Dual-Channel Drive Strategy Brought a Record-High Revenue of 588 Million & Rebound with 22.8 Million Profit
The Group Continues to Explore the Blue Ocean Market in China
Results Highlights
HONG KONG, Aug. 30, 2022 /PRNewswire/ -- Tycoon Group Holdings Limited ("Tycoon Group" or the "Group", Stock Code: 3390.HK), an omnichannel brand marketing and management service integrator of health and well-being related products in Hong Kong, announced its unaudited consolidated interim results for the six months ended 30 June 2022 (the "Period" or "1H2022").
In the first quarter of 2022, Hong Kong was at the height of the fifth wave of the epidemic. However, as the epidemic eased in the second quarter of 2022, the Hong Kong SAR government has gradually relaxed its anti-epidemic policies, coupled with the launch of electronic consumption voucher scheme, which further stimulated consumer sentiment, and brought about a recovery in the overall retail market in Hong Kong. During the Period, the revenue of the Group increased by 54.5% to approximately HK$588.2 million, as compared to HK$380.7 million for the six months ended 30 June 2021 (the "Last Period"). Net profit of the Group for 1H2022 was HK$22.8 million (1H2021: loss of HK$10.2 million).
During 1H2022, the gross profit of the Group increased by 112.7% to HK$128.4 million as compared to that of HK$60.3 million for the Last Period, and the gross profit margin increased by 5.9 percentage points to 21.8%. Increase in gross profit and gross profit margin was primarily due to (i) the expansion of the Group's total revenue; (ii) the improvement in the gross profit margin of certain products; and (iii) the decrease in write-down of inventories from HK$11.1 million in the Last Period to HK$2.2 million in the Period. The Group recorded a fair value loss of approximately HK$4.6 million on its investment for the Period. Excluding the fair value loss on investment, the Group recorded a net profit of HK$27.4 million for the 1H2022. The Board has resolved not to declare any interim dividend for 1H2022.
The successful turnaround from loss to profit is attributed to the increase in overall revenue and gross profit of the Group, and the effect of a significant decrease in the write-down of inventories. Reviewing the Group's performance since the COVID-19 outbreak in 2020, it is proven that the Group taking the lead in developing cross-border e-commerce business and adopting an online and offline dual-channel drive strategy are in right direction and have achieved with results. On the one hand, it injected new momentum into the performance growth of the Group during the peak of the epidemic; on the other hand, once traveller clearance between Mainland China and Hong Kong has resumed normal, both the distribution business and e-commerce business will keep pace, boosting the Group's revenue and profits and making the dual-channel drive strategy into harvest.
The growth in e-commerce business of the Group continued in 2022. For the Period, the revenue from e-commerce business of the Group increased by 28.2% to HK$296.3 million as compared to HK$231.1 million for the Last Period. The revenue from e-commerce business of the Group mainly derives from the cross-border e-commerce selling to Mainland China. It is believed that Mainland China consumers turned to online platforms for the purchase of reputable healthcare and anti-epidemic products as they were unable to visit Hong Kong through the Individual Visit Scheme. The Group will continue to actively expand its e-commerce business and explore the blue ocean market in Mainland China.
Revenue of Distribution business in Hong Kong recorded significant growth, grasping the opportunities in the GBA
During the Period, the Group actively sourced more overseas healthcare brands and optimised its product portfolio. The distribution business of the Group recorded a 2–fold increase to HK$291.9 million, as compared to HK$147.1 million for the Last Period.
The Group has set up a joint venture company in Mainland China with a wholly-owned subsidiary of China Resources Pharmaceutical Group Limited ("CR Pharma", Stock Code: 3320.HK), one of the substantial shareholders of the Company. The joint venture has commenced operation since the fourth quarter of 2021, leveraging on CR Pharma's sales network of more than 130,000 downstream customers and over 800 self-owned retail pharmacies across Mainland China to expand the distribution business and explore offline market in Mainland China for several renowned or century-old local PCM brand products. In addition, the Group has entered into a strategic cooperation framework agreement last year with CR Pharma and Hong Kong Guobiao Inspection and Testing to further the cooperation in various areas including the provision of integrated services for research and development and full commercial scale production of medicines in the GBA, exploring the business opportunities in the GBA. The Group currently is assisting several century-old local PCM brands to apply for registration in preparation for the cross-border trade.
Products of distributed brands and the Group's own brand both gained popularity, further internationalising our businesses
The Group actively develops the omnichannel brand marketing and management business which includes brand agent, promotion and marketing, management and distribution, providing one-stop services for brands as well as upgrading the Group's business chain and diversifying the Group's product portfolio and businesses. After obtaining of the sole distributorship in Mainland China for the world's No.1 probiotic brand, Culturelle®, and the offline distributorship in Mainland China for Australia's No. 1 hand cream brand, DU'IT, the Group has also successively obtained the exclusive distribution rights in Hong Kong for Japanese anti-hair loss and hair protection brand, Kaminowa, and France's No. 1 baby washing care brand, Biolane, which is the best-selling baby washing care brand in France. For Biolane, the Group has also obtained the exclusive distribution rights in Singapore and Malaysia recently.
In addition, the Group has set up a joint venture with a subsidiary of JBM (Healthcare) Limited (Stock Code: 2161.HK) in 2021 to develop own-brand products and jointly explore the healthcare product market. The own-brand "SEASONS (田心日辰)" and "Slimming Expert (修腩專家)" launched a number of healthcare products since 2021, and "SEASONS (田心日辰)" has launched 6 products in 2022 which are well received by consumers. As for sales channels in Mainland China, apart from the established cross-border e-commerce channels, the offline channel network of which the Group had laid the foundation in early years is strengthening. The Group is actively introducing more high-quality overseas healthcare brands to healthcare and beauty chain stores in Mainland China such as Mannings, Watsons, Olé, The Colorist, Sam's Club, PureH2B and Rainbow shopping mall etc.
In order to build a diversified sales network and enrich product portfolio, the Group continued to strengthen its overseas presence during the Period. In addition to its presence in Australia, Japan, Malaysia, Singapore, Macau and Thailand, the Group also established sourcing centres in France and South Korea this year. As an integrated provider of omnichannel brand marketing and management services, the Group will continue to source various high-quality healthcare and beauty products for local and Mainland China consumers so as to diversify the product portfolio and further internationalise the Group's businesses.
Mr. Wong Ka Chun Michael, the Chairman and the Chief Executive Officer of Tycoon Group, said, "The Group fortified its positioning as an omnichannel brand marketing and management service integrator of healthcare and well-being related products after listing. The Group possesses great growth potential as its e-commerce business will continue to be a strong advantage and it has developed the offline distribution business in the GBA, plus normal traveller clearance of Mainland China and Hong Kong will hopefully be resumed soon. In the past few years, management of the Group has been working hard to diversify the Group's businesses despite the impact of the epidemic. Apart from strengthening of the business chain, the Group continued to develop its online and offline dual-channel distribution model, driving the growth of the Group and gradually entering the harvest period. In the future, the management will continue to take a prudent yet proactive attitude and explore different opportunities for collaborations. The management will continue to monitor and adapt to the market situation, maximizing the return for shareholders and reaping success in the future."
About Tycoon Group Holdings Limited (Stock Code: 3390)
Tycoon Group is a reputable omnichannel brand marketing and management service integrator of health and well-being related products. The Group specialises in providing one-stop services for PCM, health supplements, skincare, personal care and other healthcare products, including omnichannel brand agent, marketing, management, distribution and sales. The Group has established a strong online and offline sales network in Hong Kong, Macau and Mainland China by cultivating the industry for many years with the mission of bringing health and vitality to consumers in Mainland China, Hong Kong, Macau and Asia-Pacific. The Group has provided over 100 local and foreign brands. In addition, the Group has provided a number of anti-pandemic products in great demand in respond to the pandemic happened in Hong Kong, such as surgical masks, rapid antigen test kits, hand sanitisers and cleaning wipes, etc. With a vision of establishing its own brands of products, the Group develops Private Label Products under its well-received brands including "Boost Guard (BG 博健科研)", "和漢 (Wakan)", and "金門 (Kinmen)", as well as the own-brand "SEASONS (田心日辰)" and "Slimming Expert (修腩專家)" launched under the joint venture. Tycoon has established sound relationships with chain retailer customers, with the top two chain retailer customers operating over 470 stores in Hong Kong as at 31 December 2021. The Group is also one of the major distributors for PCM in Hong Kong. For more details, please visit the Group's official website: https://www.tycoongroup.com.hk/.
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