Chow Sang Sang Holdings International Limited · HKEX:116

Chow Sang Sang Holdings International — H1 2018 Earnings Presentation

39 slides from Chow Sang Sang Holdings International's earnings presentation, August 2018

  1. Slide 1: 2018 Interim Results Presentation

    CHOW SANG SANG HOLDINGS INTERNATIONAL LIMITED 周生生 PPT集TITLE 團 國 HERE 際有限公司 Stock code: 116 Date Here 2018 Interim Results Presentation August 2018 1

  2. Slide 2: Disclaimer and Forward Looking Statements

    Disclaimer and Forward Looking Statements • This document carries the information and the opinion is not for the purpose of comprehensive research, financial services or legal opinion. Chow Sang Sang Holdings International Ltd. does not guarantee its accuracy and integrity. This document contains th

  3. Slide 3: Presentation Outline

    Presentation Outline I. Business Overview II. Financial Highlights III Future Plan and Strategy IV. Q&A Session V. Appendix 3

  4. Slide 4: Business Overview

    PPT TITLE HERE Date Here Business Overview 4

  5. Slide 5: Company Structure

    Company Structure  Physical metals trading Precious Metals service Wholesale  Commission based Services  Generated 9% of total revenue for 2018 1H Jewellery Retail Chow Sang Sang Group  8 HK offices and Internet Securities platform Brokerage  Commission based  Main business segment  No propri

  6. Slide 6: Business Overview: Jewellery Segment

    PPT TITLE HERE Date Here Business Overview: Jewellery Segment 6

  7. Slide 7: Product mix: Jewellery

    Product mix: Jewellery Gold based Items Gem-set Items Licensed Products International Brands (Rolex, Tudor) 7

  8. Slide 8: Distribution Network

    Distribution Network  Chow Sang Sang directly runs and controls all of its retail stores with no franchise operations Beijing Surrounding  Complementing the extensive retail network, the Provinces eshop.chowsangsang.com working with key retail portals (72) Heilongjiang in Mainland China, offer onl

  9. Slide 9: Focus on Growth in Mainland China

    Focus on Growth in Mainland China Increasing No. of Stores in Mainland China (No. of Stores) 450 400 350 300 250 422 442 200 374 343 150 New New New shops shops shops 100 +47 +63 +34 50 0 2015 2016 2017 2018 1H Same-store Sales +6% -4% +5% +2% Growth - PRC Same-store Sales -11% -25% -2% +22% Growth

  10. Slide 10: Financial Highlights

    PPT TITLE HERE Date Here Financial Highlights 10

  11. Slide 11: Operating Performance

    Operating Performance … Turnover Gross Profit (HK$ mm) (HK$ mm) 12,000 3,000 30.0% 27.0% 24.4% 24.7% 10,000 2,500 25.0% 8,000 2,000 20.0% 6,000 1,500 15.0% 9,558 2,360 1,000 2,109 10.0% 4,000 7,801 8,012 1,958 2,000 500 5.0% 0 0 0.0% 2016 1H 2017 1H 2018 1H 2016 1H 2017 1H 2018 1H Gross Margin 11

  12. Slide 12: Operating Performance (Cont'd)

    Operating Performance (Cont’d) … Operating Profit Profit attributable to equity holders (HK$ mm) (HK$ mm) 1,000 9.0% 1,000 8.0% 8.3% 8.0% 7.0% 800 6.9% 800 7.0% 6.5% 6.3% 6.0% 6.0% 4.7% 5.0% 600 600 5.0% 4.9% 4.0% 4.0% 400 797 400 3.0% 3.0% 606 550 2.0% 507 2.0% 200 200 392 364 1.0% 1.0% 0 0.0% 0 0.

  13. Slide 13: Driven by Retail Segment

    …Driven by Retail Segment… Revenue Breakdown Results Breakdown 0.6% 0.4% 0.2% 0.7% 0.2% 100% 0.2% 0.2% 0.3% 0.2% 100% 1.4% 3.2% 3.1% 11.1% 12.0% 9.1% 1.2% 1.2% 90% 90% 80% 80% 70% 70% 60% 60% 50% 50% 99.5% 94.9% 95.5% 88.1% 87.4% 90.5% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% 2016 1H 2017 1H 2018 1H 20

  14. Slide 14: Retail Performance

    …Retail Performance… Retail – Revenue Retail – Operating Results (HK$ mm) (HK$ mm) 10,000 1,000 10.0% 8.5% 9.0% 8,000 800 8.0% 7.1% 7.0% 7.0% 6,000 600 6.0% 5.0% 8,646 4,000 400 4.0% 7,005 733 6,871 3.0% 482 500 2,000 200 2.0% 1.0% 0 0 0.0% 2016 1H 2017 1H 2018 1H 2016 1H 2017 1H 2018 1H Margin 14

  15. Slide 15: Robust Demand in Mainland China

    … Robust Demand in Mainland China 2016 2017 2018 1H Others Others Others 0.7% HK/Macau 0.7% HK/Macau 0.6% HK/Macau 24.6% 24.7% 22.5% China 52.2% China HK/Macau 55.3% HK/Macau China HK/Macau (PRC (PRC 57.4% (PRC Customers) Customers) Customers) 22.5% 19.3% 19.5% Sales Attributable 75% 75% +2% 77% to

  16. Slide 16: Consolidated Sales Mix – (Retail)

    Consolidated Sales Mix – (Retail) 2017 1H 2018 1H Watches Watches 5% 5% Non gold Non gold Gold jewellery Gold jewellery 62% 32% 63% 33% Gross margin: Gold* : 16%-23% Non gold jewellery: 38%-42% Watches: 21%-29% * Include gold price movement 16

  17. Slide 17: Consolidated Gross Profit Contribution – (Retail)

    Consolidated Gross Profit Contribution – (Retail) 2017 1H 2018 1H Taiwan Taiwan 1% 1% Hong Hong Kong/ Kong/ China Macau Macau China 61% 38% 38% 61% 17

  18. Slide 18: Change of Average Selling Price

    Change of Average Selling Price Hong Kong/Macau - Gold Hong Kong/Macau - Jewellery (HK$) (HK$) 6,000 20,000 4,700 4,800 4,500 15,000 12,900 12,400 4,000 12,000 10,000 2,000 5,000 0 0 2016 2017 2018 1H 2016 2017 2018 1H Mainland China - Gold Mainland China - Jewellery (RMB) (RMB) 5,000 12,000 10,200

  19. Slide 19: Working Capital Trends

    Working Capital Trends Average Inventory Turnover Days Average Receivables Turnover Days (No. of Days) (No. of Days) 220 216 20 16 16 16 210 205 15 200 190 185 10 180 5 170 160 0 2016 1H 2017 1H 2018 1H 2016 1H 2017 1H 2018 1H Average Payables Turnover Days Cash Conversion Cycle (No. of Days) (No. o

  20. Slide 20: Financial Highlights

    Financial Highlights (HK$ million) For the 6 months ended % change 2016 2017 2018 18 vs 17 Turnover 7,801 8,012 9,558 +19.3% Jewellery Retail 6,871 7,005 8,646 +23.4% Other businesses 930 1,007 912 -9.4% Gross profit 2,109 1,958 2,360 +20.5% Operating profit 507 550 797 +44.9% EBITDA 598 640 824 +28

  21. Slide 21: Other Financial Information

    Other Financial Information (HK$ million) As at Dec-31 Jun-30 2016 2017 2018 Cash and cash equivalents 1,283 1,200 1,649 Listed equity investments1 744 854 841 Gearing2 20.4% 20.5% 19.8% Unused banking facilities 4,318 4,128 4,505 1 Listed equity investments represents HKEX shares which valued at qu

  22. Slide 22: Strategy Outline

    PPT TITLE HERE Date Here Strategy Outline 22

  23. Slide 23: Expansion with Distinctiveness in Mainland China

    Expansion with Distinctiveness in Mainland China Around 50 new stores in Mainland China in 2018 Expansion Philosophy Self-Run Store Model  Target entry-mid end consumers  Enable consistent and superior service quality  Leverage on high-end shopping malls and with seamless delivery department stor

  24. Slide 24: Product Mix and Branding

    Product Mix and Branding Jewellery Focus and Product Differentiation  Clear presence and visibility of international brands and signature collections  Develop house brands - focus on quality and sophistication appropriate to different customer segments Marketing Initiatives Continue existing progr

  25. Slide 25: Q&A Session

    PPT TITLE HERE Date Here Q&A Session 25

  26. Slide 26: Appendix

    PPT TITLE HERE Date Here Appendix 26

  27. Slide 27: Company History

    Company History 1930-1970 1970-1980 1980-1990 1990-2000 2000-2018 1934 1973 1998 2005 2009 2011 2014 2018 Chow Sang First Re-entered Became Opened Opened Opened Stable Sang company in the sightholder the first the first the first expansion Goldsmith the industry Mainland of Diamond Flagship Flagship

  28. Slide 28: Industry Analysis – HK & Mainland China

    Industry Analysis – HK & Mainland China FY2017-FY2018 HK Jewellery, Watches and Clocks, and Valuable Gifts Sales By comparing June 2018 with June 2017, the value 12.00 of sales of jewellery, watches and clocks, and 10.00 valuable gifts increased by 27.8%, total jewellery, 8.70 8.09 8.03 watches and

  29. Slide 29: Industry Analysis – Mainland China Luxury Market Overview

    Industry Analysis – Mainland China Luxury Market Overview  “Bain & Company Luxury Study 2018 Spring Update” stated that Global personal luxury goods market expected to grow by 6-8 percent to €276-281B in 2018, driven by strong rebound in China.  Mainland China is expected to account for the lion’s

  30. Slide 30: Marketing Program Highlights

    PPT Program Marketing TITLE HERE Highlights Date Here 2018 30

  31. Slide 31: Chinese New Year Campaign

    Chinese New Year Campaign  Celebrating the Chinese New Year, seasonal blessings were brought to the mass audience, wishing them a prosperous year like the motif “Koi” fish. Aiming to drive top of mind awareness for seasonal gifting.  Touch points included digital (social media & website), POSM, pr

  32. Slide 32: Valentine's Day Campaign

    Valentine’s Day Campaign  Launched a Valentine’s Day campaign – “Be HK my King Be my Queen” featuring affordable luxury jewellery which are ideal for seasonal gifting.  Leverage the insight of giving jewellery as a pampering gesture to girls to express feelings, we created a few key visuals featur

  33. Slide 33: Valentine's Day Campaign

    Valentine’s Day Campaign Short digital video for social media Brand website Store display Gift with purchase 33

  34. Slide 34: 3.8 Women's Day Campaign

    3.8 Women’s Day Campaign  To celebrate with independent women and seize business opportunity for self-reward, a Spring-themed campaign for 3.8 International Women’s Day was launched together with attractive promotion in store.  Touch points covered social media engagement, website and window displ

  35. Slide 35: Mother's Day Campaign

    Mother’s Day Campaign Key Visual  Celebrating a lively Mother’s Day, we have created a campaign theme in illustration to showcase the jewellery. The beautiful jewellery blended in with nature foster the self-purchase as well as the gifting initiatives.  Touch points covered digital campaign, below

  36. Slide 36: MintyGreen CN Launch

    MintyGreen CN Launch  To introduce Chow Sang Sang’s brand image to young audiences, a new Brand MINTYGREEN was launched in 2018 to strategically penetrate the daily wear market of Mainland China.  MINTYGREEN is a brand which focuses on carrying Chow Sang Sang’s young affordable daily wear collecti

  37. Slide 37: MintyGreen CN Launch

    MintyGreen CN Launch Guilin Store Cheungsha Store 37

  38. Slide 38: e-Shops Performance

    e-Shops Performance  Aside from our own eshop.chowsangsang.com, we partnered with different portals such as TMALL, JD.com to launch various trading events and achieved some very positive results.  During ecommerce giants’ sales event on 18th June, 2018 held by TMALL, Chow Sang Sang topped the list

  39. Slide 39: 2018 New Stores

    2018 New Stores Yuen Long, Hong Kong Guangzhou, Mainland China Guangzhou, Mainland China Shanghai, Mainland China Shenzhen, Mainland China Guilin, Mainland China 39

Chow Sang Sang Holdings International — H1 2018 Earnings Presentation on 6ix