2018/19 Annual Results Corporate Presentation 30 July 2019 - - PowerPoint PPT Presentation

2018 19 annual results
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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

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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International Housewares Retail Company Limited 2018/19 Annual Results

Stock code: 1373

International Housewares Retail Company Limited 2018/19 Annual Results

Agenda

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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

Business Highlights

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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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Results Highlights

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

Physical Store Retail Network

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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

Financial Performance

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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

Financial Performance – FY2019

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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

Financial Performance – FY2019

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International Housewares Retail Company Limited 2018/19 Annual Results

Business Review by Market

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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

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%

Hong Kong – 1st Market – Strategic Focus

 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

Singapore – 2nd Market – Optimistic

 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

Outlook and Strategies

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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

Focusing in Hong Kong, Singapore & Macau

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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

Simple ◆ Fast Retailing : 123 by Ella

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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

Reinforce the leading position and sustainable growth

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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

Reinforce the leading position and sustainable growth

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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

  • In-store shopping iPanel,

fully implemented in 2018

  • 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

  • Launched in 2015
  • Selective items for online

buying

  • 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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International Housewares Retail Company Limited 2018/19 Annual Results

Stock code: 1373

International Housewares Retail Company Limited 2018/19 Annual Results

Reinforce the leading position and sustainable growth

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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

  • nline & offline

 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

  • Banners / highlight on eshop, Easy Buy

& J Fun App

  • FB adv., social media post, J fun push

message

  • EDM & instore POP, newspaper ads.

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

Reinforce the leading position and sustainable growth

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3.5

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

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 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

Q & A

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International Housewares Retail Company Limited 2018/19 Annual Results

Thank You!