2015 Interim Results Presentation

August 2015

CHOW SANG SANG HOLDINGS INTERNATIONAL LIMITED

周 生 生 集 團 國 際 有 限 公 司Stock code: 116

2

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sources that we believe are reliable.

3

Presentation Outline

I. Business Overview

II. Financial Highlights

III Future Plan and Strategy

IV. Q&A Session

V. Appendix

4

Business Overview

5

Company Structure

Jewellery Retail

Main business segment

414 self-operated stores in

Greater China and Internet

platform

Operates under “Chow

Sang Sang" and “Emphasis

Jewellery”

Generated 88% of total

revenue for 2015 1H

Precious

Metals

Wholesale

Services

Other

Investments

Securities

Brokerage

Physical metals trading

service

Commission based

Generated 10.9% of total

revenue for 2015 1H

8 HK offices and Internet

platform

Commission based

No proprietary trading

Generated 0.4% of total

revenue for 2015 1H

Investment Properties

Shares of HKEx

Generated 0.4% of total

revenue for 2015 1H

Chow Sang Sang Group

6

Business Overview: Jewellery Segment

7

Product mix: Jewellery

Gold based Items

Gem-set Items

Licensed Products (Hello Kitty)

International Brands (Gucci, Rolex, Tudor)

8

Distribution Network

(1) Excluding Hong Kong and Macau

(2) Reached 334 as of Aug 25, 2015

Covered cities

Guangdong

Fujian

JiangsuHenan

Xinjiang

Gansu

Inner Mongolia

Heilongjiang

Jilin

Liaoning

Tianjin

Hebei

Shandong

Yunnan

Sichuan

Guizhou

Guangxi

JiangxiHunan

Hubei

Shanxi

Anhui

Zhejiang

Shanghai

Beijing

Taiwan

Hong KongMacau

Eastern

(71)

Hainan

Southern (1)

(97)

Chongqing

Shaanxi

NingxiaQinghai

Tibet

Beijing Surrounding

Provinces(56)

Northern

(109)

Beijing Flagship Store

Hong Kong Flagship Stores

Kunming Flagship Store

Shanghai Flagship Store

Chow Sang Sang directly runs and controls all

of its retail stores with no franchise operations

Complementing the extensive retail network, the

eshop.chowsangsang.com working with key

retail portals in China, offer online shopping

service

Chow

Sang Sang

Emphasis

Jewellery

China(1) 333(2) –

HK / Macau 49 10

Taiwan - 22

as at Jun 30, 2015

9

Focus on Growth in Mainland China

Increasing No. of Stores in Mainland China

(No. of Stores)

+5% +20% -12%Same-store

Sales

Growth+5%

New

shops

+32

New

shops

+40

New

shops

+21

10

Financial Highlights

11

Operating Performance …

Gross ProfitTurnover

(HK$ mm) (HK$ mm)

14,089

9,333 9,245

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2013 1H 2014 1H 2015 1H

…primarily due to HK retail

2,0622,173 2,134

14.6%

23.3% 23.1%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

0

500

1,000

1,500

2,000

2,500

3,000

2013 1H 2014 1H 2015 1H

Gross Margin

12

615520

729

4.4%

5.6%

7.9%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

0

200

400

600

800

1,000

1,200

2013 1H 2014 1H 2015 1H

Net Profit Margin

…include a gain on disposal of HKEx shares

Operating Performance (Cont’d) …

Profit attributable to equity holders Operating Profit

(HK$ mm) (HK$ mm)

800

678631

5.7%

7.3%

6.8%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

0

200

400

600

800

1,000

1,200

2013 1H 2014 1H 2015 1H

Operating Margin

…mainly due to inelastic rental costs

13

…Driven by Retail Segment…

Results Breakdown Revenue Breakdown

14

…Retail Performance…

Retail – Operating ResultsRetail – Revenue

(HK$ mm) (HK$ mm)

10,886

8,214 8,165

0

2,000

4,000

6,000

8,000

10,000

12,000

2013 1H 2014 1H 2015 1H

…growth in China offset softness in HK

731634

561

6.7%

7.7%

6.9%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

0

200

400

600

800

1,000

1,200

2013 1H 2014 1H 2015 1H

Margin

15

…but Robust Demand in PRC

2013 2015 1H 2014

Mainland customers’ contribution continues to increase

72% 74% 76%+2% +2%

Sales

Attributable

to PRC

Customers(1)

(1) China sales + HK/Macau sales by PRC customers

16

Consolidated Sales Mix – (Retail)

2014 1H

Gross margin:

Gold* : 16%-22%

Non gold jewellery: 39%-44%

Watches: 20%-22%

* Include gold price movement

2015 1H

17

Consolidated Gross Profit Contribution – (Retail)

2014 1H 2015 1H

18

Change of Average Selling Price

Hong Kong/Macau - JewelleryHong Kong/Macau - Gold

China - Gold China - Jewellery

(HK$)

(RMB) (RMB)

(HK$)

…drop in the price of gold and introduction of lighter pieces.

19

Working Capital Trends

Average Receivables Turnover Days Average Inventory Turnover Days

Average Payables Turnover Days Cash Conversion Cycle

(No. of Days)

(No. of Days) (No. of Days)

(No. of Days)

20

Financial Highlights

(HK$ million) % change

2013 2014 2015 14 vs 15

Turnover 14,089 9,333 9,245 -0.9%

Jewellery Retail 10,886 8,214 8,165 -0.6%

Other businesses 3,203 1,119 1,080 -3.5%

Gross profit 2,062 2,173 2,134 -1.8%

Operating profit 800 678 631 -6.9%

EBITDA 878 770 972 +26.2%

Profit attributable to equity holders 615 520 729 +40.2%

EPS (HK cents) 90.8 76.8 107.7 +40.2%

Dividend per share (HK cents) 14.0 12.0 12.0 +0.0%

Capital expenditure 127 64 74 +15.6%

For the 6 months ended

21

Other Financial Information

(HK$ million)

Jun-30

2013 2014 2015

Cash and cash equivalents 1,009 1,009 1,284

Available-for-sale investments1 659 869 1,130

Gearing2 23.4% 26.1% 20.5%

Unused banking facilities 4,114 3,813 3,790

1 Available-for-sale investments mainly represents HKEX shares which valued at quoted market prices

2 Total borrowings to total equity holders’ equity. Total borrowings includes interest-bearing bank borrowings in related to

jewellery business and bullion loans.

Dec-31

As at

22

Strategy Outline

23

Expansion with Distinctiveness in PRC

Target mid-high end consumers

Brand development and fine-tuning is more

important than growth in the number of

stores

Leverage on e-shops to expand coverage

and reach

Expansion Philosophy

Ensure consistent and superior service quality

Leverage on high-end shopping malls and

department stores’ own positioning to

enhance image

More flagship and premium-status stores

Self-Run Store Model

Around 40-50 new stores in PRC in 2015

24

Product Mix and Branding

Clear presence and visibility of international brands

Develop house brands - focus on quality and sophistication appropriate to different customer

segments

Jewellery Focus and Product Differentiation

Continue with existing programs with focus:

Expand e-shop, synergizing with physical stores

Capitalize on CRM database

Revamp VM at stores

Marketing Initiatives

25

Q&A Session

26

Appendix

27

Company History

1930-1970 1970-1980 1980-1990 1990-2000 2000-2014

1934

Chow Sang

Sang

Goldsmith

established

in

Guangdong

2005

Became

sightholder

of Diamond

Trading

Company

1973

First

company in

the industry

listed on

Hong Kong

Stock

Exchange

1998

Re-entered

the

Mainland

China

market

2011

Opened

the first

Flagship

Store in

Taiwan

No. of

Stores9

Turnover

(HK$ mm)130

2009

Opened the

first

Flagship

Store in

Beijing

2006

Launch

brand

revamp

campaign

2015 1H

Flagship

Store in

Shanghai

414

9,245

28

Industry Analysis – PRC Jewellery Market Overview

Jewellery in PRC grew 18% in 2014 to reach

RMB663 billion, and it is expected to register a

robust CAGR of 8.5% at constant value from

2014 to 2019

337.5372.6

413.4455.9

510.3563.5

616.3668.3

719.6770.6

821.4

0

100

200

300

400

500

600

700

800

900

1000

mn

units

PRC Jewellery Sales Volume

238.5295.7

381.0454.2

560.5

662.8

739.9812.7

877.7939.6

997.3

0

200

400

600

800

1000

RM

B b

n

PRC Jewellery Sales Value

Source: Euromonitor International

China will overtake Japan to become the

world’s second largest luxury goods market

China is forecast to have the second largest

population with annual gross income over

US$150,000 by 2020 behind the US

29

According to HK Census and Statistics

Department, total jewellery, watches and clocks,

and valuable gifts sales declined 15.9% y-o-y in

1H2015.

Retail sales for jewellery products in PRC stood

at RMB154.7 billion for 1H2015 as against

RMB149.7 billion in 1H2014.

Source: HK Census & Statistics

Source: National Bureau of Statistics of China* In order to eliminate the impact of the different date of the “Chinese

New Year” (CNY) each year, and enhance the comparability of data, in

accordance with the national statistical system, the data in January and

February 2015 were investigated and released together. Here the data is

evenly divided as RMB28.20 billion.

7.828.60

7.757.38

8.35

9.659.12

8.65

6.44 6.356.76 6.87

0

2

4

6

8

10

12

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

HK

D b

n

2H2014-1H2015 HK Jewellery, Watches and Clocks, and Valuable Gifts Sales

20.4

24.6 24.1 24.823.2

28.4 28.2* 28.2*

25.8

22.5

26.124.6

0

5

10

15

20

25

30

35

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

RM

B b

n

2H2014-1H2015 PRC Gold, Silver and Jewellery Sales

Industry Analysis – HK & PRC

30

Marketing Program Highlights2015

31

Valentine’s Day Campaign

Launched a Valentine’s Day

campaign – “Add Sparkle to

Love” featuring stylish diamond

jewellery which are ideal for

seasonal gifting.

Sustaining the momentum of

X’mas, continuously using the

stylish fashion illustration to

attract new customer segments

and refresh the brand.

Touch points covered above the

line thematic communication,

digital campaign, below the line

PR, store POSM and window

display.

Animation Video Content

Store Display

32

Fashionable gold jewellery – g* Collection

was launched in March 2015. A series of

handcrafted 999.9 Gold with Burgundy

Red Agate or Black Chalcedony daily

wear jewellery were featured.

Leveraged a communication platform “A

Celebration of a Golden Age for Modern

Women” to target sophisticated women.

Touch points covered a press event, store

POSM and window display.

g* Collection Launch

33

g* Collection Launch

Brand Site

Store Display

34

Infini Love Diamond Rebranding

As an in-house signature brand, Infini

Love Diamond has gone through a

rebranding exercise in 2015.

New brand platform “A Passion for

Brilliance” was created to feature

the end result from the unswerving

passion that Chow Sang Sang puts

into every piece of ILD jewellery.

Core values of the brand: Knowledge,

Precision & Passion were

communicated via various touch

points to customers.

Brand Site

35

Infini Love Diamond Rebranding

Out Of Home Advertising Exhibition at ifc mall Hong Kong

36

2015 New Stores

Times Square, HK

Shenzhen, China

Beijing, China

Changzhou, ChinaGrand Plaza, HK Venetian, Macau

Chengdu, China

Elements, HK