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Public company info - Carpenter Tan Holdings Ltd. , 00837.HK
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Carpenter Tan Holdings Ltd., 00837.HK - Company Profile
Chairman Tan Chuan Hua
Share Issued (share) 249,000,000
Par Currency Hong Kong Dollar
Par Value 0.01
Industry Furniture & Household Goods
Corporate Profile Business Summary: The Group is principally engaged in (i) the design, manufacture and distribution of small size wooden accessories which are mainly made of natural wood and designed with traditional Chinese cultural features and with high artistic qualities; (ii) the operation of a franchise and distribution network primarily in the PRC; and (iii) the operation of retailing shops for direct sale of its products in Hong Kong. The Group’s products are mainly classified into four categories, namely (i) wooden or horn combs such as coloured drawing combs, grass-and-tree dyed wooden combs and carved combs; (ii) pocket-size wooden mirrors such as coloured drawing mirrors and carved mirrors; (iii) other wooden accessories and adornments such as bead bracelets (香珠手鏈), pendants (鏈墜), barrettes (髮夾), hair bobs (髮簪) and massage tools; and (iv) box sets which combine its different products featured in themes for gift purpose. The Group’s products are mainly sold under the brand name of “Carpenter Tan” (譚木匠). Performance for the year: Revenue increased by 7.8% to approximately RMB336,538,000 (2018: RMB312,274,000). Gross profit increased by 6.5% to approximately RMB200,853,000 (2018: RMB188,676,000). Gross profit margin decreased by 0.7% points to 59.7% (2018: 60.4%). Profit for the year ended 31 December 2019 increased by 7.0% to approximately RMB122,550,000 (2018: RMB114,510,000). Profit attributable to owners of the Company increased by 7.0% to approximately RMB122,484,000 (2018: RMB114,510,000). Earnings per share increased by 7.0% to approximately RMB49.25 cents (2018: RMB46.04 cents). Business Review 1.Offline Business (i)Domestic Business During the Year Under Review, the Group's sales and marketing department experienced personnel changes and restructuring. The former online sales and marketing controller, Ms. Liu Kejia was promoted as vice president who is now responsible for both online and offline sales and marketing departments. Employees left and joined the offline marketing department in the first half of the year. Nevertheless, the offline marketing department continued to present stable performance after experiencing personnel changes and restructuring. As at 31 December 2019, Carpenter Tan had 1,242 franchised stores in China, 7 franchised stores in other countries and regions, 3 directly self-operated stores in China and Hong Kong, respectively. Focus on business expansion The target for expansion is very clear. As at 31 December 2019, shopping mall stores accounted for 51.4% of the total number of franchised stores; and accounted for 83.1% of the new stores opened during the Year Under Review, the ratio of the image stores of the third generation reached 79.4%. Compared with channels expansion, the operational performance of the franchised stores is behind the pace. The improvement of the opening new stores and day-to-day management of stores will still be the focus for the coming year. Product IP cooperation During the Year Under Review, the focus of products was put on IP cooperation. In January, May, June and December, respectively, a total of 22 Disney China authorized design products were launched. By the end of November, the sales reached 60,761 boxes which amounted to RMB17.5 million. Product design is more consumer-oriented that functions, user groups and scenarios shall be considered more and the value-added services supporting products shall be improved. In the future, more consideration will be given to the quality of products. As the Group strives to create popular products, the Group will review the previous classic products for reshaping. Raising awareness of brand image In 2019, the Group launched the Carpenter Tan membership system with an aim to strengthen interaction between the Group and the Group's members, to cultivate loyal customers and increase customer stickiness. On top of enhancing the Group's brand concept, the Group continued to enrich and enhance the Group's store image. While ensuring the speed and quality of decoration for franchised stores, the Group added displays of various materials and sizes in the store, increased product displays area and showcase designs to improve the overall effect of the store by improving the current unaesthetic and improper designs. It is expected that in 2020, a brand new store design will be developed in cooperation with Japanese designers, and the design and production of new image will be completed as scheduled. Diversified training Various training models took place in the year of 2019 in the forms of regional routine training, the tailor-made courses for large store managers and storekeeper training camps. A total of 27 multi-level face-to-face trainings for store assistants, store managers and store owners, and 21 national live trainings on YY.com were organized, with more than 2,000 persons trained. In order to get assistants in all the franchised stores nationwide work with the Group to promote the brand image, the improvement and transformation of training content will be one of the priorities in the coming year. Emphasis on festival marketing Carpenter Tan attaches great emphasis on “companionship” and spreading “beautiful passion”. The Group plan the Group's publicity programs and products to fit closely with the passion element of festivals to offer personalized and value-added support services at specific festival times. The Group also formulated a stock pre-ordering and replenishment procedure for the presale of new products at franchised stores, forecasting on customer needs and meeting market demand in advance. Directly self-operated stores and group purchase business The Group continued to explore, study and summarize the most suitable operating model and methods for Carpenter Tan’s store through operating the three directly self-operated stores in Jurong, Suzhou and Changzhou, providing guidance to franchised stores on standardized operation and management. In 2019, Carpenter Tan continued to ramp up efforts on its group purchase business. The Group reached agreements on group purchases with Dr Plant and CNPC in the first half of the year. The Group purchase policy was released in August 2019, adjusting group purchase discounts, and providing group purchase incentives to external parties, so as to stimulate growth in the group purchase business. For the year ended 31 December 2019, the external group purchase sales grew at a rate of 79.3%. Make “every comb” good For the year ended 31 December 2019, the POS sales for the Group's offline business reached 97.5% of the planned target, slightly increased by 1.1% when compared to last year, and the same store’s performance delivered a slight increase as well. There is still much room to be improved for brand building. The Group needs to go the extra miles to improve the quality of the stores, continue to promote the brand awareness, reinforce the terminal services for the market, and implement the penetration of brand culture. Looking ahead, the Group will still put the interests of the franchisees in the first place, make bold innovations and go out of the Group's way. The Group aims to make “every comb” good with diligent efforts together with the franchisees and store assistants across China as well as all the craftsmen of Carpenter Tan. (ii)Overseas Business We have been trying hard on overseas business expansion. After several years of exploration and experiencing, the Group has made certain progress in 2019 despite the difficulties. The first offline store in North America, Toronto store in Canada, was opened in March 2019. The store recorded satisfactory results under brand promotions by franchisees during Thanksgiving and Christmas sales seasons. The Group opened the first offline store in Malaysia, Kuala Lumpur store in April, and the first offline store in Taiwan, Taichung store in Taiwan in May. Carpenter Tan opened the first offline flagship store in the United States, Flushing store in New York in October. The first offline store in Japan was opened in Yokohama in November, during which a series of brand promoting activities were carried out, including tram advertisement, publicity by online influencers, customer DIY comb painting experience activities. For the time being, the Group still have not sufficient overseas brand awareness, the Group's franchisees are short of thorough understanding of the Group's brand. Consequently, the Group will continue to prepare for the opening and improving the operation and management of the overseas stores in 2020, affording more desirable ancillary and supporting brand culture, products and services for the overseas markets. Meanwhile, the Group will carry on boosting publicity through exhibitions and promotion platforms, proactively attending overseas high-quality exhibitions of the industry with a good brand image and excellent experience to get greater brand exposure and let more friends at overseas know this small wooden comb from China. 2.Online Business (i)Domestic Business Carpenter Tan e-commerce has gained a certain number of VIP customers since it launched the online sales business in 2012 under the principle of continuous online and offline same price policy. In 2019, the Group's e-commerce team successfully completed the sales target. For the year ended 31 December 2019, total sales from T Mall online store was approximately RMB82.4 million, accounting for 71.3% of the total online sales and up 23.6% when compared to the same period of last year. Total sales from Jingdong online store was RMB32.9 million, representing a proportion for 28.7% of the total online sales and increased by 14.9% over the same period of last year. There are many creative ways to hold online activities. The marketing models are updated and iterated. The Group's online sales team also vigorously caters to the market needs. Throughout 2019, the sales growth during each event was obvious, especially on the Valentine’s Day in February and during the 18 June campaign when the sales compared to last year increased by 110% and 84%, respectively. During the events of Valentine’s Day in February 2018, as it was near the Chinese New Year, the sales did not have an upward surge, and that was why the sales on the Valentine’s Day in 2019 were up by 110% when compared to 2018. So the sales on the Valentine’s Day in 2019 were only up by 9.7% when compared to 2017. During the 18 June campaign, the Group's promotion was made through the internal website and external platforms. The Group made the topic of “Making a Comb by Yourself”, which improved the interaction of consumers, increased the flow and conversion rate, with a sales growth by 84% when compared to last year. The sales decline during the Double Eleven events in 2019 was visible, mainly due to no participation in the official Double Eleven events during that year, in contrast to the Group's participation in the official platform activities in 2018 which benefited the Group's sales with the traffic. Despite promotion made through multiple channels on external platforms in 2019, the sales for Double Eleven events decreased by 44% as compared to the same period in 2018, and increased by 108% when compared to 2017. (ii)Overseas Business By accumulating experience in overseas business development, Carpenter Tan’s products have been launched on many overseas online platforms, such as U.S. Amazon, Australia Ebay, UK Ebay, U.S. Shopify, U.S. Yamibuy, Japan Amazon, Korea NAVER, Singapore LAZADA and Malaysia Shopee. The Group has also established cooperation with cross-border e-commerce companies in North America and promotion teams in the U.S. to regularly launch the Group's products and promote the Group's brand on Facebook and Instagram. Compared with last year, this year 2019’s overseas online expansion performance is more courageous and stable. The Group frequently launched offline activities consistent with the tone of the brand, expanding the brand’s local presence and gathering popularity. The Group's “Combing Hair for Mom” activity went to overseas for the first time, through which the Group passed on the Chinese filial piety and family culture in Philadelphia, the United States. The Group took the wooden comb painting DIY activity to the University of Suwon, giving Korean college students the chance to experience the fun of comb painting. The Group also entered the international fashion circle and attended the Met Gala with Gemma Chan, a Hollywood actress. The Group also participated in the Cosmo Show of North America in Las Vegas at the end of July to enlarge the influence of Carpenter Tan brand. At present, the Group's profitability in overseas markets is not high, so that the Group needs to work hard for brand localization. Consumers are hardly aware of the Group's brand name. Subject to cost constraint and different mindset, large overseas retail channels have not been developed yet. Carpenter Tan brand is mainly known among ethnic Chinese communities and there is still a lot to be done to achieve brand awareness among local consumers. Stepping into 2020, the Group's team will make continued efforts on brand promotion and social media promotion, increase brand exposure, and improve the profitability of existing online stores. Prospects: At the end of 2019, the outbreak of the novel coronavirus epidemic has blocked most of the retail industry in the country instantly, and it has also had a huge impact on economic operations. Like many peers, most of franchised stores have to take temporary closures, and the development in 2020 will face huge challenges. However, the more tense the situation, the more rational and calm thinking is required. Every member of Carpenter Tan, while trying to support Wuhan stores and first-line hospitals, worked with full spirit, sought innovations and changed marketing strategy. The Group led the operation of private traffic marketing in circle of friends in a unified manner, cooperated with shopping malls to promote traffic marketing and increased online live training for store staff. With these three initiatives, the Group believes the Group can overcome the immediate difficulties together. The Group will vigorously strengthen the Group's internal management without relaxation, continue to improve corporate image, products, packaging, etc., enhance brand awareness, and carry out product development with an open mind. At the same time, the Group will actively develop online and offline business, domestic and overseas omni-channel marketing, and continue to improve the Group's product range by adding new categories and upgrading new processes while taking into account of diversification, individualization, refinement, and style reduction and yield increase. the Group will pragmatically carry out brand promotion to bring it closer to young consumers, and keep up with market changes. The Group’s Chairman requires: “Put life first and business behind, make every effort to do the Group's works on prevention, control and support best on the epidemic in the Company’s internal and franchising systems.” the Group believes that, after experiencing the novel coronavirus epidemic, every member of Carpenter Tan will more cherish the Group's work and life, love this era the Group enjoys, devote ourselves to being a happy and ordinary brand, and work together to make this “comb” symbolizing happiness and simple life.

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