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1 Business Media China AG Company Presentation Stuttgart, August 31, 2007 Klaus M. Hilligardt, CEO.

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Presentation on theme: "1 Business Media China AG Company Presentation Stuttgart, August 31, 2007 Klaus M. Hilligardt, CEO."— Presentation transcript:

1 1 Business Media China AG Company Presentation Stuttgart, August 31, 2007 Klaus M. Hilligardt, CEO

2 2 Disclaimer This document contains forward-looking statements and forecasts based on assumptions and estimates made by Business Media China AG („BMC“) management. While we assume that the expectations of these forward-looking statements are realistic, we cannot guarantee that the expectations will prove to be correct. The assumptions may conceal risks and uncertainties which may lead to actual results significantly divergent from those made in the projective forecasts. The factors that can cause such a divergence include: changes in foreign exchange control or the economic and business environment, currency exchange rate fluctuations, the low market entry barriers for competitors, insufficient acceptance of new products or services and changes in corporate strategy. No update of the projected forecasts contained herein is planned, nor does BMC assume any obligation to do so.

3 Agenda BMC at a Glance Summary major milestones and strategic outlook China – A growing advertising and exhibition market BMC‘s operations – Travel Media – Exhibitions, Conferences and Publishing Peer Analysis Summary and contact data

4 4 BMC Vision & Strategy BMC’s vision is to provide “Total China Media Competence” to its customers by combining Exhibitions, Conferences, Publishing and Out-of-Home (OOH) advertising. It plans to deliver this by combining innovative ideas, high value media assets and strategic partnerships to become an effective channel of communication between the advertiser and the consumer. The company’s track record in Exhibitions and the high value portfolio of advertisement rights for railways stations and airports ensures a fast-growing predictable revenue and earnings stream for its stakeholders.

5 5 BMC - An Attractive Platform

6 6 BMC‘s Footprint Today BEIJING Shijiazhuang Tianjin Dalian Qingdao Shanghai Hangzhou Fuzhou Xiamen Chengdu Chonqing Guangzhou Shenzhen BMC CHINA Airport Advertising AIRPORT ADVERTISING BMC CHINA Advertising RAILWAY ADVERTISING BMC Baiwen Exhibitions EXHIBITIONS BMC-TBG EXHIBITIONS & CONFERENCES BMC Zhenwei Exhibitions EXHIBITIONS BMC Herong Exhibitions EXHIBITIONS & CONFERENCES BMC China EXHIBITIONS & CONFERENCES

7 7 BMC AG Structure

8 Management-Team  In the media and exhibition business since  Owner and President MESAGO HOLDING GmbH.  Founder of Mesago Messe Frankfurt in Stuttgart and Tokyo.  Since 15 years active in China with large personal network -Guanxi.  Founder of Business Media China AG. Klaus M. Hilligardt Chief Executive Officer  10 years international experience in the exhibition business.  Director Administrations BMC since  Vice President Subsidiary Management Messe Frankfurt von 1996 –  Director Controlling and Finance at a stock listed environmental service enterprise Peter Sassmann Chief Financial Officer Li Yang Board Member General Manager BMC CHINA Arend J.R. van Eeden Board Member  In the media and exhibition business since  30 years international experience:  Miller Freeman / United Business Media plc and EMAP plc.  Graduate of the Elite University UIBE - University of International Business and Economics.  7 years executive positions in media companies in China.  Large personal network – Guanxi – in China. 8

9 9 BMC‘s Ad Space: Railway Stations

10 10 BMC‘s Ad Space: Railway Stations

11 11 BMC‘s Ad Space: Railway Stations

12 BMC‘s Ad Space: Airports

13

14 Key figures P/L summary (in 1000 Euro) 2007, H12006, H Revenues7,972.73,057.27,478.62,185.6 Net Profit/Loss-3, , , ,395.5 Total Assets36, , ,812.98,058.6 Cash and Cash equivalents8, , ,950.62,917.4 Staff (end of period)

15 Agenda BMC at a Glance Summary major milestones and strategic outlook China – A growing advertising and exhibition market BMC‘s operations – Travel Media – Exhibitions, Conferences and Publishing Peer Analysis Outlook

16 16 Strategy  Exploring synergies between OOH advertising, exhibitions and conference businesses  Identification of opportunities in “railway station advertising” for a blue ocean strategy  Follow buy & build strategy using national and global reach  Investments in intangible assets that will be converted to tangible assets and provide returns (reap) for a long-time to come  BMC identifies market leaders in specific local or regional segment, acquires a controlling stake in it (buy), and then scales (build) it up using its national and global reach.

17 17 Business Execution Cycle

18 18  Formed a 30 year joint venture with China Railway Media for an “All-China Roll- out”  Controls increasing number of important airports and is able to scale-up and roll- out successes in one airport to the various airports across China  BMC has developed a wide personal network in government, industry, media and academia  International experience of BMC attracts important companies  Getting international brands to advertise will increase the value of the airport advertising  Plans to form JVs with leading western exhibitions for China  Acquired license agreements and JVs with top Chinese, European and American publishing houses Strategic Milestones

19 19  Revenues are growing fast  Investments in intangibles have been accomplished to a major extent  Variable costs are relatively low  Breakeven is expected within the next quarters  EBITDA is expected to turn positive and grow explosively over the next few years  ROE is expected to increase continuously and stabilize at a high level BMC’s Current Position

20 Ready for take off BMC's revenue trend over the years E2008E2009E2010E (in EUR mn.) Source: BMC Estimates

21 21 EBITDA is turning positive

22 22 To cover all major railway stations and important airports To acquire top exhibitions in China  Acquire license for premium space only  Optimum use of advertising space at airports  Optimize management structure  Organic and inorganic growth  Consolidation in the East Coast of China  Enter newer markets Future Growth Strategy

23 23 Roadmap Summary

24 24 BMC consolidated P/L projections by segment (in EUR '000)* 2007E2008E2009E2010E Railway Station12,24519,59224,48929,387 Airports7,24924,09829,58452,897 Travel Media19,49443,68954,07382,284 Exhibitions6,61210,87414,79218,710 Others1,9599,30613,71412,245 Revenue28,06563,86982,579113,239 EBITDA0 9,58020,64533,972 Projections CNY/EUR * These projections are based on existing asset and projects and are excluding the Beijing Olympics effect 2008 and the Shanghai EXPO effect 2010

25 Agenda BMC at a Glance Summary, major milestones and strategic outlook China – A growing advertising and exhibition market BMC‘s operations – Travel Media – Exhibitions, Conferences, IT + Sourcing Peer Analysis Outlook

26 Advertising Media  The Chinese economy is slated to be among the world’s top five largest economies  Economy is estimated to grow at over 9% per annum through the next decade  Huge manufacturing sector, called ‘Factory of the World’  Rising income levels and increasing purchasing power of middle class  By 2020 the middle class will comprise 40% of the total population  China will consume approximately 29% of the world's total luxury goods in 2015  Boom in the retail sector  Government modernizing rural & urban infrastructure, highways, railways, airports, roads, subways China‘s Dynamic Economy

27 27 Strong Ad Spend Growth  China’s urban population increased from 29.0% in 1995, to 40.5%, or 523 million people, in 2003  Predicted to increase beyond 615 million by 2010 Ad spend growth of China vs. World North AmericaEuropeAsia PacificChina (in %) Ad spend % of GDP of China vs. World USHong KongUKChina (in %)

28 28 Increasing Market Penetration  Massive urbanisation drives China’s ad expenditure where current figures show that over 70% of retail sales take place in urban areas with a growth rate of over 14%  Over 50% of China’s current advertising spend is targeted at the cities of Beijing, Shanghai, Guangzhou and Shenzen although currently, they only account for around 9% of the total China population. (Source: Zenith Optimedia, Clear Media, Goldman Sachs Research estimates) Outdoor advertising as percentage of total ad spend Latin America USA Germany World UK Europe Asia-Pacific France Japan South Korea Switzerland China (in %) Ad spend per Capita of China vs. World US, Hong Kong, UKChina (in EUR)

29 29 Why OOH-Advertising? The Chinese government stringently controls television, newspaper and radio and the foreign magazines are not allowed to write on politics. The Internet media is also under government’s scanner but less strictly controlled. Relative to other media types, authorities are least interfering where outdoor media is concerned. (Source: China Media Advertising outlook 2006, Goldman Sachs)(Source: China Media Advertising Outlook 2006, Goldman Sachs)

30 30 Exhibition Growth in China (Number of exhibitions) Year (Source: CCPIT)

31 31 China Takes the Lead (Source: CCPIT)

32 Agenda BMC at a Glance Summary, major milestones and strategic outlook China – A growing advertising and exhibition market BMC‘s operations – Travel Media – Exhibitions, Conferences, IT + Sourcing Peer Analysis Outlook

33 Advertising Management 33 The “Grand Dame” in China’s Advertising Business  COO JCDecaux China  General Manager JHDecaux China  COO Media Nation Group  Vice President Top-Result Advertising  CEO Top-Result Bus Advertising  General Manager Shanghai Metro Advertising from MO Li Yan President  General Manager  China Railway Century Media Co., Ltd. Mr. Zhang is the highest official in Chinese Railway Advertising and responsible for the Railway Advertising Reform. Zhang Jihong Chairman All-China Roll-Out WEN Denny Chief Executive Officer Rüdiger Wulf Director Advertising Media Sorbonne Paris Graduate  STRÖR Group (leading Outdoor Company in Germany) Director Sales & Marketing BlowUp Media GmbH One of the most prominent figures in China’s Advertising Busienss  General Manager JCDecaux  Vice General manager Media Nation Inc

34 34 Positioning Travel Media (Source: SG Ventures Proprietary Research)

35 35 Railway Station Advertising

36 36 Railway Station Milestones

37 37 Roadmap for Advertising

38 38 Railway Station Advertising 2007E2008E *2009E2010E Mediaformats (units)3,0627,1629,46210,722 Mediaformats (sqm)19,22044,95759,39467,303 Price Increases3%10%7.5% Occupancy rate37.5%60.0%72.5%80.0% Average Commission/Discount level 35% 35.0% 95 mCNY80 mCNY50 mCNY30 mCNY GM MEDIA ONLY after License Costs -31% 6%34%47% GM Total (Media & Agent activities) after License Costs and Fees for License Owner 4% 10%30%44% Targets Turnover from AGENT ACTIVITIES Fee of 85% to License owner for Turnover from AGENT ACTIVITIES (Deduction from Turnover AGENT ACTIVITIES)- BMC receives about 15% Agent Commission * Without specific "Olympic Games Effect" ** Gross Profit without any overheads / DA

39 39 Airport Advertising

40 40 Milestones - Airport Advertising

41 41 Roadmap - Airport Advertising

42 42 Roadmap - Airport Advertising ADVERTISING SPACE No of AirportsUnitsSQM Airports972811,060 New Airports No of AirportsUnitsSQM Beijing Capital International Airport - New International Terminal ,077 Xiamen (Fuzhou / Xiamen [larger ones ], Wuyishan, Longyan (Smaller ones])41,00015,192 Chongqing12003,038 Sub - Total Total End of New Airports No of AirportsUnitsSQM Hangzhou new Terminal ,038 Xi'An new Terminal12003,038 Other Airports23004,558 Sub - Total Total End of New Airports No of AirportsUnitsSQM Other Airports23004,558 Sub - Total Total End of

43 43 Profit Targets - Travel Media The rapidly increasing Profitability of the Travel Media Business is a result of increasing sales and prices as well as operational improvement. 2007E2008E *2009E2010E Ebit-Target4%13%22%30% 2007E2008E2009E2010E Sales5%7%5% Prices2%3% Cost reduction/operational improvement3%1% 2% Travel media profitability (airport & railway stations) Driving factors (improvement y-o-y)

44 44 Exhibitions, Conferences, Publishing

45 45 Exhibitions, Conferences, Publishing

46 46 Milestones - Exhibitions

47 47 Milestones - Exhibitions

48 48 Roadmap - Exhibitions

49 49 Profit Targets - Exhibitions BMC intends to beat the industry‘s profitability standards by mid-term Profitability from Exhibitions in Germany & China (Projection) GermanyChina (in %) COGSOperating CostProfit

50 Agenda BMC at a Glance Summary, major milestones and strategic outlook China – A growing advertising and exhibition market BMC‘s operations – Travel Media – Exhibitions, Conferences and Publishing Peer Group Analysis Summary

51 51 Peer Group Positioning (Source: SG Ventures Proprietary Research)

52 52 Profitability - Peer Group Source: Bloomberg, 2006 FY Figures Peers EBITDA as percentage of sales

53 53 Valuation Analysis - Peer Group Source: Bloomberg, 2006 P/S

54 54 Valuation Analysis - Peer Group Source: Bloomberg, 2006 P/E‘s

55 55 Valuation Analysis - Peer Group Source: Bloomberg, August, 18, 2006

56 Agenda BMC at a Glance Summary, major milestones and strategic outlook China – A growing advertising and exhibition market BMC‘s operations – Travel Media – Exhibitions, Conferences and Publishing Peer Group Analysis Summary

57 57 Summary - Investment Case

58 Contact Business Media China AG Rotebuehlstr Stuttgart – Germany Tel


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