Sincere Watch (Hong Kong) Limited Clocks in Net Profit Attributable to Shareholders of HK$14.1 Million on a 34% Increase on Revenue of HK$150.9 Million for 1Q/FY08 as it Strengthens its Distribution Network Across North Asia
HONG KONG, Aug. 9 /Xinhua-PRNewswire/ -- Sincere Watch (Hong Kong) Limited (HKEx: 0444) ("the Group"), the leading watch specialist in Asia, recorded a 34% increase in revenue to HK$150.9 million for the three months ended 30 June 2007 ("Q1/FY08"). The growth was mainly due to increased demand for the company's timepieces from its expanded distribution network and boutiques across the North Asia region. In particular, the company benefited from Hong Kong's strong economic performance and the increased tourist traffic from the region especially from China. The Group's net profit attributable to shareholders surged to HK$14.1 million, compared to HK$1.2 million in Q1/FY07.
The surge in net profit was mainly attributable to the unrealized foreign exchange gain of HK$1.4 million against an unrealized foreign exchange loss of HK$17.4 million in Q1/FY07.
While average gross margins softened to 27.4%, the Group enjoyed an overall improvement in gross profit to HK$41.4 million for Q1/FY08. The decrease in average gross margin was principally due to better trade incentives and rebates given to dealers for the period.
The Group embarked on an active expansion programme in Q1/FY08 to take advantage of the rising demand for luxury watches in North Asia. It incurred an increase in selling & distribution costs, in line with more promotional and marketing activities being held during the quarter.
Administrative expenses which comprised rentals, depreciation and staff costs also increased as the rental rates and depreciation grew as a result of newly opened and enlarged boutiques. During the current quarter Q1/FY08, the Group opened new boutiques in Ocean Terminal, Kowloon and Shin Kong Place, Beijing. In addition, the company's flagship Franck Muller boutique at Central, Hong Kong, was considerably enlarged and refurbished.
With the increase in net profit attributable to equity holders of the company to HK$14.1 million, the Group's earnings per share jumped to 3.45 HK cents in Q1FY08 -- up from 0.29 HK cents in Q107.
As a result of the above, net asset value grew to HK 55.45 cents for Q1/FY08 from HK 51.95 cents as at 31 March 2007.
Going forward, the Group will continue with its expansion plans in North Asia. Apart from opening new boutiques, the Group has appointed dealerships in Dalian, Hangzhou and Shanghai to strengthen its distribution network in China. In view of the PRC expecting to become the world's top consumer of luxury goods by 2015, the Group will continuously seek out new potential alliances and strategic partners to expand its distribution network there.
In September, Shanghai will also see its opening of its new Franck Muller boutique which had been relocated to the city's premier shopping mall, Plaza 66.
Mr. Kevin Chau, the Executive Vice-Chairman of Sincere Watch (HK) said: "As a luxury player, we are in the middle of exciting times in Asia - with the whole region showing a dynamic growth momentum. We will continue to push forward our growth strategy, not just by building up our retail presence in the region but also by launching new luxury brands that show good potential for growth. In the past few years, we have launched several successful brand-building initiatives to groom brands such as Cvstos and Pierre Kunz, both of which have received good market response. To meet the needs of an increasingly sophisticated marketplace, we need to keep innovating and keeping ahead of time. Strengthening our brand portfolio will also enable us to enter new market segments more readily."
The Group expects business to remain robust and profitable in the next quarter.
About Sincere Watch (Hong Kong)
Sincere Watch (Hong Kong) Limited, the leading watch specialist in Asia, is the sole exclusive distributor of Franck Muller watches and accessories in Hong Kong, Macau, Taiwan and China, and has established Franck Muller as one of the most desired and popular fine watch brands in the luxury watch segment. Leveraging on its success with Franck Muller, the Group has expanded its brand portfolio and now carries four other brands, namely de Grisogono, European Company Watch, Pierre Kunz and Cvstos.
The Group has a large network of independent watch retailers through which the luxury timepieces are distributed. As at 30 June 2007, the Group distributes through 41 retail outlets operated by 23 independent watch dealers in Hong Kong, Macau, Taiwan and China.
In addition to its dealer distribution network and as part of its brand management strategy, the Group currently has six mono-brand boutiques: three in Hong Kong, one in Macau, one in Taipei and in Beijing. Retailing under the brands of Franck Muller and de Grisogono, these mono-brand boutiques are located in prime shopping areas to showcase the full collection of these very exclusive brands.
For more information, please contact:
Ms Tham Moon Yee / Mr Lee Yew Meng / Ms June Yong
Stratagem Consultants Pte Ltd
Tel: +65-6227-0502
Fax: +65-6227-5663
Email: tmy@stratagemconsultants.com /
yewmeng@stratagemconsultants.com /
june@stratagemconsultants.com
