20 June 2019
For the year ended 31 March 2019
Annual Results
0
Press Conference
Agenda
2Group’s Financial Performance
6Business Review
13Outlook & Future Plans
1
Group’s Financial
Performance
2
FY2018/19 Annual Results Performance Highlights
Turnover
EBITDA 2.5% to HK$674.7M
Profit for the year 1.5 % to HK$472.1M
Gross profit 1.3% to HK$3,417.8M
Basic EPS(Including discontinued operation)
5.2%
Gross profit margin 1.3 p.p. to 40.8%
Net profit margin 0.2 p.p.
Return on equity(Including discontinued operation)
1.2 p.p.
to 15.4HK cents
#
Profit for the year(Including discontinued operation)
to HK$470.8M7.0 %
to 5.6%
^The final dividends will be payable in cash, with a scrip dividend alternative. To facilitate shareholders’ reinvestment of
their dividends into the Company’s shares, the Board has resolved to offer a 5% discount on the subscription price for
eligible shareholders who elect to receive the dividends in scrip#Earnings Before Interest, Taxes, Depreciation and Amortization
*Excluding the one-off special dividend of 3.0 HK cents per share in celebration of 40th anniversary of the Group last year
No. of Retail Outlets
2749 to
Interim dividend^ 100% 7.0HK cents
(per share)
Final dividend^ 18.2%* 9.0HK cents
(per share)
Total annual dividend per share 10.3%* 16.0HK cents
Dividend payout ratio ~ 105%Grand Plaza Sa Sa store
4.5 % to HK$8,375.9M
to 18.9%
3
Turnover
(HK$M)
% to Group
Turnover
HK & Macau 7,091.8 84.7% (LY:84.3%)
E-commerce 391.8 4.7% (LY:4.8%)
Malaysia 385.2 4.6% (LY:4.5%)
Mainland
China287.8 3.4% (LY:3.7%)
Singapore 219.3 2.6% (LY:2.7%)
Total 8,375.9 100.0%
Year ended 31 Mar 2019
Group Geographical Sales Mix
HK$8,375.9M 4.5%
Total Turnover(Continuing operations)
4
Year ended 31 Mar
(HK$M)2019 2018 YoY Change
- CAPEX (Excluding discontinued Taiwan operation)
131.6 166.1 -34.5
- Net cash generated from
operating activities346.2 748.2 -402.0
- Dividend for the year 495.1 531.3 -36.2
- Cash and bank balance 1,140.6 1,365.4 -224.8
Group Financial Position Is Solid
5
Business Review
6
HK & Macau: Modest Sales Growth
Remarks: The above data includes the impact of Deferred Income Adjustment for VIP bonus points
+18.5%
-5.8%
+4.9%
1H 2H FY
Year ended 31 Mar 2019
YoY Change %
+15.8%
-7.3%
+3.0%
1H 2H FY
❑ Transaction volume, avg. ticket size and retail sales increased by 10.7%, 7.0% and 18.5% in 1H
◼ High growth of mainland tourists arrivals & new trendy products boosted volume of both mainland tourists and local customers
❑ Transaction volume , avg. ticket size and retail sales declined by 2.8%, 3.0% and 5.8% in 2H
◼ Sino-US trade war, RMB depreciation and weak stock and property markets impacted consumer sentiment
◼ High base effect: Q4 LY sales increased by 18.6% driven by new trendy products; 2H CY sales declined due to weak trendy
product performance
◼ Daigou activities curtailed by Central government in Q4
◼ Intensified competition from pharmacies
Year ended 31 Mar 2019 1H 2H FY
Total no. of transactions
(Million/ YoY change%)9.9/ +10.7% 9.9/ -2.8% 19.8/ +3.5%
Avg. ticket size (HK$/ YoY change %)
352/ +7.0% 354/ -3.0% 353/ +1.4%
Retail Sales Growth
Same Store Sales Growth
Year ended 31 Mar 2019
7
YoY Change %
94,318
116,695
211,012
92,445
116,184
208,629
1H 2H FY
FY 17/18 FY 18/19
119,729 132,738
252,467
117,535130,161
247,695
1H 2H FY
FY 17/18 FY 18/19
Mainland China: Fruit of Product Portfolio Enhancement Emerged in 2H
*Average no. of stores during the stated period
Remarks: The above data includes the impact of Deferred Income Adjustment for VIP bonus points.
5454+1
54
5553 54
1H 2H
1H 2H FY
-1
Average Number of Stores*
FY18/19
FY17/18
Retail Sales
Year ended 31 Mar
(in RMB ‘000) (in RMB ‘000)
-0.4%
YoY change YoY change
Same Store Sales
❑GP%, GP$ and store contribution all improved in 2H despite slightly negative same store sales
❑Better performance in 2H than 1H:
◼House brand issues gradually resolved in 2H through the reorganisation of sourcing team and adjustment to product
portfolio
◼Sales of house brand products picked up from Q3
◼Retail sales and same store sales picked up in Q4
New warehouse in Wuhan sped up delivery in Central and Western China, increased the overall operational efficiency
❑A total of 16 shops currently operate in 8 Mainland cities in the Greater Bay Area
◼5 newly opened stores in FY1819 are located in Dongguan, Jiangmen, Zhuhai and Huizhou respectively
FY
8
Year ended 31 Mar
(RMB ‘000) 2019 2018 2017 YoY Change
- Retail sales 247,695 252,467 240,436 -4,772
- Recurring losses -13,478 -11,059 -16,794 -2,419
- Non-recurring costs &
provisions-342 2,112 3,847 -2,454
- Total operating loss -13,820 -8,947 -12,947 -4,873
Remarks: The above data includes the impact of Deferred Income Adjustment for VIP bonus points.
❑House brand sales improved in 2H, driving FY GP% to rebound
❑2H losses contracted, but not enough to bring about full year improvement against LY
9
Mainland China: Fruit of Product Portfolio Enhancement Emerged in 2H
Remarks: The above data includes the impact of Deferred Income Adjustment for VIP bonus points.
E-commerce: Third Party Platforms Have Been Major Growth Driver
❑ Third party platforms have been the main sales growth driver, accounting for near 60% of total sales
❑ Own website and mobile app took a back seat while focusing on constructing new e-commerce engine and order management system
❑ Recurrent and total losses both reduced
❑ Gradually phased in cross-border e-commerce mailing channels
◼Substantial savings on goods detention at Customs
◼Shortened delivery time
◼Logistic costs decreased from 15.3% to 10.9% of sales
Year ended 31 Mar (HK$M)
1HYoY Change
2HYoY Change
FYYoY Change
2019 2018 2019 2018 2019 2018
- Turnover 185.3 177.1 +4.6% 206.5 206.2 +0.2% 391.8 383.3 +2.2%
- in Mainland
China170.6 148.9 +14.6% 196.7 183.2 +7.4% 367.3 332.0 +10.6%
- Recurring losses -12.8 -16.8 +4.0 -12.0 -12.7 +0.7 -24.8 -29.6 +4.8
- Non-recurring
costs & provisions-4.2 0.5 -4.7 2.5 0.8 +1.7 -1.7 1.3 -3.0
- Total operating
loss-17.0 -16.3 -0.7 -9.5 -12.0 +2.6 -26.5 -28.3 +1.8
10
86,810 94,595
181,405
89,663 92,969
182,632
1H 2H FY
FY17/18 FY18/19
92,920 99,109
192,030
99,499 101,682
201,180
1H 2H FY
FY17/18 FY18/19
Malaysia: Increasing Penetration of Malay Market
Remarks: The above data includes the impact of Deferred Income Adjustment for VIP bonus points
*Average no. of stores during the stated period
Average Number of Stores* Retail Sales Same Store Sales
7975+3
Year ended 31 Mar
❑ Actions to attract Malay customers, increasing sales mix
◼ Changes to customer loyalty programme
▪ Targeted campaigns
▪ Launching suited make-up products
(in RM ‘000) (in RM ‘000)
77+5FY18/19
YoY change YoY change
7472 73FY17/18
1H 2H FY
1H 2H FY
+4
11
Singapore: Enhanced Store Network and Products
Remarks: The above data includes the impact of Deferred Income Adjustment for VIP bonus points
* Average no. of stores during the stated period
❑ Same store sales declined due to the weaker local economy in 2H
❑Will launch “Click-and-collect” service to drive sales
Retail Sales Same Store Sales
(in SGD ‘000) (in SGD ‘000)
-0.2%
YoY change YoY change
Year ended 31 Mar
2121+1
21+2FY18/19
1920 20FY17/18
2H FY
1H 2H FY
1H
+1
Average Number of Stores*
17,340 19,236
36,576
18,307 19,767
38,075
1H 2H FY
FY17/18 FY18/19
14,031 14,592
28,622
14,273 14,291
28,564
1H 2H FY
FY17/18 FY18/19
12
Outlook And
Future Plans
13
Product Portfolio
Strategy
Balance product portfolio to
support stable and sustained
growth
Capitalise on
Development
in the Greater
Bay Area
Policies & infrastructure
development will improve
economy and consumer
sentiment
Embrace
Digital World
Use Big Data to understand
customers’ needs, formulate
better product strategies and
improve customer experience
and sales
HK & Macau: Sustainable Business Development Strategy
Provide
customer
centric and
seamless
customers
experience
14
2
3
1
Usage of big data to improve product portfolio
management
◼ Balance product portfolio
◼ Faster product launches
◼ Improve linked sales and enhance GP%
Enhance the sales effectiveness of sole-agent
products through the active expansion of wholesale
distribution channels
◼ Target greater market penetration and revenue
Continuous efforts in eliminating low productivity SKUs
◼ Dedicate more shelf space for new products
and products with high productivity
◼ Lower inventory costs
PRODUCT AND SALES
CHANNEL STRATEGIES
HK & Macau:
Balance Product Portfolio to Support Stable & Sustained Growth
HOUSE BRAND
OWN BRAND
SOLE-AGENT
PARALLEL IMPORT
LOCAL SUPPLIES
SALES GROWTH;
GP CONTRIBUTION
PRODUCT MIX;
GROSS PROFIT
MARGIN
15
The Greater Bay Area
World-class Tourism
Destination
HK & Macau:
Capitalise on Development Opportunities in the Greater Bay Area (GBA)
GBA Development Plan
Unveiled on 18 Feb 2019
◼ HK becomes international
tourism showcase and hub for
multi-destinations in the region
◼ Function as core to build GBA
branding with joint efforts to
attract global tourists
XRL & HZM bridge are only 2 of 36
infrastructure projects
HK population is 7m, GBA’s
population is 70+million
National Economic Research
Institute: In 2050, GBA population will
increase from current 5% to 10% of
China’s total population
GBA Potential
Opportunities in GBA Store Network Strategy
Opportunities & Management
Open stores in target areas to fill
gaps
◼ Based on evolving
demographics, changes in
visitor arrivals via different
entry points and competitive
landscape
◼ Manage rental costs and
improve competitiveness of
the store network
O2O Seamless Experience
Source: The Outline Development Plan of GBA
Organise physical network
and online operations to
provide customers with
seamless shopping
experience offline and online
16
HK & Macau:
Strive to Manage Changes to Provide Seamless Shopping Experience
Phase 1
◼ Completed integration of the existing
customer database from 3 business units
Next steps
◼ Upload transaction data
◼ Capture new customers
◼ Identify customers
◼ Organise different business units to serve
each unique customer
Increase customer loyalty and repeat purchases
Single centralised cloud
customer database
PRC stores
HK & Macau stores
E-commerce
Develop and Use Centralised
Customer Database
Adopt Technology to Improve
Customer Experience
New POS system
Increase store capacity to handle higher traffic
Shorten checkout time
Enable self checkout and other IoT experiences
Warehouse system
Enhance handling capacity and flexibility
Shorten delivery time
Optimise cost effectiveness
BIG DATA
Customer
Database
Integration
POS
IoT
Warehouse
System
17
HK &
Macau
Stores
HK Stores
Macau
Stores E-commerce
3rd Party
Platforms
Own
Channels
PRC
Stores
Central
Western Northern
Eastern
Southern
Mainland China’s Role to Provide Seamless Customer Experience -Serve Returning Mainland Customers of HK & Macau Stores
Work closely with local suppliers
Introduce more popular new products
to boost traffic
Recruit and train more talented
frontline staff
Improve commission system
Improve Product Offerings1
Continuously Optimise
Store Network
Open stores in areas with high strategic value
GBA is one of the key development regions
Improve Store Productivity
& Cost EffectivenessBrand-new CRM System
Foster repeat purchases
Target new members
Collect data for analysis
Preparing Sa Sa for the New Retail Era
18
2
3
4
Supported by big data analysis
Online/offline coordination
New engine and order management
system to be completed by 2H 19/20
Fully leverage the strength of current
and new platforms
Expand customer base and drive sales
E-commerce: Role in Seamless Customer Experience - Online Element
Laying a Solid Foundation
for Sa Sa’s Long-term Development
E-commerce
Target to launch in FY19/20
Enable identification of customers
Facilitate New Retail operations
Launch WeChat
mini-programme2
Further Develop 3rd
Party Platforms1 New
E-commerce Engine3
Product Strategy4
Singapore & Malaysia Markets
Singapore Malaysia
Focus on product portfolio improvement, effectively introduce
popular new products
Improve store display
Enhance store productivity
Engage in attractive marketing activities
◼ Increase the exposure of Sa Sa and its product brands and
acquire new customers
Continue to attract both Malay and Chinese customers
◼ Plan to appoint Malays as brand or product
spokespersons
Launch new “Click-and-collect” service in FY19/20
Singapore & Malaysia
Markets
◼ Cater for the
growing trend of
online shopping
◼ Strengthen core
competitiveness
◼ Increase customer
loyalty & repeat
purchases
20
Store Network Strategy Varies between Markets
Hong Kong & Macau
Mainland China
Malaysia
Singapore
81
118
21
54
Total : 274 Points of sales*
*As of 31 March 2019
* Opened: Tourist stores: 6 ; Non-tourist stores: 9
** Closed: Tourist stores: 7; Non-tourist stores: 8
❑ Hong Kong & Macau: Increase profitability with
the consideration of opening new stores in tourists
areas in view of rental, districts and traffic
❑ Malaysia: Expansion mode (increase penetration)
❑ Mainland China and Singapore: Optimise the
store network
No. of Retail
Outlets
(Continuing
operations)
As of
31 Mar 18 Opened Closed
As of
31 Mar 19
HK & Macau 118 15* 15** 118
Mainland China 55 7 8 54
Singapore 20 5 4 21
Malaysia 72 10 1 81
Total 265 37 28 274
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