HK TECH VENTURE(01137)2024-09-13 08:30Financial Performance - Total gross merchandise value for the group reached approximately HKD 4,235,500,000, representing a 4.9% increase compared to the same period last year, outperforming the overall retail market in Hong Kong [7]. - Revenue for the period was HKD 1,897,548, reflecting a 3.8% increase compared to HKD 1,828,567 in the previous year [9]. - The company reported a net loss of HKD 27,478, a decline of 156.4% from a profit of HKD 48,696 in the previous year [9]. - Total gross merchandise value for completed orders gross merchandise value reached HKD 4,199,746, up 5.2% from HKD 3,992,883 year-on-year [9]. - The company reported a net loss of HKD 27,500,000 for the first half of 2024, compared to a profit of HKD 48,700,000 in the same period of 2023 [55]. - Total revenue for the six months ended June 30, 2024, was HKD 1,897,548, an increase of 3.7% from HKD 1,828,567 for the same period in 2023 [74]. - The company reported a loss before tax of HKD 28,899 compared to a profit of HKD 43,400 in the previous year, reflecting a significant decline [74]. - The company reported a total comprehensive loss of HKD 14,093 for the period, compared to a total comprehensive income of HKD 53,188 in the previous year [75]. E-commerce Growth - The group has maintained a steady growth in its e-commerce business, which has been operational for ten years, focusing on continuous improvement and innovation [7]. - The overall strategy includes exploring international markets and diversifying business models to avoid stagnation and potential market exit [7]. - Active users of the HKTVmall app increased to 1,647,000 in June 2024, up from 1,581,000 in June 2023, reflecting a growth trend [16]. - The number of independent customers shopping on HKTVmall rose by 61,000 to 1,218,000 in the first half of 2024, compared to 1,157,000 in the same period of 2023 [17]. - The total merchandise transaction value for products eligible for the eight-hour express delivery service grew approximately 130.0% from December 2023 to June 2024, exceeding the initial target of 120,000 products [38]. - The "Street Market Same-Day Delivery" service saw its total merchandise transaction value grow from HKD 23.3 million in the first half of 2023 to HKD 107.9 million in the first half of 2024, representing a year-on-year growth of 363.1% [43]. - Everuts, launched in January 2023, achieved a total merchandise transaction value of HKD 22.7 million in the first half of 2024, a 136.5% increase compared to the same period in 2023 [43]. Cost Management and Profitability - Adjusted EBITDA decreased by 54.5% to HKD 37,596 from HKD 82,580 year-on-year, with an adjusted EBITDA margin of 0.9% [9]. - The gross profit margin increased to 22.9% in H1 2024 from 22.3% in H1 2023, driven by improved margins in both 1P and 3P businesses [24]. - The 1P business gross margin was intentionally raised to 25.0% in H1 2024, up from 23.5% in H1 2023, through active pricing strategies and cost management [25]. - The company reported a significant non-cash item of investment property valuation loss amounting to HKD 8,550,000 in the first half of 2024 [12]. - Other operating expenses increased by HKD 130,500,000 to HKD 1,044,200,000 in the first half of 2024, up from HKD 913,700,000 in the first half of 2023 [49]. - Delivery costs accounted for 11.8% of the total completed order merchandise transaction value in the first half of 2024, up from 10.9% in the first half of 2023 [53]. Strategic Initiatives - The company is actively promoting two innovative business models: "Street Market Same-Day Delivery" and the global purchasing platform "Everuts," aiming to expand online shopping offerings [7]. - The company plans to invest in advertising and marketing to expand its user base beyond 1.6 million users and attract new customers [8]. - The company aims to increase customer loyalty and shopping frequency on HKTVmall through improved service offerings [35]. - The company is developing a fully automated retail store system, with the first store located in Manchester, UK, expected to enhance efficiency over the next one to two years [45]. - The company plans to allocate approximately HKD 200 million for the expansion of its electronic delivery center in Tseung Kwan O, expected to be completed by the end of 2023 [60]. Market Conditions and Challenges - The retail sales value in Hong Kong for the first half of 2024 decreased by 6.5%, while online retail sales value saw a slight decline of 0.3% compared to the same period last year [7]. - The company anticipates challenges in the retail environment in Hong Kong, maintaining a cautious yet flexible approach to manage its business [63]. - The company recognizes the need for innovation to maintain its unique advantages in the competitive landscape of Hong Kong's retail sector [7]. - The group incurred a loss of HKD 84,500,000 in the new exploration and technology segment for the first half of 2024, compared to a loss of HKD 48,000,000 in the same period of 2023 [56]. Cash Flow and Financial Position - Free cash flow improved significantly to HKD 47,250, compared to a negative HKD 26,560 in the same period last year, marking a 277.9% increase [9]. - Cash position increased by 33.4% to HKD 765,338 from HKD 573,593 at the end of December 2023 [10]. - The group generated a net cash inflow from operating activities of HKD 176,500,000 during the first half of 2024 [58]. - The company reported a significant increase in cash and cash equivalents, with a net increase of HKD 254,167,000 compared to a decrease of HKD 95,632,000 in the prior year [83]. - The total cash position increased primarily due to a net realization of financial assets of HKD 147,900,000 [58]. Shareholder Information - The company has a total of 2,165 full-time employees as of June 30, 2024, down from 2,214 as of December 31, 2023 [73]. - The company did not declare any interim dividend for the six months ended June 30, 2024, consistent with the same period in 2023 [122]. - The board has adopted a dividend policy aimed at providing reasonable returns to investors while retaining sufficient capital for sustainable growth [165]. - The company expects to distribute dividends at 30% to 60% of adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) based on current payout ratio guidelines [165].