Chow Sang Sang Holdings International Limited · HKEX:116
Chow Sang Sang Holdings International — H1 2020 Earnings Presentation
48 slides from Chow Sang Sang Holdings International's earnings presentation, August 2020
Slide 1: 2020 Interim Results Presentation
CHOW SANG SANG HOLDINGS INTERNATIONAL LIMITED 周生生集團國際有限公司 Stock code: 116 2020 Interim Results Presentation August 2020
Slide 2: Disclaimer
Disclaimer The information, statements and opinions contained in this Presentation and any subsequent discussion do not constitute an offer to sell or solicitation of any offer to subscribe for or purchase any securities or other financial instruments or any advice or recommendation in respect of su
Slide 3: Presentation Outline
Presentation Outline I. Business Overview II. Financial Highlights III. Business Review IV. Strategy Outline V. Q&A Session VI. Appendix 2
Slide 4: Business Overview
Date Here Business Overview 3
Slide 5: Business Segments
Business Segments Chow Sang Sang Holdings International Limited Wholesale of Securities and Jewellery Futures Broking Precious Metals ⚫ Manufacture of jewellery ⚫ Retail of jewellery (Gold, Gem-set, Platinum, Karat Gold and Watch) ⚫ Branded stores: ⚫ Watch boutique: Rolex and Tudor 4
Slide 6: Chow Sang Sang Jewellery Business Model
Chow Sang Sang Jewellery Business Model ⚫ Experienced team responsible for procurement of precious metals and gemstones Procurement ⚫ Being De Beers and Alrosa sightholder ⚫ Over 60% of our collections created by in-house design team Design ⚫ Others mostly through collaborative efforts with establis
Slide 7: Distribution Network as at Jun 2020
Distribution Network as at 30 Jun 2020 Mainland China Number City Number Region of stores tier of stores Heilongjiang North 85 1 150 Jilin East 117 2 270 Inner Mongolia South 199 3 138 Xinjiang Beijing Liaoning West 105 4 58 Tianjin Beijing Surrounding 110 - - Gansu Hebei Provinces Ningxia Shanxi Qi
Slide 8: Store Expansion
Store Expansion Increasing No. of Stores in Mainland China (No. of Stores) 800 700 708 700 24 25 599 70 67 600 26 519 67 500 472 25 24 72 400 74 300 606 616 506 200 374 422 100 0 2016 2017 2018 2019 2020 06 Mainland China HK and Macau Taiwan 7
Slide 9: Store Count by Brand
Store Count by Brand As at 31 Dec 2019 Addition Closed As at 30 Jun 2020 Hong Kong and Macau 49 - 1 48 4 1 1 4 5 - 2 3 Rolex/Tudor 12 - - 12 Sub-total 70 1 4 67 Mainland China 561 20 13 568 7 2 - 9 25 - 1 24 - 1 - 1 - 1 - 1 Rolex/Tudor 13 - - 13 Sub-total 606 24 14 616 Taiwan 24 1 - 25 Total 700 26
Slide 10: Financial Highlights
Date Here Financial Highlights 9
Slide 11: Operating Performance
Operating Performance Turnover Gross Profit (HK$M) (HK$M) 27.6% 30,000 6,000 26.9% 24.6% 25.0% 25,000 5,000 4,777 4,631 20.0% 20,000 18,806 4,000 17,736 2,203 2,271 15.0% 15,000 3,000 9,248 8,196 10.0% 10,000 2,000 2,360 2,574 5,000 1,000 5.0% 9,558 9,540 1,771 6,418 0 0 0.0% 2018 2019 2020 2018 201
Slide 12: Operating Performance (Cont'd)
Operating Performance (Cont’d) Earnings Before Interest, Taxes, Depreciation Profit attributable to equity holders and Amortisation* (HK$M) (HK$M) 1,800 9.0% 8.4% 1,800 7.0% 1,573 1,600 8.0% 1,600 7.2% 6.0% 5.4% 1,400 6.6% 7.0% 1,400 644 5.0% 1,200 1,162 6.0% 1,200 232 1,012 3.6% 1,000 5.0% 1,000 4.
Slide 13: Driven by Jewellery Segment
Driven by Jewellery Segment Turnover Breakdown Results Breakdown 0.2% 0.1% 0.1% 100% 0.2% 0.4% 0.4% 100% 0.2% 0.1% 0.2% 3.1% 2.6% 1.8% 1.2% 0.4% 9.1% 7.8% 11.6% 1.6% 90% 90% 80% 80% 70% 70% 60% 60% 50% 50% 95.5% 96.6% 96.2% 90.5% 92.0% 88.1% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% 2018 1H 2019 1H 2020
Slide 14: Jewellery Performance
Jewellery Performance Jewellery – Turnover Jewellery – Operating Results (HK$M) (HK$M) 20,000 2,000 9.0% 7.9% 17,130 8.0% 16,258 7.0% 7.0% 15,000 1,500 1,282 6.0% 8,484 1,205 7,485 5.0% 5.0% 10,000 1,000 521 472 4.0% 3.0% 5,000 500 8,646 8,773 2.0% 733 761 5,651 1.0% 285 0 0 0.0% 2018 2019 2020 2018
Slide 15: Jewellery Performance by Geographical Area
Jewellery Performance by Geographical Area Jewellery Segment Gross Profit Jewellery Segment Result (HK$M) (HK$M) 4,500 40.5% 1,000 10.0% 39.1% 38.6% 40.0% 8.7% 4,000 34.7% 35.0% 760 800 8.0% 31.8% 3,500 30.5% 7.0% 0.1 30.0% 3,000 26.9% 600 6.0% 24.6% 2,549 25.0% 522 5.0% 23.1% 2,500 7 23 284 2,181 6
Slide 16: Jewellery Turnover by Geographical Area
Jewellery Turnover by Geographical Area 2019 1H 2019 2H 2020 1H Taiwan Taiwan Taiwan 1% 1% 1% HK & HK & HK & Macau Macau Macau 41% 38% 34% Mainland Mainland Mainland China China China 58% 61% 65% 15
Slide 17: Jewellery Gross Profit by Geographical Area
Jewellery Gross Profit by Geographical Area 2019 1H 2019 2H 2020 1H Taiwan Taiwan Taiwan 1% 1% 1% HK & HK & HK & Macau Macau Macau 37% 33% 25% Mainland Mainland Mainland China China China 62% 66% 74% 16
Slide 18: Hong Kong and Macau Jewellery Sales Mix
Hong Kong and Macau Jewellery Sales Mix 17
Slide 19: Mainland China Jewellery Sales Mix
Mainland China Jewellery Sales Mix 18
Slide 20: Hong Kong and Macau Jewellery SSSG
Hong Kong and Macau Jewellery SSSG 40% 20% 0% -20% -40% -60% -80% 2017 1H 2017 2H 2018 1H 2018 2H 2019 1H 2019 2H 2020 1H Overall Gold Gem-set 19
Slide 21: Mainland China Jewellery SSSG
Mainland China Jewellery SSSG 20% 10% 0% -10% -20% -30% -40% -50% 2017 1H 2017 2H 2018 1H 2018 2H 2019 1H 2019 2H 2020 1H Overall Gold Gem-set 20
Slide 22: Jewellery: Change of Average Selling Price
Jewellery: Change of Average Selling Price Hong Kong and Macau - Gold Hong Kong and Macau - Jewellery (HK$) (HK$) 8,000 15,000 6,400 11,900 11,000 6,000 5,000 5,000 9,900 10,000 4,000 5,000 2,000 0 0 2018 2019 2020 1H 2018 2019 2020 1H Mainland China - Gold Mainland China - Jewellery (RMB) (RMB) 5,0
Slide 23: E-shop Sales as a Percentage of Mainland China Sales
E-shop Sales as a Percentage of Mainland China Sales 22% 20% 20% 18% 16% 16% 15% 14% 14% 12% 12% 10% 9% 8% 2015 2016 2017 2018 2019 2020 1H 22
Slide 24: Working Capital Trends
Working Capital Trends Average Inventory Turnover Days Average Receivables Turnover Days (No. of Days) (No. of Days) 400 25 22 322 20 19 300 20 231 192 15 200 10 100 5 0 0 2018 2019 2020 1H 2018 2019 2020 1H Average Payables Turnover Days Cash Conversion Cycle (No. of Days) (No. of Days) 10 400 340
Slide 25: Financial Highlights (HK$M)
Financial Highlights (HK$M) For the 6 months ended % change 2018 2019 2020 20 vs 19 Turnover 9,558 9,540 6,418 -32.7% Jewellery 8,646 8,773 5,651 -35.6% Other businesses 912 767 767 +0.0% Gross profit 2,360 2,574 1,771 -31.2% Operating profit* 797 816 329 -59.7% EBITDA* 929 930 465 -50.0% Profit att
Slide 26: Other Financial Information
Other Financial Information (HK$M) As at Dec-31 Jun-30 2018 2019 2020 Cash and cash equivalents 1,303 1,028 1,864 Long term listed investments* 807 901 1,175 # Gearing 18.6% 25.3% 20.1% Unused banking facilities 4,080 3,992 4,024 * Long term listed investments represents HKEX shares which valued at
Slide 27: Business Review
Date Here Business Review 26
Slide 28: Business Review
Business Review Hong Kong and Macau ⚫ Business was significantly impacted by COVID-19 and loss of tourist sales ⚫ Notable SSSG decreases were recorded across most product types except watch ⚫ Soaring gold prices deterred buying Mainland China ⚫ COVID-19 caused significant business disruptions in 1Q
Slide 29: Strategy Outline
Date Here Strategy Outline 28
Slide 30: Strategy Outline
Strategy Outline Store Expansion ⚫ Adopt self-run store model to provide consistent and superior service quality ⚫ Maintain steady Chow Sang Sang and specialty store expansion in Mainland China ⚫ Multi-brand strategy: EMPHASIS, MINTYGREEN, PROMESSA and MARCO BICEGO ⚫ Realign Hong Kong network to tak
Slide 31: Q&A Session
Date Here Q&A Session 30
Slide 32: Appendix
Appendix 31
Slide 33: Company History
Company History 1930-1970 1970-1980 1980-2000 2000-2020 1934 1960 1973 1990 1995 2001 2005 2014 2019 Chow Sang Started First Chow Sang • First Started Became a Chow Sang Chow Sang Sang multiple jewellery Sang jewellery online De Beers Sang Sang Goldsmith business company Precious company shopping Si
Slide 34: Multi-brand Strategy Highlights
Multi-brand Strategy Highlights 32 33
Slide 35: EMPHASIS – A Store Brand for Sophisticated and Fashion-centric Females
EMPHASIS – A Store Brand for Sophisticated and Fashion-centric Females ⚫ EMPHASIS continues to define the new fine jewellery in daily wear market with bold designs by expanding its footprint in Mainland China and Hong Kong. ⚫ The store targets at sophisticated & fashion-centric female market segment
Slide 36: MINTYGREEN – A Store Brand for Fans of Daily Wear Jewellery
MINTYGREEN – A Store Brand for Fans of Daily Wear Jewellery ⚫ MINTYGREEN captures the attention of Generation Y, who purchased their first jewellery. ⚫ IP collaborations, young celebrity endorsement and omni-channel sales operations model linked with social media are the brand features. 35
Slide 37: PROMESSA - A Store Brand For Millennial Couples
PROMESSA - A Store Brand For Millennial Couples ⚫ PROMESSA, the Italian word for “promise”, is the name of our signature line of engagement rings and wedding bands. ⚫ The first PROMESSA wedding specialty store was opened in Chongqing in May 2020. ⚫ The store is designed to provide made-to-order pers
Slide 38: MARCO BICEGO - A Store Brand of Artisanal Craftsmanship
MARCO BICEGO - A Store Brand of Artisanal Craftsmanship ⚫ MARCO BICEGO, an Italian jewellery brand featuring unique hand-crafted pieces through artisanal craftsmanship and contemporary design concepts, has been a staple in our stores since 2000. ⚫ The opening of the brand’s first store in Beijing ma
Slide 39: New Stores 2020
New Stores 2020 Jinhua, Mainland China Chongqing, Mainland China Beijing, Mainland China Taoyuan, Taiwan Xuzhou, Mainland China Beijing, Mainland China Mainland China 24 Hong Kong and Macau 1 Taiwan 1 38
Slide 40: Omni-channel Strategy Highlights
Omni-channel Strategy Highlights 32 39
Slide 41: The Omni-channel Ecosystem
The Omni-channel Ecosystem Aim to serve our customers seamlessly across all channels e-Commerce Platforms Intimate Service via IM Social Media Communication Customer Dispatch Relationship and Delivery Management Physical Stores 40
Slide 42: High Level of Personalisation and Seamless Omni-channel Experience
High Level of Personsalisation and Seamless Omni-channel Experience Personalise and design your own jewellery with more than 24,000+ exquisite combinations Freely pair up your own choice of diamond and design setting Engrave and set your birthstones to express your personal message Diamond 3,000+ Se
Slide 43: C2M ‧ Customer-driven Manufacturing
C2M ‧ Customer-driven Manufacturing • One ordering platform connects customer frontend to backend production management system • Manufacturing is driven by customer demand and preference ■ Link to advanced planning & scheduling system and production management system Manufacturing ■ Route orders to
Slide 44: Star Concierge
Star Concierge ⚫ The one-on-one jewellery sales service was launched in both Mainland China and Hong Kong ⚫ Design to provide a personalised jewellery shopping experience to our consumers at their fingertips ⚫ Allow our sales advisors to reach and engage customers remotely ⚫ Customers can appreciate
Slide 45: Star Concierge
Star Concierge Star Concierge is designed to fit into social and communication ecosystems, making distance shopping convenient and easy for every customer Mainland China and Hong Kong IM One-on-One Sales Advisor Recommendation Engagement & Purchase Delivery Store Pick-up Delivery 44
Slide 46: Industry Analysis
Industry Analysis 32 45
Slide 47: Industry Analysis – Hong Kong and Mainland China
Industry Analysis – Hong Kong and Mainland China Value of retail sales of 2H 2019 – 1H 2020 2H 2019 – 1H 2020 Hong Kong Jewellery, Watches and Clocks, and Valuable Gifts Mainland China Gold, Silver and Jewellery Sales 10.00 30.0 26.8 8.00 7.27 7.29 25.0 6.91 21.2 20.5 21.2 6.52 20.3 19.9 19.3 6.00 2
Slide 48: Thank you
Thank you 47
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