鸿福堂(01446) - 2024 - 中期业绩

Performance Highlights Financial and Operational Highlights Hung Fook Tong Group faced market challenges in H1 2024, with total revenue decreasing by 7.1% to HKD 308 million; despite the revenue decline, effective cost control narrowed the loss attributable to owners of the Company from HKD 9.6 million to HKD 7.9 million, with gross profit margin slightly increasing to 58.9% Key Performance Indicators for H1 2024 | Indicator | H1 2024 | H1 2023 | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Revenue | 308.0 Million HKD | 331.7 Million HKD | -7.1% | | - Hong Kong Retail Business | 236.3 Million HKD | 251.7 Million HKD | -6.1% | | - Wholesale Business | 71.7 Million HKD | 80.0 Million HKD | -10.4% | | Gross Profit | 181.5 Million HKD | 193.9 Million HKD | -6.4% | | Gross Profit Margin | 58.9% | 58.5% | +0.4 pp | | Loss Attributable to Owners of the Company | (7.9) Million HKD | (9.6) Million HKD | Loss narrowed by 17.7% | | Loss Per Share | 1.21 HK cents | 1.47 HK cents | -17.7% | Condensed Consolidated Interim Financial Statements Statement of Comprehensive Income In H1 2024, the company's revenue was HKD 308 million, a 7.1% year-on-year decrease; despite reductions in selling, administrative, and finance expenses, the loss for the period narrowed to HKD 10.77 million from HKD 13.90 million in the prior year, with loss attributable to owners of the Company at HKD 7.93 million Summary of Condensed Consolidated Interim Statement of Comprehensive Income (HKD Thousand) | Item | H1 2024 (Unaudited) | H1 2023 (Unaudited) | | :--- | :--- | :--- | | Revenue | 308,032 | 331,678 | | Gross Profit | 181,529 | 193,907 | | Operating Loss | (5,896) | (10,580) | | Loss Before Income Tax | (10,827) | (13,745) | | Loss for the Period | (10,765) | (13,904) | | Loss Attributable to Owners of the Company | (7,925) | (9,649) | Statement of Financial Position As of June 30, 2024, the Group's total assets were HKD 676 million, a 5.3% decrease from end-2023; total liabilities were HKD 435 million, and total equity was HKD 241 million, notably with net current liabilities of HKD 140 million primarily due to HKD 142 million in advances received Summary of Statement of Financial Position (HKD Thousand) | Item | As of June 30, 2024 (Unaudited) | As of December 31, 2023 (Audited) | | :--- | :--- | :--- | | Total Assets | 675,812 | 713,763 | | Total Liabilities | 435,090 | 457,887 | | Total Equity | 240,722 | 255,876 | | Current Assets | 212,713 | 228,439 | | Current Liabilities | 352,562 | 369,395 | | Net Current Liabilities | (139,849) | (140,956) | Notes to the Financial Statements Segment Information The Group's operations are divided into Hong Kong retail and wholesale segments; Hong Kong retail business, despite revenue decline, saw segment results increase from HKD 3.82 million to HKD 5.34 million, indicating improved profitability, while the wholesale business faced challenges with both revenue and segment results decreasing Summary of Segment Results (HKD Thousand) | Segment | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | :--- | | Hong Kong Retail | Revenue from External Customers | 236,346 | 251,683 | | | Segment Results | 5,339 | 3,824 | | Wholesale | Revenue from External Customers | 71,686 | 79,995 | | | Segment Results | 8,780 | 9,444 | Management Discussion and Analysis Business Review In H1 2024, the Group faced a challenging operating environment due to a sluggish Hong Kong economy, high interest rates, and cross-border consumption trends, leading to a 7.1% decline in total revenue; however, effective cost control and improved production efficiency resulted in a 0.4 percentage point increase in gross profit margin and a 17.9% reduction in loss attributable to owners of the Company, maintaining a solid financial position with ample cash and unutilized bank facilities - The macroeconomic environment poses challenges to the retail sector, particularly outbound travel and residents' cross-border consumption trends, which pressure the Group's catering business[28] - Despite the revenue decline, the Group successfully narrowed the loss attributable to owners of the Company by 17.9% to HKD 7.9 million through cost control and enhanced production efficiency[28] Hong Kong Retail Business As the primary revenue source, Hong Kong retail business revenue fell 6.1% year-on-year to HKD 236 million, accounting for 76.7% of total revenue, mainly due to Hong Kong residents' cross-border consumption and incomplete recovery of inbound tourism; despite this, segment profit grew 39.6% to HKD 5.3 million, driven by improved gross profit margin and reduced administrative expenses, with the Group optimizing product mix, expanding sales networks, and enhancing member engagement (over 1.398 million 自家CLUB members) to address challenges Hong Kong Retail Business Performance | Indicator | H1 2024 | H1 2023 | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Segment Revenue | 236.3 Million HKD | 251.7 Million HKD | -6.1% | | Segment Profit | 5.3 Million HKD | 3.8 Million HKD | +39.6% | - As of June 30, 2024, the Group operated 108 self-operated stores in Hong Kong and actively enhanced customer loyalty and expanded customer base through social media platforms (Xiaohongshu, Douyin) and membership programs (自家CLUB members exceeding 1,398,000)[29][30] Wholesale Business Wholesale business revenue decreased by 10.4% to HKD 71.7 million, and segment profit fell by 7.0% to HKD 8.8 million, primarily reflecting the continued sluggish consumer sentiment in Hong Kong and mainland China; Hong Kong wholesale revenue declined by 7.6%, while mainland China wholesale business revenue dropped by 24.1% due to uncertain economic outlook and intense competition, with the Group responding by launching new products and expanding online and offline sales network coverage Wholesale Business Performance | Indicator | H1 2024 | H1 2023 | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Segment Revenue | 71.7 Million HKD | 80.0 Million HKD | -10.4% | | Segment Profit | 8.8 Million HKD | 9.4 Million HKD | -7.0% | - By region, Hong Kong wholesale revenue decreased by 7.6% to HKD 61.5 million, and mainland China wholesale revenue decreased by 24.1% to HKD 10.2 million[32][33] Outlook For H2 2024, the Group anticipates continued challenging operating environments in Hong Kong and mainland China, thus adopting prudent financial management strategies focused on optimizing cost structures and maintaining robust cash flow, while actively exploring new revenue streams, including expanding product categories, broadening sales channels, seeking brand collaborations, and identifying new opportunities in the Greater Bay Area and overseas markets - Key strategies include: - Prudent Financial Management: Optimizing cost and capital structures, maintaining robust cash flow - Revenue Expansion: Expanding product categories (e.g., postpartum tonics, ambient products), broadening sales channels, seeking brand collaborations - Market Expansion: Exploring new opportunities in mainland China (especially the Greater Bay Area) and overseas markets[35][36][37] Financial Review The period's financial performance reflects macroeconomic challenges and the company's effective cost control; revenue declined by 7.1% due to changing consumption patterns, but a 8.2% decrease in cost of sales improved gross profit margin from 58.5% to 58.9%, while staff costs and depreciation expenses also fell by 10.6% and 10.0% respectively, effectively offsetting some revenue decline and ultimately narrowing the loss attributable to owners of the Company Key Financial Item Changes | Item | H1 2024 | H1 2023 | Y-o-Y Change | Ratio to Revenue (H1 2024 vs H1 2023) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 308 Million HKD | 331.7 Million HKD | -7.1% | N/A | | Gross Profit Margin | 58.9% | 58.5% | +0.4pp | N/A | | Staff Costs | 93.7 Million HKD | 104.8 Million HKD | -10.6% | 30.4% vs 31.6% | | Rental Expenses | 50.8 Million HKD | 51.7 Million HKD | -1.7% | 21.5% vs 20.5% | | Loss Attributable to Owners of the Company | 7.9 Million HKD | 9.6 Million HKD | -17.7% | N/A | Liquidity and Financial Resources As of June 30, 2024, the Group held cash and bank balances of HKD 79.4 million with a gearing ratio of 0.70, indicating a sound financial position; despite net current liabilities of HKD 140 million, HKD 142 million of this comprises advances received for prepaid vouchers and points, which are not expected to be settled in cash, resulting in net current assets of HKD 2.2 million if excluded Liquidity and Financial Resources Indicators | Indicator | As of June 30, 2024 | As of December 31, 2023 | | :--- | :--- | :--- | | Bank Deposits and Cash Balances | 79.4 Million HKD | 88.5 Million HKD | | Gearing Ratio | 0.70 | 0.69 | | Net Current Liabilities | (139.8 Million HKD) | (141.0 Million HKD) | - Net current liabilities primarily consist of HKD 142 million in advances received from prepaid voucher sales, which are expected to be settled through customer redemption of products rather than cash payments in the normal course of business[49] Other Information Dividend Policy The Board resolved not to declare any interim dividend for the six months ended June 30, 2024, consistent with the policy for the same period last year - The Board decided not to declare an interim dividend for the six months ended June 30, 2024[52] Corporate Governance During the reporting period, the company complied with the Corporate Governance Code set out in the Listing Rules; the company's Audit Committee reviewed the interim financial information, which was also reviewed by external auditor PricewaterhouseCoopers - The Company has complied with the code provisions of the Corporate Governance Code[52] - The Audit Committee, comprising three independent non-executive directors, has reviewed the interim financial information, and the external auditor has also completed its review[54]