China Dongxiang Announces Annual Results 2018/2019

June, 19/2019 - 06:00
China Dongxiang Announces Annual Results 2018/2019

Focusing on Point-of-sale Reform ; Omni-channel Distribution of Products Starts



(RMB million)

For the fifteen months ended 31 March








Gross profit (before reversal of / provision for impairment losses of inventories)



+13.1 %

Gross profit margin (before reversal of / provision for impairment losses of inventories)



-1.2 pts

Operating profit




Profit attributable to equity holders of the Company



- 27.2%

Basic and diluted earnings per share

(RMB cents)




Final dividend and special final dividend per share (RMB cents)




HONGKONG, CHINA - Media OutReach - 19 June 2019 - Theleading international sportswear brand enterprise in the PRC, China Dongxiang (Group) Co., Ltd.("China Dongxiang" or "the Company", together with itssubsidiaries, "the Group", HKEx stock code: 3818) announces itsresults for the fifteen months ended 31 March 2019 ("Reporting Period"). TheGroup's revenue for the Reporting Period was RMB2,144 million, while profitattributable to equity holders of the Company was RMB866 million. Basic anddiluted earnings per share was RMB14.91 cents. As a reward to shareholders fortheir unfailing support, the Board of Directors has proposed to distribute 30%and 20% of the net profit attributable to equity holders for the fifteen monthsended 31 March 2019 as final dividend and special final dividend, respectively,representing a dividend payout ratio of 50%.

Operational Highlights of 2018/2019

  • China Segment: Launching A New Modeland Securing Product Supply


The Group has reinforcedcross-sector collaboration with celebrities and key opinion leaders in varioussectors in the Reporting Period to fully envision the fashion trends andstrengthen its brand penetration. The Group has also endeavoured to develop a digitalisedmember recruitment programme for Kappa to increase members' repeated purchase by omni-channel managementof members and big data utilisation for precise marketing. Meanwhile, the Grouphas stayed focused on point-of-sale reform by optimising existing structure ofits stores, actively managing the proportion of top stores, shopping mallstores and outlet stores. In addition, the first step of reform onrelationship-building channels for customer adjustment has been completed, thedirect-sale system and direct-franchised customers accounted for over 90% ofthe Group's entire business. The construction of two nationwide logistics anddistribution centres will be completed in the next quarter, aiming to providesecured and prompt product turnover. The Group has sought closer cooperationwith reputable e-commerce platforms, including Tmall, and,its e-commerce business for the Reporting Period recorded a significant growth.

During the Reporting Period, theGroup achieved outstanding results on the marketing programme of kid's wearbusiness. The Group has launched a sequence of effective marketing events forkid's wear in order to further uplift its brand awareness in kid's wear market,for example, Kappa has announced via social media platforms that it willcontinue to be the sole official sponsor of the "Chinese Football Boy" (中國足球小將 ) campaign 2019 for the provision of sports gear. The Weibo hashtag of#Chinese Football Boy# secured more than 3 billion click views. During the ReportingPeriod, revenue from the kid's wear business reached RMB151 million, accountingfor 8.6% of the revenue from China segment.

As at 31 March 2019, the Group had a total of1,502 Kappa stores (including 295 Kappa Kid's stores), representing a netincrease of 15 stores as compared to the end of 2017 (a net increase of 70Kappa stores and a net decrease of 55 Kappa Kid's stores).

  • Japan Segment: Improvement in Financial Performance andSteady Progress Made on Reform

The Japan business continued to undergoreforms. During the Reporting Period, revenue from Japan segment grewsignificantly with an improved financial condition. The Group has organised anumber of marketing activities tailored to the characteristics of localconsumer spending in Japan, facilitating steady development of its business inJapan. Meanwhile, the Group has placed great emphasis on the businessdevelopment of PHENIX brand in China as well as overseas sales of PHENIX brandin Europe and other markets. PHENIX China will prepare well in advance for thecoming of Beijing 2022 Winter Olympics by focusing on omni-channel expansion,club member services and brand marketing.

  • InvestmentSegment: Progress Made in a Cautious andPragmatic Manner

In 2019, the Group's investment businessachieved a healthy growth amid fluctuations in global capital markets. As at 31March 2019, the Group reported net asset value of investments of RMB8,668 million, a 50% surplus overthe market capitalisation of the Group for the corresponding period. During theReporting Period, the Group had investment net gains of RMB1,054 million. Theprice of shares in secondary market held by the Group, such as Alibaba, wasvolatile due to market fluctuations, but the share price during the Reporting Periodwas generally stable. Certain investment funds indirectly invested by the Groupalso achieved a significant growth in value.

Mr. ChenYihong , Chairman and Executive Director of China Dongxiang, said, "Though thedomestic and international economic environment has become complicated andcomplex, China Dongxiang continued our reforms by adopting a series of effective measures which has madegood progress with interim achievements in line with our expectation. As acompany that has been established for over 17 years, China Dongxiang willcontinue to move forward and tackle challenges with confidence, bringing stableand considerable returns to shareholders."

About China Dongxiang (Group) Co., Ltd. (Stock code: 3818)

ChinaDongxiang (Group) Co., Ltd. is a leading international sportswear brandenterprise in China which has been listed on the Main Board of the Hong KongStock Exchange since 10 October 2007. The Group is primarily engaged in the design,development, marketing and wholesale of branded sportswear in China. Currently,China Dongxiang owns all rights to the internationally renowned Kappa brand inChina, Macau and Japan. On 1 May 2008, China Dongxiang completed theacquisition of PHENIX, a Japanese sportswear enterprise. PHENIX is the mostpopular ski brand in Japan with the largest market share, as well as awell-known brand in the international market.