20 December 2019 Disclaimer Stock code: 1373 This presentation - - PowerPoint PPT Presentation

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20 December 2019 Disclaimer Stock code: 1373 This presentation - - PowerPoint PPT Presentation

2019/20 Interim Results Corporate Presentation 20 December 2019 Disclaimer Stock code: 1373 This presentation and/or these materials have been delivered to you on the basis of your representation that you are a person into whose possession this


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2019/20 Interim Results Corporate Presentation

20 December 2019

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Stock code: 1373

International Housewares Retail Company Limited 2019/20 Interim Results

Disclaimer

This presentation and/or these materials have been delivered to you on the basis of your representation that you are a person into whose possession this presentation and these materials may be lawfully delivered in accordance with all applicable laws of the jurisdiction in which you are located and you may not, nor are you authorized to, deliver this presentation and these materials to any other person. Any representation to the contrary could result in a violation of applicable laws and may be a criminal offence. By attending this presentation or receiving these materials, you certify to International Housewares Retail Company Limited (the “Company”) that you are a professional investor (as defined in the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) and rules made thereunder) and are a person located outside of the United States (within the meaning of Regulation S of the U.S. Securities Act of 1933, as amended (the “Securities Act”)). The information contained in this presentation and/or these materials is strictly confidential and has been prepared and provided by the Company. By attending this presentation or receiving these materials, you agree, acknowledge and/or undertake: (i) that you have read and agree to comply with the contents of this notice and disclaimer; and (ii) to maintain absolute confidentiality regarding this presentation and these materials and all the information disclosed in it. If you do not accept these conditions or give the certifications, confirmations, agreements, acknowledgements, representations and undertakings set out above and herein, please immediately return this presentation and these materials to the Company or its advisers. Any failure to comply with these restrictions may result in a violation of applicable laws, regulations or rules and material adverse consequences. It is not the intention of the Company or any other person to provide, and you may not rely on this presentation and/or these materials as providing, a complete or comprehensive analysis of the Company and its subsidiaries and proposed subsidiaries (collectively, the "Group"), its condition (financial or otherwise) or prospects. The information contained in this presentation and these materials has not been independently verified and is subject to verification, completion and change without notice. The information contained in this presentation and these materials is only current as of the date of this presentation and these materials. None of the Company and its respective affiliates, advisers, agents and representatives nor any other person is under any obligation to update or keep current the information contained in this presentation and these materials subsequent to the date thereof. No representation or warranty, express or implied, is made or given by or on behalf of the Company or any of its respective affiliates, nor by any of the directors, officers, employees, shareholders, advisers, agents or representatives of the Company or any of their respective affiliates or any other person as to, and no reliance should be placed for any purpose whatsoever on, the fairness, reasonableness, accuracy, correctness or completeness of the information contained in this presentation and/or these materials. By attending this presentation or receiving these materials, you agree and acknowledge that you will be solely responsible for your own assessment of the market and the market position of the Company and the Group and that you will conduct your own analysis and be solely responsible for forming your own view of the Company and the Group, its condition (financial or otherwise) and the potential future performance of its business. None of the Company and its respective affiliates, nor any of the directors, officers, employees, shareholders, advisers, agents or representatives of the Company or any of their respective affiliates or any other person accepts any liability whatsoever for any loss howsoever arising from any use of this presentation or these materials or their contents or otherwise arising in connection with this presentation and/or these materials and/or their contents. This presentation and these materials contain historical information of the Group which should not be regarded as an indication of future performance or results. This presentation and these materials also contain or may contain forward-looking statements that speak only as of the date of this presentation and are, by their nature, subject to significant risks and uncertainties. These forward-looking statements, if any, reflect the Company’s current views, beliefs, plans, estimates and/or expectations with respect to future events and are by no means a guarantee of future performance or results. Actual results, performance or achievements of the Group may differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements, if any. Such forward-looking statements, if any, are based on numerous assumptions regarding factors such as the Group's present and future business strategies and the environment in which the Group will operate in the future, which are beyond the Company's control, and must be read together with such assumptions. Predictions, projections or forecasts, if any, of the economy or economic trends of the markets are not necessarily indicative of the future or likely performance of the Group, and the forecast financial performance of the Group, if any, is not guaranteed. You are cautioned not to place reliance on these forward-looking statements, if any. None of the Company and its respective affiliates, nor any of the directors, officers, employees, shareholders, advisers, agents or representatives of the Company or any of their respective affiliates or any other person shall have any liability for any inaccuracy, error or omission of this presentation or these materials or their contents nor for any loss, howsoever and directly or indirectly, arising from any use of this presentation or these materials or their contents or otherwise arising in connection with this presentation and/or these materials and/or its contents. In addition, none of the Company and its respective affiliates, nor any of the directors, officers, employees, shareholders, advisers, agents or representatives of the Company or any of their respective affiliates or any other person is under any obligation to provide any additional information or to supplement, amend or update this presentation or these materials or any additional information or to correct any inaccuracy, error or

  • mission which may become apparent or otherwise.

This presentation and these materials are for informational purposes only and do not and are by no means intended to constitute or form part of an offer, invitation or solicitation to acquire, purchase or subscribe for any securities of the Company in the United States or anywhere else. Securities of the Company may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act and the applicable securities laws of any state or other jurisdiction of the United States. No securities described herein, if any, have been or will be registered under the Securities Act. No part of this presentation and these materials shall form the basis of, or be relied upon in connection with, any contract, commitment or investment decision whatsoever. Any decision to acquire, purchase or subscribe for any securities of the Company in any offering shall be made solely on the basis of the information contained in a prospectus or offering circular to be issued by the Company in connection with such offering. Neither this presentation nor these materials nor any part or copy of any of them may be taken or transmitted into or distributed in or into, directly or indirectly, the United States (including its territories and possessions, any state of the United States and the District of Columbia). Any failure to comply with these restrictions may constitute a violation of United States securities laws. The transmission or distribution of this presentation and/or these materials in any other jurisdictions may be restricted by law, and persons into whose possession this presentation or these materials come should inform themselves about, and observe, all such restrictions. This presentation and these materials are not directed at, or intended for transmission or distribution to or use by, and the contents of which are not to be accessed or read (whether concurrently or otherwise) by, any person or entity that is a citizen or resident in any jurisdiction where such transmission or distribution or use or access would be contrary to law or regulation or rule or which would require any approval or registration or licensing or other procedure within such jurisdiction. Neither this presentation nor these materials nor any part or copy of any of them may be taken or transmitted into or distributed in Hong Kong or anywhere else, and this presentation and these materials do not, and are by no means intended to, constitute an offer, invitation or solicitation to acquire, purchase or subscribe for securities in Hong Kong or anywhere else. Neither this presentation nor these materials nor any part or copy of any of them may be reproduced, distributed, disseminated or passed on, directly or indirectly, to any other person (whether within or outside your company/firm/organisation) in any manner or published for any purpose.

  • By attending this presentation or receiving these materials, you acknowledge, accept, agree and/or undertake with, and are deemed to have acknowledged, accepted, agreed and undertaken with, the Company and any and all of its respective affiliates and advisers that:
  • 1. You are a professional investor (as defined in the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) and rules made thereunder) and are a person located outside of the United States (within the meaning of the Securities Act).
  • 2. You have the knowledge, experience and capability to conduct your own assessment of the market and the market position of the Company and the Group, that you have conducted or will conduct your own analysis and be solely responsible for forming your own view of the Company and its securities and the Group, its condition

(financial or otherwise) and the potential future performance of its business, and that you have obtained or will obtain your own independent legal, financial, tax and other professional advice relating to investment in any securities of the Company.

  • 3. You have not obtained and will not seek from the Company and its respective affiliates, or any of the directors, officers, employees, shareholders, advisers, agents and representatives of the Company and their respective affiliates, any material information including forward-looking information (whether qualitative or quantitative)

concerning the Group that is not: (i) reasonably expected to be included in the prospectus or offering circular to be issued by the Company; or (ii) publicly available.

  • 4. This presentation and these materials do not constitute, and shall not be deemed to be, a prospectus, notice, circular, brochure, advertisement or document, or an extract from or an abridged version of a prospectus or document, offering any securities to the public in any jurisdiction, nor are they an invitation or solicitation to the

public to make offers to acquire, purchase or subscribe for any securities, nor are they calculated to invite or solicit offers by the public to acquire, purchase or subscribe for any securities, and this presentation and these materials do not constitute or contain an invitation to the public to enter into or offer to enter into an agreement to acquire, dispose of, subscribe for or underwrite securities. This presentation and these materials must not be regarded as an inducement to acquire, purchase or subscribe for any securities, and no such inducement is intended. Neither this presentation nor these materials nor anything contained in any of them shall form the basis

  • f or be relied on in connection with any contract or commitment whatsoever.
  • 5. You will not publish, reproduce, distribute, disseminate, copy or otherwise transmit or pass on, directly or indirectly and in whole or in part, this presentation and/or these materials to any other person and in or into any jurisdiction.
  • 6. None of the Company and its respective affiliates, nor any of the directors, officers, employees, shareholders, advisers, agents or representatives of the Company or any of their respective affiliates, makes any express or implied representation or warranty as to the fairness, reasonableness, accuracy, correctness or completeness
  • f this presentation or these materials or any information in any of them, and none of them is under any obligation, legal or otherwise, to update or keep current this presentation or these materials or any information in any of them.
  • 7. Each of the Company and its respective affiliates, and each of the directors, officers, employees, shareholders, advisers, agents and representatives of the Company and their respective affiliates, expressly disclaims any and all liability on the basis of this presentation or these materials or any information in, or omitted from, or any

inaccuracy or error in respect of, this presentation or these materials or otherwise.

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Stock code: 1373

International Housewares Retail Company Limited 2019/20 Interim Results

Agenda

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International Housewares Retail Company Limited

Business Highlights Financial Performance Business Review by Market

Outlook and Strategies

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International Housewares Retail Company Limited 2019/20 Interim Results

Business Highlights

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Stock code: 1373

International Housewares Retail Company Limited 2019/20 Interim Results

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Results Highlights

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Profit increased 4.9% to HK$48.9m Revenue grew 7.2% to HK$1.16 B Singapore in profit with CSSG 15.3% 92% of profit from Hong Kong business Cash & Bank Balance HK$369 M Gross Profit increased 7.3% Interim dividend 5.5 HK cents per share

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Stock code: 1373

International Housewares Retail Company Limited 2019/20 Interim Results

Physical Store Retail Network

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Number of directly-owned stores

268 stores 6 stores 33 stores

46 stores in Singapore

7 stores in Macau

9 licence stores in four jurisdictions

62 Overseas Stores 311 Stores in Hong Kong

4 stores

FY2017 FY2018 FY2019 IH FY2020 Hong Kong

290 290 305 311

Singapore

57 48 44 46

Macau

8 8 7 7

355 346 356 364

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International Housewares Retail Company Limited 2019/20 Interim Results

Financial Performance

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Stock code: 1373

International Housewares Retail Company Limited 2019/20 Interim Results

For the six months to Oct 2019 Oct 2018 Turnover (HK$’000) 1,161,704 1,083,650 Gross Profit (HK$’000) 542,820 506,078 Net profit (HK$’000) 48,932 46,636 Profit attributable to equity holders (HK$’000) 48,135 48,831 Key ratios Gross Margin 46.7% 46.7% Operation profit Margin 5.8% 5.4% Net profit margin 4.2% 4.3% Total Dividend Interim dividend (HK cents) 5.5 5.3 Payout Ratio 83% 78%

Financial Performance – 1H FY2019

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Stock code: 1373

International Housewares Retail Company Limited 2019/20 Interim Results

(HK$’000) Oct 2019 Oct 2018

Capex in the 6 months to Oct 19,599 10,201 Cash & cash equivalents as of Oct 368,667 415,101 Inventory Turnover days (1) 76 73 Trade Payable Turnover days (2) 46 44

9 Notes: 1. Inventory turnover = Closing inventory / (Cost of sales x2) x365 2. Trade payables turnover = Closing trade payables / (Cost of sales x2) x365

Financial Performance – 1H FY2019

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International Housewares Retail Company Limited 2019/20 Interim Results

Business Review by Market

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Stock code: 1373

International Housewares Retail Company Limited 2019/20 Interim Results

Revenue Breakdown

Revenue breakdown

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Macau Singapore Hong Kong

3.3% 15.3%

CSSG for IH FY20

12.1%

HK$’000

1,941,285 2,071,443 952,019 1,018,203 248,841 237,715 113,758 123,842 FY2018 FY2019 IH FY19 IH FY20 Hong Kong Singapore Macau 2,230,102 2,350,351 1,083,650 1,161,704 17,873 19,659 39,976 41,193

Macau Singapore Hong Kong

87.6% 10.7% 1.7%

% to total revenue IH FY20

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Stock code: 1373

International Housewares Retail Company Limited 2019/20 Interim Results

Six months to Oct 2019 Oct 2018 Number of stores at 31-Oct 311 295 Total revenue growth 7.0% 3.1% CSSG 3.3% 2.2% % of sales to group’s revenue 87.6% 87.9%

Hong Kong – Strategic Focus

 Reinforce sourcing power on snacks & FMCG, store re-fit and re-balance project in progress to support further development of this category  Continue focus on private label products development to cater customers needs (small home, multi-function) and to upgrade brand image through marketing and publicity  Ongoing cost-efficiency improvement via cost structure analysis and implementation of control measures  Solidify plans to improve sourcing efficiency in PRC mainland and to save local warehouse cost by expanding sourcing and warehouse/logistics facilities in Guangzhou  Set up back-office in Guangzhou for easier recruiting right talents at lower cost, e.g. IT staff.  Follow government’s housing plan to set up new stores in new developing residential areas  Inter-linkages among physical store, Easy Buy, JHCeshop and J-fun form an unique O2O platform offering different retail channels for the convenience of customers  Continue to develop business of selling vouchers & coupons of local renowned brand through our retail channels

12 * Comparable store sales growth represents a comparison between the store sales of those stores that were open throughout the periods being compared

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Stock code: 1373

International Housewares Retail Company Limited 2019/20 Interim Results

Six months to Oct 2019 Oct 2018 Number of stores 46 46 CSSG 15.3% 6.0% Revenue growth 8.9%

  • 4.8%

% of sales to group’s revenue 10.7% 10.5%

Singapore – Steadfast development mid-to-long term

 Strong CSSG by in-store “Must Buy Corner” selling snack, personal care and household FMCG  Open concept store in Q3 to showcase the sourcing power and brand image  Project of launch in-store i-panel (Easy Buy) in progress  Look for high potential locations for new store opening  Make use of the Group’s sourcing and warehouse facilities in China to improve sourcing ability and reduce local warehouse cost  With ongoing support from Headquarter and new recruited local talents, financial performance substantially improved.

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International Housewares Retail Company Limited 2019/20 Interim Results

Outlook and Strategies

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Stock code: 1373

International Housewares Retail Company Limited 2019/20 Interim Results

Focusing in Hong Kong, Singapore & Macau

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 Maintain leading positing in Hong Kong  Steadfast development in Singapore  Seek right location in Macau for new store opening  Ongoing enhancement of O2O platform – the unique JHC Omni-Channel Retailing  Continue to Introduce new product categories; plan to transform ourselves into a convenience GMS retail chain

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Stock code: 1373

International Housewares Retail Company Limited 2019/20 Interim Results

Simple ◆ Fast Retailing : 123 by Ella

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 33 stores in Hong Kong  Strong CSSG, thanks to the contribution from new product categories – global beauty, FMCG and personal care products  Increase SKUs, OEM products and exclusive branded products  Diversify sourcing destinations, Korea, Japan, USA and Thailand, etc.  Store re-fit, move forward to ELLA 3.0

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Stock code: 1373

International Housewares Retail Company Limited 2019/20 Interim Results

Reinforce the leading position and sustainable growth

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New Product Category ◆ FMCG New Retail Brand ◆ $mart

 Attract traffic by category re-mix, strengthening facial & skincare, make- up and fragrance products  New store layout & shelving cater for the new product category  Good price, wide variety

  • f products

 New retail brand - $mart, build own VM personality & promotion calendar  Offer similar products at JHC stores to empower sourcing ability through volume purchase

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Stock code: 1373

International Housewares Retail Company Limited 2019/20 Interim Results

Reinforce the leading position and sustainable growth

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 Create digital content supported by internet search  Modern design + multifunctional features & hero product for tiny home

Private Label Development ◆ Continuous Efforts on House Brand Building

 Extra sales  Start with basic range  Extend to wireless & tech items in future  Create customer value with strong local knowledge  Inject new values in old products  Consistent image across a series of OEM products  Modern packaging to increase product visibility and brand awareness

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Stock code: 1373

International Housewares Retail Company Limited 2019/20 Interim Results

Easy Buy

  • In-store shopping iPanel,
  • Wide variety of products for

customers’ orders

  • Solution for limited space;

reduce stockholding

Reinforce the leading position and sustainable growth

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JHC Omni-Channel Retailing

Physical Retail Store Network

  • JHC - Iconic brand of

housewares convenience store

  • Over 300 stores in HK

JHCeshop

  • Selective items
  • Offering coupons of

renown local brands

  • Home delivery / store

pick-up

J Fun App

  • Customer loyalty
  • Gain points for purchase

at store, eshop or Ipanal

  • Push promotion message

Social media

  • Create brand content;

post promotion message; publicizing house brand products

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Stock code: 1373

International Housewares Retail Company Limited 2019/20 Interim Results

Reinforce the leading position and sustainable growth

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3.4

Strengthening Backroom Supports and Operation System

Improve & Expand Operation Capacity of Supply Chain & Human Capital

 The Group’s Guangzhou office adjacent to High-speed Rail GZ South Station has been put into

  • peration, sharing part of IT,

Sourcing and graphic designer functions at lower cost.  Moving the existing own-

  • perated GZ warehouse to a

larger site in Panyu GZ and enhancing existing facilities in Yiwu are part of our overall supply chain efficiency upgrade.

ERP Revamp (SAP)

 Blue-Print confirmed  Staff training in progress  Integration test scheduled in Q3 FY20  Target full launch in March 2020

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Stock code: 1373

International Housewares Retail Company Limited 2019/20 Interim Results

Network Expansion Plan and CAPEX

Planned store expansion & estimated capital expenditures

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Store expansion

(Net increase of number of stores)

Actual at 31 Oct 19 Net increase 2HFY2020 Net increase FY2021 Hong Kong (incl. Ella) 311 5 10 Singapore 46 2 2 Macau 7 1 1 Total: 364 8 13

Estimated capital expenditure

HK$ million

2HFY2020 FY2021 New store openings 9 20 Ongoing renovations of existing stores 12 20 Others (incl. improvements to logistics & IT) 18 5

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International Housewares Retail Company Limited 2019/20 Interim Results

Q & A

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International Housewares Retail Company Limited 2019/20 Interim Results

Thank You!