Goldlion's Revenue And Net Profit Fell By 5%, Which Is Unlikely To Be Improved In The Short Term.

On the evening of August 15th, Goldlion (00533.HK) released its first half performance in 2019, with its main business income of HK $744 million, down about 5%, and net profit of HK $163 million, down 5% from the same period last year. The company believes that the downward pressure on domestic economy is still large, the growth is slowing down, the RMB exchange rate fluctuates, and there is no sign of improvement in the retail industry.

The main business declined slightly.

During the review period, the domestic economy was affected by events such as external trade friction, the growth rate slowed down, and the consumption situation was relatively low. But at the same time, the central government promotes various preferential measures to reduce taxes and reduce fees, to a certain extent, to offset the impact of the economic downturn.

The total turnover in the first half of the year was HK $744 million, down about 5% from HK $783 million in the same period last year, mainly because the RMB exchange rate adopted during the period dropped by 5% compared with the same period last year. During the period, there was no significant difference in the domestic business income calculated by Renminbi in the same period last year. Only Singapore's clothing and apparel sales decreased compared with last year.

The gross profit margin for the period was HK $433 million, down about 5% from HK $458 million in the same period last year, which is roughly the same as the decrease in total turnover. The gross profit margin was 58.1%, down 0.4%. Gross domestic product sales of domestic clothing sales were about 52.4%, down 0.3%, and the stock impairment recorded in the period not included in the period was 2 million 690 thousand Hong Kong dollars (9 million 270 thousand Hong Kong dollars in the same period last year), and gross margin fell by 2.3%, as a result of more promotional offers.

In terms of operating costs and operating profits, the cost of distribution and market services during the period was HK $212 million, a decrease of about 3% compared with the same period last year. In addition to the RMB exchange rate factor, the main reason is that the cost of individual promotion projects is delayed compared with last year. During the period, the total cost of distribution and market services accounted for 28.4% of the total turnover, up 0.5% over the same period last year.

The operating profit during the period was HK $186 million, down by about 4%. The operating interest rate is about 25%, unchanged from the same period last year. The profit attributable to the company's owners during the period was HK $163 million, down about 5% from the same period last year.

Overseas business is still losing money.

The company's current business is mainly focused on two industries, namely, the clothing and apparel business in mainland China and Hongkong, the clothing and apparel business in Singapore and Malaysia, the three major business areas in property investment and development.

The company believes that during the review period, the Sino US trade disputes continued to haze, the RMB exchange rate was soft, the market fluctuated, and consumer confidence was compromised. Last winter, the climate was warmer, which affected the sales of the relevant quarter.

Specifically, the company's domestic clothing sales continue to sell to many provinces and cities wholesale business agents, mainly located in Guangzhou, Shanghai, Beijing and Chongqing self operated retail outlets (including outlets), e-commerce channel and group customization business. The total turnover in the period was HK $580 million, down by about 5% compared with the same period last year.

The Singapore and Malaysia markets were affected by poor external economies, weak local retail environment and the company's clothing business. With the sale of individual sales outlets since the second half of last year, the sales volume of the company's clothing business was HK $31 million 40 thousand, down by about 5% compared with the same period last year, and the overall performance was not satisfactory.

During the period, there was no significant change in the company's investment portfolio and the business remained stable at the end of last year. The fair value income of investment properties recorded by independent professional valuation is HK $49 million 260 thousand, most of which are from Hongkong investment properties and mainly based on Sha Tin Goldlion Corporation. The fair value gain for the same period last year was HK $51645000. The income of rental and property management fees during the period was HK $72 million 640 thousand and HK $19 million 70 thousand respectively, and the total amount was basically flat.

Poor prospects for retail business

The company is cautious about the business outlook for the rest of 2019. It is expected that the downward pressure on domestic economy will still be great, the growth will slow down, the RMB exchange rate will fluctuate, and the difficulties of retail industry will not improve.

The Company anticipate that the business of domestic agents will be difficult to see in the second half of the year. The company will examine whether the entire operation structure needs to be adjusted, and examine the operation of the agents to provide appropriate business improvement strategies. At the end of July, at the end of 2020, a quarterly booking for spring and summer was held. Preliminary data show that agents have reservations about the market outlook, which is a double digit decline compared with the same quarter last year.

Although the domestic retail market needs to be improved, the company will continue to consolidate the domestic retail and ograph business, including the plan to open a larger self-employed store, to provide more diversified goods, to meet the market needs, and to ensure that the business can continue to grow. In addition, due to the fact that electronic commerce and group customized sales are more concentrated in the second half of the year, it is expected that the sales will improve in the second half of the year.

In the Singapore market, the company will continue to adjust its local operation strategy, increase sales and reduce operating costs, enhance operational efficiency and reverse current losses.

In terms of property investment business, the company will continue to enhance the rental potential of the property and ensure reasonable rental income. At the same time, it will rent the remaining units of the 3 kyu Wan Street and the Guangzhou village estate in Hongkong, according to the actual market conditions. The company will carry out the construction of the "Goldlion garden" property development project in Meixian according to the plan.