Seeking Long-term Development Based on Existing Businesses
HONG KONG — Hengdeli Holdings Limited (“Hengdeli” or the “Company” and, together with its subsidiaries, the “Group”; stock code: 3389), an international retailer of renowned brand watches and manufacturer of watch accessories, announced its interim results for the six months ended 30 June 2017 (the “period under review”).
During the first half of 2017, China’s economy was mixed with opportunities and challenges. With the beginning of economic recovery on one hand and the return of economic slowdown on the other hand, the operating environment has shown no sign of sustainable recovery. As at 30 June 2017, the Group recorded revenue of RMB1,056,753,000, representing a year-on-year (“YOY”) decrease of 3.3%. Gross profit margin was 16.8%, representing a YOY decrease of 80bps. Losses for the period amounted to RMB132,313,000; the loss was mainly due to the deduction of non-recurring profits tax on the disposal and the decline in profit margin.
During the period under review, for the purpose of safe and healthy development, the Group has completed a very substantial disposal. After the completion of the disposal, the Group’s business now mainly covers the sales of internationally renowned watches in the Hong Kong, Macau and Taiwan area, as well as the manufacturing of related accessories.
For the sales of renowned watches, as at 30 June 2017, the Group operated a total of 62 retail outlets in Hong Kong, Macau, and Taiwan. During the period under review, Hong Kong’s retail sector performance was still lacklustre, but there were indications of improvement. As at 30 June 2017, the Group recorded retail sales of RMB758,654,000 in the Hong Kong, representing a YOY decrease of 5.8%; the decrease in sales has effectively shrunk. Retail sales in the Taiwan was RMB75,150,000, which is at about the same level as that in the same period last year.
During the period under review, the Group opened an “Elegant” multi-brand shop on Yun Ping Road, Causeway Bay. The Group also entered into a lease agreement with an international hotel in Macau in preparation for the opening of a world-renowned watch retail shop. After careful planning, the Group opened an “Elegant” store on Section 5, Chungshiao East Road in the downtown area of Taipei in May 2017. The store was a self-owned property, saving a considerable amount of rental costs for the Company. It also embodied the Group’s strategic goal of in-depth development in the Taiwan region. By rearranging the strategic layout, it is believed that improvements will be seen in the sales of renowned watches.
The Group continued to progress in the construction of its watch accessories industrial chain. During the period under review, with increasing industrial investment and the enrichment of customer resources, the Company has succeeded in forming closer and more in-depth relationships with brand suppliers. Two new factories located in Suzhou and Guangzhou has been put into operation during the period under review. A number of highly qualified professionals has also been hired for technical innovations. Through unremitting efforts, the Group’s watch accessories industrial chain has maintained a growth in sales, showing an increase of 5.0% YOY, taking the Group’s overall competitiveness to the next level. It is a clear demonstration of its potential.
The Group’s customer service and maintenance team keeps the promise of “Cutting-edge technology, efficient management, and considerate services”. It is the best guarantee for consumers. With continuous training provided by brand suppliers to the Group’s technical personnel and the human resources policy of recruiting talents worldwide, the Group has been able to retain the support of elite technicians and its world-wide cutting edge maintenance expertise.
It is expected that the economic climate will remain unstable during the second half of 2017, but statistics from the Hong Kong government showed that the overall retail environment is on a gradual recovery. The long-term favourable fundamentals in economic development of China remains unchanged, and the gradual recovery and even growth in consumption power of Mainland China visitors to Hong Kong will continue to be a beneficial factor in the Group’s development. Looking onto the next stage, the Group will continue to move forward with “maintaining stable and healthy growth and seeking sustainable development” as its guiding principle, and “pragmatic yet innovative” as its philosophy. On one hand, the Group will endeavour to keep its renowned watch sales healthy and stable, stepping up efforts in the development of its watch accessories industrial chain and other businesses; on the other hand, it will stand on a new starting point, leverage its core competitiveness, put heads together to explore deeper levels of cooperation with brand suppliers and international peers in various ways. This will allow the Group to seek a newer, broader mode of development, so as to find new breakthroughs for business expansion and create greater value for shareholders and the community at large.