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2015 Annual Results Presentation
March 2016
CHOW SANG SANG HOLDINGS INTERNATIONAL LIMITED
周 生 生 集 團 國 際 有 限 公 司Stock code: 116
2
Disclaimer and Forward Looking Statements
• This document carries the information and the opinion is not for the purpose of
comprehensive research, financial services or legal opinion. Chow Sang Sang Holdings
International Ltd. does not guarantee its accuracy and integrity. This document contains the
information only to provide reference. They can not become or deemed to be sold or bought
or subscribe for securities or other part for the invitation.
• This document contains information, opinion that only reflect Chow Sang Sang Holdings
International Ltd’s opinion on the date of the presentation. Chow Sang Sang Holdings
International Ltd. can change anything on this document without notices. Chow Sang Sang
Holdings International Ltd. is not liable for any losses incurred from the usage of information
or opinions obtained from this document.
• This document contains confidential information to be used solely for the purpose of
personal reference. In addition, this document may not be transmitted or transferred to
any other person or in any way be incorporated into other files or data.
• This document and the related discussion may include forward-looking statements with risk
and uncertain factors. Forward looking wording such as believe, expect, planning, forecast,
target, possible, hope, will, may, etc., will be used in this document. The reader of this
document should not excessively rely on such forward-looking statements to form their
opinions. These forward-looking statements are based on our own company and other
sources that we believe are reliable.
3
Presentation Outline
I. Business Overview
II. Financial Highlights
III Future Plan and Strategy
IV. Q&A Session
V. Appendix
4
Business Overview
5
Company Structure
Jewellery Retail
Main business segment
441 self-operated stores in
Greater China and Internet
platform
Operates under “Chow
Sang Sang" and “Emphasis
Jewellery”
Generated 88% of total
revenue for 2015
Precious
Metals
Wholesale
Services
Other
Investments
Securities
Brokerage
Physical metals trading
service
Commission based
Generated 12% of total
revenue for 2015
8 HK offices and Internet
platform
Commission based
No proprietary trading
Generated 0.3% of total
revenue for 2015
Investment Properties
Shares of HKEx
Generated 0.2% of total
revenue for 2015
Chow Sang Sang Group
6
Business Overview: Jewellery Segment
7
Product mix: Jewellery
Gold based Items
Gem-set Items
Licensed Products
International Brands (Gucci, Rolex, Tudor)
8
Distribution Network
(1) Excluding Hong Kong and Macau
(2) Reached 349 as of Mar 22, 2016
Covered cities
Guangdong
Fujian
JiangsuHenan
Xinjiang
Gansu
Inner Mongolia
Heilongjiang
Jilin
Liaoning
Tianjin
Hebei
Shandong
Yunnan
Sichuan
Guizhou
Guangxi
JiangxiHunan
Hubei
Shanxi
Anhui
Zhejiang
Shanghai
Beijing
Taiwan
Hong KongMacau
Eastern
(73)
Hainan
Southern (1)
(100)
Chongqing
Shaanxi
NingxiaQinghai
Tibet
Beijing Surrounding
Provinces(60)
Western
(25)
Beijing Flagship Store
Hong Kong Flagship Stores
Kunming Flagship Store
Shanghai Flagship Store
Chow Sang Sang directly runs and controls all
of its retail stores with no franchise operations
Complementing the extensive retail network, the
eshop.chowsangsang.com working with key
retail portals in China, offer online shopping
service
Chow Sang Sang
Emphasis
Jewellery
Jewellery Watch
China(2) 335 8 –
HK / Macau 49 17 9
Taiwan - – 23
as at Dec 31, 2015
Northern
(85)
Chongqing Flagship Store
9
Focus on Growth in Mainland China
Increasing No. of Stores in Mainland China
(No. of Stores)
+20% -12%Same-store
Sales
Growth
+6%
New
shops
+40
New
shops
+40
10
Financial Highlights
11
Operating Performance …
Gross ProfitTurnover
(HK$ mm) (HK$ mm)
… primarily due to HK retail
12
Operating Performance (Cont’d) …
Profit attributable to equity holders Operating Profit
(HK$ mm) (HK$ mm)
13
…Driven by Retail Segment…
Results Breakdown Revenue Breakdown
14
10,886
8,214 8,165
9,057
8,719 8,558
19,943
16,933 16,723
0
5,000
10,000
15,000
20,000
2013 2014 2015
… growth in China partly offset softness in HK
… Retail Performance …
Retail – Operating ResultsRetail – Revenue
(HK$ mm) (HK$ mm)
15
…but Robust Demand in PRC
2013 2015 2014
Contribution from customers in mainland increasing
72% 74% 74%
Sales
Attributable
to PRC
Customers(1)
(1) China sales + HK/Macau sales by PRC customers
16
Consolidated Sales Mix – (Retail)
2014
Gross margin:
Gold* : 16%-22%
Non gold jewellery: 39%-44%
Watches: 20%-23%* Include gold price movement
2015
17
Consolidated Gross Profit Contribution – (Retail)
2014 2015
18
Change of Average Selling Price
Hong Kong/Macau - JewelleryHong Kong/Macau - Gold
China - Gold China - Jewellery
(HK$)
(RMB) (RMB)
(HK$)
19
Working Capital Trends
Average Receivables Turnover Days Average Inventory Turnover Days
Average Payables Turnover Days Cash Conversion Cycle
(No. of Days)
(No. of Days) (No. of Days)
(No. of Days)
20
Financial Highlights
(HK$ million)% change
2013 2014 2015 14 vs 15
Turnover 25,142 19,246 19,069 -0.9%
Jewellery Retail 19,943 16,933 16,723 -1.2%
Other businesses 5,199 2,313 2,346 +1.4%
Gross profit 4,208 4,295 4,228 -1.6%
Operating profit 1,544 1,395 1,150 -17.6%
EBITDA 1,712 1,579 1,582 +0.2%
Profit attributable to equity holders 1,218 1,082 1,130 +4.4%
EPS (HK cents) 180.0 159.9 167.0 +4.4%
Dividend per share (HK cents) 68.0 61.0 62.0 +1.6%
For the 12 months ended
or as at Dec 31,
21
Other Financial Information
(HK$ million)
2013 2014 2015
Cash and cash equivalents 1,009 1,009 1,621
Available-for-sale investments1 659 869 825
Capital expenditure 280 189 172
Gearing2 23.4% 26.1% 19.3%
Unused banking facilities 4,114 3,813 3,831
1 Available-for-sale investments mainly represents HKEX shares which valued at quoted market prices
2 Total borrowings to total equity holders’ equity. Total borrowings includes interest-bearing bank borrowings, bullion
loans and interest-bearing bank borrowings arising from securities and futures broking.
For the 12 months ended
or as at Dec 31,
22
Strategy Outline
23
Expansion with Distinctiveness in PRC
Target mid-high end consumers
Brand development and fine-tuning is more
important than growth in the number of
stores
Leverage on e-shops to expand coverage
and reach
Expansion Philosophy
Ensure consistent and superior service quality
Leverage on high-end shopping malls and
department stores’ own positioning to
enhance image
More flagship and premium-status stores
Self-Run Store Model
Around 40 new stores in PRC in 2016
24
Product Mix and Branding
Clear presence and visibility of international brands
Develop house brands - focus on quality and sophistication appropriate to different customer
segments
Jewellery Focus and Product Differentiation
Continue with existing programs with focus:
Expand e-shop, synergizing with physical stores
Capitalize on CRM database
Revamp VM at stores
Marketing Initiatives
25
Q&A Session
26
Appendix
27
Company History
1930-1970 1970-1980 1980-1990 1990-2000 2000-2015
1934
Chow Sang
Sang
Goldsmith
established
in
Guangdong
2005
Became
sightholder
of Diamond
Trading
Company
1973
First
company in
the industry
listed on
Hong Kong
Stock
Exchange
1998
Re-entered
the
Mainland
China
market
2014
Opened
the first
Flagship
Store in
Shanghai
No. of
Stores9
Turnover
(HK$ mm)130
2011
Opened
the first
Flagship
Store in
Taiwan
2009
Opened
the first
Flagship
Store in
Beijing
2015
Stable
expansion
in China;
healthy
growth in e-
business
441
19,069
28
Industry Analysis – PRC Jewellery Market Overview
The Asia-Pacific region is expected to account for
over 60% of global jewellery sales in 2019, while
North America is expected to account for about 20%,
ranks second and western Europe third with less
then 10%
238.5295.7
381.0454.2
560.5
662.8
739.9812.7
877.7939.6
997.3
0
200
400
600
800
1000
RM
B b
n
PRC Jewellery Sales Value
Source: Euromonitor International
Source: Bloomberg
China is expected to continue as the main
driver of demand, with jewellery sales forecast
to rise 8.6% annually in the coming five years.
This compares with a 3.3% growth rate in the
U.S. and 5% in India, with a notable correlation
in China’s and India’s real GDP to the main
jewellery commodities
29
28.2* 28.2*
25.8
22.5
26.124.6
21.5
25.023.9
24.9 24.9
30.8
0
5
10
15
20
25
30
35
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
RM
B b
n
FY2015 PRC Gold, Silver and Jewellery Sales
According to HK Census and Statistics
Department, total jewellery, watches and clocks,
and valuable gifts sales declined 15.6% y-o-y in
FY2015.
Retail sales for jewellery products in PRC stood
at RMB306.9 billion for FY2015 as against
RMB297.3 billion in FY2014.
Source: HK Census & Statistics
Source: National Bureau of Statistics of China* In order to eliminate the impact of the different date of the “Chinese
New Year” (CNY) each year, and enhance the comparability of data, in
accordance with the national statistical system, the data in January and
February 2015 were investigated and released together. Here the data is
evenly divided as RMB28.20 billion.
9.128.65
6.44 6.356.76 6.87
7.447.84
5.98 6.136.63
8.01
0
2
4
6
8
10
12
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
HK
D b
n
FY2015 HK Jewellery, Watches and Clocks, and Valuable Gifts Sales
Industry Analysis – HK & PRC
30
Marketing Program Highlights2015
31
Valentine’s Day Campaign
Launched a Valentine’s Day
campaign – “Add Sparkle to
Love” featuring stylish diamond
jewellery which are ideal for
seasonal gifting.
Sustaining the momentum of
X’mas, continuously using the
stylish fashion illustration to
attract new customer segments
and refresh the brand.
Touch points covered above the
line thematic communication,
digital campaign, below the line
PR, store POSM and window
display.
Animation Video Content
Store Display
32
Fashionable gold jewellery – g* Collection
was launched in March 2015. A series of
handcrafted 999.9 Gold with Burgundy
Red Agate or Black Chalcedony daily
wear jewellery were featured.
Leveraged a communication platform “A
Celebration of a Golden Age for Modern
Women” to target sophisticated women.
Touch points covered a press event, store
POSM and window display.
g* Collection Launch
33
g* Collection Launch
Brand Site
Store Display
34
Infini Love Diamond Rebranding
As an in-house signature brand, Infini
Love Diamond has gone through a
rebranding exercise in 2015.
New brand platform “A Passion for
Brilliance” was created to feature
the end result from the unswerving
passion that Chow Sang Sang puts
into every piece of ILD jewellery.
Core values of the brand: Knowledge,
Precision & Passion were
communicated via various touch
points to customers.
Brand Site
35
Infini Love Diamond Rebranding
Out Of Home Advertising Exhibition at ifc mall Hong Kong
36
Charme Rebranding
As a signature collection of our
affordable luxury lineup, Charme
collection has been refreshed in
2015 by adopting a new set of visual
identity to convey young & vibrant
images.
The new identity has applied to all
level communications. The image
revamp was featured during Qixi
campaign to capture the gifting
opportunity between couples.
A range of new designs have been
applied to VM display, catalogue,
packaging box and a special edition
of jewellery box as premium item.
Qixi Key Visual
Brand Site
Catalogue
37
VM display
Charme Rebranding
Charme Table / IPAD
38
Omni-Channel Roadshow
To inject new shopping experience for the
younger crowd of consumer, we have
partnered with Intel to run a series of
Omni-Channel Roadshows in China.
Leveraged digital technology as the sales
tool, created event ambassadors
“Charming Man”, the event achieved
significant result in both branding/PR and
sales performance.
4 roadshows were done in 2015 at Xian,
Chongqing, Nanjing & Guangzhou. More to
be rolled-out in 2016.
Charme Table Magic MirrorAir Ring
39
“Love is ALL” bridal campaign continued its
2nd year across the region. The focus of the
campaign moved from branding
communication to soft-selling customer
engagement. A range of bridal roadshows
were held across mainland China.
Bridal Campaign
Roadshow booth
and model show
40
2015 New Stores
Venetian, Macau
Chengdu, China
Elements, HK
Beijing, China
Chongqing, China
Times Square, HK
Canton Road, HK
Shenzhen, China
