MC Group Public Company Limited · 12/7/2018 · online website Topwear 2008 1st Mc Shop 2012...

transcript

MC Group Public Company Limited

A leading multi-brand apparel & lifestyle products retailer

Q1 2019 Results Summary

7 December 2018

DISCLAIMER

The information contained in our presentation is intended solely for your personal

reference only. In addition, such information contains projections and forward-looking

statements that reflect our current views with respect to future events and financial

performance.

These views are based on assumptions subject to various risks and uncertainties. No

assurance is given that future events will occur, that projections will be achieved, or

that the our assumptions are correct. Actual results may differ materially from those

projected.

AGENDA

01CompanyOverview

02Business

Update

03FinancialResult

042019 Guidance

C O M P AN Y

O V E R V I E W

Opened

mcmc outlet

stores in PTT gas stations

Opened the first

Free Standing

Launched

online website

Topwear

1st Mc Shop

Expanded

Myanmar

& Laos

Launched

“Mc ” brand

Expanded

Portfolio

Women's’

Jeans & Street wear

Extended Brand

Portfolio

Acquired 51% in

Expanded to

Lifestyle Business

KidswearPremium

Jeanswear

Alliance with

Listed on the SET

Expanded

Brand Portfolio

Expanded

Brand Portfolio

Active wear“U-P”

Skin care“M&C”

Expanded to

Middle East

Key milestones

Revamped

e-commerce

platform

Started CRM

& membership

program

Started as manufacturingand selling through

traditional trade

Onto managing brands and distribution channels

Emerged as a leader in denim market in Thailand

Moving forward to become a leading apparel

and lifestyle products retailer

FY2019

Integrated

warehouse

management

solution for E-

commerce

Expanded

Brand Portfolio

MC Group’s Structure

MC Group PLC(“MC”)

P.K. Garment

(Import-Export)

Co., Ltd.

(“PKG”)

Jeanious

Co., Ltd.

Balance

Co., Ltd.

Winnerman

Co., Ltd.

(“WNM”)

MC Inter

Limited

(“MCI”)

Mc Jeans

Manufacturing

Co., Ltd.

(“MJM”)

Limited

(“WOWME”)

Mcmillion

(Thailand)

Co., Ltd.

Aromatique

Active

Co., Ltd.

Time Deco

Corporation

Co., Ltd.

Top T 2015

Co., Ltd

Production and Brand management Retail platform Operation

• Supplier of

innovative top

wear technology

under the brand

“McT”

• Importer,

retailer and

distributor of

famous int’l

watch brands

• Develop

skincare

products

B U S I N E S S

U P D A T E

Overview

Poise to become a

leading multi-brand apparel

and lifestyle products retailer

Retail platform Brand

Mc Store

Integrated warehouse solution for e-commerce

Integrated retail business is the way to go…

8Brand

Market size

THB 30,000 MN(2017)

The trend towards urban streetwear and athleisure continues

Sportswear and equipment market in Thailand

Historical Growth

in 2014-2016

▪ Thai consumers are becoming increasingly interested in exercising and have sporty and active lifestyles.

▪ Greater penetration of gyms, fitness and health clubs will be witnessed in not only Bangkok and urban cities

but also other provinces nationwide.

▪ Global brands maintain leading positions in sportswear due to strong brand recognition.

Source: Prachachat Online 2017

K Research 2016

Activewear – Market size and trend

Value for money market

Middle market Upper market

Market share

20%Market share

50%Market share

Cheap importFake ,Non-branded

Thai-branded

SMEs with functional but not fashion

Global brand

Thai-fashioned brand

> THB 1,000Price

THB 300 - 1,000Price

< THB 300

Low High

Middle marketHigh quality. Sport-fashion, affordable price

Activewear – Trend and brand DNA

• Modern look• Contemporary taste• Fun & lively

• Adaptation• Less but best• Multi-function

Street look Sportswear

The trend towards urban streetwear and athleisure continues

C O N C E P T

D E S I G N

Energy

Minimal

Remark: Warrix is a Thai-owned sportswear company and sole official licensee for production of the Thai international football jersey

Activewear – 1st collection

• Famous brand with wide recognition from Thai football fans

• Brand under MC group which stands for an in-depth understanding to customers’

needs and lifestyle with presence more than 40 years…

Product item: Vest, T-shirt, Shorts, Pants, Jogger, Sport bra, Hoodie, Light Jacket

Grand opening : U-P

23 November 2018 at Super sports, Central World

Grand opening : U-P

23 November 2018 at Super sports, Central World

Marketing communication

Events and activitiesVideo clips and brand awareness Social media

Online Channel: Tuesanit(FB, Youtube, twitter, online TV)

▪ Run for AED (Automated external

Defibrillator) on 9 December 2018

for Thai Red Cross Society

Celebrity endorsement

U-P Brand Ambassador Introduction

and VDO launch on FB

Go to market strategy

U-P Activewear

upactivelife.commcshop.com

upacivewear

@upacivewear

Sale booth

@ Tue market, Parc Paragon

Y19(F) Y20(F) Y21(F)

U-P sale revenue (projection)

Sale and products

(THB millions)

U-P sale revenue (Projection)

Product item: Vest, T-shirt, Shorts, Pants, Jogger, Sport bra, Hoodie, Light Jacket (100-150 SKUs/year)

Price range: 600 - 900 THB/item

Distribution Channel

Distribution channels

Mc Jeans / Warrix

UPACTIVELIFE.COM

E-commerce

Pop-up /Own store

Specialty store

Distribution channel

U-P flagship store

@ Stadium one

U-P flagship store@ Stadium one

18Retail platform

Affordability

Convenience

Quality

Variety of products and

brands, suitable with all ages and genders

End of season 50% - 70% discount of MC’s

products and others lifestyle products at affordable price

DNALocated close to

communities with parking space

Community Store

mcmc Outlet

1. Gas station

3. Commercial building in local communities

2. Big box retailer

Target location

mcmc store presence

NORTHEAST

CENTRAL

1 POS #Points of sales

24(end of Dec 18)

Forecasted #

Points of Sales: 38 in FY19

Marketing

Awareness through • local media• banners

• etc.

1 POS 1 POS

Go to market strategy…

mcmc outlet, Global house Wieng Kum Kam, Chiangmai

mcmc outlet, Global house Phang, Chiangmai

Go to market strategy…

mcmc Shop House Muang, Roi Et

Upcoming in December!

1. mcmc outlet, Global house Maehongsorn

2. mcmc outlet, Global house Buriram

mcmc outlet, Porto Go Ayutthaya

Living your life

Retail platform

• mcshopthailand• mcjeans• mcladyjeans• Timedecowatch• U-P Activewear

• mcshop_official• mcjeans_official• Timedecowatchclub• upacctivewear

• @mcshop.com• @mc_jeans• @upactivewear

• www.mcshop.com• www.mcjeans.com• www.upactivelife.com

Products offering >5,000 SKUs (in Sep)

Online sales growth +400% YoY

Website traffic +56%YoY

Ship to shop service*

10% contributed to all

shipments in Jul-Nov *started on late-June

E-market place

▪ Apparel

▪ Accessories

▪ Activewear & Footwear

▪ Health and beauty

▪ Cosmetic and skincare

▪ Watches

▪ Other

Strengthen products portfolio and enhance customer reach for better online shopping experience

Apparel

Health

beauty

Accessories

Activewear

and Footwear

Product mix

Strengthen products portfolio and enhance customer reach for better online shopping experience

Newness

▪ Acquire new customers

▪ Drive higher traffic to offline stores by more featured in-store services

▪ Awareness through billboard and online marketing channel

▪ Deliver exceptional omnichannel retail experience

▪ Exclusive products and promotion

▪ Enhancing content review by workshop, etc.

Digitalised lifestyle promotes greater online penetration

Integrated warehouse solution for e-commerce

Retail platform

McMillion – Integrated warehouse solution

A B O U TU S

Distribution & fulfillment

Warehousing

Shipping & forwarding agents

Application

Custom clearance

Labeling & repackaging

Mcmillion provides integrated warehouse solution for

e-commerce business and others. The company

operates by high experienced team with track record

more than 10 years including domestic and

international

The services provided including storage service,

picking & packing service, and logistic to final

consumers

In 2017, the company is very honored to be the warehouse fulfillment center in delivering the set top box-digital TV to eligible household throughout Thailand according to broadcast digital television programs from the National Broadcasting and Telecommunications Commission (NBTC)

In October 2018, MC GROUP set to expand into order fulfillment business with investment in Mcmillion with 45% share holding by subsidiary

Other services

McMillion – Integrated warehouse solution

McMillion’s warehouse at Prawet district

31Brand

Premium and

standard jeans

brands

13,000 MB

• Top leader in premium jeanswear and 43-year presence in Thailand

• Overcome other international and local competitors with quality focus unique design that fits

local customers’ shapes and bodies, extensive distribution network and trusted brands.

#myMcmybestlook

McJeans

Bottom

70%2013

Bottom

39% 2019

Merchandise Mix Gearing Towards Top-WearMore product varieties were added particularly top-wears with good and innovative fabric quality as well as special screen techniques.

Unit: pieces

McJeans

Thapoh, Phitsanulok

Phanthong, Chonburi

Out-of-home media

Digitalmedia

36Brand

Recent developments

Activities for smart watch introduction

Watch business

Fossil Watch Concept StoreMega Bangna (Sep)

Counter @Siam Takashimaya (Nov)

Mono-brand StoresTerminal 21, Pattaya (Oct)

TDC StoreTerminal 21, Pattaya (Oct)

Products offering > 1,000+ SKUs

Flash deal

Shop in shop

Activities for smart watch introduction

Watch business

Engagement and Digital marketing communication

Watch business

Celebrity endorsement

40Brand

Jan-Mar Apr-Jun Jul-Sep Oct-Dec

Y2017 Y2018

• Products are developed from natural extracts and

pure essential oils exclusive from Charabot, a

perfumery leader in Grasse, France

• Formulated without color, mineral oil, parabens,

silicone and animal testing

• Our products are designed to make customers

feel good nourishing their bodies and minds.

3 Collections with full line

Body Lotion, Shower gel, Soap bar, Talcum Powder, Eau de Parfum, Diffuser

(THB millions)

Products Engagement

M&C sale revenue

To be launched in 3Q19…

New Collections Hand creamFacial Sun Protection

Skincare business

• Counters in Department store

• Mc free-standing shops

• Pop-up stores / Beauty exhibitions

• TV Shopping @GCJ O Shopping

• Online channels and social media

• Shop in shop (Specialty stores) – NEW!

Distribution channel

Pop-up store at Central Bangyai

Counter at Central Festival Hadyai

Mc store

Retail platform

307 Shops

1. Free Standing Shops

569 PoS

2. Modern Trade

6 Units

3. Mobile Unit

14 PoS

4. International Markets

Located mainly in

commercial centers or

in the plaza sections of department stores as

well as hypermarket and

PTT gas station

New sales channel that

helps expand the reach

to customers as well as

build brand recognition

Points of sales or sales

counters in department

stores (both chain and local non-chain) as well

as hypermarket

(Songkla, Pattani)

(Lampang)

Currently, expanded

through distributors with

presence in CLMV and

Iran. 896PoS

Q1 FY19 (Jul-Sep)

Q1 FY19 (Jul - Sep)Geographical Analysis of Outlets

Q1 FY19 (Jul – Sep)Geographical Analysis of Sales

Points of Sales

Greater Bangkok

Upcountry 63%

International 1%

Greater Bangkok

Upcountry 71%

International 1%

0 200 400 600 800 1,000

Greater Bangkok Upcountry International

Extensive network : Offline

89 108 107 102 93 92

730758 790 792 801 804

Y14 Y15 Y16 Y17 Y18 1QY19

Mc and mcmc

Timedeco

Number of outlets : Omni-channel

BrandFree-

Standing

Modern

Mobile

Inter-

nationalTotal

(Open)

273 493 6 14 786

16 76 92 +3

Total 307 569 6 14 896

*Projection (Oct 18 - Jul 19)

Points of Sale

Online channels

+ 3 Mc, -1 TimedecoRemark: Mc POS (Opened 7 and closed 4 (from consolidated 2 POS and

lease-ended 2 POS), TDC POS (Opened 2 mono-brand store and closed 3

small counters)

End of 1Q19 (Jul-Sep)

# Points of sales

Offline channels : numbers adjusted to align with strategy

46Retail platform

Membership means more…

Members can enjoy special deals & offers all year.

Sign up today at https://mcclub.mcshop.com/user FREE!

Leverage large customer base using 1st ever CRM & membership program under “MC Club”

MC Club’s members : # 600,000 (end of Nov18)

Mobile App (To be launched soon!)

Newness: Call Center

(Launched in Nov 18)

Mc Club : Membership program

Launched products via social media & influencer

Customer engagement by lifestyle

Launched products via social media & influencer

#myMcmybestlookBiker communities

F I N A N C I A L R E S U L TQ 1 / 2 0 1 9 ( J u l – S e p )

Results headlines

NOTE: MC Group Public Company Limited and its subsidiaries (“MC” or “the Company”) changed in accounting period starting

from 1st January to 31st December to the period from 1st July to 30th June, starting from the period ended 30th June, 2018 onward.During the period, the Federation of Accounting Professions announced a new standard on international financial

reporting 15: Revenue from contracts with customers (IFRS 15) which is effective for annual reporting periods beginning on or after 1January 2019, with earlier application permitted. The Company and its subsidiaries agreed to adopt the new IFRS 15 Revenue prior tothe effective date, resulting in the adjustment of financial statement in earlier period for comparison and impact toward result inadoption of such new standard financial reporting.

(THB millions) Q1 FY18 (Adjusted) Q1 FY19 % YoY

Sales Revenue 890 815 -8%

Total Revenue 898 822 -9%

Gross Profit 474 488 +3%

Selling and general expenses (395) (382) -3%

EBITDA 128 136 +7%

Net Profit 85 94 +10%

Gross Profit Margin 53.2% 59.8%

SG&A to Sales 44.4% 46.9%

Net Profit Margin 9.5% 11.4%

EPS (THB) 0.11 0.12

(THB millions)

Annual Sales Revenue Quarterly Sales Revenue

Sales revenue by channel

1Q18(Jul-Sep, Adjusted) 1Q19 (Jul-Sep)

Others = E-Commerce, International, Mobile, Outside promotion, Factory sales 56

Sales Revenue

-8.4% YoY

NOTE: Due to changing fiscal year end from December

to June and starting from period ended 30th June 2018 onward. Free standing

Modern

Others

4,4424,228

FY14 FY15 FY16 FY17 FY18 (6M)

NOTE: Adjusted quarterly sale revenue according to TFRS for indication

60%34%

954890

1,1951,122

889815

1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19

Jul-Sep Oct-Dec Jan-Mar Apr-Jun Jul-Sep Oct-Dec Jan-Mar Apr-Jun Jul-Sep

Modern trade (1)

’000 THB

Free standing shop

Remark: (1) Figures are calculated based on modern trade sales revenue, before GP. Excluded sales from international markets andother source (i.e., exhibition etc.) 57

Distribution channels performance

8,338 9,158 8,742

8,200 7,678

12,145

8,152 7,420

10,094

7,404 6,557

11,000

13,000

15,000

FY15 FY16 FY17 FY18(6M) 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19

Average sales per SQM / month NOTE: Adjusted quarterly sale revenue for comparison for new accounting period

365 348

265 246 273

403342

209 224268 294

200 187

Average sales per PoS / month NOTE: Adjusted quarterly sale revenue for comparison for new accounting period

TSS & SSSG

Quarterly TSS &SSSG (YoY)

Remark: Hypermarkets are not included in the calculation in SSSG.58

Total system growth (TSS) and Same-store sales growth (SSSG)

16% 17%13% 14%

(5%)(8%)

(2%)(8%)

(7%)(12%)

FY13 FY14 FY15 FY16 FY17 FY18 (6M)

Note: FY13, 14, 15, 16 and 17 started from Jan-Dec, FY18, started from Jan-Jun (6-month period due to changing accounting period).

9% 9%7%

(9%)(6%) (8%)

(17%)(12%) (11%)

1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19

Jul-Sep16 Oct-Dec16 Jan-Mar17 Apr-Jun17 Jul-Sep17 Oct-Dec17 Jan-Mar18 Apr-Jun18 Jul-Sep18

Total system growth

Same-store sales growth

Note: Adjusted quarterly sale revenue according to accounting period for comparison while 1Q19 calculation according to new TFRS and compared to adjusted 1Q18

(THB millions)

Gross profit margin

+2.9% YoY

NOTE: Adjusted quarterly gross profit according to TFRS for indication

2,1862,430

56.1% 54.7%52.7%

FY15 FY16 FY17 FY18 (6M)

520855

670503 474

649 643 516 488

56.7% 58.5%

52.9% 52.7% 53.2% 54.3%57.3% 58.0% 59.8%

1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19

Gross Profit Gross Profit Margin

SG&A breakdown% SG&A expense to sales

SG&A to sales

-3.3% YoY

NOTE: Adjusted quarterly SG&A expense to sales according to TFRS for indication

Personnel

Advertisin

Promotion

Depreciati

on and

Amortizati

Others

402 498 435 407 395 446 409 394 382

34% 34%

43%44%

37% 36%

1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19

SG&A % SG&A to sales

NOTE: Adjusted quarterly EBITDA according to TFRS for indication

9281,098

23.6% 24.5%

FY15 FY16 FY17 FY18 (6M)

(THB millions)

6.7% YoY

146 128

268 278165 136

15.2%14.3%

18.4%16.6%

1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19

EBITDA EBITDA Margin

NOTE: Adjusted quarterly NPAT according to TFRS for indication

(THB millions)

732843

18.5% 18.8%

-10.0%

FY15 FY16 FY17 FY18 (6M)

317232

90 85198 221

125 94

9.3% 9.5%

1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19

Net Profit Net Profit Margin

Consolidated balance sheet Net debt to equity ratio

Remained strong with net cash position

(THB millions)FY2018

(Adjusted)

Q1 FY2019

(TFRS)

Cash & Short term investments 1,011 1,181

Accounts Receivable 414 372

Inventory 2,179 2,156

Other Assets 1,266 1,262

Total Assets 4,870 4,970

Accounts Payable 210 233

Interest-bearing Liabilities 16 0

Other Liabilities 446 445

Total Liabilities 671 678

Shareholders' Equity 4,199 4,293

(0.5x) (0.4x) (0.2x) (0.3x) (0.2x) (0.2x) (0.3x)

(0.6x)

(0.4x)

(0.2x)

(0.0x)

FY13 FY14 FY15 FY16 FY17 FY18

Q1/FY19

Return on capital and inventory daysROA ROE

Finished Good Inventory Days Cash Cycle

(THB millions) (THB millions)

(Months) (Months)

*Annualized*Annualized

4,724 5,196 5,355 5,091 5,030 5,082 5,219 4,827 4,970

16%18%

12%11% 12%

18%14%

1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19*

Total Assets ROA

3,967 4,286 4,521 4,214 3,952 4,168 4,406 4,280 4,293

21%22%

16%14% 15%

23% 17% 15%

1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19*

Total Equity ROE

11.9 11.9 12.1

14.2 13.2

9.6 10.7

12.0 12.1 13.3

14.2 15.0

Cash cycle (months)

12.6 12.1 12.5

14.4 13.3

9.1 10.8

12.3 12.5 13.6

14.4 15.1

FG inventory days (months)

NOTE: Adjusted quarterly sale revenue for comparison for new accounting period

Dividend policy is not less than 50% of net profit

Stock Information

Shareholder Structure

Dividend Information

Share capital information and dividend payment

Local Institutional

Retail

18%Major shareholder

Foreign Institutional

0.730.80 0.75

0.900.75

82%85%

98%92%

FY13 FY14 FY15 FY16 FY17 FY18 (6M)

DPS (THB) Payout ratio

Bloomberg/ Reuters : MC TB/ MC.BK

Share price (December 6, 2018) : THB 11.40

52 week range : THB 17.20/ THB 11.20

No. of paid up shares : 800 m

Par value : THB 0.50

Market capitalization : THB 9,120 m

Avg. daily turnover (12 mths) : THB 13.4 m

Free float : 37.7%

Foreign ownership/ Limit : 19.0% /49.0%

Major shareholder : Ms. Sunee Seripau (45.8%)

2 0 1 9 G U I D A N C E

2019 Guidance

Sales revenue contribution by product type

Sales growth

Gross profit margin

Dividend payout

: 57 %

: Not less than 50 %

CAPEX : THB 80-100 mn

Y2018 (Jan-Jun)

Y2021F

Thank you

Investor Relations

MC GROUP Public Company Limited

ir@mcgroupnet.com

Tel: +662 117-9999 Ext 1210

www.mcgroupnet.com

Line ID: @mc_jeanswww.mcshop.com

• mcshopthailand• mcjeans• mcladyjeans• Timedecowatch• AromatiqueActive• U-P Activewear

• www.mcshop.com• www.mcjeans.com• www.upactivelife.com

• mcshop_official• mcjeans_official• Timedecowatchclub• upactivewear

• @mcshop.com• @mc_jeans• @upactivewear

MC Group Public Company Limited · 12/7/2018 · online website Topwear 2008 1st Mc Shop 2012...

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