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Zungui invest quarterly_presentation_agm_december_2_2010

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Zungui invest quarterly_presentation_agm_december_2_2010

  1. 1. Zungui Haixi CorporationAnnual Special Meeting December 2, 2010 Mr. Yanda Cai Chief Executive Officer Ms. Shelly Gobin Chief Financial Officer
  2. 2. Opening Remarks – Yanda Cai• Company founded in 1992 as OEM manufacturer• Introduced ZUNGUI brand in 1995• Opened first store in 2001• Listed on TSX Venture on December 21, 2009• At November 30th over 2,000 retail outlets in network 2
  3. 3. Caution Regarding Forward-Looking StatementsThis presentation contains “forward-looking statements” that are subject to risks and uncertainties. Where possible, words such as p g j p ,“may”, “would”, “could”, “will”, “anticipate”, “believe”, “plan, “expect”, “intend”, “estimate”, “aim”, “endeavour”, “project”, “continue”and similar expressions have been used to identify these forward-looking statements. These statements reflect management’scurrent beliefs with respect to future events and are based on information currently available to management. Forward-lookingstatements involve significant known and unknown risks, uncertainties and assumptions. Many factors could cause Zungui’s actualresults, performance or achievements to be materially different from any future results, performance or achievements that may beexpressed or implied by such forward-looking statements, including, without limitation, those listed in the “Risk Factors” section of forward looking Risk Factorsthe prospectus. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results, performance or achievements could vary materially from those expressed orimplied by the forward-looking statements contained in this presentation. These factors should be considered carefully andprospective investors should not place undue reliance on the forward-looking statements. Although the forward-looking statementscontained in this presentation are based upon what management currently believes to be reasonable assumptions, Zungui cannotassure prospective investors that actual results performance or achievements will be consistent with these forward-looking results,statements. Such assumptions include the stability or improvement of general economic conditions, the secure and reasonablypriced supply of raw materials, timely manufacture of products, a stable workforce, validity of contractual rights, consumeracceptance of the products, viability of the business model and stability of costs.The forward looking statements contained in this presentation are expressly qualified in their entirety by this cautionary statement forward-looking statement.These forward-looking statements are made as of the date of this presentation and neither the company nor any other partyinvolved in the Offering intends to, or assumes any obligation to, update or revise these forward-looking statements to reflect newinformation, events, results or circumstances or otherwise after the date on which such statement is made as to reflect theoccurrence of unanticipated events, except as required by law, including securities laws. 3
  4. 4. Zungui Highlights – Fiscal 2010 • Completed initial public offering on December 21, 2009 raising gross proceeds of $39.8 million • Strong financial performance • D li Delivered consistent growth d i t t th • Expanded operations with 63 distributor- owned and 28 corporate-owned retail outlets • Built strong consumer awareness 4
  5. 5. Substantial Emerging Urban Growth 60 Number of Chinese cities with a population of more than a million379 M Increase in the size of China’s urban population over the past 20 years633 M China’s urban population today 1B China’s urban population 2030Source: Globe and Mail Article September 17, 2010 5
  6. 6. Distributor Retail Outlets - 1,762 at June 30th We ll W sell more than 11 million pairs of shoes annually th illi i f h ll 6
  7. 7. Competitive Strengths• Strong brand recognition• Efficient wholesale business model• Strong corporate culture• Experienced management team• Received Top 100 Sports Brands in China award (ranked #30 with brand valued at RMB 2.31 billion (C$355.5 million) 7
  8. 8. Zungui Retail Network Growth Number of Zungui Retail Outlets 1,800 1,793 1,544 1,600 1,390 1 390 1,400 45% CAGR in Total Retail Outlets 1,200 1,089 1,000 793 800 600 420 400 298 178 200 75 0 2001 2002 2003 2004 2005 2006 2007 2008 June 30, 2010 Sportswear Casual Line Total Retail Outlets 8
  9. 9. Financial Highlights – C$In thousands of C$ except p share data p per Year ended 30-Jun-10 30-Jun-09 Revenue 163,885 138,730 Cost of sales 119,373 101,323 Gross profit 44,512 37,407 Gross margin % 27.2% 27.0% EBITDA 38,356 32,246 EBITDA margin % 23.4% 23.2% Net income 26,976 23,047 Earnings per share $0.48 $0.46 9
  10. 10. Revenue, EBITDA and Net Income Growth – RMB Revenue EBITDA Net Income RMB million RMB million RMB million 1061.3 174.6 248.3 815.6 135.9 227.4 724.7 121.1 170.1 540.1 540 1 117.9 82.1 353.3 83.6 57.9 23.7% 23.5% 23.4% 23.2% 23 2% 21.8% 2006* 2007* 2008* 2009 2010 2006* 2007* 2008* 2009 2010 2006* 2007* 2008* 2009 20102010 and 2009 are year ended June 30th EBITDA Margin*Years ended December 31 10
  11. 11. Strong Balance Sheet As at June 30, 2010 In thousands of C$ Cash $ 85,876 Inventories $ 3,498 Property, plant & equipment $ 6,470 Total assets $ 131,705 131 705 Bank loan $ - Shareholders’ equity $ 96,003 11
  12. 12. Q1 2011 Highlights • Revenue increased 17% to C$50.4 million and 23% in RMB to RMB328.5 million • Opened quarterly record 120 net new distributor owned and 15 new coxrporate-owned retail outlets • Over 2,000 retail outlets in network at November 30th • Increased expenditure on selling expenses to launch brand recognition strategy 12
  13. 13. Q1 2011 Financial Highlights – C$In thousands of C$ except p share data p per 3 months ended 30-Sept-10 30-Sept-09 Revenue 50,425 43,030 Cost of sales 37,731 31,288 Gross profit 12,694 11,742 Gross margin % 25.2% 27.3% EBITDA 9,855 10,617 EBITDA margin % 19.5% 24.7% Net income 7,056 7,657 Earnings per share $0.11 $0.15 13
  14. 14. Three-Step Growth Strategy – Fiscal 20101. Invest C$16 Million to Expand Retail Distribution ChannelOpen up to 350 stores in 2010 - Achieved100 company-owned and managed stores250 distributor-owned or distributor-supplied stores2. Invest C$9 Million to Expand Brand AwarenessTelevision advertisingEvent sponsorshipNew brand positioning33. Invest C$ Million to Increase Internal Production Capac ty est C$7 o c ease te a oduct o CapacityNew 10 storey manufacturing facility in Shishi City7 production linesExpands production capacity > 40% 14
  15. 15. Questions 15

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