2017/18 Interim Results Corporate Presentation 19 December 2017 - - PowerPoint PPT Presentation

2017 18 interim results
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2017/18 Interim Results Corporate Presentation 19 December 2017 - - PowerPoint PPT Presentation

2017/18 Interim Results Corporate Presentation 19 December 2017 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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2017/18 Interim Results Corporate Presentation

19 December 2017

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Stock code: 1373

International Housewares Retail Company Limited 2017/18 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”) and BOCI Asia Limited (the “Sole Sponsor” or the "Sole Global Coordinator") 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, the Sole Sponsor, the Sole Global Coordinator 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, the Sole Sponsor, the Sole Global Coordinator and their 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, the Sole Sponsor, the Sole Global Coordinator or any of their respective affiliates, nor by any of the directors, officers, employees, shareholders, advisers, agents or representatives of the Company, the Sole Sponsor, the

Sole Global Coordinator 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, the Sole Sponsor, the Sole Global Coordinator and their respective affiliates, nor any of the directors, officers, employees, shareholders, advisers, agents or representatives of the Company, the Sole Sponsor, the Sole Global Coordinator 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, the Sole Sponsor, the Sole Global Coordinator and their respective affiliates, nor any of the directors, officers, employees, shareholders, advisers, agents or representatives of the Company, the Sole Sponsor, the Sole Global Coordinator 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, the Sole Sponsor, the Sole Global Coordinator and their respective affiliates, nor any of the directors, officers, employees, shareholders, advisers, agents or representatives of the Company, the Sole Sponsor, the Sole Global Coordinator 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 omission 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, the Sole Sponsor, the Sole Global Coordinator and any and all of their 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, the Sole Sponsor, the Sole Global Coordinator and their respective affiliates, or any of the directors, officers, employees, shareholders, advisers, agents and representatives of the Company, the Sole Sponsor, the Sole Global Coordinator 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, the Sole Sponsor, the Sole Global Coordinator and their respective affiliates, nor any of the directors, officers, employees, shareholders, advisers, agents or representatives of the Company, the Sole Sponsor, the Sole Global Coordinator or any of their respective affiliates, makes any express or implied

representation or warranty as to the fairness, reasonableness, accuracy, correctness or completeness of 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, the Sole Sponsor, the Sole Global Coordinator and their respective affiliates, and each of the directors, officers, employees, shareholders, advisers, agents and representatives of the Company, the Sole Sponsor, the Sole Global Coordinator 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 2017/18 Interim Results

Agenda

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Business Highlights Business Review by Market Financial Performance Outlook and Strategies

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International Housewares Retail Company Limited 2017/18 Interim Results

Business Highlights

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International Housewares Retail Company Limited 2017/18 Interim Results

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Results Highlights

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Profit attributable to equity holders increased 15.2% to HK$39.4M Revenue grew 5.7% to HK$1.06B Strong financial position with HK$348M cash in Bank Hong Kong business remains solid with 5.5% sales growth Hong Kong business contributed HK$44.1M to net profit Proposed interim divided 5.2 HK cents per share Property assets & prepayment for property assets totaling over HK$125M

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Stock code: 1373

International Housewares Retail Company Limited 2017/18 Interim Results

Retail Network

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FY2015 FY2016 FY2017 1H FY2018 Net change Hong Kong 267 277 290 291 1 Singapore 65 62 57 51 (6) Macau 8 8 8 9 1

Number of directly-owned stores

Hong Kong: 291 stores Macau: 9 stores

Singapore: 51 stores East Malaysia: 1 store Saudi Arabia: 5 stores Australia: 2 stores Cambodia: 3 stores

12 Licence Stores 351 Direct-owned Stores

Vietnam: 1 store

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Financial Performance

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Stock code: 1373

International Housewares Retail Company Limited 2017/18 Interim Results

For the six months to Oct 2017 Oct 2016 Turnover (HK$’000) 1,060,007 1,002,534 Gross Profit (HK$’000) 490,306 470,995 Net profit from Hong Kong Business (HK$’000) 44,089 39,243 Profit attributable to equity holders (HK$’000) 39,378 34,236 Key ratios Operation profit Margin 4.2% 3.6% Net profit margin 3.4% 2.9% Total Dividend

 Interim dividend (HK cents)

5.2 5.0

 Special dividend (HK cents)

  • Total Dividend (HK cents)

5.2 5.0 Payout Ratio 95% 105%

Financial Performance – 1H FY2018

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Stock code: 1373

International Housewares Retail Company Limited 2017/18 Interim Results

(HK$’000) Oct 2017 Oct 2016 Capex in the 6 months to Oct 14,110 22,282 Property acquired (capex) in the 6 months to Oct 36,889

  • Prepayment for purchase of a property as of Oct

35,035

  • Cash & cash equivalents as of Oct

347,806 408,864 Inventory Turnover days (1) 77 85 Trade Payable Turnover days (2) 43 48

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 FY2018

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Business Review by Market

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Stock code: 1373

International Housewares Retail Company Limited 2017/18 Interim Results

Revenue Breakdown

Revenue breakdown

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Macau Singapore Hong Kong

87% 11%

% to Group’s Revenue

2%

1,755,007 1,844,576 875,406 923,151 231,115 228,073 108,677 119,470

FY2016 FY2017 IH FY17 IH FY18 Hong Kong Singapore West Malaysia PRC Macau

2,039,575 1,002,534 1,060,007 2,111,001

HK$’000

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Stock code: 1373

International Housewares Retail Company Limited 2017/18 Interim Results

Six months to Oct 2017 Oct 2016 Number of stores at 31-Oct 291 284 Total revenue growth 5.5% 7.4% Comparable store sales growth (CSSG)* 4.6% 5.0%

Hong Kong – Strategic Focus with Solid Growth

 Tying togather JHCeshop, physical stores, Easy Buy (in-store ipanel) and J Fun (loyalty program) providing borderless shopping environment to customers across different retail channels  Revenue growth by CSSG and new store opening  Looking for high potential store locations, more relying on CSSG rather opening new store for revenue growth  Maintaining good-balance between CSSG and GP margin improvement  Steadfast expansion of 123 by Ella with to regular review  Responsive to customer demands and improving supply chain efficiency  Stable and extensive supplier network supplying wide variety of products at competitive price  More focused on private label improvement, quality, uniqueness, series and packaging – substitutes of international brand.

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 2017/18 Interim Results

Six months to Oct 2017 Oct 2016 Number of stores 51 61 Sales growth 9.9%

  • 8.9%

% of sales to group’s revenue 11.3% 10.8%

Singapore – Steadfast development mid-to-long term

 Optimize product-mix , increase SKUs, prevent out-of-stock and fortify supply chain  Remain focused on operational efficiency and local team cultivation  Conservative approach to store opening in short-term, closing under-performing stores and

  • pening new stores in high potential areas

 Holding optimistic view on further development given that Singapore and Hong Kong are similar in many respects

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International Housewares Retail Company Limited 2017/18 Interim Results

Outlook and Strategies

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Stock code: 1373

International Housewares Retail Company Limited 2017/18 Interim Results

Focusing in Hong Kong & Singapore

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 Solidify leading position in Hong Kong market by setting up JHC omni-channel retailing , improving supply chain efficiency and offering products and services to cater for customers’ demand in the fast changing market  Look Singapore as the 2nd important market, maintain strong focus, hold optimistic view mid-to-long term  Further integrate Singapore into Hong Kong, strengthen

talent pool, resources & system sharing

Home Market

JHC omni-channel retailing

2nd Market

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Stock code: 1373

International Housewares Retail Company Limited 2017/18 Interim Results

Simple ◆ Fast Retailing : 123 by Ella

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 Successfully established the brand “123 by Ella” in Hong Kong market – young, simple and fast.  Currently over 30 stores in operation, steadfast expansion subject to regular review  Reinforcing supply chain efficiency, product-mix optimization and responsive to trends and customer demand

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International Housewares Retail Company Limited 2017/18 Interim Results

Reinforce the leading position and sustainable growth

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Product

 Offer more customized private label products to meet customers trends and market changes  Stepping up marketing effort to enhance the presence of private labels

Retail Channel

Set up a platform putting together JHCeshop, physical stores, EasyBuy (in- store ipanel ) and J Fun (loyalty program) to provide customers with borderless shopping experience across different retail channels

Talents

 Train, promote and retain those capable internally so as to build talent pipelines;  Recruit new talents externally so as to bring new ideas and expertise

System & Supply Chain

 Operational efficiency & effective control by standardized procedures & system  Supply chain fortification by effective supplier management & intelligent information

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Stock code: 1373

International Housewares Retail Company Limited 2017/18 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 17 Net increase 2HFY2018 Net increase FY2019 Hong Kong (incl. Ella) 291 6 15 Macau 9 1 Singapore 51 3 Total: 351 6 19

Estimated capital expenditure

HK$ million

2HFY2018 FY2019 New store openings 10 22 Ongoing renovations of existing stores 10 22 Others (incl. improvements to logistics & IT) 10 30

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International Housewares Retail Company Limited 2017/18 Interim Results

Q & A

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International Housewares Retail Company Limited 2017/18 Interim Results

Thank You!