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Public company info - Tycoon Group Holdings Limited , 03390.HK
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Tycoon Group Holdings Limited, 03390.HK - Company Profile
Chairman Wong Ka Chun Michael
Share Issued (share) 800,000,000
Par Currency Hong Kong Dollar
Par Value 0.01
Industry Medicine
Corporate Profile Business Summary: The Group is a provider of a variety of PCM (i.e. “proprietary Chinese medicine” as defined in the Chinese Medicine Ordinance), health supplement, skin care, personal care and other healthcare products, predominantly selling and distributing such products in Hong Kong. Performance for the year: Despite an increase in the Group's revenue at a CAGR of 38.3% over the Track Record Period, the Group's revenue growth momentum had been adversely affected by the Social Unrest in Hong Kong during the second half of FY2019 resulting in a slight overall increase in the Group's revenue by HK$7.5 million or 1.1% for FY2019. The Group's profit after tax grew by approximately 57.8% from FY2017 to FY2018,profit after tax experienced a decline of HK$46.4 million or 46.0% for FY2019 primarily. Business Review The Group's Distribution Business The Distribution Business is the Group's major operating segment, which brought in over 95.0% of the total revenue of the Group's Group throughout the Track Record Period. In the Group's Distribution Business, the Group distribute the Group's products to chain retailers, non-chain retailers (which are mostly pharmacies) and traders. The products distributed by us include products bearing the brands of third-party brand owners, which are sourced from the brand owners and/or distributors and traders, and Private Label Products, i.e. products developed and marketed under the brands of the Group's Group and produced by external manufacturers engaged by us on an ODM basis. As a distributor, the Group play a pivotal role in the value chain in the distribution of PCM, health supplement, skin care, personal care and other healthcare products. On the upstream side of the supply chain, according to the Ipsos Report, brand owners tend to distribute their products through distributors to various retail channels, and it is the industry norm for them to take advantage of the extensive retail network of chain retailers in the sales and distribution of their products so as to maximise the market coverage. In addition, from the perspective of the brand owners, distributors do not merely act as general merchandisers, but they also help take care of retailer relationship management and the distribution workflow and serve additional functions including storage, logistics, marketing and brand building. As regards the downstream side of the supply chain, according to the Ipsos Report, retailers also tend to rely on a range of services including sourcing, storage, logistics, product labelling and packaging and marketing services provided by their distributors as it may not be cost-effective for them to deal with numbers of suppliers directly and perform these functions on their own. In particular, the sourcing of the products from the brand owners may involve ample negotiation time and paperwork and is likely to significantly tie up the resources of the retailers given their large and diverse product portfolio; moreover, with limited storage space available, each retail store usually carries a limited amount of stock only and the retailers may not be able to meet the minimum purchase requirements of the brand owners. As such, distributors perform a wide range of value-adding functions in the supply chain and the Group's role is not lightly dispensable or easily replaceable. While it is technically feasible for brand owners to engage retailers for direct distribution and for retailers to procure products directly from the brand owners, brand owners and retailers, especially those which are more resource-constrained, have generally opted to distribute and source their products through distributors, including us. By so doing, the brand owners and the chain retailers could dedicate their manpower and resources to product development and manufacturing and to retail management respectively and improve the cost-effectiveness and efficiency of their operations. Among others, the Group's Directors believe that the wide range of marketing and promotional activities performed by the Group's Group are effective in increasing the exposure and recognition of the Group's products and highly valued by both the third-party brand owners and the Group's chain retailer customers, and have been instrumental in bringing about the Group's growth since the Group's inception. In particular, throughout the Track Record Period, over 83.0% of the Group's total revenue came from the sales of the Group's products to chain retailers. Leading chain retailers are characterised by their extensive network of POS with a wide geographical coverage and direct access to the mass of consumers. As at 31 December 2019, Ipsos estimated that the Group's top two (2) customers, which are both chain retailers, operated 359 stores and 232 stores in Hong Kong respectively. Given that the major chain retailers in Hong Kong are the Group's direct customers, the Group are in a competitive position in distributing, selling and marketing the Group's products to the consumers leveraging the widespread POS network in Hong Kong of such chain retailers. the Group consider that the Group's relationship with the chain retailers is mutual. On one hand, the Group avail ourselves of the chain retailers’ sales network to enable the Group's suppliers, which are mostly the brand owners of the Group's third-party brand products, to break the entry barriers and gain access to the market, so as to establish ourselves as the preferred sales channel of the Group's suppliers. On the other hand, the Group are a distributor offering 120 Hong Kong and overseas brands of health and well-being related products during FY2019 that are sought-after by consumers to the chain retailers and providing supply chain support in areas such as warehousing and logistics. As such, by procuring products from us, the chain retailers could gain instant access to a wide variety of products without the need to deal with each brand owner individually or attend to certain major supply chain operations and could thus minimise their administrative and operational burden and costs. The Group's Retail Business In the Group's Retail Business, the Group sell third-party brand products bearing the brands of third-party brand owners and the Group's Private Label Products directly to the general public. With a vision of making the Group's products available through diversified sales channels, the Group have been developing both online and offline sales of the Group's products to consumers. the Group's Retail Business is in an early stage of development: for FY2019, the Group's revenue from online and offline sales to consumers accounted for approximately 2.2% and 2.6% of the Group's total revenue, respectively. the Group consider that e-commerce provides a sales channel which enables us to reach consumers on a borderless and 24/7 basis. As such, the Group commenced online sales of the Group's products to consumers in FY2017. During the Track Record Period, online sales of the Group's products to consumers were conducted primarily through two (2) e-commerce portals, namely JD.hk (海囤全球 京東旗下全球直購平台) and Tmall.hk (天貓國際). As regards the offline limb of the Group's Retail Business, offline sales of the Group's products to consumers have been conducted at the Group's two (2) brick-and-mortar retail stores under the trading name of Tianyi (天一) since July and November 2018 respectively in Macau, which market, as compared to Hong Kong, is less dominated by leading chain retailers according to the Ipsos Report. While the Group's Retail Business is still in its early development phase, it allows us to reach and interact with a broader spectrum of customers directly, so as to observe and understand the consumer needs and preference, market trend and general retail environment. The data and information collected will be of high reference value as the Group seek to identify and introduce new products. In addition, through the Group's retail channels, the Group could test the market acceptance and popularity of the Group's new products, which the Group may launch in the Group's Distribution Business upon receiving favourable market response. At the same time, the Group's online stores and retail stores also serve as a brand and product promotion platform so as to increase consumers’ awareness of the Group's brands and products. As such, the Group believe that the expansion of the Group's Retail Business, both online and offline, is conducive to the overall development of the Group's business, as it facilitates the operation of the Group's Distribution Business and inspires confidence in the Group's capability as a distributor among the Group's suppliers of third-party brand products and the Group's customers sourcing products from us. Prospects: To further expand the Group's business and increase the Group's market share, and to achieve the Group's mission and business objectives, the Group plan to implement the following strategies: (A)Further Developing the Group's Supply Chain and Retail Management by: (i)increasing accessibility and availability of the Group's products to consumers through the Group's Distribution Business model (offline), cross-border e-commerce business and potential acquisitions (ii)broadening product selection by introducing new third-party brand products and developing new Private Label Products for the Group's customers (iii) Enhancing enterprise resources planning, customer relationship management and warehouse management through the application of information technology and the upgrade of the Group's systems (B) Further Investing in the Group's Brand Management to Increase Mass Awareness of the Group's Group and the Group's Products

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