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International Housewares Retail Company Limited 2018/19 Annual Results
2018/19 Annual Results Corporate Presentation
30 July 2019
2018/19 Annual Results Corporate Presentation 30 July 2019 - - PowerPoint PPT Presentation
2018/19 Annual Results Corporate Presentation 30 July 2019 International Housewares Retail Company Limited 1 2018/19 Annual Results Disclaimer Stock code: 1373 This presentation and/or these materials have been delivered to you on the basis
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International Housewares Retail Company Limited 2018/19 Annual Results
2018/19 Annual Results Corporate Presentation
30 July 2019
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International Housewares Retail Company Limited 2018/19 Annual Results
Stock code: 1373
International Housewares Retail Company Limited 2018/19 Annual Results
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
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. 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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. 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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.
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International Housewares Retail Company Limited 2018/19 Annual Results
Stock code: 1373
International Housewares Retail Company Limited 2018/19 Annual Results
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Business Highlights Financial Performance Business Review by Market Outlook and Strategies
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International Housewares Retail Company Limited 2018/19 Annual Results
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International Housewares Retail Company Limited 2018/19 Annual Results
Stock code: 1373
International Housewares Retail Company Limited 2018/19 Annual Results
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Net Profit up 17.1% to HK$118.3M Revenue up 5.4% to HK$2.35B; Sales via e-platform grew over 200% Gross Profit increased 3.6% to HK$1.08B Strong balance sheet cash plus real estate assets over HK$495M Hong Kong sales growth 6.7% Singapore recorded a net profit in 2nd half of FY19 Proposed final dividend 9 HK cents/share, 87% payout ratio
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International Housewares Retail Company Limited 2018/19 Annual Results
Stock code: 1373
International Housewares Retail Company Limited 2018/19 Annual Results
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FY2016 FY2017 FY2018 FY2019 Hong Kong 277 290 290 305 Singapore 62 57 48 44 Macau 8 8 8 7
Number of directly-owned stores
263 stores 6 stores 32 stores
44 stores in Singapore
7 stores in Macau
9 licence stores in four jurisdictions
60 Overseas Stores 305 Stores in Hong Kong
4 stores
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International Housewares Retail Company Limited 2018/19 Annual Results
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International Housewares Retail Company Limited 2018/19 Annual Results
Stock code: 1373
International Housewares Retail Company Limited 2018/19 Annual Results
For the year FY2019 FY2018 Turnover (HK$’000) 2,350,351 2,230,102 Gross Profit (HK$’000) 1,080,654 1,043,039 Net profit (HK$’000) 118,270 100,992 Profit attributable to equity holders (HK$’000) 119,051 104,845 Key ratios Operating profit Margin 5.9% 5.4% Net profit margin 5.0% 4.5% Total Dividend
Interim dividend (HK cents)
5.3 5.2
Final dividend (HK cents)
9.0 7.0 Total Dividend (HK cents) 14.3 12.2
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International Housewares Retail Company Limited 2018/19 Annual Results
Stock code: 1373
International Housewares Retail Company Limited 2018/19 Annual Results
As at 30-Apr FY2019 FY2018 Net Cash generated from operating Activities (HK$’000) 102,117 114,096 Net cash outflow for capex (HK$’000) 39,776 73,344 Cash and cash equivalents (HK$’000) 369,703 386,013 Inventory Turnover (1) (days) 83 85 Trade Payable Turnover (2) (days) 45 51
9 Notes: 1. Inventory turnover = Closing inventory / Cost of sales x 365 2. Trade payables turnover = Closing trade payables / Cost of sales x 365
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International Housewares Retail Company Limited 2018/19 Annual Results
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International Housewares Retail Company Limited 2018/19 Annual Results
Stock code: 1373
International Housewares Retail Company Limited 2018/19 Annual Results
Revenue breakdown
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Macau Singapore Hong Kong
87.0% 11.2%
% to Group’s Revenue
1.8%
HK$’000
FY19 FY18
88.2% 10.1% 1.8%
2,350,351 2,111,001 1,844,576 1,941,285 2,071,443 227,686 248,841 237,715 38,352 39,976 41,193
FY2017 FY2018 FY2019
Hong Kong Singapore Macau 2,230,102
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International Housewares Retail Company Limited 2018/19 Annual Results
Stock code: 1373
International Housewares Retail Company Limited 2018/19 Annual Results
FY 2019 FY 2018 Number of stores at 30-April 305 290 Sales growth 6.7% 5.2% CSSG 4.8% 4.5% Operating profit margin 6.6% 6.4% Net profit margin 5.6% 5.5%
Revenue growth driven by CSSG and new store openings Introduced snack and FMCG products to capture new business and widen customer base Private label development and penetration – product features, lifestyle, space efficiency, consistent image & packaging, in-store visibility, marketing and publicity Moving Ella’s product focus to selling more global beauty products Established our 020 platform fitting to our unique positioning – convenient GMS chain Riding on our store footfall & online retail channels, selling vouchers & coupons for local renowned brands of food & beverage following the Government housing plans to further expand physical store network Introduced “shared inventory” and “cross-dock” concept to further improve inventory control Plan to change store layout and upgrade shelving system more fitting to the new product categories - snacks and personal & household FMCG products
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International Housewares Retail Company Limited 2018/19 Annual Results
Stock code: 1373
International Housewares Retail Company Limited 2018/19 Annual Results
CSSG remaining strong Starting to set up in-store “Must Buy Corner” offering branded snack, personal care & household FMCG to fuel sales growth momentum Importing HK good selling OEM products to attract more sales Strengthening management team by recruiting local general manager of strong local experience Better utilization of Group’s warehouse & logistics facilities in the PRC Gap substantially narrowed, confident to bring positive financial contribution to the Group in near term
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For the year FY 2019 FY 2018 Number of stores 44 48 % of sales to group’s revenue 10.1% 11.2% Gross margin 44.1% 43.4% CSSG 6.1% 9.2% Total expenses to sales ratio 46.3% 47.0%
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International Housewares Retail Company Limited 2018/19 Annual Results
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International Housewares Retail Company Limited 2018/19 Annual Results
Stock code: 1373
International Housewares Retail Company Limited 2018/19 Annual Results
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Maintaining leading position in Hong Kong Convenience GMS chain – providing customers convenience to access a wide variety of products of different categories under a roof via physical & digital display Anticipating a profitable operation in Singapore in near term Looking for right store locations in Macau, a profitable market Riding on our edges to continue our development & solidification of O2O platform with JHC unique traits
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International Housewares Retail Company Limited 2018/19 Annual Results
Stock code: 1373
International Housewares Retail Company Limited 2018/19 Annual Results
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32 stores in Hong Kong Introducing new categories – daily consumables – snacks & personal care Moving to Ella 3.0 – more focus on global beauty products Importing new products from Korea, Japan, USA and Thailand to enrich product-mix & to keep display fresh and eye-catching Modifying store layout and shelving, better fitting for new product categories
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International Housewares Retail Company Limited 2018/19 Annual Results
Stock code: 1373
International Housewares Retail Company Limited 2018/19 Annual Results
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Consistent image across 450+ SKUs of different categories New packaging – maintain fresh displays and promote USPs Add new elements to old design
House Brand
Create digital content supporting with brand search Modern design + multifunctional features for tiny home New category – extra sales More wireless & tech items in future On-going improvement for customer needs
Private Label Development ◆ Continuous Efforts on House Brand Building
House Brand
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International Housewares Retail Company Limited 2018/19 Annual Results
Stock code: 1373
International Housewares Retail Company Limited 2018/19 Annual Results
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New Product Category ◆ FMCG New Retail Brand ◆ $mart
Direct import of branded snacks, personal care & household FMCG products Improve customer foot traffic and induce extra buy, same store sales growth driver Core value - better price, convenience and wide-variety Available at all physical stores, selective items offered on eshop Create a new retail brand named $mart , in the format of shop-in-shop or separate store Plan for improvement – sourcing power, logistics, storage, store layout and shelving system
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International Housewares Retail Company Limited 2018/19 Annual Results
Stock code: 1373
International Housewares Retail Company Limited 2018/19 Annual Results
Easy Buy
fully implemented in 2018
customers’ orders
reduce stockholding
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JHC Omni-Channel Retailing
Physical Retail Store Network
housewares convenience store
JHCeshop
buying
pick-up
J Fun App
at store, eshop or Ipanal
Social media
post promotion message; publicizing house brand products
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International Housewares Retail Company Limited 2018/19 Annual Results
Stock code: 1373
International Housewares Retail Company Limited 2018/19 Annual Results
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Incremental Business ◆ B-2-B Collaborations
In collaboration with established brands in Hong Kong to sell vouchers & coupons Traffic booster both of
Fast turn items; incremental sales
Promotion in JFun APP Highlight in eShop
Provide instant wide exposures & marketing for B-2-B partners, over 300 stores well cover all households in HK Comprehensive marketing support to drive partners’ sales
& J Fun App
message
Feature in EDM & instore Leaflets
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International Housewares Retail Company Limited 2018/19 Annual Results
Stock code: 1373
International Housewares Retail Company Limited 2018/19 Annual Results
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Strengthening Backroom Supports Set up an office Centre in Guangzhou
Within 10 minute walk from High-speed Rail GZ South Station to our new office 47 minute ride from HK West Kowloon Station to GZ South Station Put in use in Mar 19 Easier to recruit right talents at lower cost – IT, Sourcing, Graphic Designer
New Outsourcing warehouse/logistics facilities in Qianhai, Shenzhen
Stand-by storage for seasonal requirements, cost based on actual usage Cross-border delivery directly to stores in HK Allow labor intensive tasks done at lower cost – e.g. packing, labelling Greater flexibility to expand future logistics capacity
Contracted signed for installation of new ERP system (SAP)
Start with core operations – Warehouse Management & Logistics and Merchandizing to go first; Accounting & Financing to be second On-going review and improvement for full system integration Total solution for operation efficiency Implementing new ERP system to well prepare ourselves for the further business expansion in the coming future
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International Housewares Retail Company Limited 2018/19 Annual Results
Stock code: 1373
International Housewares Retail Company Limited 2018/19 Annual Results
Planned store expansion & estimated capital expenditures
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Store expansion
(Net increase of number of stores)
Actual at 30 Apr 19 Net increase FY20 Net increase FY21 Hong Kong (incl. 123 by Ella) 305 12 12 Macau 7 2 2 Singapore 44 2 6 Total: 356 16 20
Estimated capital expenditure
HK$ million
FY20 FY21 New store openings (incl. relocations) 18 20 Ongoing renovations of existing stores 18 20 ERP system & logistics improvement 20 10
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International Housewares Retail Company Limited 2018/19 Annual Results
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International Housewares Retail Company Limited 2018/19 Annual Results