Results Highlights
(RMB million)
| For the six months ended 30 June
|
2018
| 2017
| Change
|
Revenue
| 772
| 675
| +14.4%
|
Gross profit (before reversal of impairment losses of inventories )
| 451
| 413
| +9.2%
|
Gross profit margin (before reversal of impairment losses of
inventories)
| 58.4%
| 61.2%
| -2.8
ppts
|
Operating profit
| 552
| 627
| -12.0%
|
Operating profit excluding investment income
| 74
| 82
| -9.8%
|
Profit for the period attributable to equity holders of the Company
| 481
| 536
| -10.3%
|
|
Basic earnings per share (RMB cents)
| 8.40
| 9.72
| -13.6%
|
Interim dividend and interim special dividend per share (RMB cents)
| 4.90
| 5.80
| -15.5%
|
Additional special dividend (RMB cents)
| -
| 17.32
| N/A
|
HONG KONG, CHINA - Media OutReach
- 15 August 2018 - The leading international
sportswear brand enterprise in the PRC, China Dongxiang (Group) Co., Ltd.
("China Dongxiang" or "the Company", together with its
subsidiaries, "the Group", HKEx stock code: 3818) announces its
unaudited interim results for the six months ended 30 June 2018
("reporting period"). The Group's revenue for the reporting period
increased by 14.4%, year-on-year ("YoY"), to RMB772 million, while
profit attributable to equity holders of the Company reached RMB481
million with the basic earnings per share as RMB8.40 cents. In
light of the sound cash condition of the Company, the Board of
Directors has proposed to distribute 30% and 30% of the net profit
attributable to equity holders for the six months ended 30 June
2018 as interim dividend and special interim dividend,
respectively, representing a dividend payout ratio of 60%. The
total distribution of dividends will amount to RMB4.90 cents
(HKD5.5992 cents) per share.
Performance Highlights of 1H 2018
- China Segment: Building Brand Clarity and Focusing on Retail-end
for Regaining
Growth
Kappa
As at 30 June 2018, the revenue of Kappa brand increased by 10.7%
YoY to RMB569 million. During the reporting period, the Company
achieved its interim targets for same-store sales and retail sales
growth, and recorded middle to low single digit growth in same
store sales and retail sales despite a 20% - 25% YoY decline in
forward orders through engaging new customers, as well as closing
down and upgrading of underperforming stores. Based on a number of
elaborate market research, the Company further clarified Kappa's
brand DNA and the brand assets, as well as developing a more
effective product category and building a brand barrier. In the
meantime, the Company continued to further enhanced its unique
brand positioning as a trendsetter as it made all-out online and
offline marketing efforts via the digital new media. Through
cross-sector collaboration with well-known designers and IP focused
on the BANDA element, the brand substance and philosophy has been
further reinforced. Looking to the second half of 2018, the Group
will step up with more innovative attempts for the BANDA series. In
addition, e-commerce has always been an integral part of the
business mix of the Group, which has been consistently seeking
changes to strive for further growth in the increasingly
competitive e-commerce market. During the first half of 2018, the
Group actively collaborated with well-known e-commerce platforms,
such as Tmall, JD.com and VIP Shop to launch promotional campaigns
during popular festive seasons, while enhancing promotion of new
products on online platforms to facilitate combination of online
and offline marketing.
On top of stable development, the kids' wear business was enhancing
its brand assets during the first half of 2018 through its
sponsorship for the "Chinese Football Boy" (中國足球小將
) tournament, whose popularity continued to grow during the period
with the launch of activities such as youth football training and
the "
Kappa Kids Cup National Tour" in further consolidation of
the brand's
position in t
he kids' wear market. As at 30 June 2018, revenue of the kids' wear
business amounted to RMB50 million, an increase of 16.3% YoY,
accounting for 7.7% of revenue of the China region.
As at 30 June 2018, the Group had a total of 1,439 Kappa stores
(including 335 Kappa Kid's stores).
- Japan Segment: Stabilized As Loss Minimised And Turnaround Can Be
Expected
The Japan business continued to undergo reforms.
During the reporting period, revenue from Japan segment grew
significantly and financial loss shrank substantially with an
improved financial condition as compared with the same period last
year. In particular, PHENIX brand, which boasts outstanding quality
of its skiing apparel and superb handicraft, supported the
Norwegian Skiing Team to top the scoreboard in terms of both golds
medal and medals in general at the 2018 PyeongChang Winter
Olympics. Meanwhile, on top of securing stable growth in Japan
business, the Group has endeavoured to expand the business
development of PHENIX in China as well as overseas sales based in
the European market. Since 2018, PHENIX China has been stepping up
with its effort in channel expansion, membership services and brand
marketing in active preparation for the four-year cycle leading to
the Beijing Winter Olympics.
- Investment Segment:
Stable Performance Secured with Progress Made in a Cautious Way
Adhering to the strategies of "profit orientation, cooperation with
trusted partners and focus on worthwhile projects", the Group's
investment business generated ample returns for shareholders. In
the first half of 2018, the investment business achieved a
satisfactory performance despite challenging circumstances, such as
fluctuation from systematic risk in the market and adoption of IFRS
9. As at 30 June 2018, the Group reported net asset value of its
investments of RMB9,137 million, an increase of 5.7% as compared
with that as at 31 December 2017, and an increase of 27.5% as
compared with market value. During the reporting period, the Group
had investment net gains of RMB423 million. The price of Alibaba
shares held by the Group further increased, and the value of our
investment in Ant Financial through special purpose vehicle ("SPV")
investment soared after a new financing plan announced.
Looking ahead, the Group will exercise extra caution in selecting
cooperation partners and investments, and seize opportunities to
release its investments for securing return on its investments.
Mr. Chen Yihong
, Chairman and Executive Director of China Dongxiang, said, "In the
first half of 2018, China Dongxiang was facing drastic changes in
the domestic as well as international market landscapes. To seize
potential opportunities arising from new developments, we continued
to implement reforms while making realistic adjustments in a timely
fashion to roll out a range of important measures in a
target-special manner, resulting in impressive performance. As a
company that has been established for almost sixteen years, China
Dongxiang will continue to uphold the 'work hard' spirit, and
strive for new milestones in the future with full confidence."
About China Dongxiang (Group) Co., Ltd. (Stock code: 3818)
China Dongxiang (Group) Co., Ltd. is a leading international
sportswear brand enterprise in China which has been listed on the
Main Board of the Hong Kong Stock Exchange since 10 October 2007.
The Group is primarily engaged in the design, development,
marketing and wholesale of branded sportswear in China. Currently,
China Dongxiang owns all rights to the internationally renowned
Kappa brand in China, Macau and Japan. On 1 May 2008, China
Dongxiang completed the acquisition of PHENIX, a Japanese
sportswear enterprise. PHENIX is the most popular ski brand in
Japan with the largest market share, as well as a well-known brand
in the international market.