Corporate Presentation 17 September 2008
Presentation Outline Business Overview FY 2008 Financial Review Outlook & Future Plans
Stock Information Stock Codes TWCH. SI, TWIN SP Share Price S$0. 140 (Closing on 16/09/08) Number of Issued Shares 374, 062, 000 Market Capitalization S$52. 4 million FY 08 PE 4. 5 times Research coverage CIMB (BUY, TP $0. 40) Westcomb (BUY, TP$0. 39) Substantial Shareholders Founder 58. 3% UOB Asset Management 10. 9% Free float 30. 8%
Time Watch – A leading PRC watch retailer ¡ Extensive retail presence and experience l Started first PRC retail store in 1988 ¡ 2 house brands “Tian Wang” & “Balco” and PRC exclusive distributor of Italian brand Police ¡ 4 key business segments l Manufacturing and Retailing l OEM Manufacturing l Watch movement trading l Leasing of Shopping Mall
Strong Brand Equity – China’s No. 1 Watch Brand Multi-brand strategy with two house brands; “Tian Wang” and “Balco” as well as exclusive PRC distributorship of Italian brand “Police” “Tian Wang” brand top among ALL watch brands in China in terms of sales volume “Balco” brand of Swiss watches among topselling foreign watch brands in China* Renowned actor Francis Ng is Balco’s spokesperson *Source: China National Commercial Information Centre, an agency governed by the Commercial Department of the PRC Government.
Market Presence in PRC 764 outlets in over 35 cities Stores present in all colored regions except Qinghai & Tibet
Presentation Outline Business Overview FY 2008 Financial Review Outlook & Future Plans
Performance Highlights Satisfactory top and bottom-line growth Gross margin expansion on higher contributions from Retail segment Shift of focus to higher margin business segments Expanded point of sales by 149 stores Initial contributions from new Police stores and HK flagship store
Income Statement - Highlights FY: Financial year ended 30 June
Balance Sheet -- Highlights
Cash Flow Statement -- Highlights
Sales by Business Segment Focus increasingly on high margin retail and OEM segments since 2007 Retail and OEM contribute 62% of sales in FY 08 versus 48% previously Retail store in Tshimshatsui, HK contributes HK$47. 9 m, 16% of total retail sales despite setting up only in late Jan 2008 Gross margin for the Group surged from 21. 2% in FY 2007 to 30. 5% in FY 2008 due to the change in business mix.
Segment Results Retail contributes 64% of Group’s core profits Watch movement segment has strategic importance to support retail and OEM segments Initial contributions from leasing of Zijingshan Department Store at Zhengzhou City, Henan Province. Profits from core operations up a strong 19%
. Breakdown of Stores Total of 149 additional stores opened for Tian Wang, Balco and Police Opened 15 stores for Italian brand Police to kickstart exclusive PRC distributorship
Tian Wang & Balco’s FY 08 sales performance Top 10 best-selling Tian Wang models in FY 08 Tian Wang Lowest Price: 150 Highest Price: 23, 800 ASP: RMB 832 Top 10 best-selling Balco models in FY 08 Balco Lowest Price: 1, 620 Highest Price: 29, 800 ASP: RMB 3, 050
. Outlets in PRC
Improving PRC Performance HK$’ 000 Average Sales Per Store 15. 2%
Presentation Outline Business Overview FY 2008 Financial Review Outlook & Future Plans
Growing Size of PRC Middle Class & Watch Market ¡ Size of China’s middle class (earning between US$6, 000 -US$25, 000 per year) to increase from 5% of urban households in 2005 to 43% in 2015 and 66% in 2025. ¡ Size of the affluent class (earning more than US$25, 000 per year) is expected to comprise 2. 3% of Chinese urban households by 2025. Source: Mc. Kinsey Global Institute ¡ Rapidly emerging middle class, along with rising discretionary spending power, to be the key fundamental driver of watch retail spending. ¡ PRC watch market size valued at RMB 7. 1 billion in 2008, reaching RMB 8. 3 billion by 2010 Source: Euromonitor
Dual Expansion Plans Expansion of Retail Point of Sales ¡ ¡ ¡ 149 point of sale (POS) added in FY 08 Continue to expand retail network in FY 09 Increase same store sales Expansion of Retail Formats ¡ ¡ To obtain additional sole distributorships in the PRC Retailing of internationally-renowned brands such as “POLICE” to target younger, trendier yuppies
On Track For Further Growth HK$’m CAG R . 4% f 33 o *Adjusted for HK$83 m in non-cash goodwill write off in FY 06, revaluation gain on property of HK$28 m in FY 2007 and HK$4. 3 m in FY 2008. Analysts’ consensus estimates used for FY 09 and FY 10
Summary Owns “Tian Wang”, the largest PRC watch brand “Balco” and “Police” brands to supplement growth Ability to pump new brands into existing network to further fortify growth opportunity Vertically integrated model from manufacturer, trader and retailer to enhance margins Trading substantially below peers, An undervalued high-growth stock
THANK YOU www. timewatch. com. sg
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