2013 Annual Results Presentation - Chow Sang...
Transcript of 2013 Annual Results Presentation - Chow Sang...
2013 Annual Results Presentation
March 2014
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Disclaimer and Forward Looking Statements
• This document carries the information and the opinion is not for the purpose of comprehensive research, financial services or legal opinion. Chow Sang Sang Holdings International Ltd. does not guarantee its accuracy and integrity. This document contains the information only to provide reference. They can not become or deemed to be sold or bought
or subscribe for securities or other part for the invitation.
• This document contains information, opinion that only reflect Chow Sang Sang Holdings International Ltd’s opinion on the date of the presentation. Chow Sang Sang Holdings International Ltd. can change anything on this document without notices. Chow Sang Sang
Holdings International Ltd. is not liable for any losses incurred from the usage of information or opinions obtained from this document.
• This document contains confidential information to be used solely for the purpose of
personal reference. In addition, this document may not be transmitted or transferred to any other person or in any way be incorporated into other files or data.
• This document and the related discussion may include forward-looking statements with risk
and uncertain factors. Forward looking wording such as believe, expect, planning, forecast, target, possible, hope, will, may, etc., will be used in this document. The reader of this document should not excessively rely on such forward-looking statements to form their
opinions. These forward-looking statements are based on our own company and other sources that we believe are reliable.
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Presentation Outline
I. Business Overview
II. Financial Highlights
III Future Plan and Strategy
IV. Q&A Session
V. Appendix
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Business Overview
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Company Structure
Jewellery Retail
Main business segment 375 self-operated stores in
Greater China Operates under “Chow
Sang Sang" and “Emphasis Jewellery”
Generated 79% of total revenue for 2013
Precious Metals
Wholesale
Other Investments
Securities Brokerage
Physical metals trading service
Commission based Generated 20% of total
revenue for 2013
8 HK offices and Internet platform
Commission based No proprietary trading Generated 0.1% of total
revenue for 2013
Investment Properties Shares of HKEX Generated 0.7% of total
revenue for 2013
Chow Sang Sang Group
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Business Overview: Jewellery Segment
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Product mix: Jewellery
Gold based Items
Gem-set Items
Licensed Products (Hello Kitty)
International Brands (Gucci, Rolex, Tudor)
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Distribution Network
(1) Excluding Hong Kong and Macau (2) Reached 298 as of Mar 25, 2014
Covered cities
Guangdong
Fujian
Jiangsu Henan
Xinjiang
Gansu
Inner Mongolia
Heilongjiang
Jilin
Liaoning
Tianjin
Hebei
Shandong
Yunnan
Sichuan
Guizhou
Guangxi
Jiangxi Hunan
Hubei
Shanxi
Anhui
Zhejiang
Shanghai
Beijing
Taiwan
Hong Kong Macau
Eastern (51)
Hainan
Southern (1)
(104)
Chongqing
Shaanxi
Ningxia Qinghai
Tibet
Beijing Surrounding
Provinces (49)
Northern (92)
Beijing Flagship Store
Hong Kong Flagship Stores
Kunming Flagship Store
Shanghai Flagship Store
Chow Sang Sang directly runs and controls all of its retail stores with no franchise operations
Complementing the extensive retail network, the eshop.chowsangsang.com working with key retail portals in China, offer online shopping service
Chow Sang Sang
Empasis Jewellery
China(1) 296(2) –
HK / Macau 46 12
Taiwan - 21 as at Dec 31, 2013
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Focus on Growth in Mainland China
Increasing No. of Stores in Mainland China
(No. of Stores)
37% 5% Same-store
Sales Growth
20%
New shops
+50
New shops
+32
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Financial Highlights
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Operating Performance …
Gross Profit Turnover
(HK$ mm) (HK$ mm)
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Operating Performance (Cont’d) …
Profit attributable to equity holders Operating Profit
(HK$ mm) (HK$ mm)
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…Driven by Retail Segment…
Results Breakdown Revenue Breakdown
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… Retail Performance …
Retail – Operating Results Retail – Revenue
(HK$ mm) (HK$ mm)
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…and Robust Demand from PRC Consumers
2011 2013 2012
Mainland customers’ contribution continues to increase
66% 71% 72% +5% +1%
Sales Attributable
to PRC Customers(1)
(1) China sales + HK/Macau sales by PRC customers
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Consolidated Sales Mix – (Retail)
2012
Gross margin: Gold* : 10%-13% Non gold jewellery: 39%-44% Watches: 22%-24% * Include gold price movement
2013
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Consolidated Gross Profit Contribution – (Retail)
2012 2013
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Change of Average Selling Price
Hong Kong/Macau - Jewellery Hong Kong/Macau - Gold
China - Gold China - Jewellery
(HK$)
(RMB) (RMB)
(HK$)
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Improved Working Capital Trends
Average Receivables Turnover Days Average Inventory Turnover Days
Average Payables Turnover Days Cash Conversion Cycle
(No. of Days)
(No. of Days) (No. of Days)
(No. of Days)
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Financial Highlights
(HK$ million)% change
2011 2012 2013 12 vs 13Turnover 17,158 18,260 25,142 +37.7%
Jewellery Retail 12,645 14,861 19,943 +34.2%Other businesses 4,513 3,399 5,199 +53.0%
Gross profit 3,254 3,432 4,208 +22.6%Operating profit 1,467 1,261 1,544 +22.4%EBITDA 1,574 1,400 1,712 +22.3%Profit attributable to equity holders 1,098 985 1,218 +23.7%EPS (HK cents) 162.2 145.5 180.0 +23.7%Dividend per share (HK cents) 60.0 55.0 68.0 +23.6%
For the 12 months endedor as at Dec 31,
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Other Financial Information
(HK$ million)
2011 2012 2013Cash and cash equivalents 631 674 1,009
Available-for-sale investments1 635 671 659 Capital expenditure 190 267 280
Gearing2 33.2% 27.1% 23.4%Unused banking facilities 2,663 4,052 4,114
1 Available-for-sale investments mainly represents HKEX shares which valued at quoted market prices
2 Total borrowings to total equity holders’ equity. Total borrowings includes interest-bearing bank borrowings, bullion loansand interest-bearing bank borrowings arising from securities and futures broking.
For the 12 months ended or as at Dec 31,
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Future Plan and Strategy
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Expansion with Distinctiveness in PRC
Large potential for growth: smaller store count compared to competitors
Selective shop positioning and careful geographic spacing to maximize efficiency & exposure but avoid overconcentration of stores
Target mid-high end consumers Brand development and fine-
tuning is more important than growth in the number of stores
Leverage on e-shops to expand coverage and reach
Capitalize on Existing Presence Expansion Philosophy
Ensure consistent and superior service quality
Leverage on high-end shopping malls and department stores’ own positioning to enhance image
More flagship and premium-status stores
Self-Run Store Model
Around 50 new stores in PRC in 2014
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Product Mix and Branding
Clear presence and visibility of international brands
Develop house brands - focus on quality and sophistication appropriate to different customer segments
Collaboration with international brands for unique products
Leverage on licensed products such as Hello Kitty
Jewellery Focus and Product Differentiation
Continue with existing programs with focus: Expand e-shop, synergizing with physical
stores Capitalize on CRM database Revamp VM at stores
Marketing Initiatives
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Improving Operating Efficiency
Build human capital
o Implement training programs to nurture and develop middle management staff in PRC o Incentive schemes to attract and motivate sales staff
Enhance inventory efficiency o strengthen the logistical network with supply hubs to facilitate “just-in-time” delivery
Focus on R&D for quality enhancement and production efficiency
initiatives for sustainable growth
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Q&A Session
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Appendix
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Company History
1930-1970 1970-1980 1980-1990 1990-2000 2000-2013
1934
Chow Sang Sang
Goldsmith established
in Guangdong
2005
Became sightholder of Diamond
Trading Company
1973
First company in the industry
listed on Hong Kong
Stock Exchange
1998
Re-entered the
Mainland China market
2011
Opened the first Flagship Store in Taiwan
No. of Stores
9
Turnover (HK$ mm)
130
2009
Opened the first
Flagship Store in Beijing
2006
Launch brand
revamp campaign
2013
Stable growth in
China
375
25,142
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Industry Analysis – PRC Jewellery Market Overview
Source: Euromonitor International, International Jewellery London 2013, Sept 4th Source: Euromonitor International, International Jewellery London 2013, Sept 4th
… China became the world leading jewellery market, beating USA and India
While global jewellery sales returns to single digit growth …
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Industry Analysis – HK & PRC
Total jewellery, watches and clocks, and valuable gifts sales growth in HK is 22.97% y-o-y in FY13, according to HK Census and Statistics Department, whereas the growth in retail revenue from Chow Sang Sang’s HK and Macau operations hit 36% y-o-y in FY13.
Growth rate of retail sales for jewellery products in PRC stood at 25.8% y-o-y for FY13, whereas the growth in retail revenue from Chow Sang Sang’s China operations hit 32% y-o-y in FY13.
Source: HK Census & Statistics
Source: National Bureau of Statistics of China
26.5 26.5
23.0
30.3
26.9 23.8 22.7 22.9 21.8 22.1 22.0
26.8
0
5
10
15
20
25
30
35
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
FY2013 PRC Gold, Silver and Jewellery Sales
RMB
billio
n
HK$ b
illion
*
* In order to eliminate the impact of the different date of the “Chinese New Year” (CNY) each year, and enhance the comparability of data, in accordance with the national statistical system, the data in January and February 2013 were investigated and released together. Here the data is evenly divided as RMB26.50 billion.
10.49 9.60
8.68
13.11
10.52 10.73 10.09
9.16
7.54 8.34 8.53
11.53
0
2
4
6
8
10
12
14
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
FY2013 HK Jewellery, Watches and Clocks, and Valuable Gifts Sales
*
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Industry Analysis – PRC Jewellery & Watches Forecast
Continued Strong Growth into 2016:
CAGR 11.2% estimated growth rate for PRC jewellery & watches market value from 2011 to 2016. The total value will increase from US$ 43,829.5 million (2011) to US$ 74,470.5 million (2016).
PRC jewellery & watches Market Value Forecast 2011–2016
CAGR: 11.2%
Source: MARKETLINE
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Chow Sang Sang marketing update 2013
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All rounded advertising campaign launched in May 2013. Covering the Greater China Region and targeting sophisticated female segment.
Touch points covered print, outdoor billboard, digital panels network, internet, social media platform & Store POSM.
Cooperated with Central Saint Martins College of Art and Design to develop collection using the themes “Knot”, “Swirl” and “Dance” to capture the grace and femininity of modern women.
Diamond in Motion
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• 2013 sustaining burst in April to reinforce the supreme quality and awareness of ILD.
• Touch points covered print, outdoor, online, social media and Store POSM.
Infini Love Diamond
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Launched a new Lace collection cooperating with Platinum Guild International, PR events were held in China first tier cities from October to December.
Cities include Shanghai, Guangzhou, Beijing, Chengdu and Xian. Fashion/lifestyle magazines editors, fashion bloggers and VIP members were invited to review the new Collection. Generated PR noise, social buzz and publication coverage.
Platinum Lace Collection
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Thematic advertising campaign featured signature collections for seasoning gifting launched in end Nov, 2013, covering the Greater China Region.
Aimed to catch the young consumers’ attention & stimulate sales by creating a whimsical animation.
Touch points covered TV, print, outdoor billboard, interactive zone in MTR, digital panels network, online, press release, social media platform & Store POSM.
Christmas Promotion
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Maintained strong partnerships with 14 distinctive international jewellery brands from Europe and Japan.
Exclusive distribution rights of Gucci Jewellery in HK, Taiwan and Macau.
Official agent of Rolex and Tudor in Hong Kong and Mainland China. A total of 23 POS as of today.
International Brand Strategic Partnership
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Strengthened product R&D to further develop in-house brands and gold gifting. Product collections developed include Lace, La Pelle Pearl, Yú Yú signature diamond product line and fine jewellery (Jade, semi-precious stones and carat plus diamonds) to capture the high end sector. Product campaign supported by marketing communication and VIP roadshows in tier one cities in China.
Enhancement in Product Portfolio
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2013 New Stores
Mongkok, HK
Kun Ming, China Heilongjiang, China
Jordan, HK
Causeway Bay Bridal zone