本间高尔夫(06858) - 2024 - 中期财报

Management Discussion and Analysis Company Profile and Business Overview Honma Golf is a vertically integrated golf product company focused on brand repositioning, targeting younger golfers with 'Ultra-Premium' and 'Ultra-Performance' product lines, and expanding its digital ecosystem - The company is a vertically integrated golf company with strong in-house design, development, and manufacturing capabilities, boasting an extensive retail presence across Asia[155] - The company has launched multiple initiatives to rebrand, aiming to position HONMA as a vibrant, valuable, and international golf brand for digitally-savvy younger golfers[159][175] - Product strategy is consolidated and simplified, focusing on two consumer segments: 'Ultra-Premium' with the BERES series and 'Ultra-Performance' with the TOUR WORLD series for performance-oriented passionate golfers[176][189] - The company is revamping its Customer Relationship Management (CRM) systems and enhancing e-commerce capabilities in key markets to build an end-to-end digital ecosystem for a 360-degree brand experience[179][196][215] Business Outlook The Group will continue its long-term growth strategy by strengthening its ultra-premium market leadership, expanding into the ultra-performance segment, developing non-club product lines, and pursuing sustainable growth in North America and Europe - A core strategy is to consolidate market share in domestic markets (Japan, Korea, China), particularly within the fast-growing 'Ultra-Performance' segment[202] - Plans include collaborating with Itochu Corporation to actively develop complementary non-club product lines like apparel, aiming to establish HONMA as a 'golf lifestyle brand'[204] - In North America and Europe, the focus will be on smaller, high-quality customer segments, combined with direct-to-consumer communication and sales strategies to achieve sustainable growth[249] - The company acknowledges multiple challenges in the golf industry, including global economic uncertainties, but is confident in mitigating adverse impacts and seizing opportunities to optimize operational efficiency for sustainable development[206][251][252] Financial Review For the six months ended September 30, 2023, total revenue decreased by 11.6% to 13,194.8 million JPY, gross profit declined by 12.6%, but net profit grew by 7.8% to 3,329.5 million JPY due to increased other income and reduced income tax expenses, with only Japan showing growth while self-operated stores performed strongly Overall Financial Performance For the six months ended September 30, 2023, the Group's total revenue was 13,194.8 million JPY, a 11.6% decrease from 14,927.4 million JPY in the prior year, with gross profit declining 12.6% to 6,877.0 million JPY, yet net profit increased 7.8% to 3,329.5 million JPY due to a 52.2% reduction in income tax expense, resulting in basic earnings per share of 5.50 JPY Consolidated Income Statement Summary (For the six months ended September 30) | Metric | 2023 (thousand JPY) | 2022 (thousand JPY) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 13,194,832 | 14,927,415 | (11.6)% | | Gross Profit | 6,876,979 | 7,866,314 | (12.6)% | | Profit Before Tax | 3,635,760 | 3,728,600 | (2.5)% | | Net Profit | 3,329,503 | 3,087,382 | 7.8% | | Basic EPS (JPY) | 5.50 | 5.10 | 7.8% | Revenue by Product Category Golf clubs remain the primary revenue source, accounting for 75.9% of total revenue, despite a 12.5% year-on-year decrease, while apparel was the only category to grow with a 2.1% increase, and golf balls and accessories saw declines of 2.2% and 27.1% respectively Revenue by Product Category (For the six months ended September 30) | Product Category | 2023 Revenue (thousand JPY) | % of Total | YoY Change (%) | | :--- | :--- | :--- | :--- | | Golf Clubs | 10,011,857 | 75.9 | (12.5)% | | Golf Balls | 1,097,872 | 8.3 | (2.2)% | | Apparel | 1,263,961 | 9.6 | 2.1% | | Accessories & Others | 821,142 | 6.2 | (27.1)% | | Total | 13,194,832 | 100.0 | (11.6)% | - The decrease in golf club revenue was primarily due to a 26.3% sales decline in the China market[7] - Revenue from accessories and other related products significantly decreased by 27.1%, mainly due to sales limitations in Japan prior to new product launches to ensure profit margins[9] Revenue by Geographical Region Japan was the only region to achieve positive growth, with revenue increasing 5.6% year-on-year, while Korea and China (including Hong Kong and Macau) saw declines of 7.0% and 12.4% respectively, and North America and Europe experienced the most significant drops of 40.7% and 52.5% due to distribution network adjustments and model shifts, with the three key domestic markets of Japan, Korea, and China collectively accounting for 88.3% of total revenue Revenue by Geographical Region (For the six months ended September 30) | Geographical Region | 2023 Revenue (thousand JPY) | % of Total | YoY Change (%) | | :--- | :--- | :--- | :--- | | Japan | 4,172,787 | 31.6 | 5.6% | | Korea | 3,942,808 | 29.9 | (7.0)% | | China (incl. HK & Macau) | 3,529,130 | 26.7 | (12.4)% | | North America | 335,024 | 2.5 | (40.7)% | | Europe | 135,861 | 1.0 | (52.5)% | | Other Regions | 1,079,222 | 8.2 | (41.9)% | | Total | 13,194,832 | 100.0 | (11.6)% | - Japan market revenue grew by 5.6%, benefiting from a strong rebound in consumer demand and ongoing marketing activities[13] - North America and Europe revenues significantly declined, primarily due to the ongoing impact of distribution network adjustments and changes in distribution models[14] Revenue by Sales and Distribution Channel Self-operated store channels performed strongly with a 13.2% year-on-year revenue increase, primarily driven by robust retail sales recovery in Japan and China, whereas third-party retailer and wholesaler channels saw a significant 22.5% decline, mainly impacted by China market challenges and European distribution model changes Revenue by Sales Channel (For the six months ended September 30) | Sales Channel | 2023 Revenue (thousand JPY) | % of Total | YoY Change (%) | | :--- | :--- | :--- | :--- | | Self-operated Stores | 5,170,582 | 39.2 | 13.2% | | Third-party Retailers & Wholesalers | 8,024,250 | 60.8 | (22.5)% | | Total | 13,194,832 | 100.0 | (11.6)% | - The growth in self-operated store revenue was primarily driven by strong retail sales recovery in Japan and China, which recorded increases of 30.7% and 23.6% respectively[17] Cost of Sales and Gross Profit Gross profit for the period was 6,877.0 million JPY, a 12.6% year-on-year decrease, with the overall gross profit margin slightly declining from 52.7% to 52.1%, while golf club gross margin slightly decreased to 59.3%, golf ball gross margin fell to 29.0% due to rising raw material costs, apparel gross margin decreased to 28.2%, and accessories and other products' gross margin improved to 32.4% due to product mix optimization - Total gross profit decreased by 12.6% from 7,866.3 million JPY to 6,877.0 million JPY, with the gross profit margin slightly declining from 52.7% to 52.1%[58] Gross Profit and Gross Margin by Product Category (For the six months ended September 30) | Product Category | 2023 Gross Profit (thousand JPY) | 2023 Gross Margin (%) | 2022 Gross Margin (%) | | :--- | :--- | :--- | :--- | | Golf Clubs | 5,935,944 | 59.3 | 59.8 | | Golf Balls | 318,691 | 29.0 | 31.9 | | Apparel | 356,200 | 28.2 | 30.2 | | Accessories & Other Related Products | 266,144 | 32.4 | 25.6 | | Total | 6,876,979 | 52.1 | 52.7 | Operating Expenses and Profit Sales and distribution expenses decreased by 8.0% year-on-year to 4,486.0 million JPY, though their percentage of revenue increased from 32.7% to 34.0%, while administrative expenses remained stable, other income and gains increased due to positive foreign exchange revaluation, and finance costs rose by 84.9% due to higher borrowing costs, ultimately leading to a 7.8% increase in net profit for the period to 3,329.5 million JPY due to a significant 52.2% reduction in income tax expense - Sales and distribution expenses decreased by 8.0% year-on-year to 4,486.0 million JPY[294] - Other income and gains increased to 2,019.4 million JPY, primarily due to positive foreign exchange revaluation results[23] - Income tax expense decreased by 52.2% from 641.2 million JPY to 306.3 million JPY, with the effective tax rate falling from 17.2% to 8.4%[272] - Net profit for the period was 3,329.5 million JPY, representing a 7.8% year-on-year increase[297][118] Liquidity and Capital Resources The company demonstrates sound working capital management, with trade receivables turnover days decreasing from 54 to 49 days, while inventory turnover days increased to 320 days due to lower sales, and the debt-to-equity ratio improved from 36.3% to 31.5%, with approximately 4,972.2 million JPY of global offering proceeds remaining unutilized at period-end, primarily earmarked for potential strategic acquisitions - Trade receivables and bills receivable turnover days decreased from 54 to 49 days, primarily due to enhanced collection efforts[35] - Inventory turnover days increased from 299 to 320 days, mainly due to a decline in sales over the past 12 months[279] - The debt-to-equity ratio decreased from 36.3% as of March 31, 2023, to 31.5% as of September 30, 2023[284] - As of September 30, 2023, the unutilized balance of global offering proceeds was approximately 4,972.2 million JPY, with 29.4% intended for potential strategic acquisitions[64][288][114] Other Information Directors' and Shareholders' Interests This section details the interests of the company's directors, chief executives, and major shareholders in the company's shares as of September 30, 2023, with Chairman Mr. Liu Jianguo holding approximately 38.72% interest, and other major shareholders including Charoen Pokphand Group (29.93%), Mr. Ma Jianrong (7.76%), Itochu Corporation (6.32%), and Fosun International-related entities (5.88%) Directors' and Chief Executives' Shareholding Interests | Name | Capacity/Nature of Interest | Number of Shares Held (L) | Approximate % of Interest (%) | | :--- | :--- | :--- | :--- | | Mr. Liu Jianguo | Founder and Sole Beneficiary of Trust/Interest in Controlled Corporation/Beneficial Owner | 234,512,775 | 38.72% | | Mr. Yasuki Ito | Beneficial Owner | 337,552 | 0.06% | | Mr. Zuo Jun | Beneficial Owner | 254,020 | 0.04% | Major Shareholders' Shareholding Interests | Shareholder Name | Nature of Interest | Number of Shares Held (L) | Approximate % of Interest (%) | | :--- | :--- | :--- | :--- | | Kouunn Holdings Limited | Beneficial Owner | 233,560,525 | 38.56% | | Charoen Pokphand Group Company Limited | Interest in Controlled Corporation | 181,296,500 | 29.93% | | Mr. Ma Jianrong | Interest in Controlled Corporation | 47,000,000 | 7.76% | | Itochu Corporation | Beneficial Owner | 38,284,000 | 6.32% | | Fosun International Limited | Interest in Controlled Corporation | 35,629,425 | 5.88% | Share Award Schemes The company operates a 'Restricted Share Unit Scheme' and a 'Post-IPO Share Option Scheme' to incentivize and retain talent, with share movements but no new grants under the RSU scheme during the period, and no options granted under the Post-IPO Share Option Scheme since its inception, while an interim dividend of 1.5 JPY per share has been declared for the six months ended September 30, 2023 - The company adopted the Restricted Share Unit (RSU) scheme in 2015, aiming to reward and incentivize directors, senior management, and employees[322] - The company adopted the Post-IPO Share Option Scheme in 2016 to incentivize eligible persons, with no options granted under the scheme as of September 30, 2023[79][108] - The Board has declared an interim dividend of 1.5 JPY per share for the six months ended September 30, 2023, totaling approximately 908.5 million JPY, on November 24, 2023[469] Corporate Governance The company complied with all applicable code provisions of the Corporate Governance Code in Appendix 14 of the Listing Rules during the reporting period, with the sole deviation being the combined roles of Chairman and President (Chief Executive Officer) held by Mr. Liu Jianguo, an arrangement the Board believes facilitates effective group management and business development, and an Audit Committee has been established and reviewed this interim report - The company complies with the Corporate Governance Code, with one deviation: the roles of Chairman and President (Chief Executive Officer) are combined and held by Mr. Liu Jianguo[334][84] - The Board believes that combining the roles of Chairman and President allows the Group to effectively plan and execute business decisions under strong and consistent leadership, benefiting management and business development[84] - The company has established an Audit Committee, comprising three independent non-executive directors, which has reviewed this interim results and report[86][260] Interim Condensed Consolidated Financial Statements Review Report and Financial Statements This section includes the review report by independent auditor Ernst & Young, along with the unaudited interim condensed consolidated income statement, statement of comprehensive income, statement of financial position, statement of changes in equity, and cash flow statement, with Ernst & Young concluding that nothing has come to their attention to suggest the interim financial information is not prepared in all material respects in accordance with International Accounting Standard 34 - Independent auditor Ernst & Young has reviewed the interim financial information and issued no audit opinion, concluding that nothing significant suggests non-compliance with International Accounting Standard 34[91][117][261] Interim Condensed Consolidated Income Statement (For the six months ended September 30) | Item | 2023 (thousand JPY) | 2022 (thousand JPY) | | :--- | :--- | :--- | | Revenue | 13,194,832 | 14,927,415 | | Gross Profit | 6,876,979 | 7,866,314 | | Profit Before Tax | 3,635,760 | 3,728,600 | | Profit for the Period | 3,329,503 | 3,087,382 | | Profit Attributable to Owners of the Parent Per Share (JPY) | 5.50 | 5.10 | Interim Condensed Consolidated Statement of Financial Position (Summary) | Item | September 30, 2023 (thousand JPY) | March 31, 2023 (thousand JPY) | | :--- | :--- | :--- | | Total Non-current Assets | 8,320,186 | 8,208,542 | | Total Current Assets | 33,543,335 | 32,158,818 | | Total Current Liabilities | 11,832,643 | 12,134,527 | | Total Non-current Liabilities | 2,094,826 | 2,201,905 | | Net Assets | 27,936,052 | 26,030,928 | Interim Condensed Consolidated Cash Flow Statement (Summary, For the six months ended September 30) | Item | 2023 (thousand JPY) | 2022 (thousand JPY) | | :--- | :--- | :--- | | Net Cash Flows from Operating Activities | 3,251,296 | 3,277,219 | | Net Cash Flows Used in Investing Activities | (196,923) | (228,919) | | Net Cash Flows Used in Financing Activities | (1,449,364) | (1,267,049) | | Cash and Cash Equivalents at End of Period | 16,659,964 | 17,038,061 | Notes to the Financial Statements The notes to the financial statements provide detailed explanations and supplementary information on interim financial data, covering key matters such as basis of preparation, changes in accounting policies, operating segment information, revenue recognition, composition of costs and expenses, tax details, earnings per share calculation, asset and liability specifics (e.g., inventories, receivables, bank borrowings), dividend policy, and related party transactions Basis of Preparation and Accounting Policies This interim condensed consolidated financial information is prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting', with accounting policies consistent with those used in the annual financial statements for the year ended March 31, 2023, and new and revised International Financial Reporting Standards effective during the period have been adopted without significant impact on the Group - The interim financial information is prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting'[140] - Several new and revised International Financial Reporting Standards were adopted for the first time during the period, but they had no significant impact on the Group's interim condensed consolidated financial information[130][425][433] Operating Segments and Revenue For management purposes, the Group has only one reportable operating segment: 'Manufacture and sale of golf-related products and provision of related services', with revenue primarily derived from golf-related product sales recognized at a point in time when goods are transferred, and the notes provide detailed revenue by geographical region, indicating approximately 3,512.8 million JPY of revenue from a single customer during the period - The Group has only one reportable operating segment: the manufacture and sale of golf-related products and the provision of services related to such products[427] - For the six months ended September 30, 2023, approximately 3,512,852 thousand JPY of revenue was generated from sales to a single customer[458] Revenue by Geographical Region (For the six months ended September 30) | Region | 2023 (thousand JPY) | 2022 (thousand JPY) | | :--- | :--- | :--- | | Japan | 4,172,787 | 3,951,625 | | Korea | 3,942,808 | 4,237,634 | | China (incl. HK & Macau) | 3,529,130 | 4,028,409 | | Other Regions Worldwide | 1,079,222 | 1,858,853 | | North America | 335,024 | 565,128 | | Europe | 135,861 | 285,766 | | Total | 13,194,832 | 14,927,415 | Profit, Taxation, and Earnings Per Share This section details the components of profit before tax, including various costs, expenses, and exchange gains, along with explanations of income tax rates and calculation methods across different jurisdictions (e.g., Japan, Hong Kong, Mainland China, USA), ultimately resulting in basic and diluted earnings per share of 5.50 JPY Key Adjustments to Profit Before Tax (For the six months ended September 30) | Item | 2023 (thousand JPY) | 2022 (thousand JPY) | | :--- | :--- | :--- | | Cost of Inventories Sold | 6,273,022 | 7,017,994 | | Employee Benefit Expenses | 2,230,947 | 2,395,600 | | Net Exchange Gains | (1,912,301) | (1,624,510) | | Write-down of Inventories to Net Realizable Value | 702,101 | 770,562 | - The Group pays income tax in its major operating regions (Japan, Hong Kong, Mainland China, USA, Switzerland, etc.) at local statutory tax rates[371][439][464][440][465] - Basic and diluted earnings per share are calculated based on profit attributable to owners of the parent of 3,329,450 thousand JPY and a weighted average of 605,643 thousand ordinary shares outstanding, resulting in 5.50 JPY[373][374][443] Assets and Liabilities The notes detail major asset and liability items, with total inventories at 11,196.7 million JPY as of September 30, 2023, lower than the beginning of the period, trade receivables and bills receivable at 3,863.1 million JPY primarily within one month aging, and total interest-bearing bank borrowings at 6,540.0 million JPY, mostly unsecured loans due within one year, alongside actuarial valuations for employee defined benefit liabilities Inventory Details (thousand JPY) | Item | September 30, 2023 (thousand JPY) | March 31, 2023 (thousand JPY) | | :--- | :--- | :--- | | Raw Materials | 2,758,875 | 3,244,147 | | Work-in-progress | 1,134,280 | 1,547,032 | | Finished Goods | 10,559,390 | 10,634,117 | | Less: Provision | (3,255,810) | (3,127,965) | | Total | 11,196,735 | 12,297,331 | Interest-bearing Bank Borrowings (thousand JPY) | Term | September 30, 2023 (thousand JPY) | March 31, 2023 (thousand JPY) | | :--- | :--- | :--- | | Current (within one year) | 5,940,000 | 6,690,000 | | Non-current | 600,000 | 600,000 | | Total | 6,540,000 | 7,290,000 | - The credit period for trade receivables and bills receivable typically ranges from 30 to 90 days, with no significant concentration of credit risk[474] Equity, Dividends, and Related Party Transactions This section covers share capital structure, dividend distribution, and related party transactions, including the Board's declaration of an interim dividend of 1.50 JPY per ordinary share for the six months ended September 30, 2023, and disclosures on lease transactions with related parties (e.g., Shanghai Pentech Enterprise (Group) Co., Ltd.) and key management personnel compensation - The Board declared an interim dividend of 1.50 JPY per ordinary share for the six months ended September 30, 2023, totaling approximately 908.5 million JPY, on November 24, 2023[469] - During the period, total compensation paid to key management personnel was 71,171 thousand JPY, a decrease from 100,480 thousand JPY in the prior period[505] - The Group has related party transactions, primarily rental expenses, with Shanghai Pentech Enterprise (Group) Co., Ltd., a company controlled by a shareholder[392][485]