2014/15 lnterim Results Corporate Presentation
19 December 2014
Disclaimer
Stock code: 1373
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International Housewares Retail Company Limited
2014/15 lnterim Results
2
Presenters
Stock code: 1373
Peter Lau
Lisa Ngai
Dave Cheng
Edmond Lau
Co-Founder, Chairman,
Executive Director
Co-Founder, Vice-Chairman,
Executive Director
Financial Controller,
Executive Director
Business Development Director
International Housewares Retail Company Limited
2014/15 lnterim Results
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Content
Stock code: 1373
Business Review
Financial Highlights
Business Review by Market
Outlook and Strategies
International Housewares Retail Company Limited
2014/15 lnterim Results
4
Business Review
International Housewares Retail Company Limited
2014/15 lnterim Results
5
Key Performance Highlights
Stock code: 1373
Sustainable Growth particularly in Hong Kong
Solid and strong business growth in Hong Kong with diversifying business
formats and future plans
Solid Financial Position with Healthy Returns
Strong cash flow and financial position, raised dividend payout
Steadfast Growth in Singapore Business
Rapidly growing Singapore business amidst challenging marketplace
International Housewares Retail Company Limited
2014/15 lnterim Results
6
Results Highlights
Revenue
significantly
grew 14.6% to
HK$901.3
million
Stock code: 1373
Number of stores
increased to 354,
a net increase of
21 stores
Proposed Interim
Dividend 4.9 HK
cents per share
Gross profit
margin increased
to 47.1%
Hong Kong
Business Remains
Solid with a CSSG
of 10%
International Housewares Retail Company Limited
2014/15 lnterim Results
Revenue in Hong
Kong achieved a
record high of
HK$751.8 million
7
Financial Performance
International Housewares Retail Company Limited
2014/15 lnterim Results
8
Financial Performance – 1H FY14/15
Six months ended 31 October
FY2015
Stock code: 1373
FY2014
Change
Turnover (HK$’000)
901,339
786,275
+14.6%
Gross Profit (HK$’000)
424,631
367,926
+15.4%
44,828
45,533*
-1.5%
6.20
7.87*
-22.2%
47.1%
46.8%
+0.3pp
4.8%
5.7%
-0.9pp
4.9 HK cents
2.0 HK cents
+2.9 HK cents
-
4.0 HK cents
n/a
80%
55%
+25pp
Profit attributable to equity holders
(HK$’000)
Basic Earnings per Share (HK cents)
Gross Profit Margin
Net profit margin
Interim Dividend#
 Basic
 Special
Payout Ratio
* Excluding the one-off items of HK$Nil (1H 2013/14: Net gain of HK$33,500,000)
# Proposed and declared final dividends of HK$96.0 million for the financial year ended 30 April 2013 which were paid in FY2013/14
International Housewares Retail Company Limited
2014/15 lnterim Results
9
Strong Financial Position
Six months ended 31 October
Stock code: 1373
FY2015
FY2014
Change
CAPEX (HK$’000)
19,679
16,355
+20.3%
Net Cash generated from Operating
Activities (HK$’000)
81,276
13,991
+480.9%
502,193
466,432
+7.7%
Inventory Turnover (1)
92
99
-7 days
Trade Payable Turnover (2)
60
54
+6 days
Net Cash Balance (HK$’000)
Notes:
1. Inventory turnover = Closing inventory / (Cost of sales x 2) x365
2. Trade payables turnover = Average trade payables / (Cost of sales x2) x 365
International Housewares Retail Company Limited
2014/15 lnterim Results
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Business Review by Market
International Housewares Retail Company Limited
2014/15 lnterim Results
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Revenue Breakdown
Stock code: 1373
Revenue growth by region
Revenue breakdown by region
HKD’000
Hong Kong
1,746,838
1,498,673
Singapore
901,349
786,275
West Malaysia
FY2013
FY2014
1H FY2014
1H FY2015
Mainland China
Hong Kong
Singapore
West Malaysia
PRC
Macau
Macau
International Housewares Retail Company Limited
2014/15 lnterim Results
12
New Stores Opened in 1H FY2015
Stock code: 1373
354 stores
in Hong Kong, Singapore, Malaysia, the PRC and Macau
4 PRC
6
1
Directly-owned store
Hong Kong
2 Macau
Cambodia
Licenced store
8
Singapore
Number of directly-owned stores
FY2012
Net
change
FY2013
Net
change
FY2014
Hong Kong
Singapore
West Malaysia
PRC
Macau
220
23
4
5
0
10
9
5
2
5
230
32
9
7
5
11
20
6
2
1
241
52
15
9
6
6
8
0
4
2
247
60
15
13
8
Total
252
31
283
40
323
20
343
International Housewares Retail Company Limited
2014/15 lnterim Results
Net
1H FY2015
change
13
Hong Kong – Strong Growth and improved mix
Six months ended 31 October
Number of stores
Comparable store sales growth (CSSG)
Oct 2014
Oct 2013
Stock code: 1373
Change
247
238
+9 stores
10%
12%
-2pp
 Developed different types of outlets during the review period:
(1) MTR station retail store, (2) wet market store, (3) new City Life flagship store and so
on
 Rental remains stable and sees signs of easier negotiation for street stores
 Improved sourcing mix allows higher flexibility in campaigns to drive customer traffic
 Imported and Private Label now accounted for >60% of sales
International Housewares Retail Company Limited
2014/15 lnterim Results
14
Hong Kong Stable Cost Structure
Stock code: 1373
Expenses as a % of revenue
10.9%
11.6%
12.0%
12.0%
12.9%
13.1%
13.2%
13.3%
Other expenses
Employee expenses
Rental expenses
12.6%
13.1%
14.2%
14.2%
FY2013
FY2014
1H FY2014
1H FY2015
Note: “Other expenses” include auditor’s remuneration, air conditioning expenses, advertising and promotion expenses, amortisation of trademark, building management fees,
delivery charges, depreciation expense, government rates, landing charges, legal and professional fee, rental expense of office premises and warehouses, goodwill written off,
repair and maintenance, utility expenses, net exchange losses/gains, and others.
International Housewares Retail Company Limited
2014/15 lnterim Results
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Singapore – At Steadfast Growth and Development
Stock code: 1373
Six months ended 31 October
Number of stores
Comparable store sales growth (CSSG)
Oct 2014
Oct 2013
60
39
-6.8%
14.5%
HDB Shops
Old shops still operating
Newly-opened stores in the past 12 months
Shops at Malls
Total
21
18
39
8
13
21
 Total retail market is flat with sluggish property market
 Amidst rapid growth, the Group faced some merchandising challenges as our supply chain
management and logistics operations lagged
 New stores are more productive than existing stores
 More mall stores are opened than HDB shop lots
 Ex-hypermarket merchandising director already joined the Group to systemize the process
International Housewares Retail Company Limited
2014/15 lnterim Results
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Other Markets
Six months ended 31 October 2014
Stock code: 1373
CSSG (%)
West Malaysia
-5.0%
China
30.9%
Macau
3.7%
 West Malaysia: Shows signs of profitability in some stores, pending loss making
stores to expire
 China: Stores are not productive yet despite strong CSSG
 West Malaysia and China: Will freeze expansion plan and close 4 to 5 stores in the
coming 6 months
 Macau: Challenging property market amidst the booming gaming economy,
changing strategy to small-to-medium size stores at high local traffic locations
International Housewares Retail Company Limited
2014/15 lnterim Results
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Growth Strategies
International Housewares Retail Company Limited
2014/15 lnterim Results
18
1 MTR Station Retail Store Expansion
Stock code: 1373
Continued expansion of MTR retail store along MTR route





First MTR retail store officially opened in early Nov in Siu Hong MTR station
More MTR station retail stores to open based on its satisfactory results
Smaller store size around 1,000 sq ft, with more handy and international products
Attracts a broader range of customers with different needs in heavy-traffic area
Offers one-stop shopping experience for quality household products along MTR route map
Shop 32, Tuen Mun Siu Hong Station (From 9:am – 10pm)
International Housewares Retail Company Limited
2014/15 lnterim Results
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2 ELLA Integration
Stock code: 1373
Acceleration of customer base expansion through partnership projects





Acquisition of ELLA completed on 5 Dec 2014
Position: Personal Life Style Experience Shop
Target: Teenage and younger customers between 20s and 30s
Build ELLA counters at selected JHC shops to increase customer traffic
Introduce internationally sourced products into ELLA’s product portfolio
Current Product Range
Mobile
accessories
Stationery
Bags
Toys and accessories
Houseware
products
Jewels
Ella
International Housewares Retail Company Limited
2014/15 lnterim Results
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Our Network in Hong Kong
Stock code: 1373
 8 shops in 12 months
 ELLA Counters in
selected JHC
stores
Five brands serving Hong Kong community – One-stop convenience for everyone
Japan Home Centre
 Offers a wide range of
products, which include
kitchenware, plasticware,
household electronics and
other household items for
daily use
City Life
 Provides higher-end
alternative for higher
income households
looking for the same
convenient shopping
experience
International Housewares Retail Company Limited
2014/15 lnterim Results
Epo Gifts
 Caters to students and
other younger customers
and carry a wide variety of
stationery items, small toys
and accessories as well as
travel accessories, books
and household items
Happy Kitchen
 Offers specialised items
and a comprehensive
kitchenware line of
products to enhance its
image as a kitchenware
expert
Ella & Ella Bits
 Targets teenage and
young customers with
a wide variety of
stationery, mobile and
fashion accessories
21
3 Ichiban Programme and Property Investment
Stock code: 1373
“Ichiban” programme
 Take advantage of depreciation of Japanese Yen
 Rolled out “Ichiban Japanese Products” programme :
Selected Japanese special products at HK$29.9 for 3 items
 Expect at least 60 containers of Japanese products coming into
warehouse in the next 2-3 months
Property investment
 Entered a Sell & Purchase agreement for a 2,500 sq ft shop at Caine Road for
HK$39 million
 Seek possible property acquisition for strategically important locations
International Housewares Retail Company Limited
2014/15 lnterim Results
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4 HomePass Membership Programme
Stock code: 1373
HomePass Membership Programme
 Launched on 12 Dec 2014
 Target to recruit 250,000 members based on the strength in market
penetration
 Fully integrated point rewarding system with www.JHCeShop.com
 Objective: Increase average ticket size (currently HK$57.30)
How to become a member?
 Customers will be entitled “HomePass” on any purchase of HK$100
at any Japan Home Centre, City Life and EPO stores in Hong Kong
What are the membership benefits?
 Buy more earn more
 Special promotion day – Exclusive VIP purchase with more discount
 Birthday promotion – Special birthday purchase benefits
International Housewares Retail Company Limited
2014/15 lnterim Results
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5 E-commerce Platform – JHCeShop.com
Stock code: 1373
JHCeShop.com to boost O2O business
 Launched e-commerce platform JHCeshop.com on 20 Dec
2014
 Provides another convenient, highly flexible and accessible
retail channel for diversified IH Retail’s products
 Captures more potential younger customers who prefer online
shopping
 Offers both household products of physical stores together with
some exclusive non-household products available online only
 Closely follows the market trend and expands to offer the
genuine “one-stop” shopping convenience experience
 Poised to seize the enormous opportunities from Internet
International Housewares Retail Company Limited
2014/15 lnterim Results
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Expansion Plan and CAPEX
Stock code: 1373
Planned store expansion & estimated capital expenditures
Store expansion
(net increase of number of stores)
New FY2015
new FY2016
By April 2016
Hong Kong (incl. Ella)
16
20
291
Singapore
13
15
88
West Malaysia
0
3
18
Mainland China
0
0
13
Macau
2
3
13
Total
31
41
423
HKD’000
FY2015
FY2016
New store openings
22,000
28,000
Ongoing renovations of existing stores
15,000
17,000
Property acquisition & Improvements to logistics
90,000
100,000
Total
127,000
145,000
Estimated capital expenditures
International Housewares Retail Company Limited
2014/15 lnterim Results
25
Q&A
International Housewares Retail Company Limited
2014/15 lnterim Results
26
Thank You!
International Housewares Retail Company Limited
2014/15 lnterim Results
27