2017 Annual Results Announcement

Corporate Presentation

21 March 2018
Disclaimer
This presentation and the accompanying slides (the “Presentation”) which have been prepared by Best Pacific
International Holdings Limited (“Best Pacific” or the “Company” or “We” and together with its subsidiaries,
collectively, the “Group”) do not constitute any offer or invitation to purchase or subscribe for any securities of the
Company, and shall not form the basis for or be relied on in connection with any contract or binding commitment
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accuracy, completeness, fairness and reasonableness of the contents of this Presentation. This Presentation
may not be all inclusive and may not contain all of the information that you may consider material. Any liability in
respect of the contents of or any omission from this Presentation is expressly excluded.

Certain matters discussed in this Presentation may contain statements regarding the Company’s market
opportunities and business prospects that are individually and collectively forward-looking statements. Such
forward-looking statements are not guarantees of future performance and are subject to known and unknown
risks, uncertainties and assumptions that are difficult to predict. The Company’s actual results, levels of activities,
performance or achievements could differ materially and adversely from results expressed in or implied by this
Presentation, including, amongst others: whether the Company can successfully penetrate new markets and the
degree to which the Company gains traction in these new markets; the sustainability of recent growth rates; the
anticipation of the growth of certain market segments; the positioning of the Company’s products in those
segments; the competitive environment; and general market conditions. The Company assumes no obligation to
update any forward-looking information contained in this Presentation. Any forward-looking statements and
projections made by third parties included in this Presentation are not adopted by the Company and the
Company is not responsible for such third-party statements and projections.

Best Pacific International Holdings Limited 2

 Section 1

RESULTS REVIEW
Financial highlights
FY2017* FY2016* Change
(HK$ million) (%)

Revenue 2,794.8 2,469.1 +13.2%

Gross profit 772.7 828.0 -6.7%

Net profit 303.6 456.3 -33.5%

1H2017** 2H2017** FY2017* FY2016* Change

Gross profit margin 28.7% 26.8% 27.6% 33.5% -5.9% pts

Net profit margin 11.1% 10.6% 10.9% 18.5% -7.6% pts

FY2017* FY2016* Change

Earnings per share (HK cents) (HK cents) (%)
- Basic 29.45 44.37 -33.6%
- Diluted 29.29 44.00 -33.4%

Dividend

- Interim Nil 7.3 -100%

- Final 5.9 9.5 -37.9%
- Full year 5.9 16.8 -64.9%
* FY2017 and FY2016 referred to the year ended 31 December 2017 and 2016 respectively;
** 1H2017 and 2H2017 referred to the six months ended 30 June 2017 and 31 December 2017 respectively.

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Revenue
Revenue contribution by product categories
FY2017 FY2016 Change

(HK$ million) (% of revenue) (HK$ million) (% of revenue)

Elastic fabric 1,767.7 63.2% 1,526.4 61.8% +15.8%

1,262.5
- Lingerie and
apparel 1,121.6 971.1 34.7% 1,070.9 43.4% -9.3%

- Sportswear 796.6 28.5% 455.5 18.4% +74.9%

Elastic webbing 941.5 33.7% 832.5 33.7% +13.1%
Lace 85.6 3.1% 110.2 4.5% -22.3%
Total 2,794.8 100.0% 2,469.1 100.0% +13.2%

Revenue breakdown by product categories

FY2017 971.1 796.6 941.5 85.6 HK$2,794.8 million

(34.7%) (28.5%) (33.7%) (3.1%)

+ 13.2%

FY2016 1,070.9 455.5 832.5 110.2 HK$2,469.1 million

(43.4%) (18.4%) (33.7%) (4.5%)
Elastic fabric - Lingerie and apparel
Elastic fabric - Sportswear
Elastic webbing
0 500 1,000 1,500 2,000 2,500 3,000 Lace
(HK$ million)
Best Pacific International Holdings Limited 5
Revenue
 Overall
 Revenue increased by approximately
13.2% year-on-year to approximately
HK$2,794.8 million
 Increase in revenue was mainly
attributable to:
• The Group’s continual expansion
into the new sportswear and
apparel materials segments
 Elastic webbing
 Revenue: HK$941.5 million
 Increased by approximately 13.1% year-
on-year mainly due to:
• The Group’s dedication in cross-
selling its different primary products
 Elastic fabric
 Revenue: HK$1,767.7 million
 Increased by approximately 15.8% year-
on-year mainly due to:
• Continual expansion into the
sportswear and apparel materials
market
• Revenue from the sales of
sportswear fabric materials
increased by approximately 74.9%
year-on-year
 Lace
 Revenue: HK$85.6 million
 Decreased by approximately 22.3% year-
on-year mainly due to:
• Simpler and thinner lace, which
commanded a lower unit selling
price, sold by the Group
Best Pacific International Holdings Limited 6
Gross profit and gross profit margin

Gross profit and gross profit margin Gross profit margin

33.5%
FY2017 FY2016 Change
27.6%
Gross profit
(HK$ million) Overall 27.6% 33.5% -5.9% pts

Elastic Fabric 25.6% 33.2% -7.6% pts

828.0 772.7 - Lingerie and
26.4% 33.5% -7.1% pts
apparel

- Sportswear 24.7% 32.4% -7.7% pts

FY2016 FY2017
Elastic Webbing 29.9% 32.3% -2.4% pts
Gross profit Gross profit margin
Lace 44.8% 47.6% -2.8% pts

 Gross profit decreased by approximately 6.7% to HK$772.7 million

 Overall gross profit margin reduced by approximately 5.9 percentage points to approximately 27.6%,
mainly due to:
 a lower-than-expected revenue from sales of elastic fabric, elastic webbing and lace to lingerie
customers;
 the higher direct labour costs and manufacturing overheads; and
 the increase in costs due to Renminbi appreciation

Best Pacific International Holdings Limited 7

Net profit and net profit margin
Historical net profit margin Net profit and net profit margin
FY2014 FY2015 FY2016 FY2017
Net profit (HK$ million)
13.3% 16.7% 18.5% 10.9%
18.5%
 Net profit for FY2017 decreased by
10.9%
approximately 33.5% to HK$303.6 million
(FY2016: HK$456.3 million)

 Net profit margin for FY2017 decreased by

approximately 7.6 percentage points to
approximately 10.9% (FY2016: 18.5%)
456.3
 The decrease in net profit and net profit
margin was mainly due to: 303.6

 a lower gross profit margin attained;

 the increased overall costs spent on

human resources; FY2016 FY2017
 the start-up costs of the operation in Net profit Net profit margin
Vietnam; and

 the increase in costs or losses due to

Renminbi appreciation

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Cost of sales
 Cost of sales amounted to HK$2,022.1 million,
Cost of sales - by nature of cost
representing an increase of approximately 23.2%
year-on-year, mainly due to:
 the increase in total sales volume;
HK$2,022.1 million  the increase in overall manufacturing
HK$1,641.1 million overheads driven by the Group’s
Others
(0.5%)
continued business expansion as well as
higher production costs to cope with the
Direct labour
Others (11.9%) more stringent environmental rules and
(0.7%)
regulations; and
Direct labour
(11.5%) Manufacturing  the increase in direct labour costs as a
overheads
Manufacturing (36.3%) result of an increase in number of staff as
overheads
(33.8%) well as overall wages; and
 the increase in costs due to Renminbi
appreciation
Raw Raw
materials materials
(54.0%) (51.3%)

FY2016 FY2017

Best Pacific International Holdings Limited 9

Working capital management

Turnover days

FY2016 FY2017
108.2
91.1 97.0
75.8 79.0 81.5

Trade and bills receivables Trade and bills payables Inventory turnover days
turnover days turnover days

 Trade and bills receivables turnover days remained relatively stable

 Decrease in trade and bills payables turnover days was primarily due to the increase in use of cash to
settle transactions for the benefits of better prices
 Increase in inventory turnover days was primarily attributable to the fact that more raw materials were
purchased by the Group to cope with
 the rising raw material prices; and
 the shorter production time as demanded by customers, in which more work-in-progress
inventories being prepared
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Liquidity and financial resources

As at 31 December 2016 As at 31 December 2017

(HK$ million) (HK$ million)

Pledged bank deposits 61.6 54.6

Short term bank deposits 13.4 11.7

Bank balances and cash 424.5 176.7

Net working capital 847.3 744.3

(Current assets less current liabilities)

Net debt position

(Sum of bank deposits and bank balances and cash, (94.0) (997.2)
less total bank borrowings)

Current ratio Gross gearing ratio

2.1 53.9%
1.8
31.2%

As at 31 Dec 2016 As at 31 Dec 2017 As at 31 Dec 2016 As at 31 Dec 2017

Best Pacific International Holdings Limited 11

 Section 2

BUSINESS HIGHLIGHTS
Leading market position with continuous growth

2. Strategically
penetrating into
sportswear and apparel
materials market
▪ Enormous market potential
with sportswear and apparel
materials market
▪ Achieved high growth since
1. Strengthened one-stop the official launch in 2012
solutions strategy
▪ A comprehensive product
portfolio, comprising of
elastic fabric, elastic webbing
and lace

3. Enhanced innovation
and R&D capabilities
▪ Provided customers with
unique value-added
innovations and
4. Close collaboration strategically enriched its
with leading lingerie / new products offering
apparel and sportswear
brands
▪ Close collaboration with
renowned international
lingerie / apparel brands
▪ Established and deepened
its partnership with the
world’s leading sportswear
brands

Best Pacific International Holdings Limited 13

1. Strengthened one-stop solutions strategy

Helping customers: to achieve

 More simplified procurement process

 Synchronisation of colors for different
components within a lingerie product
Comprehensive Product Portfolio
 Shorter inventory cycle and production (HK$ million)
lead time
 Help lingerie customers to expand into
85.6
sportswear and apparel segments

971.1
Helping Best Pacific to achieve 941.5 One-stop
solutions
 Growth in sales
provider
 Product bundling with several products
offered for sale to the same customer
 Benefits from economies of scale 796.6
Total = HK$2,794.8 million

Elastic fabric - Lingerie and apparel

Elastic fabric - Sportswear
Elastic webbing
Lace
*Revenue contribution by product categories during FY2017

Best Pacific International Holdings Limited 14

2. Strategically penetrating into sportswear and apparel materials market

• Collaborated with well-known international sportswear

and apparel brands in launching products with
revolutionary innovative concepts

• Comfort and functionality blended into the design of

sportswear

+74.9%
year-on-year

Revenue from sales of

sportswear fabric
materials in FY2017

Robust revenue growth

We continue to expand and diversify our customer portfolio

Best Pacific International Holdings Limited 15

3. Enhanced innovation and R&D capabilities
Strategic
competitiveness
• Developed tailor-made
innovative materials based
on market trends and
customer needs
• New growth drivers through
expanding into new product
categories by leveraging on
the competitive edge of the
Group’s innovation and
R&D capabilities
Strong R&D
capabilities
• R&D team consists of over
100 technicians who have
been offered technical
training on a periodic basis
• Obtained qualification as a
High and New Technology
Enterprise in the PRC since
2010
Continuous
investment
• Invested approximately 2%
- 3% of its revenue in R&D
annually
• Established Best Pacific
Institute of Technology and
Research in June 2016
Best Pacific International Holdings Limited 16
4. Close collaboration with leading lingerie / apparel and
sportswear brands

Other leading international lingerie, apparel and sportswear brands

2013
2012

2010

2008

2007

2005

2004

Best Pacific International Holdings Limited 17

 Section 3

INTERNATIONAL FOOTPRINT
 Section 3.1

OVERSEAS FACTORY - VIETNAM

Overseas factory - Vietnam
Licence Commencement Manpower
- Successfully obtained the - Trial production commenced - Over 500 staff currently
approval for sewage in July 2017 employed in Vietnam
treatment with daily
discharge capacity of - First batch of production in - Expected to hire up to
waster water of maximum the third quarter of 2017 approximately 1,200 local
of 20,000 tonnes of waste workforce
water per day

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Overseas factory - Vietnam
Production base: Vietnam Singapore Industrial Park (“VSIP”), Hai Duong, Vietnam

Total investments: ~ HK$600 million Total designed annual production capacity

• To increase capacity in elastic fabric and
elastic webbing production by approximately
25% - 30% as compared to the relevant
capacities as of 31 December 2015

Gross floor area : ~ 121,804 square meters Construction status

• Land A: ~ 70,569 square meters • Trial production commenced in July 2017
• Land B: ~ 51,235 square meters • First batch of production in the third quarter of
2017

Local tax incentives:

• Total waiver of tax – first two years of
profitable operations
• Half tax rate - subsequent four years

Capture the potential market opportunities

through neighbourhood advantages

Costs savings on:

• Lower labour costs
• Logistic costs

Best Pacific International Holdings Limited 21

Overseas factory - Vietnam

Best Pacific Vietnam

in Hai Duong, Vietnam

Source: VSIP

Best Pacific International Holdings Limited 22

 Overseas factory - Vietnam

Main entrance

Overall site (bird view)

Overall site (side view)

Best Pacific International Holdings Limited 23
 Overseas factory - Vietnam

Production area

Dyeing facilities

Warehouse Best Pacific International Holdings Limited 24

 Section 3.2

OVERSEAS FACTORY - SRI LANKA

Joint Venture with Brandix
Subject Description

6 November 2017
Date of shareholders agreement
- To establish Best Pacific Textiles Lanka (Pvt) Ltd, a joint
venture, with Brandix

Shareholding structure Best Pacific: 75% Brandix: 25%

Composition of the board of directors Best Pacific: 3 directors Brandix: 2 directors

Total investment amount Approximately USD70,000,000

Manufacturing and the sales of synthetic textiles and textile related

Business of the joint venture
products

- One of the largest apparel exporters in Sri Lanka

- Over 40 manufacturing locations around the world
Particular of Brandix - Over 55,000 employees
- A preferred solutions provider to some of the world’s leading
apparel brands

- Best Pacific will become the most preferred supplier of Brandix

Benefits to Best Pacific - Shorter lead time
- Cost-saving

Best Pacific International Holdings Limited 26

Joint Venture with MAS
Subject Description

4 December 2017
Date of sales and purchase agreement
and shareholders agreement - To acquire 51% equity interest of Trischel Fabric Private Limited
(“Trischel”) from MAS

Shareholding structure Best Pacific: 51% MAS: 49%

Composition of the board of directors Best Pacific: 3 directors MAS: 2 directors

- 51% of the audited NAV of the Trischel as at the completion date

Total consideration
- no more than USD50,000,000
On or before 1 August 2018 or any other dates mutually agreed between
Completion date
Best Pacific and MAS
Manufacturing of warp and weft knitted fabric, and the importation of yarn
Business of the joint venture and greige fabric and complementary accessories for dyeing and
finishing for export
- One of the largest apparel and textile manufacturers in South Asia
- Over 50 manufacturing locations around the world
Particular of MAS - Over 90,000 employees
- Partners with some of the world’s foremost brands in fashion and
style
- Best Pacific will become the most favoured fabric supplier of MAS
Benefits to Best Pacific - Shorter lead time
- Cost-saving
Best Pacific International Holdings Limited 27
 International footprint and production capacity

Jiangxi,
Dongguan, China
China

Designed annual
production capacity as
at 31 December 2017
• Elastic fabric:
110.3 million meters

• Elastic webbing:
1,669.4 million meters Pannala, Hai Duong,
Thulhiriya, Vietnam
• Lace:
24.6 million meters Sri Lanka
Best Pacific International Holdings Limited 28
 THANK YOU

Investor relations and media contact

Tel: 3185 3185
Email: ir@bestpacific.com
 Best Pacific’s innovations
One-stop solutions provider of lingerie Strategically penetrating the sportswear and apparel
materials market with enormous potential

Elastic Lace (15.7%)

webbing
(21.3%)

Molded foam (22.1%) Elastic fabric (28.5%)

* Cost contribution of lingerie components within a typical bra

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