Dah Chong Hong Announces 2013 Interim Results
through Strategic Partnership with Car Manufacturers,
Enhanced After-Market Development and
Expanding Sales Network, Channels & Products of Food Business
(Hong Kong, 14 August 2013) —Dah Chong Hong Holdings Limited ("DCH" or the "Group"; stock code: 01828) announced today its interim results for the six months ended 30 June 2013.
In the first half of 2013, owing to the discontinuation of the Bentley distributorship and temporary reduced sales of imported commercial vehicles in the PRC, turnover of DCH dropped by 19.9% to HK$18,935 million. Together with the slow recovery of gross margins in the car dealership business, the profit from operations fell 33.3% to HK$637 million. Profit attributable to shareholders was further down 38.3% to HK$401 million due to a lower net gain on re-measurement of investment properties and properties held for sale. Basic earnings per share were 21.91 HK cents. The Board of Directors of DCH has declared an interim dividend of 8.68 HK cents per share(2012 first half: 11.78 HK cents per share).
Mr Clement Hui, Chairman of DCH, said,"The business in first half of 2013 remained tough as the market has not recovered from the low profitability on new car sales carried over from last year. Despite this difficult period, the Group considers that the auto market in mainland China will grow steadily. DCH will continue to invest in the auto business and benefited from the increased demand of the after-market and motor-related service as it has taken the initiative in developing this segment for some years. For Food and Consumer Products Business, we shall continue our Total Food Supply Chain strategy with upstream and downstream expansion supporting the rapid development of our core midstream distribution business."
Business Review & Prospects
Motor and Motor Related Business
Segment turnover of the Motor Business was down 24.6% to HK$14,578 million, whereas segment result from operations was down 25.5%to HK$567 million year-on-year.The segment margin remained stable at 3.9% despite the weakened demand.
-Approximately 36,800 units of new car sold, of which 33,300 units are passenger car and 3,500 units are commercial vehicle
-Number of 4S shops increased to 72. A total of 16 4S greenfield projects are in the pipe line
-Strategic partnership with major car manufacturers in brand portfolio will accelerate 4S shop network expansion
-Enhance and expand income source of 4S shops, including car insurance, car financing and used car trading
-After-sales revenue accounted for 11.3% of our dealership business. Same store after-sales revenue grew 16.6% year-on-year
-Finance leasing business commenced in Beijing and Shenzhen and will be rolled out in our dealership network in the second half
-PRC car rental business continued to grow with 33.4% expansion in fleet size in the first half
Hong Kong, Macao & Other Markets
-In Hong Kong, DCH achieved remarkable unit sales growth of 31.3% and segment result from operations increased by 50.6%, with segment margin increased by 1.5-percentage-point as compared with the same period last year; with 22.0% of market share in the first half of 2013, up 2.6-percentage-point year-on-year
-In Taiwan, to set up a Semi-knock down assembly plant in Taichung for Isuzu trucks providing good opportunity in upstream arena
Food and Consumer Products Business
Segment turnover grew by 2.1% to HK$4,333 million. In addition, revenue of HK$1,694 million from frozen meat and poultry distribution business was booked separately under the joint venture ("JV") with BRF S.A. Segment result from operations rose by 22.2% to HK$110 million, while segment margin improved by 0.4-percentage-point to 2.5%.
-Regional expansion accelerated to enlarge sales network and penetrate to growing food service business
-Enhance product portfolio aggressively with new agencies of dairy products, beverage and snacks in mainland China
-A total of 85 DCH Food Mart retail shops are in business in Hong Kong and target to revamp the retail network and add new concept stores and specialty shops
-House brand Cheer and Del Leche dairy and snack products introduced in Hong Kong and China markets to uplift profitability
-Currently 51 DCH AV Shops and DCH Digi Shops in Hong Kong and mainland China covering Shanghai, Chengdu, Suzhou and Guangzhou. Target to expand to 80 shops by the end of 2013
-Development of logistic services especially cold chain and valued added service to support Food Business
Mr Hui concluded, "Our vision in the Motor and Motor Related Business remains to be one of the key market players capitalising on the full Motor Business value chain in the Greater China Region. We will continue to expand our dealership network through strategic partnerships with major car manufacturers and accelerate the development of after-market business. In Food and Consumer Products Business, we will enlarge sales network and widen the sales channels including the food service business which is expected to grow rapidly in mainland China. With our ample experience and solid business foundation established in the automobile and food and consumer products sectors in the Greater China market, we are confident to turn challenges into opportunities and grow steadily in the coming years."