Tag: Tai Hing

Tai Hing’s 2020 Interim Revenue Was Approximately HK$1,316.9 Million with EBITDA at HK$117.1 million and Profit Attributable to Owners of the Company Was HK$8.4 Million

Tai Hing Group Holdings Limited (stock code: 6811), a multi-brand casual dining restaurant group with roots in Hong Kong and a network of more than 200 restaurants in Hong Kong, Mainland China, Macau, and Taiwan, has just announced its interim results for the six months ended 30 June 2020.

RESULTS HIGHLIGHTS
– Revenue at HK$1,316.9 million in 1H2020
Revenue from major operations in Hong Kong, Macau and Taiwan down 13.2% to HK$1,135.5 million – increased sales from takeaway and delivery services partially offset the reduced dine-in traffic due to the social distancing measures to curb COVID-19
– Gross profit and gross profit margin recorded at HK$928.4 million and 70.5% respectively
– Amid the challenging operating environment, the Group’s EBITDA was HK$117.1 million, with EBITDA margin at 8.9%
– Profit for the period attributable to owners of the Company amounted to HK$8.4 million in 1H2020
– The Board has resolved to propose an interim dividend of HK1.3 cents per ordinary share for the six months ended 30 June 2020
– “Men Wah Bing Teng” recorded a satisfactory revenue growth and opened 7 stores in total in Hong Kong and Mainland China during 1H2020

The outbreak of the novel coronavirus in late 2019 (COVID-19) invariably had a detrimental effect on the Group during 1H2020, affecting its operations in Mainland China, Hong Kong, Macau and Taiwan. Nevertheless, the Group has managed to maintain stable revenue during the Review Period, particularly in Hong Kong, as the significant increase in sales from takeaway and delivery services partially offset the reduced dine-in traffic due to the social distancing measures, and the satisfactory sales growth in Men Wah Bing Teng was also one of the key contributors to its revenue during the Review Period.

In 1H2020, the Group’s revenue was HK$1,316.9 million, down 19.7% as compared with the same period last year. Hong Kong has continued as the principal market of the Group, while Hong Kong, Macau and Taiwan markets collectively contributed HK$1,135.5 million in revenue in 1H2020, a year-on-year decrease of 13.2% as compared with 1H2019. As for Mainland China, the market contributed HK$181.4 million in revenue in 1H2020, mainly due to the suspension of operations of most of the Group’s restaurants in February and reduced customer traffic resulting from public health measures and lockdowns. The Group’s restaurants have gradually reopened in March 2020 with improving operating performance quarter-on-quarter.

The Group’s gross profit and gross profit margin were HK$928.4 million and 70.5% respectively. Although the Group has actively employed measures to control costs during the Review Period, some overhead costs could not be reduced significantly. With less revenue in 1H2020, profit attributable to the owners of the Company amounted to HK$8.4 million. Basic earnings per share were HK0.84 cents. To share the Group’s achievements with Shareholders, the Board has resolved to propose an interim dividend of HK1.3 cents per ordinary share for the six months ended 30 June 2020.

The Group’s financial status remains healthy with sufficient cash and healthy operating cash inflow so as to allow it to weather the current headwinds and further its future development. As at 30 June 2020, the Group had cash and cash equivalents of HK$629.2 million.

Business review
As at 30 June 2020, the Group has 203 restaurants in Hong Kong, Mainland China, Macau, and Taiwan, under 12 casual dining brands.

The flagship brand “Tai Hing” has continued to be a key revenue contributor of the Group. During the Review Period, revenue totalling HK$692.6 million was generated by the “Tai Hing” brand, accounting for 52.6% of the Group’s total revenue. “Tai Hing” is an established name in the mass market, with the majority of its restaurants found in shopping malls or situated in well-populated communities, thus allowing it to satisfy strong household demand, particularly with the rising “work-from-home” trend.

“Men Wah Bing Teng” has outperformed the market during the Review Period, resulting in a significant revenue growth of 85.6% to HK$211.2 million (1H2019: HK$113.8 million). It has become the second-largest revenue contributor to the Group in 1H 2020, accounting for 16.0% (1H2019: 6.9%) of the Group’s total revenue during the Review Period. Owing to the observance of an affordable pricing strategy, “Men Wah Bing Teng” is popular among both Hong Kong and Mainland China customers, enabling it to be more resilient facing the weak market sentiment than many of its peers. Consequently, the Group proceeded with the opening of four and three stores in Hong Kong and Mainland China respectively in 1H2020. To maintain its outstanding performance, the Group will further promote “Men Wah Bing Teng” in the Greater Bay Area as well as other potential markets.

“TeaWood” has remained among the top three revenue contributors of the Group, generating HK$204.9 million in revenue, accounting for 15.6% of the Group’s total revenue in 1H2020. The Group will continue to respectively adjust the menus of its brand portfolio, implement marketing campaigns and strategies, and enhance mobile application and ordering platforms to satisfy ever-changing consumption patterns.

Having introduced several new brands in the preceding financial year, the Group is delighted to see that “Asam Chicken Rice”, which premiered in Central, Hong Kong, has enjoyed a favourable market response; successfully capturing the interest of office workers in the district, particularly their strong demand for takeaway orders. During the Review Period, the Group opened two more “Asam Chicken Rice” restaurants in Hong Kong located principally in core business districts, to cater for the dining needs of the respective locations.

Outside of its catering interests, the Group is also involved in the canned products business. In 1H2020, the Group launched six products, comprising braised pork with preserved vegetables, curry beef brisket, minced beef, meat sauce with mushroom, curry chicken, and spiced pork cubes. Since entering the market in April 2020, the products have received an overwhelmingly favourable response, with the first batch of canned food products manufactured at the Group’s factories selling out quickly. The Group will explore more options, covering both food and beverages, as it plans to introduce a second assortment of canned food products to the market in the second half of 2020.

Prospects
Looking ahead, the outbreak of the COVID-19 epidemic is expected to affect the overall catering business in both Hong Kong and Mainland China. However, with a business history of over three decades, the Group is confident that it can break new business ground through new prudent development strategies amidst industry consolidation. The Group has already had well-planned business strategies in place to mitigate the headwinds and further develop its business and drive sales.

In the wake of COVID-19, the “home meal” trend has gathered momentum, driving demand for delivery and takeaway services. In this regard, the Group will also continue co-operating with leading third-party food ordering platforms, both in Hong Kong and Mainland China, to increase its stake in the food delivery business. To further sharpen its competitiveness, the Group will enhance its takeaway food business via different platforms, in order to offer convenience to customers, and promptly adjust its menus and marketing campaigns through customer behaviour analysis. Still another means of capitalising on the “home meal” trend will involve the Group’s canned food and beverage products. The Group will develop an even greater array of appealing products that suit the takeaway and delivery business, thereby effectively tapping this burgeoning segment.

At the same time, the Group will use the opportunity to optimise its restaurant network through consolidation and relevant expansion. After the outbreak of COVID-19, the Group has received more invitations from landlords, with more preferential rental offers, to open stores in core shopping districts and high-traffic residential shopping malls which are attributable to the Group’s multi-brand business model and strong reputation. Tai Hing will carefully consider options based on such factors as population density, local retail and business attractions, demographics, consumption patterns, etc., in order to open suitable brands at the opportune time and location to meet customers’ tastes, all the while generating the best returns to the Group and its shareholders.

As the Group’s multi-brand strategy has been fundamental to its success, it will continue to introduce new brands in both Hong Kong and Mainland China in line with market trends and customers’ needs. In Hong Kong, the Group has just opened a restaurant in Whampoa under the new brand name “White Little” which targets office workers in the district, particularly in meeting their takeaway food needs. In Mainland China, the Group has opened a new restaurant in Shenzhen in early August under the new brand name “Winter Joy”. This restaurant specialises in Taiwanese-style spicy hotpot, hence is set to seize opportunities arising from the highly popular “Hot Pot Culture” in the country. The Group will introduce more new brands to the local market to attract a wider spectrum of food lovers, especially those seeking to broaden their cuisine horizons.

Mr. Chan Wing On, Chairman and Executive Director of Tai Hing, said, “Despite the difficult operating environment that faced us in the first half of 2020, I remain confident in the Group’s long-term growth potential attributable to our solid experience of overcoming all temporary difficulties and setbacks over the past three decades. With our experienced and farsighted management team and a well-established multi-brand strategy, we are confident of maintaining stable business operations amidst the current headwinds, while also breaking new business ground through prudent development strategies.”

Tai Hing Announces 2019 Annual Results

Revenue up 4% Year-on-Year to HK$3,252.3 Million With Adjusted Net Profit at HK$135.0 Million;
To Launch Six New Canned Food Products and Enhance Delivery Service to Mitigate Current Headwinds and Boost Income Stream

Tai Hing Group Holdings Limited (“Tai Hing” or the “Group”; stock code: 6811), a multi-brand casual dining restaurant group with roots in Hong Kong and a network of more than 200 restaurants in Hong Kong, Mainland China, Macau, and Taiwan, has just announced its annual results for the year ended 31 December 2019 (the “Review Year” or the “FY2019”).

RESULTS HIGHLIGHTS
– Revenue increased by approximately 4.0% to HK$3,252.3 million in 2019 (2018: HK$3,126.1 million)
– Gross profit margin remained stable at 71.3% (2018: 71.6%)
– Adjusted profit1 amounted to HK$135.0 million in 2019 (2018: HK$153.3 million), while adjusted profit margin was 4.2% (2018: 4.9%)
– To launch six new canned food products in the second quarter to capture the home meal market; and striving to capture the growth potential of delivery business by deepening the cooperative relationship with certain leading third-party delivery platforms in both Hong Kong and Mainland China
– Total dividend for FY2019: HK5.04 cents per share, representing a dividend payout ratio of 65.3%

During the Review Year, the Group’s revenue recorded a year-on-year increase of 4.0% to HK$3,252.3 million (FY2018: HK$3,126.1 million). This increase was primarily due to the rising revenue generated from the restaurant operation in its major markets, along with the steady performance from both the signature “Tai Hing” brand, and younger brands within the portfolio, in particular “Men Wah Bing Teng”, and “Pho Le”.

The Group’s gross profit amounted to HK$2,319.7 million (FY2018: HK$2,239.0 million), with gross profit margin remaining at a stable level of 71.3% (FY2018: 71.6%). Profit attributable to owners of the Company was HK$76.9 million (FY2018: HK$304.9 million), owing to various extraordinary one-off items recorded during the Review Year and FY2018. If an one-off gain on disposal of non-current assets as held for sale booked in FY2018, one-off listing expenses recorded in FY2019, and implementation of a new accounting policy (HKFRS 16 Leases), which was effective for the period beginning on or after 1 January 2019, were excluded, the Group’s adjusted profit would have amounted to HK$135.0 million (FY2018: HK$153.3 million). Basic earnings per share were HK8.65 cents (FY2018: HK40.66 cents).

To share the Group’s success with shareholders, the Board has resolved to propose a final dividend of HK1.80 cents per ordinary share for the year ended 31 December 2019. Together with an interim dividend paid during the year, total dividend will amount to HK5.04 cents, representing a dividend payout ratio of 65.3%.

Business review
As at 31 December 2019, the Group has a network of 205 restaurants spanning across Hong Kong, Mainland China, Macau and Taiwan, under eleven casual dining brands.

The flagship brand “Tai Hing” remains the key revenue generator of the Group. During the Review Year, Tai Hing restaurants generated HK$1,931.8 million in revenue and accounted for 59.4% of the Group’s total revenue. A major milestone for the brand during the Year is the Group’s opening its first “Tai Hing” restaurant in Taiwan in May 2019, to an overwhelmingly favourable market response.

The “Men Wah Bing Teng” restaurant chain was warmly welcomed by the market, resulting in a significant 148.6% year-on-year rise in revenue to HK$299.5 million. The restaurant chain also achieved satisfactory same-store sales growth of 3.2% and an outstanding seat turnover rate of 15. Since the first “Men Wah Bing Teng” was opened in Guangzhou in July 2019, two more restaurants have been opened in Mainland China, which has significantly strengthened the brand’s presence in the country. To maintain its outstanding performance, the Group will further promote “Men Wah Bing Teng” in the Greater Bay Area, as well as other high potential markets.

The Group’s other subsidiary brands have also performed favourably during the Review Year. Among them, “TeaWood” continued to deliver considerable revenue amounting to HK$521.5 million, accounting for 16.0% of the total revenue and remained as the Group’s second largest revenue contributor. “Pho Le” recorded a 43.9% year-on-year rise in revenue to HK$138.4 million, benefiting in part from the introduction of an expanded menu. As for the “Trusty Congee King” brand, revenue from the operation increased by 12.8% year-on-year to HK$235.5 million and the Group opened one and two stores in Hong Kong and Mainland China, respectively, during the Review Year.

Indicative of the Group’s desire to continuously enhance its offerings to customers through its multi-brand strategy, three new sub-brands were launched during the Review Year. In January, it opened the first Taiwanese hotpot restaurant under the “Hot Pot Couple” brand in Mongkok. This was followed by the launch of the classy “cha-chaan-teng” brand- “King Fong Bing Teng” at Elements, Tsim Sha Tsui in October. By December, “Asam Chicken Rice” brand outlet offering Southeast Asian delights was introduced in Central.

Prospects
Looking ahead to 2020, the outbreak of the COVID-19 epidemic is expected to affect both Hong Kong and Mainland China economies to varying degrees. To mitigate the headwinds, the Group has implemented certain business strategies with new initiatives to drive sales.

Among them, the Group will launch six new canned food products in the second quarter of 2020, with flavours including stir-fried pork with vegetables, curry beef brisket, minced beef, braised pork, curry chicken, spiced pork cubes, etc. It is believed that the new canned food products, available in both restaurants under the Tai Hing Group as well as selected online platforms in Hong Kong and Mainland China, will help capture the growing demand of home meal and serve as a new income stream to the Group. It also intends to develop more canned food and beverage products by leveraging its Dongguan food factory. In doing so, the Group will be able to achieve the dual goals of expanding income streams and more fully utilising the factory.

On the other hand, in view of the huge business potential of the delivery business, the Group is actively co-operating with certain leading third-party food ordering platforms, both in Hong Kong and Mainland China, to increase its stake in the food delivery business. The Group’s enhanced efforts to bolster its delivery operations starting from 2019 highlight its optimism towards this business, and in particular, its ability to cater for the rise in takeout food orders driven by the COVID-19 outbreak in the first quarter of 2020. The Group is also working hand-in-hand with various food ordering platforms to raise awareness of its brands through linkage with their respective signature products, so that various distinguished brands under the Group come immediately to mind when customers want fine cuisine delivered to their home. Further driving the takeaway food business will be the Group’s “T-Factory” mobile application and the technology will also allow collection of data on customers, which in turn enables it to promptly determine the latest market trends, leading to timely adjustments to menus and marketing campaigns.

While it will take a prudent approach to network expansion in view of the current economic and geopolitical climate, the Group will continue to develop and improve its high-growth brands, including “Men Wah Bing Teng”, “Pho Le” and “Trusty Congee King” at an opportune time after the epidemic is under control. At the same time, it will also review the positioning of its mature brands to adjust strategies based on different market requirements. The Group will also explore potential partnerships in tapping the overseas markets, as well as the provision of different cuisine to meet the tastes and preferences of global customers, ultimately facilitating overseas business expansion and sustaining the growth momentum.

Mr. Chan Wing On, Chairman and Executive Director of Tai Hing, said, “Despite the current difficult operating environment backdrop for all catering enterprises, I remain confident in the Group’s long-term growth potential attributable to our solid foundation as well as our ample experience facing both good times and bad during the past three decades. With our multi-brand strategy targeting the mass market customers and our store locations mainly in neighbourhood malls where business is relatively resilient, we are confident of maintaining stable business operations amidst the current headwinds. Looking ahead, we are committed to developing an effective omnichannel business model to include food and beverage canned products and delivery service supported by our well-established restaurant network, which will allow us to facilitate long-term growth”.

About Tai Hing Group Holdings Limited (stock code: 6811)
Tai Hing Group Holdings Limited (“Tai Hing Group”) is a multi-brand casual dining restaurant group with roots in Hong Kong. In addition to its flagship “Tai Hing” brand, the Group has a growing brand portfolio comprisng of self-developed brands, and acquired and licensed brands, including “TeaWood”, “Trusty Congee King”, “Men Wah Bing Teng”, “Pho Le”, “Tokyo Tsukiji”, “Fisher & Farmer”, “Rice Rule”, “Hot Pot Couple”, “King Fong Bing Teng” and “Asam Chicken Rice”. Currently, it has a network of more than 200 restaurants in Hong Kong, Mainland China, Macau and Taiwan.