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Hengdeli Maintains Healthy Business Results for 1H 2016
"Pragmatic yet Innovative Approach Aims at Sustainable Development"
HONG KONG, Aug 18, 2016 - (ACN Newswire) - Hengdeli Holdings Limited ("Hengdeli" or the "Company" and, together with its subsidiaries, the "Group"; stock code: 3389), a world-leading retailer of internationally renowned brand watches and manufacturer of watch accessories, announced its interim results for the six months ended 30 June 2016 ("period under review").
During the first half of 2016, the global economy remained sluggish. The overall operating environment was quite challenging and this had a large negative impact on the business of the Group. However, following the implementation of a series of reforms and innovations, the Group's watch accessories segment achieved growth in sales. During the period under review, the Group recorded revenue of RMB5,883,698,000, a year-on-year decrease of 12.9%; retail sales recorded a year-on-year decrease of 17.0%; the sales of the Group's watch accessories business achieved a year-on-year increase of 9.6%. Profit attributable to equity shareholders amounted to RMB90,186,000, representing a year-on-year decrease of 64.7%. The decrease in profit was mainly due to a drop in sales and gross profit margin as well as net losses recognised by the Group due to repurchases of senior notes issued by the Company during the period under review.
Mr. Zhang Yuping, Chairman and the Executive Director of Hengdeli, said, "In the first half of 2016, amid increasing global political and financial uncertainties, the long awaited economic recovery has fallen far below expectations. Having entered into a new normal phase following years of rapid growth, China's economy is still facing significant downward pressures. Confronted with these various risks and challenges, the Group strove to keep its traditional business operations running steady, adhering to a core principle of 'maintaining healthy and stable growth through practical innovation', while proactively optimising its business structure and nurturing new growth drivers through which the interests of shareholders have been safeguarded by recording sound operating results."
During the period under review, the sales environment for renowned watches showed no signs of turning the corner, and the momentum of the jewelry and watch industry has plunged into a period of deep adjustment. Against such a backdrop, the Group continued to take prudent measures such as making structural adjustments, optimising its inventory and strengthening its operations. They also bolstered their scientific management in order to promote a more comprehensive overall competitiveness. In both Mainland China and Taiwan, the group adhered to an operating strategy that has as its core principle - "maintaining steady sales and profits, and promoting comprehensive inventory structure enhancement". In Hong Kong, the group deployed a multi-layer brand positioning strategy and further refined its management structure for improved performance. Despite these various efforts, however, the Group was unable to stem the decline in sales which were negatively affected by adverse macro conditions and subdued consumer demand. After implementing adjustments and optimisation, the Group operates a total of 470 retail outlets across mainland China, Hong Kong, Macau and Taiwan as at 30 June 2016.
During the period under review, the Group's watch accessories industrial chain achieved steady results, taking further steps towards strengthening its overall market competitiveness. The Group has established a new business model comprising upstream and downstream operations of the watch accessories industrial chain, spanning primarily from watchcase and watchband manufacturing, and product packaging to commercial space design as well as production and decoration, earning high praise in their respective markets. At the same time the Group has increased its investments in the watch accessories business. Apart from extending its watchcase reproduction operations and other items that promote watch sales, the Group has also expanded a watchband factory to achieve annual production of over a million pieces. Moreover, a breakthrough was made in the Group's exporting business which involved completion of sample manufacturing of items to promote sales of world-famous watch brands, and the exporting of these items has already begun.
The comprehensive launch of an integrated media-based e-commerce cross-platform system that runs its major flagship (www.censh.com), draws together a number of interactive platforms such as O2O, CRM system, WeChat and Weibo to facilitate watch sales by means of guiding the flow of people to shop online. As at 30 June 2016, approximately 200 outlets of the Group have adopted reservations for the "censh.com" try-on service system and the total number of service orders has increased rapidly. Meanwhile, the network platform "censh.com" has achieved significant results in terms of improving the interaction between the watch sales of the Group and its customer services.
Capitalising on its large online warranty system and high-tech service quality across the Greater China region, the Group continues to broaden and deepen cooperation with brand suppliers. During the period under review, the Group entered into watch maintenance agent agreements with MGI in relation to Coach, Hugo Boss, Juicy Couture, Lacoste, Scuderia Ferrari and Tommy Hilfiger, the six brands it owns. As at 30 June 2016, the Group has become the maintenance agent for 72 international brands including the SWATCH Group and LVMH Group, of which the Group is the exclusive maintenance agent for 48 brands.
In the brand distribution business, the Group has maintained strong partnerships with brand suppliers as well as numerous retailers, and currently has about 400 wholesale customers in over 100 cities across China, either distributing or exclusively distributing world-famous branded watches. The Group has also worked closely with brand suppliers to respond to today's challenging market environment and to strive for mutual benefits.
Mr. Zhang concluded, "In the second half of 2016, due to various uncertainties, the global economy will continue to remain sluggish. Meanwhile, the Chinese economy is at a crucial stage of transition from old to new growth drivers and of economic transformation and upgrading. As a result we will still be suffering from heavy downward economic pressures. We do not anticipate significantly better watch sales in the Greater China region compared with the first half of 2016. However, the Group will benefit from favourable long-term fundamentals in the overall economic development of China, plus the gradual recovery in consumer power of Mainland China visitors to Hong Kong, and rental adjustments. By continually leveraging its core competitiveness, the Group will identify new opportunities to achieve breakthroughs and expand business despite the current headwinds and challenges."
In the second half of 2016, guided by the philosophy of "pragmatic yet innovative", the Group will keep moving forward by sticking to the principle of "maintaining stable and healthy growth and seeking sustainable development". The Group will also endeavor to keep its renowned watch sales healthy and stable. On the other hand we will exert greater efforts to facilitate the rapid development of the watch industrial chain. The Group will also vigorously explore a new development mode, pursuant to which we can achieve steady and sustainable growth under the current era of the new norm, and generate greater value for our shareholders and the community at large.
Source: Hengdeli Holdings Ltd
Sectors: Daily Finance, Daily News
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