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EQS-News / 21/11/2017 / 21:55 UTC+8
*Chow Tai Fook Announces Encouraging 2017/18 Interim Results*
_Resumed Market Recovery Lifted Revenue and Profitability _
*Financial Highlights*
*For the six months ended 30 1HFY2017 *1HFY2018* *YoY Change*
September*
*(HK$ million)*
*Revenue* 21,526 *24,754* *+15.0%*
*Gross profit* 6,828 *7,166* *+4.9%*
Gross profit margin (%) 31.7 *28.9* *-2.8% pts*
Adjusted gross profit margin1 30.1 *28.7* *-1.4% pts*
(%)
*Core operating profit*2 1,708 *2,396* *+40.3%*
Core operating profit margin2 7.9 *9.7* *+1.8% pts*
(%)
*Profit attributable to 1,222 *1,779* *+45.6%*
shareholders of the Company*
*Basic earnings per share (HK 12.2 *17.8* *+45.6%*
cents)*
*Dividend per share (HK cents)*
Interim 6.0 *12.0* *+100.0%*
Special 15.0 *-* *N/A*
*Total* 21.0 *12.0* *-42.9%*
_1_ _Adjusted gross profit margin, a non-IFRS measure,
eliminates the effect of unrealised hedging gain on gold
loans, which the Company believes is useful in gaining a
more complete understanding of its operational performance
and the underlying trend of its businesses._
_2_ _Core operating profit and the corresponding margin, a
non-IFRS measure, being the aggregate of adjusted gross
profit and other income, less selling and distribution costs
and general and administrative expenses, which the Company
believes is useful in gaining a more complete understanding
of its operational performance and the underlying trend of
its core businesses._
(Hong Kong, 21 November 2017) *Chow Tai Fook Jewellery Group Limited* ("Chow
Tai Fook" or the "Company"; collectively with its subsidiaries, the "Group";
SEHK stock code: 1929), a Hong Kong Main Board listed company with 88 years of
heritage, today announces its interim results for the six months ended 30
September 2017 ("1HFY2018").
The Group recorded a revenue of HK$24,754 million for 1HFY2018 (1HFY2017:
HK$21,526 million), representing a year-on-year increase of 15.0%. Gross
profit amounted to HK$7,166 million (1HFY2017: HK$6,828 million), while
reported gross profit margin was reduced by 280 basis points year-on-year
primarily as a huge unrealised hedging gain of HK$357 million was recorded in
the same period last year, whereas a much smaller unrealised hedging gain of
HK$69 million was recorded during the period. Thanks to the improving sales
momentum and operating leverage, core operating profit surged by 40.3% to
HK$2,396 million (1HFY2017: HK$1,708 million). Profit attributable to
shareholders of the Company increased significantly by 45.6% to HK$1,779
million (1HFY2017: HK$1,222 million). Earnings per share were reported at
HK17.8 cents (1HFY2017: HK12.2 cents). The Board has declared an interim
dividend of HK12.0 cents per share. The payout ratio approximates 67.4% in
1HFY2018.
*Business Review*
The early signs of recovery in the jewellery industry which began in 2HFY2017
have extended into 1HFY2018. This resumed market recovery has also been felt
in the Group's operations, leading to encouraging Group results during
1HFY2018. Same Store Sales Growth in both reportable segments continued to
rebound. Same Store Sales in Mainland China increased by 10.3%, mainly driven
by ASP, while that the growth of Hong Kong and Macau of 9.5% was primarily
driven by volume.
In 1HFY2018, the Group opened a net of 107 POS, bringing the total number of
POS to 2,488 as at 30 September 2017. In Mainland China, on the back of a
general resumption of growth in the jewellery market and an easing trend of
consolidation in conventional department stores, net openings amounted to 112
POS. In Hong Kong and Macau, consolidation of network continued in 1HFY2018.
Closures were focused in touristic area while there were openings in
residential neighbourhoods, resulting in a net closure of 7 POS. The Group
also opened 1 POS in the United States and 2 POS in Japan to capture the
opportunities arising from the demand of local customers and travellers in
these regions.
E-commerce business of the jewellery business in Mainland China further
accelerated in 1HFY2018, registering an impressive Retail Sales Value ("RSV")
growth of 120.4%, mainly thanks to a strengthened co-operation with major
online platform partners. It contributed to 5.4% of RSV and 13.4% of retail
sales volume in the jewellery business of Mainland China.
CHOW TAI FOOK T MARK, the Group's revolutionary diamond brand, continued to
make healthy progress since its debut in August last year, reflecting its
unique product innovation to create a brand new customer experience. As at 30
September 2017, 198 POS in Mainland China and 33 POS in Hong Kong and Macau
carried CHOW TAI FOOK T MARK products.
The Group expanded the presence of Hearts On Fire primarily in
shop-in-shop/counter-in-shop format through the Group's extensive retail
network. As at 30 September 2017, more than 180 POS in Mainland China and 20
POS in Hong Kong and Macau carried Hearts On Fire jewelleries. To boost the
brand awareness in Greater China, the Group invited famous Chinese actress
Zhao Li-ying and contemporary artist Cheng Ran to collaborate on a photography
exhibition themed "Fire" in Shanghai K11 in November 2017, where Hearts On
Fire collections were showcased in the event.
Store differentiation has been an on-going exercise in recent years in
response to customers' demand for unique and personalised shopping experience.
Monologue, launched last year, carries a unique brand DNA of individuality and
style distinctions to appeal to millennials. As at 30 September 2017, there
were 6 Monologue-branded POS in Mainland China. SOINLOVE, with products and
store layout enriched with a romantic ambience, is catered to the wedding
market. During 1HFY2018, the Group opened 6 SOINLOVE-branded POS in Mainland
China focusing on Tier I and II cities.
POS of the Chow Tai Fook jewellery brand are segmented into different styles
in Mainland China to serve different customer clusters. Further refurbishment
on store interior designs is in the pipeline. In Hong Kong and Macau, 2 POS
with refreshed store layouts and themes have been introduced in Tsuen Wan and
Yuen Long to accommodate the local customer profile and positioning of the
respective shopping malls during the period.
As at 30 September 2017, our members reached over 1.73 million, with the
repeat purchase ratio in Mainland China, and in Hong Kong and Macau of 30.5%
and 32.5%, respectively.
*Prospects and Strategies*
FY2018 will be a turning point for the Group's business given the jewellery
market recovery. Although the recovery is gradual and mild, the industry is
expected to return to a stable yet sustainable growth.
To capitalise on this recovery, the Group's network expansion in Mainland
China is expected to continue in 2HFY2018, in view of the improving general
consumer sentiment, while continuing to optimise POS efficiency in touristic
area and selectively open stores in residential neighbourhoods in Hong Kong
and Macau. The Group will also progressively expand wholesale business in the
United States with reputable branded retailers.
To bolster its sustainability, the Group would intensify its focus on customer
experience by differentiating product offerings through innovations, exquisite
craftsmanship and compelling designs, and continuing store differentiation to
increase the uniqueness of multiple brands. Production and operations will be
enhanced from a customer-centric perspective. Customer relationship will also
be further elevated through the membership programme of the Group.
Chow Tai Fook Chairman Dr. Henry Cheng remarked, "Despite the ups and downs in
the economy, there is always a genuine demand for jewellery as it is deeply
attached to emotional needs and desired in different important occasions. We
therefore remain optimistic about the long-term prospects of the jewellery
market. Through preserving, passing on and promoting artisanal and innovative
spirits, we strive to facilitate the upgrade of cultural standard of the
general population so as to create a better future for the society. At the
same time, our efforts will contribute to the sustainability of the Group."
*PHOTO CAPTION*
Chow Tai Fook Jewellery Group Executive Director *Adrian Cheng*
(Middle),
Managing Director *Kent Wong *(Left) andFinance Director
*Hamilton Cheng *(Right)
announce the interim results for FY2018
_- End -_
*Chow Tai Fook Jewellery Group Limited *
Chow Tai Fook Jewellery Group Limited (the "Group"; SEHK stock code: 1929) was
listed on the Main Board of The Stock Exchange of Hong Kong in December 2011.
Founded in 1929, the iconic brand "Chow Tai Fook" of the Group has been widely
recognised for its trustworthiness and authenticity, and renowned for product
design, quality and value. The legacy of the Group and its iconic brand is
rooted in innovation, craftsmanship and heritage. The Group also encompasses
other jewellery brands including Hearts On Fire, Monologue and SOINLOVE.
The Group's commitment to sustainability is anchored in its "Smart+"
initiatives which have been in place to promote innovation surrounding its
business, people and culture. Another asset underpinning its sustainability is
a sophisticated vertically integrated business model which supports the Group
in fostering excellence and extending opportunities along the entire value
chain. With an extensive retail network of over 2,400 POS spanning over
Greater China, Korea, Japan, Singapore, Malaysia and the United States, and a
fast-growing e-commerce business, the Group is capable of implementing
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