Incorporated in the Cayman Islands with limited liability HKEX Stock code: December Sole Sponsor

Transcription

1 Incorporated in the Cayman Islands with limited liability HKEX Stock code: 6822 December 2014 Sole Sponsor

2 Disclaimer This document has been prepared by King s Flair International (Holdings) Limited (the Company ) solely for use in the presentation(s) to investors held in connection with the proposed initial public offering on the Main Board of The Stock Exchange of Hong Kong Limited by the Company. The information contained in this document has not been independently verified. No representation or warranty expressly or impliedly is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. The information contained in this document is subject to change without notice and will not be updated to reflect material developments which may occur after the date of the presentation. None of the Company and Baron Global Financial Services Limited (the Sole Sponsor and Bookrunner ), nor any of their respective affiliates, employees, advisers or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with this document. This document contains forward-looking statements. These forward-looking statements express the Company s current views, projections, beliefs and expectations with respect to future events as of the respective dates indicated herein, involve predictions and are not a guarantee of future performance. The Company gives no assurance that those views, projections, beliefs and expectations will prove to be correct and the anticipated results will be achieved. These forward-looking statements are based on a number of assumptions about the Company s operations and factors beyond the Company s control and are subject to significant risks and uncertainties, and, accordingly, actual events or results may differ materially from these forward-looking statements and the forward-looking events discussed in this document might not occur. Prospective investors are cautioned not to place undue reliance on these forward-looking statements. The Company undertakes no obligation to update or revise these forward-looking statements for events, information or circumstances that occur subsequent to such dates. Moreover, any statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. By accepting this document, you are agreeing to maintain absolute confidentiality regarding the information contained in this document. These materials are given to you solely for your own use and information and no part of this document may be copied or reproduced, or redistributed or passed on, directly or indirectly, to any other person (whether within or outside your organization/firm) in any manner or published, in whole or in part, for any purpose. Unauthorized copying or reproduction, or redistribution of this document or any information contained herein to any person, could result in material delay to, or otherwise prejudice the success of, the Global Offering of the Company. No part of this document may be distributed, reproduced, taken or transmitted into the United States, Canada, Japan or the People s Republic of China. You are aware that monetary damages shall not be a sufficient remedy for any breach of the confidential obligation undertaken by you, or by any of your directors, officers, employees, legal counsel, accountants or tax advisers, agents, consultants and other representatives. You also agree that, in addition to all other remedies, the Company shall be entitled to specific performance and injunctive relief, or other equitable relief, as a remedy for any such breach. This document does not constitute an offer or invitation to subscribe for any shares and, save as expressly mentioned herein, no part of it shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. 1

3 Roadshow Team Mr. Wong Siu Wah Chairman and Executive Director Ms. Wong Fook Chi Executive Director Mr. Dennis Wong Executive Director Mr. Ronnie Po Financial Controller & Company Secretary 2

4 Agenda Issue Statistics and Timetable Company Overview Industry Overview Investment Highlights Financial Highlights Development Strategies Open Forum 3

5 Issue Statistics and Timetable Issuer Share Offers Over-allotment Option King s Flair International (Holdings) Limited ( King s Flair or the Company ) Stock code: 6822.HK 175,000,000 Offer Shares, 25% of the enlarged issued share capital (before Over-allotment Option) Placing: 157,500,000 Shares, or 90% of the share offer (subject to reallocation and the Over-allotment Option) Public Offer: 17,500,000 Shares, 10% (subject to reallocation) 26,250,000 Shares (representing 15% of the initial no. of Offer Shares) Board Lot 4,000 Price Range HK$1.08 to HK$1.48 per Offer Share Offering Size HK$189 million - HK$259 million Listing Exchange Main Board of The Stock Exchange of Hong Kong Limited Expected Timetable Roadshow and bookbuilding: 24 Dec Jan 2015 Hong Kong Public Offer: 31 Dec Jan 2015 (12 noon, HKT) Pricing: 8 Jan 2015 Allotment results: 15 Jan 2015 Listing: 16 Jan 2015 Sole Sponsor Joint Bookrunners and Joint Lead Manager 4

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7 Major Milestones Established a distribution network covering over 80 point-of-sales in major cities in the PRC (As at 28 October 2014) Commenced retail business of kitchenware products in the PRC Established product design and development team Established business relationship with Ignite USA Became a strategic partner of Lifetime with the formation of a joint venture through World Alliance Established business relationship with William Levene Ltd. (acquired by Diethelm Keller Brands AG) Established business relationship with Lifetime, a North American based corporation, and Kai Corporation, a Japan based corporation Founded by Chairman Wong Chairman Wong began kitchenware business 6

8 King s Flair at a Glance Strong product design and engineering capabilities Unique business model that competes on superior product design, development and engineering capabilities A diverse range of modern, stylish products that appeal to high-end customers Strategic relationships with international brandowners Established reputation Well established long-standing relationship of 10 to over 20 years with international kitchenware brandowner customers who possess recognised brand names Established reputation for quality, consistency and reliability Strict compliance to standards in relation to food contact substance Rapidly expanding distribution network in China Visionary management team A distribution network via retailers for retailing authorised kitchenware products in over 80 sales points in major cities in China (as at 28 October 2014) Online sales channels via major e-commerce platforms Experienced and professional management team with an entrepreneurial spirit and a proven track record 7

9 A Diverse Range of Products Drinkwares Tools and gadgets Bakewares and accessories Food preparation products Storage and accessories 8

10 Our Business Model Design briefing Design development Design evaluation Commercialisation Multiple evaluations and alterations throughout the process Marketing Product design Ordering and and and trend capturing development sourcing Product engineering Mass production by Production Factories Sales Outsourced to manufacturers Tests to ensure product quality and safety, include 1. Testing during product development 2. Testing of raw materials 3. Production line sample testing Product quality further ensured by independent professional quality assurance firm Strong control of intellectual property 9

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12 The Global Kitchenware Market Overview A highly fragmented market with a diverse range of brands and products New sales in the global kitchenware market from : US$20.3 billion China is expected to contributed 53.4% of these new sales The Global Kitchenware Market (US$ million) 100,000 80,000 60,000 40,000 20,000 80,767 75,577 78,375 72,744 10,993 10,974 10,523 10,288 28,142 28,348 28,486 28,681 83,768 85,041 86,642 88,545 11,147 11,261 11,386 90,702 93,031 11,677 11,812 26,707 27,937 27,428 27,058 26,856 26,758 11,318 12,374 13,499 14,707 16,020 17,450 7,617 8,884 10,063 6,622 27,154 28,951 30,170 31,569 33,366 33,978 34,699 35,452 36,247 37,062 11, E 2015E 2016E 2017E 2018E Source: Euromonitor Report US China Western Europe Others 11

13 Global Market Trends As the urbanization rate of a region increases, the expenditure per household on kitchenware products also increases Multigenerational households are becoming less common in urban areas More single and two person households lead to increased demand for kichenware products Growth of disposable income is correlated with the growth of the kitchenware market Kitchenware market growth forecast ( CAGR) US: +1.2% W. Europe: 0.9% China: +9.0% Individuals living in urban areas increasingly view kitchenware as lifestyle accessories Celebrity endorsed products fuel growth Increasingly influenced by the younger generation: consumers are often willing o buy a new product simply because its unique style 12

14 China Market the Growth Driver China s share in the global market increased from 9.1% in 2009 to 13.5% in 2013, and is expected to grow to 18.8% by 2018 Grow at a CAGR of 9.0% from on the back of 10.7% household disposable income growth China market value forecasted to increase by US$1,056 million from , accounting for 85.3% of all new global growth that year The China Kitchenware Market (US$ million) 20,000 15,000 10,000 6,622 7,617 8,884 10,063 11,318 12,374 13,499 14,707 16,020 17,450 5, E 2015E 2016E 2017E 2018E Source: Euromonitor Report 13

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16 Investment Highlights Long-standing strategic relationships with international kitchenware brandowners Strong product design and engineering capabilities Reputation for quality, consistency and reliability Strict compliance with standards for food contact substances Fast-growing retail business in China Experienced and professional management team 15

17 1. Long-standing Strategic Relationships with International Kitchenware Brandowners Well-known customers base Established long-standing relationships with several international kitchenware brandowner customers Business relationships with top five largest customers ranged from 10 to over 20 years Comprehensive service Product design and development Production engineering solutions Stringent quality control and production control Stable delivery of high quality products, and Timely completion of customers orders 16

18 2. Strong Product Design and Engineering Capabilities In order to keep abreast of the trends in kitchenware products, we analyse and monitor market trends, new materials, colour trends and design updates on products Design briefing Design development Design evaluation Commercialisation Decision of basic design requirements Ideas and concepts generation 2-dimentional appearance design 3-dimentional design Mechanical design Prototype creation Mechanical design and testing, and engineering evaluation Marketing evaluation Packaging design Samples to customers Multiple evaluations and alterations throughout the process 17

19 3. Reputation for Quality, Consistency and Reliability Stringent quality control procedures have been established throughout the entire production process so as to ensure that the kitchenware products are manufactured with consistent, reliable and high quality standard Selecting qualified production factories Selecting criteria: factory scale factory facilities and equipment quality standard management skills financial stability, production capacity and location Raw material sourcing Imported from overseas markets such as the U.S., South Korea, Germany, Australia, Taiwan and Japan Procured from over 15 suppliers Established business relations of over 5 to 10 years Quality control and production control Under supervision by quality assurance team together with a quality assurance firm Provide training to the quality assurance personnel on the quality assurance guidelines, methods and procedures 18

20 4. Strict Compliance with Standards for Food Contact Substances We assist the Production Factories to set up in-house component and product testing facilities to perform product testings during the production process Prior to confirming orders placed by customers, our sales and marketing team communicates with the customer to understand and define their needs, expectations and specifications for products and to adopt or tailor-make a specific quality assurance plan ( QAP ) Quality Assurance Plan ( QAP ) Testing during product development Raw material testing Production line sample testing Final product testing Extra testing Carry out tests on product samples before trial production Production Factories or raw material suppliers to provide a material safety data sheet for the raw material used Randomly inspect and perform sample testing in the production lines Inspect and test the final products for defects before shipping Appoint international third party laboratories to perform food safety tests Conduct extra testing in addition to that set out in the QAP 19

21 5. Fast-growing retail business in China Operated a flagship store in Beijing Agreements with over 20 retailers for retailing our kitchenware products in over 80 sales points in Beijing, Shanghai, Tianjin, Xi an and other PRC cities Online sales channels : and and was awarded by Amazon China as one of the top five partners within the kitchenware categories A retail website ( as an online sales platform to offer our kitchenware products in Hong Kong 20

22 6. Experienced and Professional Management Team Most of our Executive Directors and senior management have more than 15 years of experience in the kitchenware industry Mr. Wong Siu Wah Chairman, Executive Director and Chief Executive Officer Founder of the Group Approx. 30 years of management and operation experience Primarily responsible for the overall corporate strategic planning and corporate management of the Group Ms. Wong Fook Chi Executive Director Over 8 years of experience in the management and operation of kitchenware business Oversees the business operation and corporate strategy implementations of the Group Mr. Wong Ying Wai, Dennis Executive Director Over 13 years of experience in the kitchenware industry Primarily responsible for the business operation and corporate management of the Group Mr. Wong Chi Man Supply Chain and Logistic Manager Approx. 17 years experience in quality control and production coordination Primarily responsible for the overall supplier management and oversees the supplies network and production capacity Mr. Wong Lok Hey R&D Development Manager Approximately 6 years of kitchenware design and development experience Primarily responsible for product design and product development of the Group Mr. Po Tien Chu, Ronnie Financial Controller & Company Secretary Over 10 years of experience in auditing and accounting field Responsible for financial and accounting management, taxation and compliance of the Group Mr. Chow Chi Wai, Kevin Regional Manager, Sales and Marketing Approx. 10 years experience in marketing and merchandising field Primarily responsible for the business development and customer relationships of the worldwide (excluding China) business of our Group Ms. Lam Hau Fung Regional Manager, Sales and Marketing Over 9 years experience in marketing and merchandising field Primarily responsible for the business and customer relationships of the worldwide (excluding China) business of our Group Mr. Chan Chi Man, Arthur Quality Assurance Manager Over 5 years experience in marketing and merchandising field Primarily responsible for the management of the quality control of the Group 21

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24 Financial Statement (HKD 000) For the year ended 31 Dec For the six months ended 30 Jun 2013 (unaudited) 2014 Revenue 968,505 1,077,351 1,236, , ,715 Cost of Sales (844,675) (917,307) (1,048,295) (428,842) (520,228) Gross Profit 123, , ,989 76, ,487 Distribution Expenses (14,758) (18,418) (23,403) (10,903) (11,001) Administrative Expenses (47,321) (62,402) (84,900) (39,205) (48,249) Operating Profit 66,289 84,545 90,651 35,211 50,450 Profit before Income Tax 65,308 83,725 96,483 34,996 50,278 Profit for the Year/Period 45,448 68,208 78,333 27,087 41,869 23

25 Growing Revenue and Net Profit Total Revenue Profit for the Year / Period (HKD 000) 1,400,000 (HKD 000) 100,000 1,236,284 1,200,000 1,077,351 80,000 78,333 1,000, ,505 68, ,000 60, , , ,715 40,000 45,448 41, ,000 27,087 20, , Year ended 31 Dec 6 months ended 30 Jun Year ended 31 Dec 6 months ended 30 Jun 24

26 Effective Cost Control Improves Gross Profit Margins Gross Profit Gross Profit Margin (HKD 000) 200, ,989 18% 16.7% 160, , ,830 16% 14.9% 15.2% 15.2% 100, ,487 14% 76, % 50,000 12% Year ended 31 Dec 6 months ended 30 Jun 10% Year ended 31 Dec 6 months ended 30 Jun 25

27 Key Financial Ratios Trade and Bills Receivables Turnover Days Trade and Bills Payable Turnover Days For the financial year ended 31 Dec For the six months ended 30 Jun Return on Equity 29.7% 37.1% 39.6% 45.2% Return on Assets 12.5% 18.3% 17.1% 17.4% As at 31 Dec As at 30 Jun 2014 Gearing Ratio 28% 23% 18% 16% Net-debt-to-equity Ratio N/A N/A N/A N/A Current Ratio 1.58x 1.82x 1.66x 1.55x Quick Ratio 1.57x 1.77x 1.62x 1.51x 26

28 Use of Proceeds Enhance product design, development and engineering capabilities 22% 45% Purchase and renovate office premises Establish flagship stores, with one flagship store in Shanghai by end of 2015, and expand retail sales network and e-commerce business in the PRC 15% photo Broaden customer base, expand penetration in existing markets and penetrate into new markets 5% 3% 10% Enhance information technology infrastructure Working capital and general corporate purposes 27

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30 Development Strategies Broaden existing customer base and expand into new markets Enhance design, development and engineering capabilities Expand retail networks and e-commerce in China Selectively pursue acquisition and strategic alliance opportunities 29

31 Broaden Existing Customer Base and Expand into New Markets Leverage on our market presence and quality customer services to attract new international kitchenware brandowners in order to diversify our revenue sources Further collaborate with existing customers to deepen penetration into existing markets Collaborate with existing customers to develop new series of kitchenware products in order to expand existing target markets Enter into new markets (excluding Sanctioned Countries) with good potential such as Eastern Europe, Africa and South America, by working with local importers and trade agents when appropriate Eastern Europe Africa Hong Kong South America 30

32 Enhance Design, Development and Engineering Capabilities Continue to collaborate with major customers in product design and development process and further collaborate with existing customers Enhance the variety of the designs and also to re-design kitchenware products that suit the preference and cooking habits of our target markets, such as the PRC and South Africa Continue improving production engineering quality by providing advanced engineering software and hardware and providing training, exposure and experience to production engineers Design, develop and build toolings for approximately 10 categories of products such as storage, tools and gadgets and food preparation by 2017 and apply for mechanical patents and design patents of such products covering U.S., China, Europe and Japan. 31

33 Expand Retail Networks and e-commerce in China Introduce various brands and selection of kitchenware products to the Chinese consumers in our flagship store in up-scaled shopping malls Enhance our shop image and publicity by adopting marketing strategies Establish one flagship store in Shanghai by end of 2015 to expose the brands and kitchenware products we supply in the Yangtze River region, and to establish more flagship stores in the PRC after 2015 Expand our retail networks as to accelerate our PRC retail business and have our products sold in 120 and 250 sales points of our retailers by the end of 2014 and 2015 respectively Enhance our e-commerce operations and sales by offering our products on more online shopping websites and building our own online shopping platform 32

34 Selectively Pursue Acquisition and Strategic Alliance Opportunities Consider opportunities to acquire distribution platforms that complement our existing business and enter into strategic alliances with international brandowners Criteria of selection of potential targets: Reputable management Solid track record Good operating platform Enhance our competitiveness and further solidify our market position 33

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