Forging Ahead and Seeking Sustainable Development

HONG KONG, Aug 16, 2019 - (ACN Newswire) -  Hengdeli Holdings Limited ("Hengdeli" or the "Company" and, together with its subsidiaries, the "Group"; stock code: 3389), an international retailer of renowned branded watches and manufacturer of watch accessories, announced its interim results for the six months ended 30 June 2019 ("the period under review").

Results Summary:
- Recorded revenue of RMB1,361,170,000, representing a year-on-year increase of 1.3%
- Gross profit margin was 18.5%, representing a year-on-year increase of 240 bps
- Profit for the period amounted to RMB33,414,000, representing a year-on-year decrease of 1.9%
- Profit attributable to equity shareholders of the Company amounted to RMB29,925,000, representing a year-on-year decrease of 2.9%
- A special interim dividend of RMB3.8 cents per ordinary share is declared

During the first half of 2019, the global economy continued the overall trend in the second half of 2018, and experienced volatility and a downward trend due to impacts of trade frictions between China and the United States as well as many other unfavourable factors. The downward pressures on the economies of Mainland China, Hong Kong and Macau also increased significantly. Faced with the extremely challenging business environment, the Group has progressed steadily by adapting to secure the overall stability of the Company's health and performance under the joint efforts of all of our staff members. As at 30 June 2019, the Group recorded revenue of RMB1,361,170,000, representing a year-on-year ("YOY") increase of 1.3%; the gross profit margin was 18.5%, representing a YOY increase of 240bps; profit of the period amounted to RMB 33,414,000, representing a YOY decrease of 1.9%; profit attributable to equity shareholders of the Company amounted to RMB29,925,000, representing a YOY decrease of 2.9%. The decrease in profit was mainly due to the increase in staff costs during the period.

For the sales of renowned watches, the Group operated a total of 71 retail outlets in areas such as Hong Kong, Macau, Taiwan and Malaysia as at 30 June 2019, of which 13 in Hong Kong (5 were multi-brand "Elegant" shops and 8 were single-brand boutiques or image stores), 1 in Macau, 51 in Taiwan and 6 in Malaysia. Due to the trade disputes between China and the United States, geopolitical situations and other factors, Hong Kong's consumer market continued to slow down in the first half of 2019. The Group's sales of renowned watches in Hong Kong was significantly affected, with a decrease of 13.5% as compared with the same period of last year. While the sales in Macau, Taiwan and Malaysia remained stable. The Group believes that, as the Chinese economy remains at a reasonable level at present with the consumption growth at a medium to high speed, the stable and prosperous development of Guangdong-Hong Kong-Macau  Greater Bay Area will definitely benefit the Hong Kong market in the long term. Therefore, the Group considers to expand its retail outlets in the commercial district in Hong Kong in the second half of the year to further expand its market share in Hong Kong.

The Group has a rather mature industrial chain for watch accessories manufacturing, its branches and subsidiaries have earned a solid reputation in their respective fields. Despite the unfavourable operating environment, progressive strategy and scientific management have enabled various businesses of the industrial group to continuously maintain promising growth momentum in both productivity and sales during the period under review. The turnover has increased by 8.9 % as compared with the same period of last year. The major companies showed great improvement in both technology level and scale efficiency, achieving further improvement of development potential and competitiveness. During the period under review, the Group was also planning to acquire a piece of land in Hunan, China for the construction of a larger industrial base, with an aim of constantly enhancing the capacity and profits of the industrial group, laying a solid foundation for the Group's sustainable development.

The real-time repair and maintenance networks in retail stores of all regions and the watch repair and maintenance centres located in Hong Kong, Taiwan and Malaysia ensure timely delivery of all-round after-sale services to customers. "Cutting-edged technology, efficient management and considerate services" are the solemn commitments made by the Customer Service and Maintenance of the Group to consumers, providing consumers with the best assurance and confidence. Top international watch technicians and high-end maintenance equipments have provided international first-rate watch repair and maintenance services. The Group has also maintained good cooperation relationship with brand suppliers. As at 30 June 2019, the Group has become the maintenance agent for almost 100 international brands, of which 7 brands were exclusive.  

At present, the global politics and economic situation are not quite stable, there are still many difficulties and issues in economic operation, and downside risks remain evident. However, the Group believes that the favourable long-term fundamentals in the Chinese economy will remain unchanged and the developing trend of the economy at a medium and high speed will continue. The construction of Guangdong-Hong Kong-Macau Greater Bay Area will also enable Hong Kong and Macau to maintain its stability of the operating environment and economic progress. Looking ahead, in the second half of the year, by continuously adhering to the principle of "maintaining stable and healthy growth and seeking sustainable development" and the strategy of "seeking progress in stability" and exploiting the synergy effect of internationally renowned watch sales and watch accessories manufacturing and services, the Group will engage in more in-depth cooperation with brand suppliers and international peers through various ways in Hong Kong, Southeast Asia and other countries and regions. Focusing on the construction of new industrial production bases, the Group will make full effort in carrying out the diversification process of industrial production, and seek for newer and broader development models, so as to create greater value for both our shareholders and community at large.

Breakdown of Revenue

For the six months ended 30 June
2019   %  2018   %
Retail Business  Hong Kong Region  RMB (Thousand)  864,834  63.6  999,323  74.4
Taiwan Region/ Malaysia  RMB (Thousand)  103,909  7.6  72,839  5.4
Industrial Group and others  RMB (Thousand)  392,427  28.8  271,883  20.2
Total  RMB (Thousand)  1,361,170  100  1,344,045  100

Breakdown of Retail Network

For the six months ended 30 June 2019
 Hong Kong and Macau Regions  Taiwan Region  Malaysia  Total
Elegant  5  1  0  6
Hengdeli/ Watchshoppe  1  33  4  38
Brand boutiques  8  17  2  27
Total  14  51  6  71

Hengdeli Holdings Limited
Hengdeli Holdings Limited (the "Company" or "Hengdeli" and its subsidiaries, collectively as the "Group") is a recognised retailer of internationally renowned brand watches and manufacturer of watch accessories. The Group's shareholders include: the Zhang family and the prestigious watch manufacturer SWATCH Group.

The Group owns an extensive retail network comprised of: "Elegant" (top internationally renowned branded watches), "Hengdeli" / "Watchshoppe" (mid and mid-to-high end internationally renowned branded watches), as well as single-brand boutiques. As at 30 June 2019, the Group had 71 retail outlets, selling watches from more than 50 internationally renowned brands in Hong Kong, Macau, Taiwan and Malaysia etc, and provides comprehensive after-sales services for internationally renowned branded watches.

The Group also owns a number of watch accessories manufacturing enterprises, including the manufacturing of furniture and items used for watch sales and watch packaging products, commercial space design, production and decoration, serving customers throughout the greater China region, Asia Pacific and other countries and regions such as Switzerland and the United States.

The Group has maintained sound and in-depth collaborations with many world-renowned premier brand suppliers including SWATCH Group, LVMH Group, RICHEMONT Group, and KERING Group etc..

The Company has been listed on the Main Board of the Hong Kong Stock Exchange since 2005 under stock code 3389. The abbreviated stock name is: Hengdeli  

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