Interim Results FY16/17 - TodayIRlivewebcast.todayir.com/sasa_16ir/ppt.pdf · Interim Results...
Transcript of Interim Results FY16/17 - TodayIRlivewebcast.todayir.com/sasa_16ir/ppt.pdf · Interim Results...
23 November 2016
Interim Results FY16/17 For the 6 months ended 30 September 2016
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Agenda
• Group’s Financial Performance
• Business Review by Market
• Outlook And The Way Forward
Group’s Financial
Performance
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Six months ended 30 Sep
(HK$M)2016/17 2015/16 YoY % Change
Turnover 3,628.0 3,777.9 -4.0%
Gross profit 1,494.2 1,621.7 -7.9%
EBITDA 181.5 256.4 -29.2%
Profit for the period 96.0 153.0 -37.3%
EPS – basic 3.3 cents 5.4 cents -38.9%
Return on equity 4.0 % 7.0 % -3.0 p.p.
Gross profit margin 41.2 % 42.9 % -1.7 p.p.
Net profit margin 2.6 % 4.1 % -1.5 p.p.
Group Performance in 1H
Interim dividend* 9.0 cents 9.0 cents --
-Basic 5.0 cents 5.0 cents --
-Special 4.0 cents 4.0 cents --
Dividend payout ratio ~ 278% ~ 167% +111 p.p.
* The interim and special dividends will be payable in cash, with a scrip dividend alternative. A 5% discount is offered on the subscription price for
eligible shareholders who elect to receive the dividends in scrip.
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Turnover
(HK$M)
% to Group
Turnover
HK & Macau 2,937.0 81.0%(LY:80.8%)
Mainland China 135.0 3.7% (LY:3.9%)
Singapore 101.3 2.8% (LY:3.0%)
Malaysia 163.4 4.5% (LY:3.8%)
Taiwan 98.3 2.7% (LY:3.4%)
sasa.com 193.0 5.3% (LY:5.1%)
Total 3,628.0 100%
Six months ended 30 Sep 2016
Total Turnover : HK$3,628.0 M (-4.0%)
Group Geographical Sales Mix
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Six months ended 30 Sep
(HK$M) 2016/17 2015/16 +/- Change
CAPEX 37.4 50.5 -13.1
Net cash generated from
operating activities238.8 84.6 +154.2
Dividend for the period 266.5 256.0 +10.5
Net cash and bank balance
(As of 30 Sep)
1,276.2
(*note 1)
783.5
(*note 2)+492.7
Group: Sound Financial PositionGroup
*note 1: Before payment of HK$220 million of final dividend in cash for FY15/16
*note 2: After payment of HK$410 million of final dividend in cash for FY14/15
Business Review
by Market
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Remarks: The above data includes the impact of Deferred Income Adjustment for VIP bonus points
*Source: Hong Kong Tourism Board
HK & Macau : Transactions Starting to Increase
• PRC tourist arrivals still falling but signs of decline tapering off
• Store transactions picking up due to improving product offerings and display
• Lower basket size reflects product offerings adapting to changing visitor
demographics and consumption behaviour
15.6%
22.1%20.4%
12.0%
3.7%
-4.1%
-11.2%
-14.4%
2.7%5.9%11.8%
13.8%
18.2%
7.7%
1.4%
-7.3%
-11.9%-15.1%
-5.4%
-5.1%-8.6%
-5.0%
-14.6% -15.1% -15.3%
-12.5%
-8.0%-9.8%
-6.4% -6.9%
Q114/15
Q214/15
Q314/15
Q414/15
Q115/16
Q215/16
Q315/16
Q415/16
Q116/17
Q216/17
FY14/15 to FY16/17 Volume and ASP Changes of PRC Customers
YoY Change in no. of transactions
YoY Change in PRC tourist arrivals*
YoY Change in basket size
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FY2016/171H
YOY retail sales changes -3.6%
YOY same store changes -3.6%
Total no. of transactions (Million / YoY change%)
- Mainland customers (YoY change%)
- Local customers (YoY change%)
9.1 / +2.3%
+4.4%
+0.2%
Avg. ticket size (HK$ / YoY change%)
- Mainland customers (YoY change%)
- Local customers (YoY change%)
321 / -5.7%
-6.6%
-6.3%
Customer Mix (by sales value / volume)
- Mainland customers
- Local customers68.9% / 49.1%
28.3% / 47.2%
HK & Macau: Sales Decline is Narrowing
• The improvements in Q2 are apparent and is due to increasing transactions with both
Mainland and local customers
• Sales decline purely due to lower ticket size:
Reflecting changes in consumption pattern and weaker spending power
Affected by strength of HK$ and depreciating RMB
Remarks: The above data includes the impact of Deferred Income Adjustment for VIP bonus points
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China: Sales Declined but Store
Contribution Continued to Improve
* Remarks: As at 31 Mar 2015, there were 62 multi-brand “Sasa “ stores and 3 single-brand counters in PRC ; as at 30 Sep 2015, there were 55 multi-brand “Sasa “ stores in PRC
As at 31 Mar 2016, there were 57 multi-brand “Sasa “ stores in PRC ; as at 30 Sep 2016 , there were 53 multi-brand “Sasa “ stores in PRC
Six months ended 30 Sep 2016/17 2015/16
(RMB 000’)
Avg number of multi-brand “Sasa” stores* 55 59
Retail Sales 115,231 119,883
YoY sales change -3.90% -8.60%
Total operating loss -12,236 -20,115
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Retail (in local currencies)
FY2016/17
1H
Singapore
YoY sales changes -11.0%
Malaysia
YoY sales changes 19.3%
Taiwan
YoY sales changes -22.8%
Remarks: The above data includes the impact of Deferred Income Adjustment for VIP bonus points.
Other Markets Performance
• Operation performances diverged - affected by management changes
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Remarks: The above data includes the impact of Deferred Income Adjustment for VIP bonus points.
• Fulfillment was seriously affected by changing logistics providers (sales affected & incurred
$5.6m one off costs)
• Lower GP% and increase in A&P
• China market initiatives
Commenced Zheng Zhou Free Trade Zone warehouse deliveries in August 2016
Launched a new App and cooperation with Netease - Kaola in September 2016
Driving flash sale and increasing marketing capability to drive traffic
E-commerce: Sales Flat due to Logistic Issues
FY16/17
(HK$M)
16/17
1HYoY Change
Total sales 193.0 -0.1%
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Brand Management: Adaptation to Market
*House brands = Own brands + Sole-agent brands Six months ended 30 Sep 16
• Adaptation of product offerings to market has improved sales performance
• Gross profit margin affected in the process
• House brands mix declined to 38.8% (LY: 41.3%)
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Outlook And
The Way Forward
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Challenges Remain but Opportunities Abound Challenges
• Cyclical economic weaknesses and currency weakness of RMB & strength of HK dollar,
changes in tourist flow, increasing local and global competition and evolution of shopping
behaviour
Opportunities
• Operating costs are adjusting downward, including rental and others; and there are rooms for
further reduction
• Consumer behaviour adaptation offers vast potential to acquire new customers, retain
existing ones and drive new sales
• Continuously improve product offering, particularly house brand
Fast-changing market require focus and fast adaptation
• Market focus - Hong Kong, Macau & Mainland China; Online and offline
• Embrace O2O- Digital media engagement, in store inter-activity and logistics upgrade
• Backend- Upgrade online Order Management System, CRM and content
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HK & Macau: Store Network Strategy
• Target aggressive rental cut (minimum 40- 50% reduction) in tourist locations
• Improve store locations to enhance brand image in tourist locations when
opportunities arise;
• Add stores in residential areas to capture market share of local consumers and also
stores near the Mainland border
• Close down big stores that are unproductive to enhance overall profitability
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• New store formats and products will attract new customers, enhance productivity and cost
efficiency
• Offer new concept and diverse product range from Korea, Japan and Taiwan
• Increase mid to high price product offerings to improve ticket size
• Improve house brand offerings to improve margin
HK & Macau: New Store Formats and Products
Attract New Customers
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HK & Macau: Consumer Behaviour Adaptation
Provides Opportunities for Growth
• Adapt marketing approach and customer experience to match customer journey changes
Increase online exposure and interactivity
Improve in-store interactivity and O2O integration
Improve visual merchandising with new store formats and streamlined SKUs
Improve CRM to retain customers, build customer loyalty and facilitate targeted marketing
• Faster new product launches to satisfy the latest demand trend
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China : Improve Management and Operations
• Have enhanced management team and structure
• Introduce fast moving and trendy products to boost sales
• Accelerate O2O business development
Introduce O2O experience zone in mainland physical stores to broaden product
selections through online offerings
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Malaysia Market
• Achieve better market performance amid weak local market in recent years
• Leading beauty specialty store in the market but competition heating up
• Strengthen makeup offerings to broaden customer base (Malay segment)
• Strengthen marketing resources including digital media
Singapore and Taiwan Markets
• Markets not attractive and conditions not favourable
• In consolidation mode
• Rebuild team, stabilise operations and reduce losses
• Aim for a smaller presence but with more effective operations
Singapore, Malaysia and Taiwan Markets
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Online Operations Part of O2O Strategy
• O2O will be main focus for future development
• Online operations require major improvements in systems development and
fulfillment capabilities
• Drive scalability and cost effectiveness to support growth
• Increase usage of Zhengzhou Free Trade Zone warehouse
• Increase number of PRC stores with O2O zone
• Coordinate online and offline operations for O2O shopping experience
• Explore strategic alliances with external parties to improve capabilities, increase
exposure and distribution channels
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• Using business and market intelligence improve product offerings
• Next step to improve house brand offerings to enhance margin
• Streamlining of product offering underway
Category Management &
Product Development Strategies
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No. of Retail Outlets
As of 31 Mar 16 Opened Closed
As of
30 Sep 16
HK & Macau 111 6* 5** 112
Mainland China 57 2 6 53
Singapore 23 0 0 23
Malaysia 65 2 0 67
Taiwan 31 1 6 26
Total 287 11 17 281
Multi-brand “Sasa” Stores
Store Network Strategy Varies Between Markets
• HK & Macau: Rationalise stores in tourist locations, build stores in residential locations, and modify size of specific stores to enhance productivity and profitability
• Malaysia: Expansion mode (increase penetration)
• Mainland China, Singapore and Taiwan: Optimisation mode (enhance store contribution)
* Opened: Tourist stores: 2; Non-tourist stores: 4
** Closed: Tourist stores: 1; Non-tourist stores: 4
Remarks: “Tourist stores” are defined as the traditional tourist area stores, which are different from the Group’s internal definition
As at 30 September 2016, there were 2 single-branded stores/ counters (1 in HK & Macau and 1 in Malaysia), totaling 283 retail outlets for the Group.
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Q&A