dr. wu skincare co., ltd investor meeting
TRANSCRIPT
DR. WU Skincare Co., Ltd
Investor Meeting
Disclaimer
• The information and forecast contained in this presentation and released at the same time, including
the information regarding business outlook, financial status, and business forecast, is produced
according to the internal data of this Company and the status of overall macroeconomic development.
• The actual operational outcomes, financial status, and sales results in the future may differ from the
forecast for various reasons, including but not limited to market demand; changes in policies, laws and
regulations, and macroeconomic condition; and other risk factors beyond the reasonable control of
this Company.
• Information contained in this presentation reflects the future outlook of this Company until the
present time. This Company makes no guarantee, either expressed or implied, for its accuracy,
integrity, or reliability. This Company assumes no responsibility for the update or revision of such
information according to its future changes or adjustments.
01 Introduction to DR.WU Skincare
- Retrospect
- Industry Outlook
- Brand Positioning
02 Growth Pillars
- Product Category
- Sales Reginal Expansion
- Integrated Digital Marketing
03 1Q-3Q21 Financial Results
Agenda
Company IntroductionOur Philosophy
4
• Founded：2003
• Co-Founders: Dr. Wu & Eric Wu
• Listing on TPEX：2016
• Market Capital：USD 120m
• Revenue: USD 35 million
• Product： 10 Skin Care Lines
• Sales Channel：9 Countries
• Employee：111 staffs
Taiwan’s No.1 Derma Skincare
DR.WU is a line of highly effective skincare
products developed with advanced patented
technologies to target various problems in Asian
skins. Our philosophy behind our pursuit for
enhancing beauty and wellness is through
simple, effective products backed by the latest
discovery in Science, Biotechnology and
Cosmetics. We believe in the partnership
between innovation and science to bring about
non-surgical solutions in enhancing one’s beauty
and wellness.
Retrospect – Leader in Dermatological Skincare
Geographical ExpansionOrganic Growth Restructuring & Digitalization
Invested by LVMH Group Flagship Products Built New Partnership in China
Hydrating
(hyaluronic acid)
Renewal
(Mandelic Acid)
Repairing
(Squalane)
< 2003 - 2013 > < 2014 - 2019 > < 2020 - Now >
Key Channel Expansion Expansion into China Digital Transformation
5
GrowthSales
Power
• 100% penetration in drugstore
chains
• Full coverage of virtual online stores
• Present footprint in overseas market
• Non-surgical cosmetic medicine
more common and reaching
younger market which drives
growth of derma skincare
• Consumption habits changing from
emotional to rational. Consumers
trying to select derma skincare vs
general skincare products
Complete Coverage of Online/Physical Channels
High Potential Markets+ Necessity of Skincare
Brand
Power
• Market leader: Taiwan’s No.1
Derma Skincare /First to enter the
derma skincare market
• High popularity, high reputation,
high reliability from consumers
• One of few Asian derma skincare
brands to truly stem from doctors
and clinics
LeadingDerma Skincare Brand
Product
Power
• Complete product line developed by
authoritative dermatologists with
patented formula in Asia
• 15% new product development rate
• Advanced knowledge and skills in R&D
• 10 full product lines (cyclical, risk
diversification, synergy), satisfying
needs of Asian skin care
• Insist on applying 5 principles to
develop high effectiveness,
hypoallergenic and high quality
products
R&D by Authoritative Dermatologist in Asia
DR.WU – TW’s No.1 Derma Skincare Competitive Advantages and Our Success Formula
6
28%
23%13%
11%
25%
Health & BeautySpecialist Retailers
Department Stores
E-commerce
Direct Selling
Others
Source：Euromonitor
Booming Dermatological Science with increasing customer preference in high-performance professional skincare Taiwan Skincare Industry Outlook
Growing Derma Skincare withinGeneral Caring Market
Increasing Online Weight within Skincare Market
2019 2020
Physical Online
5.9B
4.8B
2019 2020
Mass Derma
7.2B
66%
52%
17%
11%
20%Skin Care
Color Cosmetics
Hair Care
Other
Sales of Beauty and Personal Care NT$ 130B* Breakdown by Category
Source : Nielsen
Distribution of Beauty and Personal Care
NT$ 7.8B
34%30%
70% 66%
34%
76%
24%
*Note : Sales of Beauty and Personal Care was under 2019. 7
Brand Differentiation – First & Leading Home Care Brand Positioning Among Derma Skincare and Doctors’ Brands
High effectiveness
High priceLow price
Low effectiveness
• DR.WU is a PROFESSIONAL brand positioned to offer Non-Surgical Cosmetic Medicine Concept Skincarewith fast effective functional skincare
• Mid- to High-end Skincare solutions developed by renowned Asian dermatologist for Asian skins, targeting 18-40-year-old segment
Specialize in Exfoliating
Mass Dermatological Brand
Masstige Dermatological Brand
Premium Dermatological Brand
8
02 Growth Pillars
- Product Category Expansion
- Sales Reginal Expansion
- Integrated Digital Marketing
HYDRATING SYSTEM x12
REPAIRING SYSTEM x7
WHITENING SYSTEM x6
RENEWAL SYSTEM x6
SUNCARE SYSTEM x4
DermLab Solutions x6
CAPSULE MASK x3
MINERAL MAKE UP x2
BEAUTY SUPPLEMENT X 4
Product Category Expansion10 Key Product Lines with 15% Annual New Product Launch Rate
SKINCARE FOR MEN x4
CoreExtension
Incubation
BODY CARE
HAIR CARE
COLOR COSMETICS
10
Total of 18 SKU New Products and New Formulation
AgeVersal System3sku
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Suncare System4sku
HyaluComplex Hydrating System2sku
Mandelik Renewal System1sku
AgeVersal System 1sku
Beauty supplements4sku
Dermlab Solutions Series 1sku
HyaluComplex Hydrating System2sku
2021 R&D Accomplishments
11
Product CompositionProduct Line Distribution and Form-Type Breakdown 1Q-3Q21
Sales Breakdown by Product Line Sales Breakdown by Form Type
33%26%
21%
7%4%
9%55%
12%
8%3%
3%
5% 14%
FY20 Sales NT$ 765M
1Q-3Q21 Sales NT$ 804M
FY20 Sales NT$ 765M
12
27%42%
16%4%
6%
6%
Hydrating
Renewal
Repairing
Whitening
Dermlab
Others 63%13%
6%
3%3%
2% 10%Serum
Toner
Lotion
Cream
Sunscreen
Mask
Others
1Q-3Q21 Sales NT$ 804M
Source : Euromonitor
Sales Regional ExpansionFrom Taiwan to Global Skincare Market
13
TW Market ─ Grow steadily
✓ Physical Watsons、COSMED、POYA
✓ Online Momo、Yahoo、Shopee、Official website
Overseas ─ Continue to invest
✓ SG, HK, MO, JP Continue to invest
✓ MY, TH, CA Develop new strategy
✓ PH, VN, US Expand new market
✓ Global Skincare Market62x Taiwan MKT
✓Taiwan Skincare Market NT$70B
DR.WU-N0 1. in Taiwan’s cosmeceutical market
✓ ASEAN Skincare Market3x Taiwan MKT
✓ China Skincare Market13x Taiwan MKT
CN Market ─ Double digit growth
✓ Online Tmall、Taobao 、 JD 、 VIP、WeChat
44%
23%
7%
26%
1Q-3Q21 Sales NT$ 804M
Physical Taiwan
Online Taiwan
Overseas
China
Social Media Management
InfluencerMarketing
Top Star
FOLLOWERSCOMMONSTRATEGY
FB、IG、YOUTUBE、LINE、WECHAT、WU CLUB
Loyal Customers/KOC
Macro KOL
200K+
50K-200K
10K-50K
EFFECTIVENESS
Impression, Reach,Brand Lift
Engagements,Views
Click, Conversions
Brand Awareness
Interest
ConversionMicro/Nano KOL
BrandConnection
Brand PreferenceCredibility, Loyalty1K-10K
AdvocatingMarketing
Integrated Digital Marketing via KOL/KOCBuild broad and depth of user generated contents (UGC)
Utilizing different opinion leaders
to express their professional view
or exercise influence to build broad
and depth of user generated
contents so as to enhance our
brand image.
14
Integrated Digital Marketing via CRMFrom Transactions to Relationships with Enabling Digitalization & Customer Relationship Management
Transactions
Guessing Preferences
Relationships
Prediction for Customization
CRM
SOCIAL MEDIA
BIG DATA
LOYALTY PROGRAM
PRM
Cross-channel Integration
• Engage with customers through QRcode across any channel interaction, physical and digital
• Integration of all data flow from multi-channels
CRM
• Analyzation of customer data through systems
• Deliver relevant experience to match behaviors, needs and increasing expectations.
Loyalty Program
• Through loyalty program design toretain customers and boost their engagement
• Seamless, orchestrated, and personalized
15
16
Short Term Long Term
Leveraging capabilities of brand building & R&D to expand coverage of the beauty market
Flagship Brand – DR.WU
- Product Category Expansion- Sales Regional Expansion- Integrated Digital Marketing
Incubated Brand – Re’dermx
- Targeting high-end Skincare- Personalized Formula
Portfolio Expansion – M&A
- Strengthening brand synergy
Overall Growth StrategiesOne Single Brand to Multi-Brand Platform
1Q-3Q21 Financial Results 03
936,922 962,998 1,014,212
764,630 804,270
2017 2018 2019 2020 1Q-3Q21
YoY +45%
DR.WU Financial Performance in 1Q-3Q21Post-COVID19 Revenue Recovery
18
NT$'000
*Since Nov 2019, the consolidated revenue contributed from China was changed from accrued GMV basis to export value.
NT$'000
• 2020 Revenue impacted by COVID & de-consolidation of China sales*
Consolidated Revenue Revenue Breakdown by Channels
44%
23%
7%
26%
1Q-3Q21 Sales NT$ 804M
Physical Taiwan
Online Taiwan
Overseas
China
59%26%
6%9%
1Q-3Q20 Sales NT$ 555M
DR.WU Financial Performance in 1Q-3Q21Increasing Profitability with Reduced Downside Risk from China & Improved Expense Ratio
63% 61%
69% 67%62%
15%
8%
23%
31%35%
13%3%
19%23%*
27%
2017 2018 2019 2020 1Q-3Q21
Gross Margin Operating Margin Net Margin
Margin
235,428 237,359
177,135
285,733
-
25,000
50,000
75,000
100,000
125,000
150,000
175,000
200,000
225,000
250,000
275,000
300,000
325,000
350,000
375,000
400,000
2019 2020 1Q-3Q20 1Q-3Q21
YoY +61%
Operating Income
NT$'000
*Note:2020 Net margin excludes one-time gain on disposal of investment : NT$483 million.
19
20
7.06
2.78
0.55
4.26
14.68
1.88 0.54
2.31
6.60
2.50
0.5
3.86
14.0 *
4.0 ** 4.0
5.22
2016 2017 2018 2019 2020 1Q21 2Q21 3Q21
2016-3Q21 EPS & Cash Dividends
EPS
Cash dividend
Historical Dividend Payout- Average Cash Dividend Payout Ratio > 90% - Issued by Quarterly Basis Since 2021
*Note 1. NT$10 cash dividend was from capital surplus.
**Note 2. NT$ 4 cash dividend was from capital surplus.
NT$
Items3Q20 3Q21 1Q-3Q20 1Q-3Q21
Amount % Amount % Amount % Amount %
Net Revenue 231,045 100% 331,450 100% 555,104 100% 804,270 100%
Gross Profit 157,773 68% 202,361 61% 369,413 67% 503,151 62%
Selling expenses 51,658 22% 59,413 18% 146,664 26% 160,777 20%
Administrative expenses 13,267 6% 17,991 5% 37,607 7% 49,280 6%
R&D expenses 2,514 1% 2,448 1% 8,063 2% 7,238 1%
Expected credit loss (gain) -78 0% 74 0% -56 0% 123 0%
Operating Expenses 67,361 29% 79,926 24% 192,278 35% 217,418 27%
Operations Income 90,412 39% 122,435 37% 177,135 32% 285,733 35%
Non-operating Income and Expenses
-398 0% -3,060 -1% -2350 -1% -2,724 0%
Investment loss/gain -3,267 -1% 0 0% -6590 -1% 0 0%
Profit Before Income Tax 86,747 38% 119,397 36% 168,195 30% 283,009 35%
Income Tax Expenses 18,025 8% 15,224 5% 35,040 6% 69,718 8%
Net Profit 68,722 30% 104,151 31% 133,155 24% 213,291 27%
EPS 1.53 2.31 2.96 4.73
Revenue growth rate 44% 45%
Operating income growth rate 35% 61%
Net profit growth rate 52% 60%
Income Statement
NT$'000
21
Balance Sheet & Key Indices
Selected Items 2020.09.30 2020.12.31 2021.9.30
Cash and Cash Equivalents 254,058 712,355 836,050
Financial Assets at amortized cost 871,200 871,200 744,900
Accounts Receivable 172,679 97,891 225,323
Inventories 130,538 103,015 143,935
Total Assets 1,565,636 2,264,946 2,125,560
Account Payable 44,054 28,518 101,622
Dividend Payable 0 0 180,191
Total Liabilities 173,500 266,370 445,344
Total Shareholders' Equity 1,392,136 1,998,576 1,680,216
Key Indices 2020.09.30 2020.12.31 2021.9.30
A/R Turnover Days 88 67 55
Inventory Turnover Days 183 157 121
A/P Turnover Days 65 52 59
Liability Ratio (%) 11 12 21
ROE(%) 11 35 15
Cash from OP activities 150,334 300,908 57,275
22
NT$'000
Thank you
Contact InformationCheryl Lin, Investor RelationsTEL：+886-2-2517-9888
E-mail：[email protected]