Hong Kong Television Network Ltd
Hong Kong Television Network — H1 2018 Earnings Presentation
39 slides from Hong Kong Television Network's earnings presentation, Aug 30, 2018
Slide 1: Interim Results Presentation for the Period Ended 30 June 2018
HONG KONG TELEVISION NETWORK LIMITED 香港電視網絡有限公司 (SEHK stock code: 1137) Interim Results Presentation for the Period Ended 30 June 2018 30 August 2018 1
Slide 2: Disclaimer
Disclaimer This presentation and subsequent discussions may contain forward-looking statements and information that involve risks, uncertainties and assumptions. Forward-looking statements are all statements that concern plans, objectives, goals, strategies, future events or performance and underlyi
Slide 3: Agenda
Agenda •Operational and Financial Review By Ms. Alice Wong, CFO •Business Review and Outlook By Mr. Ricky Wong, Chairman •Q & A 3
Slide 4: Operational and Financial Review
Operational and Financial Review BY Alice Wong, CFO 4
Slide 5: In Need of Online Shopping in Hong Kong!
In Need of Online Shopping in Hong Kong! Group GMV on Order Intake Average Daily Order (HK$000) / Monthly Login User 400,000 11,000 (HKTVmall Only) 10,000 350,000 9,000 300,000 8,000 250,000 7,000 6,000 200,000 5,000 150,000 4,000 3,000 100,000 2,000 50,000 1,000 - - GMV (HK$000) Monthly Login User
Slide 6: Sustainable Growth Momentum
Sustainable Growth Momentum 900.0 76% of 816.7 FY2017 800.0 GMV 700.0 80% 600.0 500.0 453.8 80% of 388.6 FY2017 400.0 Turnover 90% 300.0 203.9 200.0 115.7 100.0 67.9 - HK$mn HK$mn GMV for order intake Turnover 1H2016 1H2017 1H2018 Remark: GMV = Gross sales dollar value for merchandise sold excluding
Slide 7: Growing Revenue and Decent Margin
Growing Revenue and Decent Margin 1H2018 1H2017 On Completed Orders HK$’000 HK$’000 Direct merchandise sales GMV on completed orders 297,165 148,181 Cost of Inventories (239,139) (124,556) 58,026 23,625 Gross margin % 19.5% 15.9% Income from concessionaire sales and other service income GMV on compl
Slide 8: Multiple Growth Rate on Customer Base
+ Multiple Growth Rate on Customer Base – Making real purchases at HKTVmall and / or HoKoBuy 187% 91% Source: Internal system 8
Slide 9: Managed CAPEX for Sustainable Growth
Managed CAPEX for Sustainable Growth CAPEX (HK$) Cash Outflow on CAPEX included Deposits Paid (HK$) 384.6 131.4 111.3 112.6 77.5 26.4 1H2016 1H2017 1H2018 Heavy construction CAPEX for new TKO headquarters was completed in 2016/2017. Upcoming CAPEX is scalable and for sustainable business growth – fo
Slide 10: Consolidated Income Statement
Consolidated Income Statement 6 months ended 6 months ended 30 June 2018 30 June 2017 Variance HK$'000 HK$'000 HK$'000 % GMV on Order Intake 816,721 453,800 362,921 80% Turnover - Ecommerce 384,064 202,842 181,222 89% - Multimedia 4,534 1,063 3,470 326% Total Turnover 388,598 203,905 184,693 91% Cos
Slide 11: Key Highlight on Consolidated Income Statement
Key Highlight on Consolidated Income Statement Adjusted EBITDA Loss of HK$128.4mn in 1H2018 vs. HK$126.1mn in 1H2017; Net loss of HK$139.9mn in 1H2018 vs. HK$96.2mn in 1H2017. Relative to 1H2017, 1. Turnover increased by HK$184.7mn to HK$388.6mn in 1H2018; Relative to FY2017, represented 80% of what
Slide 12: Other Operating Expenses
Other Operating Expenses As a % of GMV on 1H2018 As a % of GMV on 1H2017 Variance Functions completed orders HK$'000 completed orders HK$'000 HK$'000 Fulfillment cost 19% 148.4 26% 108.7 39.7 Marketing and promotion including O2O shop 6% 47.1 6% 24.7 22.4 Ecommerce operation and supporting functions
Slide 13: Consolidated Statement of Financial Position
Consolidated Statement of Financial Position Jun 2018 Dec 2017 Variance HK$'000 HK$'000 HK$'000 in % Property, plant and equipment 1,167,751 1,152,387 15,364 1% Intangible assets 101,576 100,725 851 1% Other financial assets (Fixed income and Equity investment) Non-current 673,934 675,161 (1,227) 0%
Slide 14: Business Review and Outlook
Business Review and Outlook By Ricky Wong, Chairman 14
Slide 15: Traditional Retail vs Online Retail
Traditional Retail vs Online Retail Traditional Retail Online Retail Merchants’ At HKTV Warehouses: Warehouse: ~160,000 SKU ~20,000 SKU Pick & Pack, Sorting Automation System at HKTV Distribution Centre 15
Slide 16: Our Mission
Our Mission • To build an Ecosystem to transform Hong Kong business operation, trading, retail, finance and daily life onto a digital online platform. • To maintain Hong Kong as one of the leading cities in Asia 16
Slide 17: Our Plan and Strategy
Our Plan and Strategy 1. From online supermarket & grocery (40,000 SKU) online department store/shopping mall (177,000 SKU); 2. From online shopping online insurance/finance platform 3. From online shopping big data (collection and utilization) 4. From consumer benefit value to merchants/ret
Slide 18: Flexibility for Different Merchants' Requirements
Flexibility for Different Merchants’ Requirements Merchants send product to HKTVmall warehouse upon HKTVmall Own HKTVmall 1H2018 GMV Delivery Model Business Model customer order placement Inventory Warehousing Proportion / eCoupon by email for use or for redemption Buy and Sell Consignment by HK
Slide 19: No. 1 Hong Kong Based Online Shopping Platform
No. 1 Hong Kong Based Online Shopping Platform Top Sites in Hong Kong - as at 15 August 2018 Ranking in Hong Kong Sites 1 www.google.com.hk 2 www.youtube.com 3 www.google.com 4 www.facebook.com 5 www.yahoo.com 9 www.taobao.com 15 www.amazon.com 21 www.tmall.com 79 www.hktvmall.com 318 Zalora.com.hk
Slide 20: Monthly traffic, subscriptions and app download metrics
+ For the month of June 2018 Dec 2017 No. of Unique Devices landing on PDP or 1,409,000 1,129,000 performing search on HKTVmall (source: 1) No. of Registered Email Subscriptions 4,522,000 4,280,000 (source: 2) No. of Apps download (source: 3) 3,880,000 3,571,000 Facebook likes (source: 4) 911,000 89
Slide 21: Breakeven Profitable Stage
In 2 – 3 Years’ time - Become the Largest and “Profitable” Future Retail Volume in Product Spectrum in Visitor and Customer Base in Automated Fulfillment and Logistic Capacity are the Foundation which we are building. Our aim is in 2 -3 years’ timeframe, 1) Expand the Penetration by new customers ac
Slide 22: HKTVmall P&L model
HKTVmall P&L model We run the Ecommerce Business aiming to reach different stages to attain “Profitable” stage: Stage 1 : Order fulfilment (Primarily Variable costs) Stage 2 : Online shopping mall operation (Primarily Fixed costs) Supporting functions including Admin, Finance, TM, Stage 3 : Technica
Slide 23: Efficiency Gain on Fulfillment Costs Driven by Volume and Automation
Efficiency Gain on Fulfillment Costs Driven by Volume and Automation 1. Launched Phase 1 of Robotic System in March 2018 HK$ 2. 2. Average Daily Order Intake 120 > 10,000 since May 2018 107 100 100 84 80 60 40 20 - 2017 2018Q1 2018Q2 Fulfillment costs / order (HK$) Fulfillment costs included logisti
Slide 24: Expanding Product Spectrum
Expanding Product Spectrum As at 15 August 2018 Offer > 177,000 product items - From own FMCG inventory to Merchant offered varieties Skincare & Upcoming: Supermarket Personal Care Fashion Housewares Make up and Health Financial Services Dining and Electrical Toys and Mother & Sports and Travel Pets
Slide 25: New Customers Acquisition
New Customers Acquisition • Tier One Banks partnership – • Benefit from different database cross selling to accelerate new customer acquisition • Ready for innovative TechFin development – 88 days technical development to launch the first Pay with Points API with highly regulated Tier One Bank • Rea
Slide 26: Expanding Channels for Payment and Mall Dollars
Expanding Channels for Payment and Mall Dollars 26
Slide 27: 1st Wave – TV Commercials for New Customer Acquisition
1st Wave – TV Commercials for New Customer Acquisition 21 May – 30 June 2018, we sold more than 41,000 sets https://youtu.be/WyY_U2mmPLA 27
Slide 28: 2nd Wave – Just launch at August 2018
2nd Wave – Just launch at 28 August 2018 嚟HKTVMALL (日本)和牛就係住家飯 https://youtu.be/-jDns_fQb1E 28
Slide 29: Increase in Merchant Commission Rate from October 2018 onward
Increase in Merchant Commission Rate from 1 October 2018 onward Just like other Hong Kong Retailers, we aim to increase our Blended Gross Margin and Commission Rate up to 27% to 33% in 2 – 3 years’ time. 29
Slide 30: Scalable Capacity - Phase II and III of Robotic System
Scalable Capacity - Phase II and III of Robotic System at Self-Owned TKO Headquarters Estimated Daily Pick/Pack Investment Estimated Launch Capacity (HK$) Date (Number of Orders) 1Q 2018 Phase 1 29,000,000 8,000 to 10,000 (officially launched) Phase 2 92,000,000 20,000 Q1 2019 Phase 3 52,000,000 > 3
Slide 31: Lowering Delivery cost
Lowering Delivery cost Another Volume Game, the more the order, the higher the density in each district, the shorter the delivery distance – and lower costs! Aim at 6-8% of GMV$ In 3 years’ In 1 year’s time ~ 500 in Now, ~ 200 in time ~ 300 in In 2 years’ operations operations operations time ~ 400
Slide 32: A New Way of Retail Store Concept
A New Way of Retail Store Concept Pick Up (to suit different customer needs) Education (to reach and convert new group of customers) CS handling (to increase confidence on products and service level) Brand awareness and build-up A few hundreds sq. ft. shop “retailing” 177,000 sku 32
Slide 33: A New Way of RETAILING – Offline to Online to Offline Pick-up
A New Way of RETAILING – Offline Patronage -> Online Shopping -> Offline Pick-up points 2017 :15 June :24 2018 Now :30 Dec 2018 :35 33
Slide 34: Review on Collaboration with Google Partner Since Jan 2018
Review on Collaboration with Google Partner Since Jan 2018 to groom SME According to 2017 experiment, HKTVmall remarketing audience vs Google audience Conversion rate Uplift 31x More precise target marketing in placing digital ad, this is our strength brought by BIG DATA collected from HKTVmall and
Slide 35: Case Sharing 1 – Small Merchant Partnership Programme
Case Sharing 1 – Small Merchant Partnership Programme (update since 2017 annual results) A new-joined small grocery shop by end of January 2018- • Selling (parallel import) baby goods, such as diaper, cups, vacuum bottle, bathing oil etc. • Annual Ad Budget: HK$100,000 • Ad Spent amount: HK$3,400 on
Slide 36: Case Sharing 2 – Small Merchant Partnership Programme
Case Sharing 2 – Small Merchant Partnership Programme ● Existing merchant conversion from February 2018 ● Store selling sterilizing products, such as flea spray, hand sanitizer, floor cleaner, etc. ● From January 2018 to February 2018 : GMV ○ Ad Spend amount: HK$2,100 only HK$65,000 in February 2018
Slide 37: What are the Difficulties We are Facing?
What are the Difficulties We are Facing? Lack of similar online operation in Hong Kong difficult to accelerate the “Online/Digital Ecosystem” momentum Lag-behind scale of e-Wallet or e-Payment Digital Ecosystem is incomplete Consumer behavior and Merchants commitment 37
Slide 38: Thank You
THANK YOU 38
Slide 39: Retail Market Reference from Bricks and Mortar
Retail Market Reference from Bricks and Mortar Market Cap Key Financials as at 15 Listed Company Mainly trading Historical August Year Ended NAV GMV/Sale GP Remarks (Stock Code) as P/B 2018 s HK$bn HK$bn HK$bn Direct Merchandise Sales Gross Margin : 1H2018: HKTVmall and See 19.5% ; FY2017: 14.7%; HK
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