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Public company info - Hop Hing Group Holdings Ltd. , 00047.HK
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Hop Hing Group Holdings Ltd., 00047.HK - Company Profile
Chairman Seto Gin Chung, John
Share Issued (share) 10,070,000,000
Par Currency Hong Kong Dollar
Par Value 0.1
Industry Restaurants & Fast Food Shops
Corporate Profile Business Summary: The Group is mainly engaged in the operation of quick service restaurant chain business (“QSR Business”), principally selling rice bowl under the brand name of Yoshinoya ( 吉野家) and ice-cream under the brand name of Dairy Queen (冰雪皇后), in northern part of China. Performance for the year: The number of issued shares of HK$0.10 each of the Company as at 31 December 2020 was 10,070,431,786 (31 December 2019: 10,070,431,786). Business Review In response to the challenges posed by the outbreak of the COVID-19, Hop Hing implemented a number of measures to protect the safety of employees and customers, its top priority, and the Company’s wellbeing. Correspondingly, the Group adopted stringent hygiene and social distancing measures to safeguard staff and patrons, which also enabled stores to remain open whenever practicable. In addition, the Group established an array of policies and protocols pertaining to its operations, including those aimed at encouraging cash flow management, facilitating better rental concessions with property owners, optimizing manpower deployment and distribution costs, etc. Furthermore, the management took voluntary pay cuts, and non-essential expenditures were either trimmed or cut, in order to husband financial resources for allocation to key operations and stabilize employment. The Group has nevertheless upheld its corporate social responsibility (CSR) and delivered free meals to organizations and hospitals engaged in the fight against the pandemic. Seize opportunities from industry consolidation, strive to press ahead with comprehensive New Retail development model The pandemic has brought about obstacles as well as opportunities. The Group seized new opportunities that emerged from the industry consolidation by adjusting its network based on the latest city development plans, mapping out the location of its stores to ensure service coverage through different models so as to enhance the potential for future development. Although 2020 was difficult, it was also bountiful. Hop Hing launched its “Family Kitchen” product line, and began utilizing several new sales methods to capitalize on new trend, notably social media marketing and live streaming. These fresh initiatives brought forward The Group’s comprehensive New Retail development model. Actively develops/explores New Retail business model, introduces “Family Kitchen” product line With pandemic measures severely limiting the options available to the public in terms of eating out at restaurants, the Group introduced timely initiatives to take advantage of opportunities arising from the “dine-at-home” new norm. This included the launch of the “Family Kitchen” product line in February 2020, which enabled customers to prepare high-quality meals at home in a matter of minutes. With substantial early achievement, the new line has facilitated further business diversification and accelerated the recovery of the Company’s sales. In addition to utilizing the Group’s extensive store network as key marketing platforms, it also made creative use of social media marketing, including live streams for the “Family Kitchen” product line. Staff and distributors also promoted products to their friends through social media. These offline and online channels stimulated the sales of “Family Kitchen” products. In 2020, the “Family Kitchen” product line, with less than a year’s operation, already generated sales of RMB120 million, accounting for 7.6% of the Group’s total sales. Well-established delivery business model contributed notably during the COVID-19 Optimized in recent years, The Group’s delivery model further boosted sales during the pandemic. Food orders are delivered with “non-contact” service to ensure customer safety. The Group’s well-established delivery team can make timely delivery with top-notch service and a high level of customer satisfaction. Consequently, the delivery business grew from representing 35.5% of the Group’s total sales in 2019 to 44.6% in 2020. Revenue from the delivery business accounted for 49.1% and 26.0% of the total sales of Yoshinoya and DQ respectively. In Beijing, the contribution of the delivery business of Yoshinoya surged from 46.1% in the previous year to 55.5% in 2020, making the delivery sales one of the key revenue sources for the Group. Although the Group had incurred much efforts and adopted measures to transform its business and extend the delivery business, the Group’s total sales revenue was adversely impacted by the COVID-19 pandemic and decreased by 24.4% to RMB1,590.3 million (2019: RMB2,102.8 million) for the year ended 31 December 2020. Overall sales at operating restaurants were severely and adversely affected during the first half of 2020. Meanwhile, recovery of delivery sales was driven by the Group’s optimized delivery model from the second quarter of 2020. However, recovery of the dine-in customer traffic still experienced pressure due to the impact of regional resurgences of the COVID-19 in China. The Group consequently reported a decline in same-store sales of 23.0% (2019: increase of 1.3%) from the Yoshinoya network and a decrease in same-store sales of 27.1% (2019: increase of 1.9%) from the DQ network during the year. The Group’s overall same-store sales contracted by 23.4% (2019: increase of 1.3%). In 2020, the Beijing-Tianjin-Hebei Province Metropolitan Region remained the largest market of the Group based on revenue. Sales revenue from Yoshinoya products accounted for approximately 85% of the Group’s total revenue. To enhance resources allocation efficiency, the Group gradually closed down stores of minor brands. New restaurant openings were slowed down for the Group to exercise better control of expenditures and maintain a healthy balance sheet and strong cash position. As of 31 December 2020, the Group together with its joint venture, had 580 stores in operation. Due to the pandemic’s adverse impact during the year under review, the Group undertook a number of price-driven promotion activities and digital campaigns to stimulate sales and promote new products, especially to bolster the “Family Kitchen” product line and speed up the recovery of its sales in the second half of 2020. Despite these efforts, gross profit in 2020 was adversely impacted and a gross profit margin of 59.4% has been recorded with a decline of 3.4 percentage points when compared with the 2019 level. During the year, the Group implemented tight cost control measures to cope with the impact from the COVID-19. The Group proactively enhanced operating cost structure realignment including optimizing manpower deployment, negotiating with landlords for rental concessions, communicating with authorities for the reduction and exemption of social insurance premiums. The operating costs of the Group therefore went down during the year under review. Since certain operating costs are fixed and not proportionate to sales revenue, operating costs as a percentage of sales recorded increases compared to last year’s level. Prospects: For 2021, being mindful of its belief that digitalization is instrumental to consolidating Hop Hing’s traditional operating model and strengthening the New Retail business model, The Group will continue to invest in technology, smart tools, social media and online platforms in order to attract new customers and increase retention rates among existing customers. Being an established branded catering enterprise and with a solid corporate culture and a stable professional team, the Group will continue to uphold its quality and product-oriented principles to provide customers with exceptional value, while advancing its innovative New Retail business model. In response to the anticipated post-pandemic growing demand for the packaged and convenience food products, the Group will continue to develop its “Family Kitchen” product line by way of dine-in, delivery, online and offline channels. Last but not least, The Group will continue to steadfastly adhere to The Group’s core value of quality and safety by strictly controlling quality and healthiness of The Group’s food products and ensuring the hygiene and wellbeing of The Group’s customers and employees. Hon. Shek Lai Him, Abraham, GBS, JP, retired as an independent non-executive director of the Company with effect from the conclusion of the annual general meeting of the Company held on 2 June 2020. On behalf of the Board, I would like to take this opportunity to express my deepest thanks to Mr. Shek for his many years of dedicated service to the Company and wish him well in his future endeavor. The past year was an extremely difficult year for Hop Hing. I would like to express my sincere gratitude and appreciation to The Group’s Board members, management and colleagues for their enormous dedication in overcoming the obstacles during such challenging times. I would also wish to thank The Group’s customers, shareholders and business partners for their continued support, trust and loyalty to the Group.

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