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WW Holding (8442 TT)Investor Presentation
Dec 2019
• The information contained in this confidential document ("Presentation") has been prepared by WW Holding (the "Company"). It has not been fullyverified and is subject to material updating, revision and further amendment.
• While the information contained herein has been prepared in good faith, neither the Company nor any of its shareholders, directors, officers,agents, employees or advisers gives, has given or has authority to give, any representations or warranties (express or implied) as to, or in relationto, the accuracy, reliability or completeness of the information in this Presentation, or any revision or supplement thereof, or of any other written ororal information made or to be made available to any interested party or its advisers (all such information being referred to as "Information") andliability therefore is expressly disclaimed. Accordingly, neither the Company nor any of its shareholders, directors, officers, agents, employees oradvisers takes any responsibility for, or will accept any liability whether direct or indirect, express or implied, contractual, tortious, statutory orotherwise, in respect of, the accuracy or completeness or injury of the Information or for any of the opinions contained herein or for any errors,omissions or misstatements or for any loss, howsoever arising, from the use of this Presentation or the information.
• Neither the issue of this Presentation nor any part of its contents is to be taken as any form of commitment on the part of the Company to proceedwith any transaction and the right is reserved by the Company to terminate any discussions or negotiations with any prospective investors. In nocircumstances will the Company be responsible for any costs, losses or expenses incurred in connection with any appraisal or investigation of theCompany. In furnishing this Presentation, the Company does not undertake or agree to any obligation to provide the recipient with access to anyadditional information or to update this Presentation or to correct any inaccuracies in, or omissions from, this Presentation which may becomeapparent.
• This Presentation should not be considered as the giving of investment advice by the Company or any of its shareholders, directors, officers,agents, employees or advisers. Each party to whom this Presentation is made available must make its own independent assessment of theCompany after making such investigations and taking such advice as may be deemed necessary. In particular, any estimates or projections oropinions contained herein necessarily involve significant elements of subjective judgment, analysis and assumptions and each recipient shouldsatisfy itself in relation to such matters.
• This Presentation includes certain statements that may be deemed “forward-looking statements”. All statements in this discussion, other thanstatements of historical facts, that address future activities and events or developments that the Company expects, are forward-lookingstatements. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonableassumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those inthe forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements includemarket prices, continued availability of capital and financing, general economic, market or business conditions and other unforeseen events.Prospective Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developmentsmay differ materially from those projected in forward-looking statements.
2
Disclaimer
2016 2017 2018 9M19
31% 27% 21% 25%
25% 30%26% 21%
20% 22%18% 19%
14% 11%11% 12%
9% 10%9% 5%
0% 1%15% 18%
Non-leather Bags Leather Bags
Sports Protectives Sport Gloves
Sport Accessories Luggage & Suitcases
Who we are and why invest in us?
3
We are a global leading sports protectives & accessoriesand handbags & luggage producer focusing on ODM forglobal sports and fashion & lifestyle brands.
Our key strengths lie in our strong R&D capability,particularly in fulfilling and customizing according to ourcustomers’ needs and expectations and overcomingbarriers to commercialization and mass production.
As a result, we are able to develop a diversified customerbase but at the same time, achieves a prime vendorposition. Based on our estimates, we supplied up to 70%and 80% of Nike’s sports protective products and gloves,respectively. We also supply up to 40% of TUMI’s bagsand luggage products.
We see huge growth opportunities globally in sportsaccessories and fashion & lifestyle products, thanks togrowing popularity of sports/outdoor activities andaffordable luxury.
We will continue to seek growth by moving/expandingour production facilities to Southeast Asia and broadenour product offerings to better meet the needs of ourexisting and potential new customers.
Our topline and bottomline have been negativelyimpacted by our production migration in the past twoyears, however, as we are completing our migration, wehave already started to deliver strong topline and marginimprovement.
WW Holding consolidated sales breakdown
WWHoldingModel
SportsProtective Gear & Accessories
PurseHandbags & Luggage
Company Background
4
Company Milestones
5
Foundation & Structuring1998-2006
Corporate Expansion2006-2017
Rationalization of Production2015 - 2018
1998 - Formerly Honour RichLimited in Dongguan, WilsonGroup Holdings Limited has itsorigin in Dongguan ofGuangdong Province, China,and has been engaged in theproduction of high-endboutique bags since 1998.
2003 – Nike onboarded 2004 - Established Dongguan
Wellpower Sporting Goods,mainly for the production ofsports protective gear andaccessories.
2006 - Established a newproduction site in Huaian,Jiangsu Province.
2006 – Kipling, Tumi,Decathlon on boarded
2008-09 - Under Armour andJR286 onboarded
2011-13 – Nike: Best StableSupplier Award, BestInnovative Product Award,Best Supplier Award.
2013-15 – JR286: BestProduct Quality Award, BestSupplier Award.
2014 – Longchamponboarded
2014 – Renamed thecompany to WW Holding Inc.
2014 – Merged with WilsonGroup Holdings Limited.
2016 – Armani and HugoBoss onboarded.
2016 – IPO in Taiwan withticker 8442 TT.
2016 - Established WilsonLeather (Thailand) Co.
2016 - Established WilsonLeather (Cambodia) Co.
2016-17 – Graduallyexpanded more of ourproduction from China toSoutheast Asia.
2017 - Established GlobalWorth Investment Holdingand Global Vibrant TradingLimited as the holding armfor our luggage business.
2017 – Acquired TWTManufacturing Co., Ltd inThailand – a major supplierto Tumi bags and luggage.
Consolidate Leadership Position2018 - Beyond
Consolidate leadership
position
Our Products
6
Non-leather boutique bags Luggage & suitcasesLeather boutique bags
Sports protectives Sports accessoriesSports gloves
Our Production Sites & Company Structure
7
• Sports goods production• Production line: 13• Workers: 670
• Handbags and backpacks• Production line: 22• Workers: 1,196
• R&D center• Boutique leather bags and
Sports goods production• Production line: 52• Workers: 3,488
• Boutique bags production• Production line: 28• Workers: 1,962
• Luggage production• Production line: 13• Workers: 1,352
Xingguo, JiangxiHuian, Jiangsu
Taiwan
Dongguan, Guangdong
Thailand
Phnom Penh, Cambodia
• Headquarter• Financial and R&D center
8,778 Employees128 Production lines2 Business segments1 Common goal
*As of 3Q19 *All companies are 100% owned
WW Holding Inc.
GLOBAL WORTH INVESTMENT HOLDING
LTD.
TWT Manufacturing Co.
Ltd.
GLOBAL VIBRANT TRADING LIMITED
WILSON GROUP HOLDINGS
LIMITED(SAMOA)
WILSON GROUP HOLDINGS
LIMITED
Hong Sheng Leather
(Dongguan)
Guangdong AnGaea
Wilson Leather (Cambodia)
WILSON HOLDINGS (HK)
LIMITED
Wilson
(Jiang Su)
NICE-BAG (Huai’an)
NICE-BAG
(Jiang Su)
WELLPOWER COMMERCE
HOLDING CO., LTD.
Wellpower(Dongguan)
Wellpower(jiangxi)
Our Primary Customers
8
Our Competitive Strengths
9
Strong R&D Capability Broadest SKUs in Our Categories
Diversified Customer Base with Prime Vendor Position
Regional Deployment of Production Bases
Our Core Strengths
Our Competitive Strengths
10
Strong emphasis on research and design Design is the heart and soul of our business We have a team of 308 dedicated designers and
R&D personnel who develop the most functionaland fashionable products for our customers.
In many cases, we generate product design ideasfor our customers.
For example, Time Magazine ranked NIKE’sMuslim sports Hijab as one of the top25 “BestInventions” of 2017, which was designed andmanufactured by us.
A one-stop shopping for our customers We cover up to 90% of all kinds of bags and
luggage SKUs for our customers to choose from. The same goes to our sports protectives and accessories business. In total, we cover up to 22k SKUs.
We have a firewall between showrooms foreach customer and will never sell any of our customers’ product designs to another.
The established trust in our company allows usto supply to major global brand customers (despite themselves being competitors).
Our Competitive Strengths
11
Diversified customer base with prime vendor position Besides strong R&D capability, our ability to
fulfill and customize according to our customers’needs and expectations along with overcomingbarriers to commercialization and massproduction have won us prime vendor positionin many of our customers’ supply chain.
Based on our estimates, we supplied up to 70%and 80% of Nike’s sports protective products andgloves, respectively. We also supply up to 40% ofTUMI’s bags and luggage products.
Regional deployment of production bases Production bases in multiple regions in China
and Southeast Asia allow us to supportdifferent customers to supply into respectivedomestic markets faster than peers whileobtaining a higher margin.
This also allows us to diversify and mitigate ourpolitical and financial risks in the case ofgovernment/ trade policy changes or currencyfluctuations.
Customer Product Est. MktShare
TUMI
Business Bags 20%
Luggage 50%
Women Bags 70%
NikeSports Gloves 80%
Sports Protectives 70%
DecathlonShinguards 60%
Skate Protectives 70%
Longchamp Nylon Bags 40%
Kipling Nylon Bags 30%
Our Competitive Strengths
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Handles & Grips
Wheels
Zipper
Body & Parts
Strength
Safety
Durability & Resilience
Endurance
1. Product Safety2. Colorfastness to Crocking3. Colorfastness to Water/Water Repellency4. Colorfastness to Perspiration5. Colorfastness to UV Fading6. Oil Resistance7. Clean Ability8. Finish Adhesion9. Abrasion Resistance10. Bally Flex11. Stiffness12. Tensile Strength13. Tear Strength14. Seam Strength15. Break/Pipiness
TUMI vs. Other BrandsProduction Steps
Number of Parts
Accuracy Tolerance
Length of training for skilled labor
150
1 millimeter
18-24 months
40-60
120 50
5 millimeters
3 months
vs.
vs.
vs.
vs.
16. Shrinkage17. Dimensional Stability18. Salt Spray19. Mini-Tumble20. Operational Forces21. Zipper Crosswise Strength22. Zipper Puller Tensile Strength23. Environmental Cycle24. Handle Jerk/Strap Jerk25. Drop Test26. Tumble Test27. Telescoping Handel Free Fall/Impact28. Telescoping Handle Cycling29. Mileage Cycle30. Customized tests as required
Environmental Cycle Test Machine
Drop and TumbleTest Machine
Salt Spry Test Machine
For TUMI, products are put through 30 unique tests
Why we are chosen – TUMI as an example
Industry Trends & Outlook
13
According to various research institutes, the globalsports protective equipment market is expected togrow at a CAGR of 3.5% - 4.7% from 2016-2026.
The growth is mainly driven by an increase in sportsparticipation, rising popularity of sports leagues andthe number of sports events, combined with agrowing consumer awareness of safety duringsports activities.
Based on our estimates, we have roughly 10%market share in the global sports protectiveequipment market and 20% market share in theglobal sports gloves market (based on FOB prices).
0.6
0.7
0.8
0.9
1.0
2016 2017 2018E 2019E 2020E 2021E 2022E
Global Sports Gloves Market
4
6
8
10
2016 2017 2018E 2019E 2020E 2021E 2022E
Global Sports Protective Equipment Market
Factor & Equilibrium Allied Market ResearchKBV Research Transparency Market ResearchAverage
Sports Protectives Industry
14
(USD/Bn) (USD/Bn)
Source: Index Markets Research
0%
4%
8%
12%
20
40
60
80
100
2005 2009 2013 2017
Sports events market revenueCAGR
CAGR(%) 2005-2009
2009-2013
2013-2017
Football 8% 9% 5%U.S. sports 5% 5% 4%Tennis 2% 5% 3%Golf 3% 2% 4%Other 11% 9% 9%Total 6% 7% 5%
*US Sports include NFL,MLB, NBA, NHL, NASCAR, NCAA
Global Sports Events Revenue(USD/Bn)
Source: A.T. Kearney Analysis
340
380
420
460
2016 2017 2018E 2019E 2020E 2021E
Global Luxury Goods
40
50
60
70
80
2017 2018E 2019E 2020E 2021E 2022E 2023E
Global Luxury Bag Market KD Market Insights QY Research
10
14
18
22
26
2016 2017 2018E 2019E 2020E 2021E 2022E 2023E
Global Travel Bags Market
Global Luxury Bags and Travel Bags Industry
15
(USD/Bn)
Source: KD Market Insights, QYResearch
(USD/Bn)
Source: BBG
(USD/Bn)
Source: Global Opportunity Analysis and Industry Forecast
According to Bloomberg research, the global luxurymarket is gradually rebuilding, and is expected togrow at 3% CAGR from 2016-2021.
China’s economic recovery, along with loosening ofanti-extravagance measures, along with productdesigns and innovations, are rebuilding demand.
Beauty products, small leather goods andaccessories, and travel bags and luggage are amongthe fastest-growing categories at the more-accessible price points.
-10%
-5%
0%
5%
10%
15%
8090
100110120130140
2012 2013 2014 2015 2016 2017
ASEAN FDI inflow outgrew China in 2016-17
China Southeast AsiaChina Growth Rate Southeast Asia Growth Rate
Non-tech manufacturing gradually moving away from China
16
Source: National Bureau of Statistics of China
(USD/Bn)
Source: World Investment Report
30,000
40,000
50,000
60,000
70,000
80,000
2010 2011 2012 2013 2014 2015 2016 2017
China workers base salary(CNY/dollar)
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1990
1995
2000
2005
2010
2015
2020
E20
25E
2030
E20
35E
2040
E20
45E
2050
E20
55E
2060
E20
65E
2070
E20
75E
2080
E20
85E
2090
E20
95E
2100
E
0-14 15-64 65 and above
(Billion)
Source: United Nations & National Bureau of Statistics of China
Chinese working age population to plateau from 2015
0 100 200 300 400
MyanmarCambodia
VietnamMalaysiaThailand
PhilippinesIndonesia
China
Monthly minimum wage level in Asia
(USD)
Source: Bank of Tokyo Mitsubishi UFJ
Our Goals & Strategies
17
Our Group Vision and Goals
18
Weaving Sports & Fashion in Innovation
World Class Team and Infrastructure to Build Scale
Optimize coststructure
Sufficient capacitiesand flexibilities
Strengthen resilienceto down cycles
New brands ofcustomers
An expandingproducts portfolio
Strategic M&As
Re-deploy capitaltowards highermargin business toincrease return
Operational Excellence
Accelerating Growth
To become the global no. 1 supplier for premiumsports accessories and fashion & lifestyle products
Increase Shareholder Value
Our Growth Strategies
19
Objectives
Levers
1
2
3
4
Strengthening the core
New brands of customers
Expand along value chain
Mergers & acquisitions
Completesproductionmigration toSoutheast Asia
Increase automationlevel
Increase walletshare in existingcustomers
New customersacquisitionsthrough productcapacity expansion
Expand our sportsofferings to medical-and industrial-gradeprotectives
Expand our offeringsin bags andaccessories categories
Explore acquisitionsthat enhancevertical integration
Explore acquisitionsof original productmanufacturingcompanies
Continue toexpand in productofferings
Accelerate growthand return
Organic growththrough customeracquisition
1. Strengthening the Core
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We are better positioned to serve our customers after realignment of our production capabilities
Auto CuttingTraditional
Progress of Auto Cutting for Ankle Sock
Need to move the cutting mold and material after each cutting
Two layers cut at the same time 1 Worker does 1500 pairs/day
Auto adjust material position aftereach cutting
4 layers cut at the same time 1 Worker does 2000 pairs/day
Progress of Auto Stitching
Auto StitchingTraditional Worker holds the foam and backer
and sleeve Small sleeve opening would impact
stitching efficiency 70 seconds needed per piece
Only need to fix the foam backerand sleeve on the machine
35 seconds needed per piece
# of plant workers
1,191 1,196
1,000
1,100
1,200
1,300
9M18 9M19
Huian plants
3,819
3,488
3,000 3,200 3,400 3,600 3,800 4,000
9M18 9M19
Dongguan plants
692 670
500
600
700
800
9M18 9M19
Xingguo plant
1,259 1,352
1,000 1,100 1,200 1,300 1,400 1,500
9M18 9M19
Thailand plant
1,098
1,962
-
500
1,000
1,500
2,000
9M18 9M19
Cambodia plant
2. Expand the Value Chain
21
We firmly believe the key to our success lies in the products that we offer to our customers
Marathon Jackets
Belts & Leather
Accessories
Medical Support/Gloves
Medical Support Socks
Sports, Medical, Industrial Protectives
& Fashion, Lifestyle
Products
Specialty Sports Bags
Diaper/Baby Bags
Sports Hats & Beanies
Industrial/Safety Vests
3. New Brands of Customers
22
Our goal is to emerge as a trusted partner to the top global sports and lifestyle brands
Growing new brands
Sports protective
s
Gloves
Accessories
Bags
Equipment
Women Bags
Men Bags
Luggage, Travels
Belts
Accessories
Growing wallet share in existing customers
Global brands Boutique brands
A balanced portfolio & target markets to ensure the highest profitability
LuxuryPremium
Sports & Designer
Fast Fashion
Casual & Mass
4. Mergers and Acquisitions
23
We have a strong M&A track record and we are return-focused
Our three priorities for M&As
1. Contributes tovertical
integration
2. Must be anoriginal product manufacturing
company
3. Return-focused
Our acquisition of TWT (Thailand) in 4Q17 as an example (a major supplier to TUMI)
1013 13
0
5
10
15
2017 2018 9M19
Production lines
1177
1,367 1,352
1000
1100
1200
1300
1400
2017 2018 9M19
Factory workers
0%
5%
10%
0
1,000
2,000
3,000
2017 2018 9M19
TWT's net profit and margin
Net Profit(USD '000) Net Margin(RHS)
Financial Performance
24
We are making a strong growth as we complete our transition
25
-40
-30
-20
-10
0
10
20
30
40
50
60
-10
-5
0
5
10
0.00
5.00
10.00
15.00
20.00
25.00
0100200300400500600700
Consolidated Monthly Revenue (NT$m) Revenue growth (YoY%)
Revenues are growing……and maintain at double digit growth
Gross Margin (%) Operating Margin %
Our margin took a hit but is recovered Our margin took a hit but is recovered
Income Statement
26
NT$m 2014 2015 2016 2017 2018 9M19YoY (%)
2015 2016 2017 2018 9M19Revenue 4,841 5,211 4,904 4,795 6,030 4,901 7.6 (5.9) (2.2) 25.8 10.1 COGS 3,862 4,168 4,054 4,064 5,117 4,061 7.9 (2.7) 0.2 25.9 5.4 Gross Profit 979 1,043 850 731 914 840 6.5 (18.5) (14.0) 25.0 40.4 Operating Expenses (725) (791) (724) (706) (833) (658) 9.0 (8.4) (2.5) 17.9 5.5
Operating Profit 254 252 125 25 81 182 (0.5) (50.3) (80.2) 225.9 -Non Operating Income/(Loss) 5 65 29 (20) 21 (26) 1159.1 (56.1) - -(171.6)
Pretax Income 259 318 154 4 102 157 22.7 (51.5) (97.1) 2177.7 1421.0Tax Expenses (62) (78) (41) (43) (10) (12) 24.9 (46.7) 4.3 (76.6) 534.9
Net Income to Parent 173 240 113 (39) 91 145 38.8 (53.1) - - 1614.9Basic EPS (NT$) 4.18 5.46 2.51 (0.78) 1.83 2.90 30.6 (54.0) - - 1605.9Key Financial Ratios (%)Gross Margin 20.2 20.0 17.3 15.2 15.2 17.1 Operating Expense Ratio 15.0 15.2 14.8 14.7 13.8 13.4 Operating Margin 5.2 4.8 2.6 0.5 1.3 3.7 Effect Tax Rate 24.0 24.5 26.9 969.0 10.0 7.5 Net Margin 3.6 4.6 2.3 (0.8) 1.5 3.0
Balance Sheet
27
NT$m 2014 2015 2016 2017 2018 9M19YoY (%)
2015 2016 2017 2018 9M19Total Assets 2,922 3,075 3,228 4,010 4,181 4,821 5.2 5.0 24.2 4.3 12.8 Cash 572 524 682 572 383 603 (8.4) 30.1 (16.1) (33.1) 43.6 AR & NR 518 599 595 889 1,055 1,142 15.7 (0.7) 49.5 18.6 0.1 Inventories 605 640 567 737 890 907 5.7 (11.4) 29.9 20.8 2.3 Fixed Assets 666 672 757 1,159 1,014 934 1.0 12.6 53.1 (12.5) (7.8)
Total Liabilities 1,865 1,838 1,853 2,804 2,906 3,476 (1.4) 0.8 51.4 3.6 12.6 AP & NP 351 342 324 457 521 599 (2.4) (5.3) 41.1 13.9 2.6
Total Equity 1,057 1,237 1,375 1,205 1,275 1,345 17.0 11.2 (12.3) 5.8 13.4 Key Financial Ratios A/R Turnover Days 41.9 38.6 43.8 55.7 58.0 62.4 Inventory Turnover Days 56.4 53.8 53.6 57.8 57.2 68.3 A/P Turnover Days 34.8 29.9 29.6 34.6 34.4 38.1 Cash Conversion Days 63.5 62.4 67.8 78.9 80.8 92.6 ROE (%) 24.9 20.9 8.6 (3.0) 7.4 15.3 ROA (%) 6.3 8.0 3.6 (1.1) 2.2 4.3 Net debt (cash)/Equity (%) 32.3 20.0 17.3 69.8 88.1 72.1
Notes:
1. Our net debt to equity ratio grew significantly from 2017 to 1H18 was due to increased borrowings for ourcapacities build-up and M&A in Southeast Asia. As we are completing our production migration we expectthe ratio to lower starting from 2019 and gradually normalizing to 2015-2016 level.
Dividend Payout and Capex
28
Notes:
1. WW Holding became listed on TAIEX on Nov 8, 2016.
2. Cash yield is calculated based on WW Holding’s closing share price on Dec 13, 2019.
3. We did not pay a dividend in 2018 due to losses in 2017. However we returned to profitability in full-year2018 and hence has planned to resume our cash dividend payout in 2019.
(NT$m) 2014 2015 2016 2017 2018Net profit 173 240 113 -39 91Dividend Paid 43.9 131.8 110.0 - 75DPS (NT$) 1.0 2.6 2.2 - 1.5Payout ratio (%) 25.4% 54.9% 97.7% - 82.0%
Dividend yield 1.5% 4.6% 4.2% - 2.8%Capex 36 96 241 122 143Capex/Sales 0.7% 1.8% 4.9% 2.5% 2.3%
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WW Holding (8442 TT)Thank You !
www.ww-holding.com.tw
For more information, please visit our website