2016/17 interim results corporate...

2016/17 Interim Results Corporate Presentation

16 December 2016

Stock code: 1373

International Housewares Retail Company Limited 2016/17 Interim Results

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2

Stock code: 1373


Agenda

3

Business Highlights

Business Review by Market

Financial Performance

Outlook and Strategies

4 International Housewares Retail Company Limited 2016/17 Interim Results

Business Highlights

Stock code: 1373


Hong Kong business

contributed HK$39.2

million to net profit

5

Revenue grew 4.4% to HK$1

billion

Strong financial

position with cash of

HK$408.9 million

Profit

attributable to equity holders up by 62.2% to K$34.2 million

Proposed interim

Dividend 5 HK cents per

share

Gross Profit increased by

5.5% to HK$471.0

million

Hong Kong business

remains solid with a CSSG

of 5%

Results Highlights

Stock code: 1373


Retail Network

365 stores

6

FY2014 FY2015 FY2016 IHFY2017 Net change

Hong Kong 241 267 277 284 7

Singapore 52 65 62 61 (1)

Macau 6 8 8 8 0

Total 347 353 6

Number of directly-owned stores

Hong Kong: 284 stores

Macau: 8 stores

Singapore: 61 stores

East Malaysia: 1 stores

Saudi Arabia: 5 stores

Australia: 2 stores

Indonesia: 1 stores

Cambodia: 3 stores

12 Licence Stores 353 Direct-owned Stores


Financial Performance

Stock code: 1373


For the six months to Oct 2016 Oct 2015 Change

Turnover (HK$’000) 1,002,534 960,463 +4.4%

Gross Profit (HK$’000) 470,995 446,584 +5.5%

Net profit from Hong Kong Business (HK$’000) 39,243 33,633 +16.7%

Profit attributable to equity holders (HK$’000) 34,236 21,103 +62.2%

Key ratios

Gross Profit Margin 47.0% 46.5% +0.5pp

Net profit margin 2.9% 1.5% +1.4pp

Total Dividend

Interim dividend (HK cents) 5.0 5.0 --

Special dividend (HK cents) - - NA

Total Dividend 5.0 5.0 --

Payout Ratio 105% 171% -66pp

Financial Performance – 1H FY2017

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Stock code: 1373


As at October Oct 2016 Oct 2015 Change

CAPEX (HK$’000) 22.282 15,869 +40%

Net Cash generated from Operating

Activities (HK$’000) 62,162 28,986 114.5%

Cash and cash equivalents (HK$’000) 408,864 405,368 1%

Inventory Turnover (1) 85 91 -6 days

Trade Payable Turnover (2) 48 41 +7 days

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 – IH FY2017


Business Review by Market

Stock code: 1373


Revenue Breakdown

Revenue breakdown

11

Macau

Singapore

Hong Kong 87%

11%

% to Group’s Revenue

2%

1,651,154 1,755,007

815,003 875,406

238,213 231,115

119,311 108,677

FY2015 FY2016 IH FY16 IH FY17

Hong Kong Singapore West Malaysia PRC Macau

1,951,279

2,039,575

960,463

1,002,534

HK$’000

Stock code: 1373


Six months to Oct 2016 Oct 2015 Change

Number of stores at 31-Oct 284 272 +12 stores

Total revenue growth 7.4% 8.4% -1pp

Comparable store sales growth (CSSG)* 5.0% 7.0% -2pp

Hong Kong – Strategic Focus with Solid Growth

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

Fast expansion of 123 by Ella with to regular review

Responsive to customer demands and healthy inventory turnover by shortening procurement cycle

Stable and extensive supplier network supplying wide variety of products at competitive price, strong

Hong Kong dollar reducing procurement cost

More focused on private label improvement, uniqueness, series and packaging

Launched J Fun app , providing a platform to interact with member customers

Extended JHCeShop from web-base to mobile

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

Stock code: 1373


Singapore – Steadfast development mid-to-long term

In-depth product-mix study and restructuring to make it more appealing to local customer

demographic

More focused on operational efficiency and local team cultivation to maximize productivity

Conservative approach to store opening in short-term, closing under-performing stores and

opening new stores in high potential areas

Holding optimistic view on further development given that Singapore and Hong Kong are similar

in many respects

13

Six months to Oct 2016 Oct 2015 Change

Number of stores 61 64 -3 stores

% of sales to group’s revenue 11% 12% -1pp


Outlook and Strategies

Stock code: 1373


Focusing in Hong Kong & Singapore 1

15

Continue expansion in Hong Kong home market

Develop omni-channel retail by integrating physical store network,

JHCeshop, J Fun Apps, ipanel and other social network platforms

Look Singapore as the 2nd important market, maintain strong focus, hold

optimistic view mid-to-long term

Stock code: 1373


New Store Format : 123 by Ella 2

16

Simple and fast-consuming concept

Offering trendy and lifestyle

merchandize, personal accessories

and beauty products in a range of

fixed prices

Fast expansion subject to regular

review, total number of stores will

reach to around 30 stores in Hong

Kong at the end of FY2017

Strengthening sourcing capabilities,

shortening lead time and responsive

to trends and customer demand

Stock code: 1373


Reinforce the leading position and sustainable growth in Hong Kong

3.1

17

CSSG by Strategic Renovation Plan

Concept stores to enrich customer profile

Providing customers with better shopping environment

Attracting traffic by modernized look and customer-oriented display

A clear message of “we are staying to provide better services and

products”

Setting up concept stores at strategic locations

Contemporary fixtures, flooring and lighting, creating pleasant and

comfortable store atmosphere

Tailored product-mix in 8 Zones, inspiring new ideas in living

Offering good-value, trendy and stylish products to target

customers

1 2 3 4 5 6 7 8

Stock code: 1373



18

Private Label Products with higher margins

3.2

Work across assortment, series, new items,

product mix and product range each for private

label based consumer trends

Add value by package design

Good-value products in return for higher margins

Personal & health Bedding and linens Umbrellas

Gardening Stationery

Stationery Porcelain kitchenware Ceramic ware

Charcoal products

Assortment Productivity

Product range refinement

Integrate POS data and market information in

assortment planning

Get ride of those slow-moving and add new

SKUs to fit customers’ tastes and preferences

Stock code: 1373



19

Operational Efficiency

3.3

Regularly reviewing and monitoring internal procedures/cost structure to enhance

competitiveness

Improving operation efficiency by simplifying workflow, shortening procurement cycle and

coordinating with business-partners even closer

Stock code: 1373



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3.4

Ipanel at store

e-category for ordering

Pay at store

Home delivery

Store pickup

JHCeShop

Web and mobile

Home delivery

Store pickup

Over 280

Physical Stores in Hong Kong

Ads & commercials

Discount/promotion activities

Brand image Messaging via mobile

J Fun app

Bonus points

e-stamp/e-coupon

Interact with customers

Social Network Platform

Develop JHC Omni-Channel Retailing

Stock code: 1373


Network Expansion Plan and CAPEX

Planned store expansion & estimated capital expenditures

21

Store expansion

(net increase of number of stores) Actual at 31 Oct 16 Net increase

2H FY17

Net increase

FY2018

Hong Kong (incl. Ella) 284 10 30

Macau 8 0 1

Singapore 61 1 2

Total 353 11 33

Estimated capital expenditures

HKD million 2H FY17 FY2018

New store openings 11 22

Ongoing renovations of existing stores 11 22

Property acquisition & Improvements to logistics 35 35


Q & A


Thank You!

2016/17 interim results corporate...

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