Chow Tai Fook Jewellery Group Limited Credit Suisse 17 th Annual Asian Investment Conference 24 March 2014
Agenda About Chow Tai Fook Business Updates 360 Shopping Experience
About Chow Tai Fook
About Chow Tai Fook 1929 Started engaging in the jewellery business 1956 The first to launch the 999.9 gold jewellery products in Hong Kong & Macau 1990 Implemented the Fixed Price policy which enhanced the pricing transparency and customers shopping experience 1998 Opened our first jewellery POS in Beijing 2003 Centralised PRC operations and established the headquarters in Shenzhen 2010 Opened our 1,000 th jewellery POS in Beijing 2011 Listed on the Main Board of The Stock Exchange of Hong Kong (stock code: 1929) Present The largest jeweller by market share in the Mainland of China, Hong Kong & Macau The world s largest pure-play jeweller by market capitalisation 3
About Chow Tai Fook Our Unrivalled Competitive Strengths 1 Iconic & trusted brand with 85 years of heritage 2 Loyal, highly-experienced & dynamic management team 3 4 5 Vertically integrated business model Extensive retail network with deep access to rising consumer spending Diversified product portfolio 4
About Chow Tai Fook Vertically Integrated Business Model Upstream Midstream Downstream 1 Raw material procurement 2 Diamond cutting & polishing 3 Product design & development 3 Production 4 Retail 4 diamond cutting & polishing factories 1 US Partnership with Alrosa, DTC and Rio Tinto Stable diamond supply Europe 1 2 2 1 2 South Africa 9 jewellery factories Shunde 2 3 22,000+ retail staff 4 1 Australia POS in the PRC, HK, Macau, Malaysia, Singapore & Taiwan Shunde, Shenzhen, Hong Kong Remark: Data as at 30 Sep 2013 5
About Chow Tai Fook Extensive Retail Network 2,048 POS as at 31 December 2013 110 POS in Hong Kong, Macau and other Asian markets, and 1,938 POS in the Mainland of China Net 200 POS openings expected in FY2015 The Mainland of China (As at 30 September 2013) Network Distribution (Total: 1,844 POS) 257 14% Operation Model (Total: 1,844 POS) Tier I cities 875 47% Others 12% Franchised 712 39% Tier III & other cities Sales Channel (Total: 1,261 self-operated POS) 32% 68% Self-operated Tier II cities 88% Concessionaire counters 6
About Chow Tai Fook Diversified Product Portfolio Event-driven Category Self-rewarding Category The Perfect One Wedding Collection Charming Gold Collection Imperial Collection Ombre di Milano Collection Other Collections Wedding segment accounts for over one-third of our Group s retail revenue Enrich product offerings with design-oriented collections Viral marketing to promote wedding proposal culture Bao Bao Family Collection Disney Classic & Winnie the Pooh Collection Broad product offerings include one-of-a-kind pieces, patented, proprietary and licensed collections Collaboration with international diamond miners and brands to launch exclusive collections 7
Business Updates
Business About Chow Updates Tai Fook Revenue Breakdown Revenue by operation model (HK$ m) 37,768 Revenue by product category (HK$ m) 37,768 Revenue by geography (HK$ m) 37,768 17.6% 23,874 82.1% 25,436 86.5% 86.9% 23,874 23.6% 53.1% 25,436 22.7% 55.5% 65.2% 23,874 56.0% 25,436 55.2% 51.4% 29.0% 21.4% 23.7% 17.9% 13.5% 13.1% 1H2012 1H2013 1H2014 15.6% 7.7% 15.9% 13.2% 5.9% 4.0% 1H2012 1H2013 1H2014 22.6% 21.1% 19.6% 1H2012 1H2013 1H2014 Retail Wholesale Gem-set jewellery Gold product Platinum / Karat gold product Watch The Mainland of China Hong Kong, Macau and other Asian Markets (Revenue settled in RMB or China UnionPay) Hong Kong, Macau and other Asian Markets 9
Business About Chow Updates Tai Fook Same Store Sales Growth Same Store Sales Growth (%) 47% 33% 3% 22% 14% 7% 11% 18% 11% 15% -6% -2% -8% -1% -5% 1H2013 2H2013 1H2014 3Q2014 CNY2014 * The Mainland of China Hong Kong, Macau & Taiwan Overall * CNY period in 2013 and 2014 covers period from 27 January to 13 February 2013 and from 17 January to 3 February 2014, respectively 10
Business About Chow Updates Tai Fook Normalising product mix Mass luxury jewellery segment Key driver for recovery in the next 6-12 months Business Outlook Increase penetration into lower tier cities through franchisees Vertically integrated business model E-commerce and Online-to-Offline (O2O) interactions 11
360 Shopping Experience
360 Shopping Experience Four Key Trends about the Chinese Luxury Shoppers Hong Kong and Macau were ranked as favored shopping destinations Prefer low-key and understated products LOGO In-store experience is increasingly important for customer relationship management Online commerce is exploding US$540bn Source: McKinsey Luxury Without Borders: China s New Class of Shoppers Take on the World 2012 & China s e-tailing revolution, March 2013 13
14 360 Shopping Experience Online-to-Offline (O2O) Interactions 360 Customer Relationship Management (CRM) Interactive Shopping Environment at POS Level Exclusive Jewellery Events held beyond POS Level
360 Shopping Experience Online-to-Offline (O2O) Interactions Singles Day Marketing Campaign Online purchase discount coupons distributed at store level Tmall Singles Day s online sales US$5.7bn VS US Black Friday s online sales US$1.2bn >4x Online games collaborated with Tmall CTF Singles Day s sales on Tmall Platform CTF +84% US$2.0m 2012 US$3.6m 2013 Source: Tmall, Bloomberg, USD/RMB exchange rate as at 11 Nov 2013 15
360 Shopping Experience Online-to-Offline (O2O) Interactions The Power of Social Media Long queue showed up starting from 7am outside store Grand launch of the collection on Tmall platform Beads of Elements Collection The collection was outof-stock at the end of the day 2014 Prior to Feb 16 Feb 16 Feb 21 Feb 23 Widespread discussions and selfies posted on WeChat and Sina Weibo about the collection CTF responded quickly by launching a preordering service via WeChat In 3 days, daily revenue for this collection was ~2x average and >38,000 views online 16
17 360 Shopping Experience Interactive Shopping Environment at POS Level The First Experiential Jewellery POS in Wuhan, China At store entrance Virtual receptionist to greet customers and serve as an interactive shopping guide Inside the store Large touchscreen for customers to select and purchase jewelleries via mobile phone
18 360 Shopping Experience Interactive Shopping Environment at POS Level The First Experiential Jewellery POS in Wuhan, China Virtual showcase to rotate and display the features of the jewellery in one touch Interactive storefront display enables virtual jewellery fitting and games entertainment featuring our collections characters
19 360 Shopping Experience Exclusive Jewellery Events held beyond POS Level L HISTOIRE DE COLEURS COLLECTION Fine Jewellery Private Appreciation ONE-OF-A-KIND PIECES High Jewellery Previews and Auction Dinner CTF x SIMON MA - NATURE CHANT COLLECTION Designer Collection Preview Grand Hyatt, Hong Kong Three On The Bund, Shanghai Ritz-Carlton, Hong Kong Hong Kong Jockey Club Clubhouse, Beijing Grand Hyatt, Hong Kong Paris Fashion Week
360 Shopping Experience Customer Relationship Management (CRM) Members proportion Diamond, Platinum and Gold members Virtual flight experience 2013 Christmas party 12% Fascinating 6-day trip in Paris Art jamming Shiseido skincare and makeup workshop Basic members 88% Remark: Data as at 30 Sep 2013 2013 Hello Kitty halloween party Inner beauty sharing session by leading psychologist in China WeChat & Sina Weibo as the key communication tool with basic members 20
Q&A Session
Thank You
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