2012 core NP broadly in line with our expectation benefited from lower tax rate NWDS reported NP was flat at HK$332m (HK$330 in 1HFY12) on sales increase of 19.7% to HK$2bn yoy. Core EBIT rose by 4% to HK$408m when revaluation and exceptional were removed. Core EBIT was slightly lower than our estimates by ~5% while NP was broadly in line thanks to lower than expected effective tax rate. The compan y proposed an interim dividend of HK$0.098 per share (vs HK$0.098 in 1HFY12).
Operational review
The company opened two self-owned department stores, Yancheng store and Xi’an store in 1HFY13. It also set up new managed store in Beilun, Ningbo during the period.
GSP increased by 17.2% to HK$8.26bn, and the reported SSSg was 9.2% during the period. This was slightly below management guided SSSg of low-teens during its FY12 analyst’s results meeting. Commission income rate deteriorated by 0.6ppt to 17.8%, due to more aggressive promotions and higher contribution from new stores, gold and jewellery sales and electronic products sales which have relatively lower commission rate. Direct sales margin edged down to 15.6% for 1HFY13, from 16.5% in 1HFY12, dragged by the higher contribution by new stores and supermarket sales. Rental income surged by 47.1% yoy to HK$247.2m in 1HFY13, mainly contributed by the full half-year contribution of Lanzhou stor e, Shanghai Shaanxi Road store and Beijing Liyang Store acquired in Nov 2011 and Jan 2012, respectively