2016 Annual Results Presentation

March 2017

CHOW SANG SANG HOLDINGS INTERNATIONAL LIMITED

周 生 生 集 團 國 際 有 限 公 司Stock code: 116

2

Disclaimer and Forward Looking Statements

• This document carries the information and the opinion is not for the purpose of

comprehensive research, financial services or legal opinion. Chow Sang Sang Holdings

International Ltd. does not guarantee its accuracy and integrity. This document contains the

information only to provide reference. They can not become or deemed to be sold or bought

or subscribe for securities or other part for the invitation.

• This document contains information, opinion that only reflect Chow Sang Sang Holdings

International Ltd’s opinion on the date of the presentation. Chow Sang Sang Holdings

International Ltd. can change anything on this document without notices. Chow Sang Sang

Holdings International Ltd. is not liable for any losses incurred from the usage of information

or opinions obtained from this document.

• This document contains confidential information to be used solely for the purpose of

personal reference. In addition, this document may not be transmitted or transferred to

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• This document and the related discussion may include forward-looking statements with risk

and uncertain factors. Forward looking wording such as believe, expect, planning, forecast,

target, possible, hope, will, may, etc., will be used in this document. The reader of this

document should not excessively rely on such forward-looking statements to form their

opinions. These forward-looking statements are based on our own company and other

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

472 self-operated stores in

Greater China and Internet

platform

Operates under “Chow

Sang Sang" and “Emphasis

Jewellery”

Generated 87% of total

revenue for 2016

Precious

Metals

Wholesale

Services

Other

Investments

Securities

Brokerage

Physical metals trading

service

Commission based

Generated 12% of total

revenue for 2016

8 HK offices and Internet

platform

Commission based

No proprietary trading

Generated 0.2% of total

revenue for 2016

Investment Properties

Shares of HKEx

Generated 0.7% of total

revenue for 2016

Chow Sang Sang Group

6

Business Overview: Jewellery Segment

7

Product mix: Jewellery

Gold based Items

Gem-set Items

Licensed Products

International Brands (Gucci, Rolex, Tudor)

8

Distribution Network

(1) Excluding Hong Kong and Macau

(2) Reached 376 as of Mar 27, 2017

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

(73)

Hainan

Southern (1)

(118)

Chongqing

Shaanxi

NingxiaQinghai

Tibet

Beijing Surrounding

Provinces(65)

Western

(32)

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

Jewellery Watch

China(2) 365 9 –

HK / Macau 48 17 9

Taiwan - – 24

as at Dec 31, 2016

Northern

(86)

Chongqing Flagship Store

9

Focus on Growth in Mainland China

Increasing No. of Stores in Mainland China

(No. of Stores)

-12% +6%Same-store

Sales

Growth

-4%

New

shops

+40

New

shops

+47

10

Financial Highlights

11

Operating Performance …

Gross ProfitTurnover

(HK$ mm) (HK$ mm)

… primarily due to HK retail … gold price and improved mix protected margin

12

Operating Performance (Cont’d) …

Profit attributable to equity holders Operating Profit

(HK$ mm) (HK$ mm)

13

…Driven by Retail Segment…

Results Breakdown Revenue Breakdown

14

… Retail Performance …

Retail – Operating ResultsRetail – Revenue

(HK$ mm) (HK$ mm)

… despite revenue dropped, margin showed resistance

15

Mainland customers’ contribution continues to increase

2014 2016 2015

74% 74% 75%+1%

Sales

Attributable

to PRC

Customers(1)

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

16

Consolidated Sales Mix – (Retail)

2015

Gross margin:

Gold* : 16%-22%

Non gold jewellery: 38%-42%

Watches: 20%-28%* Include gold price movement

2016

17

Consolidated Gross Profit Contribution – (Retail)

2015 2016

18

Change of Average Selling Price

Hong Kong/Macau - JewelleryHong Kong/Macau - Gold

China - Gold China - Jewellery

(HK$)

(RMB) (RMB)

(HK$)

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

2014 2015 2016 15 vs 16

Turnover 19,246 19,069 16,093 -15.6%

Jewellery Retail 16,933 16,723 14,045 -16.0%

Other businesses 2,313 2,346 2,047 -12.7%

Gross profit 4,295 4,228 4,050 -4.2%

Operating profit 1,395 1,150 1,019 -11.4%

EBITDA 1,579 1,582 1,201 -24.1%

Profit attributable to equity holders 1,082 1,130 742 -34.3%

EPS (HK cents) 159.9 167.0 109.6 -34.4%

Dividend per share (HK cents) 61.0 62.0 43.0 -30.6%

For the 12 months ended

or as at Dec 31,

21

Other Financial Information

(HK$ million)

2014 2015 2016

Cash and cash equivalents 1,009 1,621 1,283

Available-for-sale investments1 869 825 763

Capital expenditure 189 172 197

Gearing2 26.1% 19.3% 20.4%

Unused banking facilities 3,813 3,831 4,318

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, bullion

loans and interest-bearing bank borrowings arising from securities and futures broking.

For the 12 months ended

or as at Dec 31,

22

Strategy Outline

23

Expansion with Distinctiveness in PRC

Target entry-mid end consumers

Brand development and fine-tuning are 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

with seamless delivery

Leverage on high-end shopping malls and

department stores’ own positioning to

enhance image

Refresh store image to meet consumer

preferences

Self-Run Store Model

Around 50 new stores in PRC in 2017

24

Product Mix and Branding

Clear presence and visibility of international brands and signature collections

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

segments

Jewellery Focus and Product Differentiation

Continue existing programs with focus:

Expand e-shop, synergizing with physical stores

Capitalize on CRM database

Reinforce Wedding; expand on Daily wear

Revamp VM at stores

Marketing Initiatives

25

Q&A Session

26

Appendix

27

Company History

1930-1970 1970-1980 1980-1990 1990-2000 2000-2016

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

2014

Opened

the first

Flagship

Store in

Shanghai

No. of

Stores9

Turnover

(HK$ mm)130

2011

Opened

the first

Flagship

Store in

Taiwan

2009

Opened

the first

Flagship

Store in

Beijing

2016

Stable

expansion

in China;

healthy

growth in e-

business

472

16,093

28

Industry Analysis – PRC Luxury Market Overview

Personal luxury goods market

in China contracted to €17

billion in 2016, representing a

2% year-on-year decline.

Chinese consumers have slightly

decreased their contribution to the

global luxury market—from 31% in

2015 to 30% in 2016.

Longer term, China remains an

engine of growth for luxury goods as

the country’s middle class continues

to grow in size and purchasing power.

The behavior of Chinese consumers

epitomizes a larger global trend: the

re-localization of luxury.

Source: Bain & Company

* Note: RoW is rest of the world

* CAGR: Compound annual growth rate

* 2016 figures are estimates.

29

27.1* 27.1*

22.7 22.2 24.0 24.2

20.9

23.4 24.9 25.5 25.7

32.3

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

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

RM

B b

n

FY2016 PRC Gold, Silver and Jewellery Sales

According to HK Census and Statistics

Department, total jewellery, watches and clocks,

and valuable gifts sales declined 17.2% y-o-y in

FY2016.

Retail sales for jewellery products in PRC stood

at RMB299.6 billion for FY2016 as against

RMB306.9 billion in FY2015.

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 2016 were investigated and released together. Here the data is

evenly divided as RMB27.1 billion.

7.63

5.84 5.13 5.30 5.50 5.47 5.48 5.76

5.24

6.13 5.67

8.19

0.00

2.00

4.00

6.00

8.00

10.00

12.00

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

HK

D b

n

FY2016 HK Jewellery, Watches and Clocks, and Valuable Gifts Sales

Industry Analysis – HK & PRC

30

Marketing Program Highlights2016

31

Chinese New Year Campaign

Celebrating the year of Monkey,

bringing New Year blessings to

the mass audience and creating

top of mind awareness for

seasonal gifting.

Touch points included digital

(social media), store POSM,

printing collaterals and window

display.

32

Valentine’s Day Campaign

Launched a Valentine’s Day campaign –

“The Return of Romance” featuring

affordable luxury jewellery which are

ideal for seasonal gifting. Launched the

new product features “sound wave” from

Love Decode collection.

Leverage the insight of modern

Valentine’s Day being a cliché on gifting,

we advocated the classic way of

expressing love by giving jewellery as a

romantic gesture.

Touch points covered above-the-line

thematic communication, digital

campaign, below-the-line PR, store

POSM, give-away and window display.

Key Visuals

Postcard & Chocolate as

seasonal give-away

33

Valentine’s Day Campaign

Storefront iPad Sales Tool

The sound wave of the words

“I Love You”

Website with video

34

White Day Campaign

Launched a new unisex Gold jewellery

collection “Noir” during White Day to

capture the demand of gifting between

couple.

Touch points covered digital campaign,

below the line PR, store POSM, sales

tool in iPad and designated collection

window display.

35

Infini Love Diamond

After launching Infini Love Diamond rebranding in 2015, a campaign rerun was in place in

June 2016 to reinforce the emotional bonding of our top-notch diamond brand with the

customers.

On top of above-the-line advertising, we have brought a few celebrities who are popular

amongst Greater China to well elaborate the “Passion for Brilliance” stories.

Other touch points included digital (social media), PR and promotions.

Lala Hsu

Cheung Chi Lam & Anita Yuen Couple

Key Opinion Leader communications

36

Infini Love Diamond

Roadshow tour has continued its footprint to cities in China

such as Chongqing.

37

Bridal Campaign

Catering strong demand on bridal

market, we have launched “For Your

Precious Commitment” 360-degree

Integrated Campaign throughout HK,

China and Taiwan in second half of

2016.

Touch points included above-the-line

advertising i.e. TV commercial, print

media, digital media as well as social

media, and below-the-line activations

such as bridal events, catalogue and

visual merchandizing.

Featured our signature brands including

Infini Love Diamond, Promessa, La

Pelle, Personalized solitaire and

Chinese wedding gold jewellery.

A loyalty programme “Lasting Joy

Wedding Privileges” was launched on 1

Sep 2016 to enhance cross-selling of

wedding jewellery in HK.

Key Visual

Website pages

38

Christmas Campaign

Key Visual

To create top-of-mind awareness of X’mas gifting

season, a festive theme campaign “A Season of

Surprises” was launched in Dec 2016 covering

Greater China.

Targeting at sophisticated consumers, a full range of

diamond and gold jewellery were selected (Infini

Love Diamond, V&A, Charme and Lady heart etc.) to

bring end-users a romantic Christmas experience.

The campaign was focused on driving social touch

points including Facebook, Instagram, Wechat and

Weibo. A tailor-made give-away item and season VM

display were designed to create festive ambience.

Give-away for Media / Special VIP

39

Christmas Campaign

Website & online video

VM Display

40

e-Shops Performance

Aside from our own eshop.chowsangsang.com, we partnered with different portals such

as TMALL, JD.com to launch various trading events and achieved some very positive

results.

During ecommerce giants’ sales event on 18th June, 2016, Chow Sang Sang topped the

list of jewellery business.

41

2016 New Stores

APM, HK

Yuen Long Plaza, HK

Beijing Surrounding Provinces

Baoding, Beijing, Hengshui

Huhhot, Tangshan, Tianjing

East Rugao, Shanghai

NorthernChangchun, Chengdu, Dalian

Fuxin, Qingdao, Yantai

Southern

Changde, Chenzhou

Guangzhou, Guiyang, Haikou

Hengyang, Huizhou, JiuJiang

Kumming, Sanya, Shenzhen

Shiyan, Xiamen, Xiangyang

Wuhan, Zhanjiang

WesternKaifeng, Lanzhou

Xian, Urumqi

New Stores in ChinaNew Stores in Hong Kong