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Chow Sang Sang's 1H net profit jumped 67% to 496.2 mln hkd.Photo: Company

CHOW SANG SANG: Net Jumps 67% To 496 Mln Hkd On Sparkling Jewelry Sales

CHOW SANG SANG (HK: 116) said its first half net profit leapt 67% year-on-year to 496.2 mln hkd on very strong sales performance, in which the top line surged ahead 58% to 8.3 bln.

Turnover for jewelry alone in the January-June period rose 55% to 5.75 bln hkd, while turnover from other businesses jumped 65% to 2.5 bln.

Chow Sang Sang Chairman Chow Kwen Lim said that the main revenue driver continues to be shoppers arriving from the PRC.

“In the first half of 2011, Hong Kong continued to be a favorite tourist destination for Mainland visitors, some of whom might have rerouted their travel to Hong Kong from Japan in the aftermath of the tragic tsunami and nuclear incidents. Arrivals from the Mainland increased by 21% over 2010,” he said.

Stronger precious metal sales also helped boost earnings.

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Of the total turnover in the first half, 69% was attributable to jewelry retail, increasing 55% from that of the first half of 2010. Photo: Chow Sang Sang

“The price of gold rose by more than US$120/oz during the period. However, sentiments being pervasively bullish on the metal, sales of gold ornaments, in both Hong Kong and the Mainland, actually shot up 37% by weight,” Mr. Chow said.

He added that the stock market in Hong Kong had a “roller-coaster ride” in the first six months of the year, ending with a slight drop in the benchmark Hang Seng Index from the beginning of the year.

“Investors tended to be cautious and their enthusiasm for initial public offerings was depressed,” Mr. Chow said.

Of the total turnover in the first half, 69% was attributable to jewelry retail, increasing 55% from that of the first half of 2010.

“Hong Kong and Macau accounted for 61% of total jewelry retail turnover. Out of this percentage 47% came from Mainlanders,” Mr. Chow said.

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He added that although the price of gold climbed to over HK$15,000 per tael, year-on-year growth of sales of gold rose 38% by weight and 75% in dollar terms, and turnover of diamond jewelry rose by 22%.

Visitor spending also benefited the Emphasis Jewelry shops in Macau, as well as Midtown Jewelry in Disneyland Hong Kong, bringing 46% growth in turnover in the former and 31% in the latter.

“A new Chow Sang Sang shop opened in January at iSQUARE in Tsimshatsui. The shop in Maritime Square, Tsing Yi was relocated to a larger space,” Mr. Chow said.

Capital expenditure during the first half amounted to HK$17 million.

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CSS recent price: 26.05 hkd

Turnover in Mainland China registered 69% growth from last year, contributing 38% to overall jewelry retail.

There was an increase of 54% in the number of items sold that were priced at RMB50,000 and above. Fourteen new shops began operation in the first half, bringing the total number of shops at the end of June to 193. (In June 2010 the number was 164).

“Cities newly covered by the network included Jilin in the province of Jilin, Panjin in Liaoning, and Zhangjiagang in Jiangsu. Shops were added in the cities Tianjin, Shanghai, Shijiazhuang, Zhengzhou and Hefei, among others. A Rolex/Tudor boutique was opened in Shenzhen in February,” Chairman Chow said.

Looking ahead

As the central government continues to wield credit control as a weapon against inflation and speculative activities, business operations are bound to be affected to varying degrees.

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Chow Sang Sang executives meeting with investors recently in Hong Kong. Photo: Aries Consulting

Mr. Chow said the group itself has taken measures to ensure the availability of funding for its operations and expansion.

“It is difficult, however, to gauge whether the damping measures will eventually hurt enough businesses as to cause reduction of spending at the consumer level. So far into the second half there has been no evidence of this happening,” he said.

In order to increase market share in the tourist area of Sheung Shui, a new Chow Sang Sang shop will be opened in the second half. Another is planned for Christmas in a new complex with hotel, office, residential and retail spaces in Tseung Kwan O.

“In Macau a new shop in the centre of town has just been opened, and another will open within the year.

“On the Mainland, nearly thirty new shops are in the pipeline, scheduled to open in the second half.”

He added that most of them will be in familiar cities such as Guangzhou, Tianjin and Fuzhou, being part of the program to increase market share and efficiency in key cities.

Bengbu in Anhui and Ganzhou in Jiangxi will also be new cities joining the network.

See also:

HK JEWELERS CHOW SANG SANG, LUK FOOK: What Analysts Now Say...

CHOW SANG SANG: Double Digit Growth Seen For 3Q 


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Focus Media Network celebrates its July listing in Hong Kong. Photo: Aries Consulting

FOCUS MEDIA: First Post-IPO Interim Revenue Jumps 37% to 20.8 mln hkd

SINGAPORE AND HONG KONG out-of-door advertiser Focus Media Network (HK: 8112) – which listed in Hong Kong in July – boosted its first half revenue 37% year-on-year to 20.8 mln hkd thanks to an expanded network and sponsorship events.

Meanwhile, January-June net profit was up a healthy 11% at 0.7 mln hkd.

Hong Kong-based Focus Media Network saw first half revenue from external customers in Hong Kong at 13.93 mln hkd versus 9.75 mln a year earlier.

Meanwhile, total first half revenue from external customers in Singapore was 6.86 mln hkd compared to 5.43 mln in the year-prior period.

“The year has so far been very meaningful for the development of our group. After building our business, one brick at a time for the last seven years, on 28 July 2011 we successfully listed on the Growth Enterprise Market (GEM) of The Stock Exchange of Hong Kong.

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“We are delighted that our placing was well-received by the investment community and at the top end of our indicative price range based on 20 times our historical FY2010 earnings,” said Chairman, CEO and Executive Director PJ Wong.

He said the successful IPO in Hong Kong demonstrates that Focus Media Network has won investors’ faith and confidence in the power of the brand, the quality of the team, the track record of the firm’s growth and the potential of the group to move forward.

“With our listing behind us, we have embarked on our next phase of growth, armed with a new currency and a new set of valued-shareholders to run the next league of our journey with us.

Our successful listing not only reminds us of our humble beginning and recognizes our past achievements, it also marks the beginning of our company’s next phase of growth.”

He added that the listing in Hong Kong marks “a significant milestone” for the group and opens up another opportunity for investors to the fast growing digital Out-of-Home (“OOH”) advertising sector.

“Looking ahead, we will utilize the resources as a publicly-traded company to expand our network coverage and to create new platforms and advertising opportunities for our customers.”

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Focus recent price: 0.80 hkd

Mr. Wong called Focus Media Network “a well-established digital OOH media company in Hong Kong and Singapore,” doing business since April 2004.

“We had pioneered the concept of creating a sizeable network of flat panel displays in elevator lobbies of office and commercial buildings to sell advertisements. In terms of the number of venues, our group is the largest digital OOH media company that has created a sizeable network in elevator lobbies of office and commercial buildings in Hong Kong and Singapore.”

Mr. Wong added that the company would strive to increase the number of stores under its existing In-store digital media network at Mannings in Hong Kong and at Watsons in Singapore, as well as pursue the launch of new in-store digital media networks with owners of other retail outlets and chain-stores.

Due to the aggressive expansion plans of Focus Media Network, the board does not recommend the payment of an interim dividend for the period.

See also:

FOCUS MEDIA: Gen2 Fund Boosts Stake In HK/Singapore Ad Firm

FOCUS MEDIA: Singapore, Hong Kong Ad Firm's HK Placement 20x PE 


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