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Public company info - Hong Kong Technology Venture Company Limited , 01137.HK
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Hong Kong Technology Venture Company Limited, 01137.HK - Company Profile
Chairman Cheung Chi Kin, Paul
Share Issued (share) 916,000,000
Par Currency
Par Value 0.0
Industry Movies & Entertainment
Corporate Profile Business Summary: The principal activities of the Group are the provision of multimedia production and contents distribution and other multimedia related activities. Performance for the year: 57.7% growth on turnover reaching HK$1,414.0 million in 2019 versus HK$896.4 million in 2018; Net loss of HK$289.9 million in 2019 (after including valuation gains on investment properties of HK$0.8 million) versus loss of HK$133.1 million in 2018 (after including a gain on disposal of a subsidiary of HK$161.6 million and valuation gains on investment properties of HK$43.6 million); Business Review Looking back at 2019, the Group’s 24-hour online shopping mall-HKTVmall has developed steadily. The three core pillars on infrastructures that the management has been emphasizing have gradually become more mature and stable, fuelling the Group with sufficient capacity to handle surging orders in response to the epidemic since early 2020. A Fair and Transparent Online Shopping Mall The first major infrastructure pillar is our “online shopping mall”. This mall is already the largest in Hong Kong and has partnered with more than 3,200 retailers and suppliers, offering more than 320,000 items for sale, including many large brands, traditional retailers, traders, small and medium retailers and enterprises, to display and sell their own products on the platform. HKTVmall is an open online shopping mall that any merchant is welcome to join. Therefore, merchants on HKTVmall are having different commission rates as they joined us through different channels and merchant plans, even though they may be selling exactly the same products. In this aspect, the role of HKTVmall is not only to provide platform space, research and development of technologies, sales support and marketing, etc. The most important thing is to create a fair and transparent competitive environment to protect customer choices and rights. In this regard, we notified all merchants at the end of last year for a new commission plan starting from 1 January 2020 : standardized commission rates for merchants selling the same product category. In the future, merchants will be able to sell and promote their products under this fair and transparent commission plan. At the same time, as the number of suppliers, retailers and brands cooperating with HKTVmall has increased significantly, we understand that merchants are facing fierce competition on advertising space on HKTVmall. Therefore, we opened some of the advertising resources on HKTVmall to merchants with fees, including splash ad, image slider, electronic Direct Mail, etc; hoping that both large and small businesses will have the opportunity to use advertising resources on HKTVmall under a transparent mechanism, and to allow customers selecting their products on a fair basis. Automated & Robotic System The second infrastructure pillar is the four logistics centres with a total area of more than 400,000 square feet located in different districts of Hong Kong, and with different automated and robotic systems being installed. As mentioned in the annual results announcements over the past years, the first and second phases of automated picking and warehousing system introduced from Germany, which are located at the logistic centres in Tsing Yi and the headquarters of Tseung Kwan O have been completed. They can now handle 20,000 orders on supermarket products and groceries daily on a combined basis, bringing higher efficiency and accuracy to our logistics, warehousing and fulfilment operations. The effectiveness of the system is even more prominent from January to February this year, when the public has less desire to go and stay in crowded locations and switched to shop online for daily life and disinfection products, which brought a surge in the order numbers of HKTVmall. In fact, currently around 60% of the collaboration between HKTVmall and merchants falls into the items from merchant’s self-operated warehouses, which will be packed according to customer orders and delivered to HKTVmall’s logistics centre in Tuen Mun, and we sort these orders based on delivery addresses. In the past, the operation of sorting was conducted manually, with intensive manpower performing the work from evening to overnight. As the number of orders increased, manual operations became a bottleneck for the Group’s business growth. To this end, the Group has been looking for different innovative logistics technologies to deal with this issue. In February 2020, the establishment of a set of cross-belt automatic sorting system was officially completed to enhance productivity, accuracy of order processing and to improve the working environment of warehouse operators. In simple terms, this automatic sorter system scans the barcode labels on parcels and distributes the parcels to designated delivery points with the use of conveyance belts. The sorters are designed to handle throughputs around 13,000 items per hour on average and sort a wide range of products from large parcels down to loose items, to different delivery points with an accuracy rate of 99%. Collaborate with Third Parties to Expand Delivery Network & Pick Up Points The third infrastructure pillar is the residential distribution network, which includes our fleet and store network. The scale of the fleet is about 250 trucks operating daily, and orders are delivered to customers by delivery talents and drivers. In order to deal with the surge of orders, the Group has expanded its delivery capacity by working with a number of large scale outsourced companies and individual drivers starting from February 2020, ramping up to as high as 350 trucks operating daily. Another segment of residential distribution is HKTVmall’s O2O stores. In addition to serving as an education centre of our 60+ O2O stores, the role of a sales centre was added during the year, and electronic payment options including Octopus and credit cards are accepted for onsite sales of fresh fruit and frozen meat products. Another important role of HKTVmall O2O stores is the pick up service for customer orders. Starting from 14 February 2020, we extended our collaboration with a number of well-known chain retailers including Baleno, CATALO, Foodwise, GIORDANO and Hung Fook Tong, to have their outlets serving as pick up points for HKTVmall customer orders. This collaboration has increased our 90 pick up points (including 64 HKTVmall O2O stores, 19 mobile pickup trucks and 7 merchant stores) by 25 pick up points, making up a total of 115 pick up points. This collaboration not only offers convenience to customers, merchants are also benefited from increased traffic. We will continue to expand this collaboration model. Prospects: Under the current COVID-19 outbreak, Hong Kong people are now spending more time at home and have listened to the opinions of medical experts to avoid crowded places. This outbreak has brought unprecedented challenges to Hong Kong, especially the retail industry, and no one can estimate how long it will last. However, this has brought gradual changes to the working and consumption habits of Hong Kong people. For example, online conferencing and online shopping are becoming more popular and habit-forming. Traffic and business volume in the past two months have increased more than expected. While bringing us business growth, it has also led to a considerable number of HKTVmall customers facing unpleasant experiences of online shopping and delivery services. Therefore, after attracting a large number of new customers, how to convert them into regular users and repeat purchasing through HKTVmall is the challenge we are facing. If we can overcome this issue, HKTVmall will be able to step up to a higher level of development. After the increase in demand in January and February 2020, management has examined the shortcomings of HKTVmall more clearly; all Talents of the Group, including logistics, O2O stores, information technology and system management, marketing, etc., will continue to work hard to overcome these challenges. Following the change of business landscape of Hong Kong retail industry, and referencing to the growth and trend for the Group’s turnover over the first three months of this year, we should make an upward adjustment on the GMV target for 2020 at HK$3.4 billion that we set at the end of last year. We estimate that the GMV for the first three months of this year will exceed HK$1.2 billion. Despite the fact that HKTVmall has catered for the new shopping model for consumers with new technologies that has solved the needs of daily necessities for Hong Kong people, the current outbreak has led to economic downturn or even recession for global economy that may severely affect the Hong Kong economy that will reduce the income of Hong Kong people and will result in reduction of shopping intention in both physical stores and online platforms. Even though we are sure that HKTVmall is on the right track and this year we are likely to have better business performance than 2019, the possibility of further deterioration of the current outbreak may pose more uncertainties to our economic outlook and therefore we are unable to make a proper quantitative estimation for the growth of sales turnover this year. We will continue to keep an eye on the situation and estimate the impact on the sustainability of the Group’s business growth.

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