Hengdeli Fine-tuning Business Structure; Continues to Seize Hong Kong and Taiwan Markets

Tuesday, 7 March 2017, 18:32 HKT/SGT

HONG KONG, Mar 7, 2017 - (ACN Newswire) - According to statistics released by the Census and Statistics Department, the decline in the value of total retail sales in January 2017 has narrowed year-on-year. Provisionally estimated at Hong Kong dollar $43.1 billion, decreased by 0.9% compared with the same month in 2016, among which, the value of sales of jewellery, watches and clocks, and valuable gifts has dropped by 3.9%, which was better than the market's expectation. Recovery in visitor arrivals has improved the overall atmosphere in the retail industry. Renowned brand watches retailer, Hengdeli (03389), is getting ready to start a new journey by fine-tuning its business structure.

In recent years, Hengdeli has been nurturing its watch accessory industrial chain to be its new growth engine. The industrial chain has achieved better results due to a range of innovative revolutions. Production automation, management information system, continued innovations in products, increasing depth and breadth in of cooperation with brand suppliers, as well as the continued growth of clientele on both domestic and foreign fronts have all brought the overall sales of accessories to a whole new level. It is expected to be one of the highlights of the group's business growth.

Furthermore, at the end of December 2016, Hengdeli announced its will to sell its shares in Xinyu Fine Watch Service and Harvest Max Holdings to Chairman Zhang-Yuping in order to optimize the Company's financial structure. Xinyu Fine Watch Service's main business is the retail of mid to high-end internationally renowned watch brands in China, as well as the wholesale and post-sale servicing of mid-end internationally renowned watch brands in China. Meanwhile, the main business of Harvest Max Holdings is jewellery retail in Hong Kong, as well as mid-to-low-end watch brands and general miscellaneous goods retail at department stores (including, but not limited to, electrical appliances and cosmetic).

Said disposal aids the company's business development and protects the interest of its shareholders. It was understood that Hengdeli's retail business in China and wholesale business are capital intensive in nature, and the Company has devoted a lot of funds in support of the businesses since 2005. However, taking into account of the depreciation of Renminbi against United States dollars, the impact of austerity measures on China's economic and financing environment, and the recent deceleration of growth in certain businesses, the Company consider the risk and capital investment to be out of proportion. The proposal to sell the aforementioned businesses to its chairman is to shield shareholders from bearing too much risk.

Hengdeli expects the disposal to bring about a cash inflow of Renminbi 5.8 billion, of which Renminbi 3.2 billion will be used to repay debts. Afterwards the Company could enjoy almost debt-free status, and could enjoy a much healthier financial situation. Renminbi 0.8 billion from the disposal will be distributed to shareholders as special dividend (amounting to no less than Hong Kong dollar $0.2 per share) to show appreciation for the shareholders' continued support.

When the disposal is completed, Hengdeli will continue to operate its mid to high-end internationally renowned watch brands retail and watch accessory industrial business in Hong Kong and Taiwan. Intending to ride on the recovery of Hong Kong's retail market, Hengdeli is looking at a bright future for its business.

Topic: Press release summary Sectors: Daily News
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