Convenience Retail Asia Limited · HKEX:831
Convenience Retail Asia — H1 2015 Earnings Presentation
30 slides from Convenience Retail Asia's earnings presentation, Aug 25, 2015
Slide 1: Convenience Retail Asia Ltd 2015 Interim Results Announcement
Convenience Retail Asia Ltd 2015 Interim Results Announcement 25 August 2015
Slide 2: Agenda
Agenda Hong Kong & China Retail Markets Key Highlight 2015 First Half Financial Results Highlight 2015 Update & Outlook Question & Answer 2
Slide 3: Hong Kong & China Retail Markets Key Highlight
Hong Kong & China Retail Markets Key Highlight 3
Slide 4: Hong Kong Retail Market
Hong Kong Retail Market Sing Tao Daily News (21 August 2015) Hong Kong Economic Times (20 August 2015) Ming Pao (22 August 2015) Hong Kong Oriental Daily News Economic Times (10 August 2015) (14 August 2015) 4
Slide 5: Hong Kong Retail Market
Hong Kong Retail Market Total Retail Sales Value Composite CPI 20 June YTD: -1.6% 6 June YTD: +3.7% 14.8 11.0 4.6 4.5 10 9.8 4.3 4.4 4.1 4.1 Year-on-year % change Year-on-year % change 4 3.0 3.1 2.8 0 -0.2 -0.1 -0.4 -2.9 -2.1 2 -10 -14.5 -20 0 2012FY 2013FY 2014FY 201501 201502 201503 201504 201505
Slide 6: China Consumer Confidence Index By City Tier
China Consumer Confidence Index By City Tier Rural Q2 CCI rebounds with 2 points increase, other tiers’ confidence keeps stable Source: China Consumer Confidence Survey 6
Slide 7: China Retail Market
China Retail Market Total Retail Sales Value Consumer Price Index 18 4 June YTD: +10.4% June YTD: +1.3% 15 14.3 13.1 3 Year-on-year % change 12.0 Year-on-year % change 2.6 2.6 12 10.7 10.6 10.2 10.0 10.1 2.0 9 2 1.5 1.4 1.4 1.4 6 1.2 1 0.8 3 0 0 201501-02 201503 201504 201505 201506 2012FY 2013FY 20
Slide 8: China GDP and Retail Sales
China GDP and Retail Sales China economy keeps the new normal and stabilizes in Q2; Retail sales still maintains double digital growth while FMCG growth lags behind Source: National Bureau of Statistics; Nielsen Retail Index 8
Slide 9: Key Highlight of the Hong Kong & Southern China Markets
Key Highlight of the Hong Kong & Southern China Markets Very challenging time for retailing Declining PRC consumer spending sentiment Hong Kong consumers purchasing same volume Yet operating expenses still escalating Rental dropping but renewal still increasing 17% - 23% Labour shortage
Slide 10: New Products and Re-inventing
New Products and Re-inventing 10
Slide 11: New Products and Re-inventing
New Products and Re-inventing 11
Slide 12: New Products and Re-inventing
New Products and Re-inventing 12
Slide 13: FingerShopping.com
FingerShopping.com FingerShopping Sales Trend 2014 2015 13
Slide 14: 2015 First Half Financial Results Highlight
2015 First Half Financial Results Highlight 14
Slide 15: Number of Stores
Number of Stores End of 1H2014 Opened Closed 1H2015 2014 Circle K Hong Kong 336 329 5 (6) 328 Circle K Southern China 80 89 1 (8) 82 Circle K Macau (franchised) 25 26 2 (2) 26 Circle K Zhuhai (franchised) 12 12 3 (1) 14 Saint Honore HK & Macau 99 102 2 (6) 98 Saint Honore Southern China 43 46 5 (8)
Slide 16: Group Turnover
Group Turnover + 5.8% 3,000 2,368.3* 2,500 2,238.6* 498.2 2,000 472.2 HK$ Million 1,500 Saint Honore Circle K 1,000 1,801.3 1,910.4 500 0 1H2014 1H2015 ∗ Less inter-group sales: HK$34.9M in 1H2014 and HK$40.3M in 1H2015 16
Slide 17: Group Gross Profit & Other Income
Group Gross Profit & Other Income 40 - 0.8% 38 36.8 36.0 % of Turnover 36 34 32 30 1H2014 1H2015 17
Slide 18: Group Store Operating Expenses
Group Store Operating Expenses + 0.1% 30 28 27.0 26.9 % of Turnover 26 24 22 20 1H2014 1H2015 18
Slide 19: Group Net Profit
Group Net Profit 80 60 48.7 30.8 40 Net Profit: -36.8% HK$ Million Excluding FingerShopping & Sinopec Project: -16.1% 20 0 -5.5 -9.9 -20 -4.8 1H2014 1H2015 FingerShopping Loss Sinopec Project 19
Slide 20: Net Profit by Market
Net Profit by Market (HK$ Million) 1H2014 1H2015 Change Hong Kong & Macau Markets 73.6 66.0 -10.3% China Market (19.4) (20.5) -5.7% FingerShopping & Sinopec Project (5.5) (14.7) -1.6x CRA Group Net Operating Profit 48.7 30.8 -36.8% 20
Slide 21: Group Net Profit as % of Turnover
Group Net Profit as % of Turnover 3 2.4 2.2 Net Profit 2 1.9 % of Turnover Excluding FingerShopping & Sinopec Project 1.3 1 0 1H2014 1H2015 Net Profit as % of Turnover: -0.9% Excluding FingerShopping & Sinopec Project: -0.5% 21
Slide 22: Basic Earnings Per Share
Basic Earnings Per Share 10 8 7.27 Basic Earning Per Share 6.53 6.04 6 Excluding FingerShopping HK Cents & Sinopec Project 4.09 4 2 0 1H2014 1H2015 Basic Earning Per Share: -37.4% Excluding FingerShopping & Sinopec Project: -16.9% 22
Slide 23: 1H2015 Financial Results Highlight
1H2015 Financial Results Highlight 1H2014 1H2015 Change Number of Stores 595 591 - 4 stores Group Turnover (HK$M) 2,238.6 2,368.3 +5.8% Group Net Profit (HK$M) 48.7 30.8 -36.8% Excluding FingerShopping and Sinopec Project 54.2 45.5 -16.1% Net Profit as % of Turnover 2.2% 1.3% -0.9% Excluding Fin
Slide 24: 2015 Update & Outlook
2015 Update & Outlook 24
Slide 25: Tough Operating Environment
Tough Operating Environment Online Disruptions Declining PRC tourist spending Fierce competition Customer expectations increase Difficult to recruit staff Drop in spending sentiment High rents & More concern for product salary expenses safety, quality, health 25
Slide 26: Volatile and Challenging Outlook
Volatile and Challenging Outlook Digital Disruption Europe Economic Headwind STORES China & Asia Growth CUSTOMER Slowing FRIENDS 26
Slide 27: Major Strategic Changes to Reinvent CRA
Major Strategic Changes to Reinvent CRA 1. CRA to sell Guangzhou CVS business to Fung Holdings 1937, controlling shareholder of CRA Reduce losses to CRA Focus time and resources on profitable growth 2. Circle K Hong Kong and Saint Honore to be bold and speedy in reinvention Improve customer ex
Slide 28: CRA to Sell Guangzhou CVS Business to Fung Holdings 1937
CRA to Sell Guangzhou CVS Business to Fung Holdings 1937 Based on arm’s length valuation and recommendation by independent financial advisor, cash consideration of HK$104.5M Circle K Guangzhou business and Sinopec collaborating opportunity Total net asset value of about HK38M Disposal gain o
Slide 29: To Summarize
To Summarize Tough first half 2015 Challenging outlook for 2nd half Major changes to reinvent the Group 29
Slide 30: Thank You!
Thank You! 30
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