
1,310 1,362 1,414 1,381 1,356
1,209 1,168 365 388 402
1,127 1,118 1,101 307
1H2017 1H2018 1H2019 1H2020 1H2021 1H2017 1H2018 1H2019 1H2020 1H2021 1H2017 1H2018 1H2019 1H2020 1H2021
6
Gross Profit and GP Margin
Gross Profit GP Margin
(RMB mn)
42.3%
41.6% 41.8%
40.9%
1,255.7 1,322.7 1,299.7
1,184.1 Overall
1,015.8 37.8%
Footwear
Apparel
Kids' Sportwear
1H2017 1H2018 1H2019 1H2020 1H2021 1H2017 1H2018 1H2019 1H2020 1H2021
Footwear Apparel Kids’ Sportwear
GP/GP Margin (RMB mn) GP/GP Margin (RMB mn) GP/GP Margin (RMB mn)
42.4% 43.1% 42.0%
43.3% 42.0%
40.2%
42.1% 41.2%
41.3% 42.1% 41.7%
42.1%
36.0% 36.0%
42.3%
567.5 571.5 600.2 594.5 209.3
508.6 545.6
465.6 470.7 481.6 153.4 161.8
396.4 144.6
129.9
1H2017 1H2018 1H2019 1H2020 1H2021 1H2017 1H2018 1H2019 1H2020 1H2021 1H2017 1H2018 1H2019 1H2020 1H2021
7
Operating Profit and Net Profit
Operating Profit Profit Attributable to Equity Shareholders
(RMB mn) (RMB mn)
710.2
629.1 630.6 641.5
538.2 401.4
367.4
318.3 335.0
301.9
1H2017 1H2018 1H2019 1H2020 1H2021 1H2017 1H2018 1H2019 1H2020 1H2021
OP Margin NP Margin
12.9%
22.9% 11.4% 11.3%
22.5% 11.1% 11.2%
20.9%
19.8% 20.0%
1H2017 1H2018 1H2019 1H2020 1H2021 1H2017 1H2018 1H2019 1H2020 1H2021
8
Major Operating Expenses
Operating Ratios
8.7%
9.0%
8.7% 8.5% 8.7%
A&P
8.5% Staff costs
7.8% 8.0%
7.7% 7.4% R&D
3.8% 3.6%
3.6%
2.9% 3.1%
1H2017 1H2018 1H2019 1H2020 1H2021
Selling and Distribution Costs Administrative Expenses
For the 6 mths ended 30 Jun For the 6 mths ended 30 Jun
RMB mn 2021 2020 Change RMB mn 2021 2020 Change
A&P 247.3 197.7 +25.1%
R&D 110.4 101.9 +8.3%
E-commerce - commission & 49.4 26.4 +87.1%
other service charges Staff costs 55.3 51.0 +8.4%
E-commerce – other expenses 15.4 14.4 +6.9%
Others 73.3 54.3 +35.0%
Others 149.6 114.4 +30.8%
461.7 352.9 +30.8% Total 239.0 207.2 +15.3%
Total
9
Financial Highlights
For the 6 mths ended 30 Jun
RMB mn 2021 2020 Change
Revenue 3,107.1 2,686.1 +15.7%
Gross profit 1,299.7 1,015.8 +28.0%
Operating profit 710.2 538.2 +32.0%
Profit attributable to equity shareholders 401.4 302.0 +32.9%
Basic EPS (RMB cents) 19.4 14.6 +32.9%
Profitability Ratios (%)
Gross margin 41.8 37.8 +4.0 p.p.
Operating margin 22.9 20.0 +2.9 p.p.
Margin of profit attributable to equity shareholders 12.9 11.2 +1.7 p.p.
Return on shareholders equity 6.0 4.7 +1.3 p.p.
Operating Ratios（as % of turnover）
Advertising and promotional expenses (%) 8.0 7.4 +0.6 p.p.
Staff costs (%) 8.7 9.0 -0.3 p.p.
R&D expenses (%) 3.6 3.8 -0.2 p.p.
10Working Capital Cycle
Working Capital Turnover Days
(days)
179
158 160 159
149 146
151 151 Inventories
149
120 121 119 Trade & bills receivable
109
Trade & bills payable
94 112 111 107 Overall
90
85
70
1H2019 2019 1H2020 2020 1H2021
Trade and Bills Receivables Ageing Analysis
As at 30 Jun As at 31 Dec As at 30 As at 31 %
RMB mn Jun 2021 % Dec 2020
2021 2020
Trade Receivables 2,774,645 2,274,493 Within 90 days 2,196,037 80.3% 1,672,852 74.1%
Less: Allowance for Over 90 days
doubtful debts (92,803) (90,303) 375,030 13.7% 385,969 17.1%
but within 180
days
2,681,842 2,184,190
Over 180 days
but within 360 165,265 6.0% 198,623 8.8%
Bill Receivables 54,490 73,254 days
2,736,332 2,257,444 2,736,332 100% 2,257,444 100%
11Liquidity and Capital Strength
Cash Flow Financial Resources
For the 6 mths ended 30 Jun
As at 30 Jun As at 31 Dec
RMB mn 2021 2020 RMB’000 2021 2020
Profit before income
677.3 462.2
tax Pledged bank deposits 28,323 62,628
Adjustments for non-
cash gain/loss and 14.1 131.6 Deposits with bank with
non-operating items maturities > 3 mths 2,000,000 3,000,000
Change in inventories 138.7 258.3
Cash and cash equivalents 2,966,110 3,451,331
Change in trade and
(481.5) (347.6)
bills receivables
Total cash 4,994,433 6,513,959
Change in trade and
(54.4) (282.7)
other payables
Bank loans 208,593 210,222
Change in deposits,
prepayments and (110.3) (164.4) Senior unsecured notes — 1,726,570
other receivables
Taxes paid (203.8) (154.0) Total borrowings 208,593 1,936,792
Cash inflow from
operating activities (19.9) (96.6) Net cash (incl. deposits, cash
equivalents etc.) 4,785,840 4,577,167
12Balance Sheet Highlights
RMB mn As at 30 Jun 2021 As at 31 Dec 2020 Change
Current assets 9,377.9 10,440.1 -10.2%
Current liabilities 2,256.4 4,041.2 -44.2%
Net current assets 7,121.5 6,398.9 +11.3%
Equity attributable to owners of the
6,876.0 6,608.9 +4.0%
company
Net asset value per share (RMB) 4.0 3.7 +0.3 p.p
*(HK$) 4.8 4.4 +0.4 p.p
Net cash per share (RMB) 2.3 2.2 +4.5%
*(HK$) 2.8 2.6 +7.7%
*HKD to RMB exchange rate=0.8326 (2021)
0.8393 (2020)
For the 6 mths ended 30 Jun
2021 2020 Change
Return on shareholders equity (%) 6.0 4.7 +1.3 p.p
13Operational
Review
AG1-PRO basketball shoes361°Overview
Continue to position as a “specialized, youthful and internationalized” brand
Feature product functionality while combining fashion concepts to realize the dual
brand strategy of “professional sports and fashion”
Cater to the “mass market”, deploy omnichannel retail coverage, provide
consumers with full series of high-value products
15Sports Goods for Running
Geared up running products with professionalism, won popularity
among runners with product strengths
• Running products are equipped with core technology of the Group, demonstrating the brand’s technology,
research and innovation strengths and displaying professional sports functional characteristics;
• Launched professional marathon running shoes “Flying Flame” and qualified as the IAAF certified carbon running
shoes; international product line of professional running shoes “Spire-S” and “Spire-R” debuted in the domestic
market;
• Sponsored premium marathon events like 2021 Xuzhou International Marathon, sponsored Chinese national
teams including China’s national triathlon team, structured a professional runner spokespersons line-up of the Asia
and China marathon double champions LI Zicheng and elite marathon runners including GUAN Siyang, MA
Liangwu and ZHAO Na, etc.; organized the own-branded event “Track Three” (三號賽道) in major cities in China,
continuously enhanced the Group’s brand influence over the running sector.
Professional marathon running shoes “Flying Flame” LI Zicheng, the Asia and China marathon double champions
16Sports Goods for Basketball
Continued expansion in the basketball market, effectively enhanced
brand strength
• Basketball products showcased both technology strength and fashion elements, went beyond the consumer circle
and became a breakthrough in increasing brand equity;
• Launched 3TECH embedded AGI PRO basketball shoes series after the release of basketball superstar Aaron
GORDON’s first edition signature shoes AG1, receiving enthusiastic response from the market with its trendy
design;
• Gathered core resources including international basketball superstar Aaron GORDON and well-known Chinese
professional basketball player Kyranbek MAKAN, combined with grassroot players and city teams to promote its
own basketball events “A Fireball Plan” (燃球局計劃) and “Touch Down and Burn” (觸地即燃) in China’s major
cities, thereby expanding market share in the basketball market.
Aaron GORDON with his first edition
signature shoes AG1
17Sports Goods for Comprehensive Training
Comprehensive training products rooted in professionalism, focused on
differentiated needs in sports
• Fulfilled consumers' increasingly segmented and differentiated needs in sports with a wide range of products,
creating differentiation competitive advantage;
• Launched “Balance Training Wings”, a fitness training shoes series incorporated with cushion technology,
providing support and professional protection for comprehensive training members;
• Sponsored China’s national sports teams such as the national cycling team and national women's water polo team,
building a professional brand image for comprehensive training products; rendered tremendous support to XU Can,
the WBA Featherweight World Boxing Champion and TEAM M23, China’s professional boxer training and agency
team, increasing participation in sports with professional products and differentiated marketing strategy.
WBA Featherweight World Boxing Champion XU Can Fitness training shoes “Balance Training Wings”
18Sports Goods for Lifestyle
Unleashed driving force from fashion and anchored the favourites of
young consumers
• Highlighted fashion design concepts to meet the increasing expectations of young consumers for product
comfortability, aesthetics and fashion sense;
• Released wide-ranging co-branded IP series and celebrity-endorsed products, aiming to draw new customers with
fashion trend and promote sales growth;
• Contracted with GONG Jun (龔俊), a well-known young actor in China. Utilizing the power of fan economy, Gong
Jun-endorsed products recorded impressive sales, broadening the link with young consumers.
361° global endorser GONG Jun with his endorsed products
19361°Sales Overview
Global Sales Network
• The Group has 6,072 point-of sales across the world, in which 5,155 point-of-sales are in mainland China.
• Point-of sales in mainland China: In terms of city distribution, point-of sales in the 1st and 2nd-tier cities accounted
for 23.7%, and point-of sales in the 3rd-tier or lower cities accounted for 76.3%; in terms of channel types, malls
and department stores accounted for 28.9%, and street level stores accounted for 71.1%; in terms of store image
upgrades, the 8th generation or above stores accounted for 89.8%; the average area of point-of sales is about 113
sq.m.
23.7% 76.3%
City 1st and 2nd-tier cities 1,224
Distribution
3rd-tier or lower cities 3,931
28.9% 71.1%
5,155
Channel Mall + Department stores 1,491
Structure Street level stores 3,664
89.8% 10.2%
Store Below 8th generation stores 527
Image
8th generation or above stores 4,628
No. of point-of-sales
20361°Kids Overview
Follows the brand spirit of “One
Extra Degree of Passion” of the 361° core brand
With the brand statement “Love it, Kids!”, 361° Kids focuses on the market for
children’s and teenagers’ sporting goods
Committed to fulfilling sports apparel needs of “children and teenagers”
in various types of sporting and living scenarios
21Differential Advantages
Enhance differentiation-based competitive advantages, strengthened
the Group’s leading position in the kid’s wear industry
Professional Functionality
• Partnered with China’s strongest football clubs (youth training) including Shenhua, Evergrande, Guoan and Luneng, carrying
out cooperation in youth football;
• Attended Shanghai International Children Wear Expo, jointly launched the “Youth Sports Promotion Plan” with the
Gymnasiade.
Health Technology
• Launched innovative technologies such as “dryness” and “FUNFOAM” technology so as to meet the needs of youth sports
clothing for different occasions;
• Integrated the best resources of the industry and cooperated strategically with China State Shipbuilding Corporation in
upgrading the brand’s technological innovation using military grade “Zinc” anti-microorganism Technology
Trendy Elements
• Continuously launched high quality co-branded IP products with The Three-Body Problem, Minions and Captain Tsubasa,
etc., which are highly sought after by kids and parents;
• With the advent of space fever, 361° Kids cooperated with “China Aerospace • Space Imagination”, which represents the
power of China’s science and technology, featuring products with a sense of future, science and technology.
361° Kids professional football products Applied military grade “Zinc” anti-microorganism 361° Kids x Minions co-branded products
Technology to 361° Kids products
22Kids’ Sportswear Sales Overview
China Sales Network
• The Group has 1,745 point-of-sales for kids’ sportswear in China. In which: In terms of city distribution, point-of-
sales in 1st and 2nd-tier cities accounted for 29.2%, and point-of-sales in 3rd-tier or lower cities accounted for
70.8%; in terms of channel types, malls and department stores accounted for 41.4%, and street level stores
accounted for 58.6%; in terms of store types, standalone stores accounted for 77.8%, composite stores accounted
for 22.2%; 4th generation or above stores accounted for 26.0%, the average area of the point-of-sales is about 71
sq.m.
• During the period under review, revenue from kids’ sportswear business was RMB 498.2mn, accounting for 16.0%
of the group’s total revenue, representing a yoy increase of 24.0%. 29.2 %
70.8%
Western Northern City First and second-tier cities 510
Region 386 region 793 Distribution
Third-tier or lower cities 1,235
41.4 %
58.6 %
Eastern
region 278 Mall + Department stores 722
Channel
Structure Street level stores 1,023
1,745
22.2%
77.8%
Store Composite stores 388
Type
Southern Standalone stores 1,357
No. of point-of-sales region 288
23361°E-commerce
Captured new opportunities in the post-pandemic era to accelerate high-quality
growth in e-commerce
• In 1H 2021, revenue from e-commerce sales of web-exclusive products was RMB 487.8 mn, accounting for 15.7%
of the Group's total revenue, a yoy increase of 54.5%;
• Engaged 361° official website and renowned e-commerce platforms in China including Tmall Taobao and JD.com to
sell all products under the brand.
Integrated e-commerce resources to expedite brand upgrade online
• Adopted a user-centric approach and carried out digital transformation to speed up the brand upgrade online;
• Achieved precision product planning, increased product originality and established efficient sales and marketing
plans to enhance the operational efficiency of e-commerce in multiple dimensions;
• Increased target market penetration and created vertical communities to earn recognition from wider audience.
28.6％
Tmall Taobao
Channel JD.com
Structure
Official website and others
6.7％
64.7％
29.4％
Products exclusively for online
Commodity
Structure Assisting offline stores’ sales
70.6％
Aaron GORDON’s signature shoes AG1 series in various colors
were sold out in seconds after their online launch
24Brand
Building
GONG Jun
361º Global EndorserPremium Brand Resources
In 1H 2021, A&P expenses accounted for 8.0％ of the Group’s total
revenue
Large-scale Sports Events 20 Top-tier Athletes and Celebrities
• Major comprehensive sports events: as Spokespersons
The 19th Asian Games in Hangzhou 2022 • Basketball player: international basketball superstar Aaron
The 18th ISF Gymnasiade (School Summer Games) GORDON, famous Chinese professional basketball player
• Marathon: Xuzhou Marathon, Zaozhuang Marathon Kyranbek MAKAN
• Marathon runner: LI Zicheng, the Asia and China marathon
champion, and etc.
National & Professional Sports Teams • Track and field athlete: Ashton EATON, Decathlon Champion in
• National sports teams: China National Triathlon Team, the 2016 Rio Olympics, and etc.
China National Cycling Team, China National • Triathlete: Katie ZAFERES, 1st in the 2019 ITU World Triathlon
Women’s Water Polo Team Series, and etc.
• Swimmer: famous Chinese swimmer LI Bingjie
• Professional sports teams: TEAM M23, China • Boxer: XU Can, WBA featherweight world boxing champion
Professional Boxer Training and Agency Team • Celebrity: young actor GONG Jun
Aaron GORDON Kyranbek MAKAN Katie ZAFERES XU Can GUAN Siyang
26Premium IP Crossover
Make room for brand growth with premium IP resource integration
• Our mature crossover operation model has been widely recognized in the industry and won numerous awards;
• In-depth strategic cooperation with the China Cotton Industry Alliance (CCIA) to provide products with high-
quality “Chinese cotton” + “China-Chic trend” for consumers;
• Continuously launched various co-branded products such as The Three-Body Problem, Saint Seiya, Minions,
Captain Tsubasa, Gundam and Initial D. In the future, 361° will continue to cooperate with more high-quality IP
resources.
361° crossover products with The Three-Body Problem, Saint Seiya and Minions China-Chic products with Xinjiang characteristics
27Consumption Experience Upgrade
Renewed store image to elevate shopping experience
• Constantly renewed store image, upgrading to the latest 361° core brand 9th generation and 361° Kids 4th
generation image stores significantly improved customer experience;
• Enhanced channel structure, strengthened cooperation with malls and department stores, opened image stores,
improved efficiency of individual stores.
Explored new retail models to build a fully covered shopping network
• Launched WeChat mini program “361 Degrees You Yan You Du (有顏有度)” and dubbed “Thousands of Stores
with Thousands of Images (千店千面)” at WeChat Mall to boost sales growth;
• Integrating “customers, products and stores” to create vertical user communities and accumulate brand reputation;
• Steady membership growth and providing additional membership rights and activities effectively strengthened
brand loyalty.
361° 9th generation image store Kids 4th generation image store
28Industry
Outlook
XU Can
WBA featherweight
world boxing championFavourable Government Policies
“The National Fitness Plan (2021-2025)”
points out the domestic sports industry Action plan to further promote sports consumption
Implementation Plan for Further Optimizing Supply to
to reach RMB 5 trillion by 2025 Promote the Stable Consumption Growth and Facilitating
the Formation of a Strong Domestic Market
Opinions on Implementation of Healthy China Initiative
Healthy China Initiative, Outline of the Construction of a
Issuing agency Powerful Sports Country
Policy frequency Opinions on Supporting National Fitness and Sports-related
Policy content Consumption in Promoting High-quality Development of
Sports Industry
The Catalogue for the Guidance of Industrial Structure
Adjustment
Plan for Piloting Work on Stimulating Sports Consumption
Opinions on Strengthening the Construction of National
Fitness Facilities and Developing Mass Sports
The National Fitness Plan (2021-2025)
Document 46
Several Opinions of the State Council
on Accelerating the Development of
National Fitness Regulations Sports Industry and Promoting Sports
Consumption
Guiding Opinions of the General Office
of the State Council on Accelerating the Opinions on the Acceleration of Fitness
Development of the Sports Industry and Leisure Industry Development
The 13th Five-Year Plan, National
The Central Committee of the Communist Party of Fitness Program
China and the State Council on Further Strengthening
and Improving Sports Work in the New Period Healthy China 2030 Plan
1995-2010 Sports Industry China’s National Soccer Reform Plan
Development Outline
Opinions on the Acceleration of
Winter Sports Development
National Fitness Strongly promote Sports policies
Explore Layout Trend sports continue
construction to be refined
2000 2008 2014 2017 till now
Beijing Olympics Policy Reinforcement
30Consumption Growth Momentum
Overall sportswear market sales in Spending Per Capita on Sports Goods
various countries 2015-2020 CAGR in 2020 (USD)
307.3
13.5%
138.3
124.3
109.2
3.0%
1.4%
0.9%
89
0.7%
-2.8%
32.4
Mainland Mainland
中 国 內 地 Japan
日 本 Singapore
新加坡 韩 国 美USA
国 英 国
中國內地 日 本 Singapore
Japan 新加坡 韓國
Korea 美國
USA 英
UK國 Korea UK
China China
The rapid growth of China’s sportswear in the past 10 In the next 10 years, the rise of new consumption
years mainly benefited from: trends will promote the development of China’s
sportswear:
• The Chinese government's robust support for the sports • Consumption upgrade brings more opportunities for
industry sports brands
• Substantial increase in per capita disposable income of • Segmentation and product technological innovation raise
Chinese consumers product repurchase rates
• Public health consciousness on the rise • The rise of social media helps brands effectively capture
• Continuous increase in sports participation of the public young consumers
• Athleisure and " China-Chic" continue to be sought after
Sources: Euromonitor International, SPDB International by young people
31Favourable Industry Development
The sports industry has been releasing its potential at an accelerated
rate, advancing to the stage of higher-quality development
2015-2025 Market Size of China’s Sportswear Industry
(RMB bn） Major sports events such as the Winter Olympics
and Asian Games will be held in China, together
with China’s effective epidemic prevention
603
measures, passion for sports will be further evoked;
550
496 The sports industry development is gearing
towards diversification and innovation, crossover
440 cooperation and other business models emerge
as the new growth drivers of market;
384
320 315 The epidemic has accelerated changes in
consumption patterns, “stay-at-home economy”
269 has accelerated the integration of online and
222 offline retail channels, unlocking the market’s
190 potential for development;
167
The size of China’s kids’ wear market continues to
expand rapidly. The “Third-child policy” and
“Improve the eugenic quality of population” imply a
2015A 2016A 2017A 2018A 2019A 2020A 2021E 2022E 2023E 2024E 2025E
huge market potential in the future.
Source: Euromonitor International
*The forecast as published in Feb 2021, has already included the impact of the
COVID-19 epidemic
32Appendix
361-FENGYI III
running shoesBrand Positioning
High-end Market
Casual Professional
Fashion Sports
Mass Market
34R&D
In 1H 2021, R&D expenses accounted for 3.6% of the Group’s total
revenue. The Group obtained approval for 387 patents as of 30 June 2021,
gaining strong competitive edge in R&D.
361° “Flying Flame”
shoes
IAAF certified carbon
running shoes
361° “Lightspeed” suit
German Red Dot Design
Award 2021
361-FIERCE
Rated “Best Deal” by Test 4
Outside, a professional review
website in France
361-STRATA 4
Rated as One of the 25 Top
Picks for Running Shoes
in 2021 by the United States’
“Runner’s World”
35Q&A Kyranbek MAKAN
Well-known Chinese
professional basketball playerYou can also read
