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Best Mart 360 Holdings Limited to Raise a Maximum of Approximately HK$300 Million by Way of Public Offer and Placing


Redaksi | Kamis,27 Desember 2018 - 04:37:49 WIB
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Best Mart 360 Holdings Limited to Raise a Maximum of Approximately HK$300 Million by Way of Public Offer and Placing

Highlights

  • The second largest leisure food retailer in Hong Kong* which operates chain retail stores under the brand "Best Mart 360˚" since the inception of business in 2013, with a market share of approximately 21.6%
  • Offers wide collection of imported prepackaged leisure foods and other grocery products, principally from overseas
  • As at 19 December 2018, the Group operates 85 retail stores that are strategically located in 18 districts in Hong Kong
  • The Group sources products of around 495 brands and 1,960 stock keeping unit ("SKU") from different overseas suppliers mainly from Europe, US, Japan, Korea and South East Asia and importers in Hong Kong
  • The Group had the highest retail revenue per store with approximately HK$15.4 million per store for the year ended 31 March 2018 amongst the top seven leisure food retailers*
  • Same store sales growth of approximately 1.3%, 8.8% and 14.4% for each of the year ended 31 March 2017 and 2018 and the four months ended 31 July 2018 against previous year or period
  • Established membership scheme with over 1 million members as at 19 December 2018
  • Plans to open 76 additional stores for the four years ending 31 March 2019, 2020, 2021 and 2022

Financial Highlights

 

Year ended 31 Mar

4 months ended 31 Jul

HK$'000

2016

2017

2018

2017

2018

Revenue

472,831

689,994

1,075,930

256,496

338,459

Gross profit

138,387

216,253

342,289

85,129

113,251

Operating profit

16,822

33,072

68,796

8,150

9,093

Net profit for the year/period

12,450

25,144

53,599

5,900

5,662

Adjusted net profit for the year/period(excluding listing expenses)

 

12,450

 

25,144

 

58,235

 

6,388

 

11,832

             

*Source: Frost and Sullivan

HONG KONG, CHINA - Media OutReach - 27 December 2018 - Best Mart 360 Holdings Limited ("Best Mart 360", together with its subsidiaries, the "Group"; stock code: 2360.HK), the second largest leisure food retailer in Hong Kong in 2017, announces the details of its plan to list on the Main Board of The Stock Exchange for Hong Kong Limited ("SEHK") today.

A total of 250,000,000 shares will be offered under the Share Offer, of which 225,000,000 Shares, or 90% (subject to re-allocation), will be offered by way of Placing; while the remaining 10%, or 25,000,000 Shares (subject to re-allocation), will be offered under the Public Offer. The Offer Price per Offer Share is expected to be not less than HK$1.0 and not more than HK$1.2. The Public Offer will commence on 28 December 2018 (Friday) and close at 12:00 noon on 4 January 2019 (Friday). The allotment result is expected to be announced on 10 January 2019 (Thursday). Dealings in Best Mart 360's shares on the Main Board of the SEHK are expected to commence on 11 January 2019 (Friday).

Assuming an Offer Price of HK$1.1 per Offer Share (being the midpoint of the Offer Price range), the aggregated net proceeds from the Share Offer, after deducting underwriting fees and estimated expenses payable in connection with the Share Offer, will be approximately HK$232.7 million. Best Mart 360 intends to use these net proceeds for the following purposes: 1) approximately 66.5% for the opening of additional retail stores; 2) approximately 13.5% for intensifying and broadening marketing efforts; 3) approximately 10.1% for upgrading information technology systems; and 4) approximately 9.9% for general working capital purposes.

Lego Corporate Finance Limited is the Sole Sponsor, while Lego Securities Limited is the Sole Bookrunner.

Business Overview
The Group operates chain retail stores under the brand "Best Mart 360˚" since the inception of business in 2013, The business objective of the Group is to offer "Best Quality" and "Best Prices" products to customers through continuous efforts on global procurement with a mission to provide comfortable shopping environment and pleasurable shopping experience to customers.

Major customers of the Group are walk-in customers from the general public. The Group offers wide collection of imported prepackaged leisure foods and other grocery products, principally from overseas, which can be broadly categorised into 1) confectioneries; 2) packaged bakery products and snacks; 3) nuts and dried fruits; 4) grains and other miscellaneous food products; 5) beverages and wine; 6) personal care products; and 7) other products, such as baby food and products, health food and supplements and miscellaneous household items, such as cleaning agents, table ware and rain gear.

As at 19 December 2018, the Group operates 85 retail stores that are strategically located in 18 districts in Hong Kong. The Group sourced products of around 495 brands and 1,960 SKUs from different overseas suppliers mainly from Europe, US, Japan, Korea and South East Asia and importers in Hong Kong.

According to the Frost & Sullivan Report, the Group had the highest retail revenue per store with approximately HK$15.4 million per store for the year ended 31 March 2018 amongst the top seven leisure food retailers, which operated over 20 retail stores in Hong Kong. Besides, the Group ranked as the second largest leisure food retailers amongst such top seven leisure food retailers in Hong Kong in terms of revenue of approximately HK$1,075.9 million for the year ended 31 March 2018, translating to a market share of approximately 21.6%.

The Group recorded revenue of approximately HK$472.8 million, HK$689.9 million and HK$1,075.9 million for the three year ended 31 March 2016, 2017 and 2018, representing a CAGR of approximately 50.8%.

The Group recorded adjusted net profit (excluding listing expenses) of approximately HK$12.5 million, HK$25.1 million and HK$58.2 million for the three year ended 31 March 2016, 2017 and 2018, representing a CAGR of approximately 116.3%.

Competitive Strengths
1)    Strong Brand Recognition
Since the inception of business in 2013, the Group is characterised by its strong brand positioning in providing overseas prepackaged leisure foods under the brand "Best Mart 360˚" which is well-recognised in the leisure food market of Hong Kong.

"Best Mart 360˚" has obtained various awards and recognitions during the past years. Together with its marketing strategies in local television commercials, newspapers, magazines, digital marketing activities through electronic media, direct mailing promotion, members' communications and other ad hoc promotional and sponsorship activities for television dramas, premieres and joint marketing and promotion campaigns with banks, credit card issuing institution and amusement park and shopping arcades, the Group has established, popularised and elevated its brand positioning and brand recognition in the market.

Further, the Group's established membership scheme that keep members and potential customers promptly informed of new products launches, thematic or special featured product's promotion and other promotional offers also raises market visibility and brand awareness of the Group. The Group believes that its well-established brand positioning and strong brand recognition are valuable assets of the Group.

2)    Quality, trendy and broad appeal product mix
The Group believes that one of the key contributors to its success is the popularity and marketability of products that successfully attract the attention of consumers and stimulate their desirability of purchase. Through continuous efforts on global procurement from international groceries markets, the Group has increased the SKUs of products from 1,764 as at 31 March 2016 to 1,960 as at 19 December 2018.

In addition, the Group has successfully maintained the quality of products by adopting stringent quality assurance procedures that ensure compliance of food safety standards and regulations and thereby gaining consumers' confidence. As the Group managed to continuously expanding and optimising products portfolio to cover quality, trendy and broad appeal product mix available from international groceries markets at competitive prices, the Group believes that it is eligible to arouse, meet and satisfy consumers' needs and expectations in pursuing freshness and distinctiveness in groceries products at affordable prices which will in turn increase its leverage in the market and enhance consumer trust, confidence and loyalty that enhance long term competitiveness.

3)    Pricing policy and effective cost control measures which optimise and escalate the level of profitability
The Group's management closely and regularly monitors its financial performance and implements measures to provide well balance between profit margins and the target sales growth. The Group implements measures with aim to improve profit margins and sales including 1) tactical determination of retail prices for products with differentiated nature and distinctiveness that we trust represents value-for-money and remains competitive to that of competitors of the Group; 2) constant price adjustments on products in accordance with market trends and customers' responses and evolving preferences to products; 3) prices adjustments by seasonality; 4) regular launches of thematic or special featured product's promotion that effectively boost up sales volume; and 5) timely promotion of slow moving inventories imperatively. Such measures working together essentially maximise sales performance and operating margins of the Group.

The Group has taken steps to effectively control operating costs such as 1) tight control of rental expenses; 2) maintaining relatively low capital expenditure for opening new stores; 3) broadening networks to source directly from overseas brand owners and manufacturers to effectively reduce procurement costs; 4) achieving gradual realisation of the benefit of economy of scale by enlarging the scale of procurement following the increasing numbers of retail stores; and 5) continuously optimising information technology systems to increase efficiency in inventory control and management that substantially minimise waste of inventories.

The Group believes that the effective pricing policy and cost control measures have been key contributors to the growth in financial performance of the Group during the Track Record Period.

4)    Capability in maintaining stable collaborative relationships with existing suppliers and proactively and constantly identifying new suppliers
Suppliers of the Group mainly consist of brand owners, manufacturers, distributors and trading companies from Europe, the United States, Japan, Korea, South East Asia and importers in Hong Kong. In order to enrich product range and product portfolio seamlessly, the Group has maintained stable collaborative relationships with existing suppliers and has proactively and constantly identified new suppliers by regularly attending international tradeshows, exhibitions and business missions.

Given that the Group has developed and maintained diverse suppliers' base and has thereby possessed with affluent latest products information in the international groceries markets, it is able to comprehend the ever-changing product trends swiftly and to capture the pre-emptive opportunities to source a wide variety of quality, popular, trendy and distinctive leisure food products originated from various overseas countries swiftly and on a continual basis.

5)    Strategic planning in expanding the structure of target customers
In anticipation of the strong purchasing power and purchasing desirability of tourists, especially from the PRC, the Group opened its first retail store in July 2013 in Sheung Shui, New Territories, a district in Hong Kong that have relatively high traffic of daily or short stay round trip PRC tourists for shopping in Hong Kong. Since then, the Group put substantial efforts in promoting sales to tourists at the initial stage of business establishment by opening retail stores in various populous tourists shopping hotspots.

As the Group believes that local consumption force would enable the Group to broaden market share in the leisure food retail market of Hong Kong and is an essential gear to diversify customer base and procuring business growth, it commenced to strengthen sales to the local population from the local community by opening first retail store in a shopping arcade of a community district, i.e. Tseung Kwan O in August 2014, with a view to intensify influence over the supply chain of necessities to the local population in the local community. Since then, the Group further develop and reinforce customer base covering both tourists and population from the local community parallelly.

6)     Strategically located retail stores and stringent management of sales performance of retail stores
As at 19 December 2018, the Group operates 85 retail stores in Hong Kong, consisting of 31 retail stores situated at street-level, 48 retail stores situated at the shopping arcades of community districts and 6 retail stores situated at various traffic hubs.

The Group generally chooses street-level stores that are conveniently located in popular shopping districts and popular tourists shopping malls with high pedestrian flow and high visibility. For retail stores that mainly target on sales to local population, the Group generally selects store location with reference to the population density in the community districts or residential areas and the level of their accessibility by target customers.

In addition, the Group cautiously controls rate of returns from capital expenditure on opening new stores by various measures to substantially alleviate the risks and losses of underperforming retail stores. Besides, management of Group closely monitors the sales performance of each of retail stores and promptly takes necessary steps to improve the sales performance for individual underperforming stores.

BUSINESS STRATEGIES
1)    To expand business by opening additional retail stores
The Group believes that there will be promising growth potentials for its business and the Group plans to expand its retail network and intensify market penetration by opening additional retail stores in the forthcoming years progressively.

 

As at 19 Dec

Year ended 31 Mar

 

2018

2019

2020

2021

2022

No. of additional retail stores

-

6

28

28

14

Total no. of retail stores

85

91

119

147

161

The Group targets to open 2, 28, 28 and 14 additional retail stores by applying the net proceeds from the Share Offer for each of the year ending 31 March 2019, 2020, 2021 and 2022 respectively. 4 additional stores are planned to be opened with its own resources, making up a total of 76 additional retail stores.

2)    To improve procurement capabilities and continuously to enlarge collection of products with competitive price.
To continuously maintain the popularity and attractiveness of products, the Group will improve its procurement capability by recruiting additional motivated and skilled members of purchasing team, continuously increasing exposures to new products and new suppliers by attending additional overseas trade shows and business missions, continuously optimise pricing policy and controlling procurement costs.

3)    Further enhance overall brand awareness by marketing strategies and campaigns
Parallel to the proposed expansion of scale of operation, the Group will implement marketing strategies to further enhance the overall brand awareness of "Best Mart 360˚". The Group will continue to carry out advertising and promotional activities and other corporate image enhancement programs to further strengthen brand image through various types of media. The Group will take continuous proactive marketing approaches and efforts to utilise both traditional media, such as newspaper, magazines, and televisions commercials, and digital media, such as social media platforms, websites and internet platforms, to promote its brand and products.

The Group will also continue to selectively participate in ad hoc promotional and/or sponsorship activities such as those for television dramas, premieres and joint marketing and promotion campaigns with financial institutions and other entertainment businesses so as to reinforce and promote brand awareness, which will in turn increase its market shares and customers' awareness.

4)    Continue to expand member base
Given that the Group's business is to a substantial extent of customer driven nature, and maintained membership scheme since April 2015 for promoting consumer loyalty, stimulating sales at retail stores and further expanding customer base.

Directors of the Group believe that the provision of incentives and special promotional offers on designated products exclusively to members such as reward points earning, various exclusive member offers and selected product redemption, also boost sales and cultivate bonding with members. The membership scheme also allow the Group to collate purchasing information and data of frequent customers for surveying and analysing customers' purchasing preferences, needs and habits that are significant for enriching product portfolio, determining pricing strategy for individual products and procuring better customer services.

The Group intends to further expand member base by offering additional members' benefits in the near future and further increase communication channels with members.

5)    Increase warehousing and logistics capacities
In line with the Group's expansion plan on retail network, it will evaluate and monitor  warehouse utilisation and logistic arrangement from time to time and consider to expand warehousing and logistics system as and when appropriate.

6)    Further upgrade information technology systems to constantly improve operation efficiency
While the Group is preparing to expand operation progressively, it plans to further upgrade its information technology systems to support foreseeable growth in business scale. For instance, the Group will optimise and/or extend the functions of its existing POS system and WMS system for improving the accuracy of operation data for internal analysis purpose and enhancing systematic control and loading of documentations for facilitating efficient warehousing and logistics. It also intends to adopt an enterprise resource planning system, so as to allow direct interface among various information technology systems of the Group to streamline the operation process and reduce human errors so as to cope with progressive expansion in business.

About Best Mart 360 Holdings Limited
Best Mart 360 Holdings Limited, the second largest leisure food retailer in Hong Kong, mainly operates chain retail stores under the brand "Best Mart 360˚". It offers wide collection of imported prepackaged leisure foods and other grocery products, principally from overseas. The Group's business objective is to offer "Best Quality" and "Best Prices" products to customers through continuous efforts on global procurement with a mission to provide comfortable shopping environment and pleasurable shopping experience to customers.

As at 19 December 2018, the Group operates 85 retail stores that are strategically located at 18 districts in Hong Kong. The Group sourced their products of around 495 brands and 1,960 SKUs from different overseas suppliers mainly from Europe, US, Japan, Korea and South East Asia and importers in Hong Kong.


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