Monday, November 30, 2020
Martin Hennecke
HKEx Stock Code : 02223 
Corporate Profile
The Group primarily designs, manufactures and sells bedding products with a focus on the high-end and premium markets under its proprietary Casablanca and Casa Calvin brands, respectively.

Business Review - For the year ended December 31, 2012

Continued expansion of the sales network

Our expansion of sales network to 382 points of sale (¡§POS¡¨) (2011: 346 POS) was one major factor contributing to our success in 2012. The network expansion strategy was implemented in a balanced way with the combination of our self-operated POS in Hong Kong and first-tier cities of the PRC and other POS operated by distributors in other major cities of the PRC, both of which had direct contact with target customers and facilitated us to respond quickly to changing consumer preferences and capture new market opportunities.

As at 31 December 2012, we had a sales network covering 82 cities in 25 provinces, autonomous regions and municipalities in the PRC, including a total of 233 self-operated POS and 149 POS operated by distributors. During the year 2012, we opened 88 new POS, including 11 in Hong Kong and 77 in the PRC. Concession counters in department stores remained the most important channel of our sales, whilst the number of stand-alone retail stores increased rapidly in southern China.

Adoption of a multi-brand strategy targeting at different customer groups

We have adopted a multi-brand strategy to meet the needs of consumers in different market segments. During the year 2012, our proprietary brands, mainly ¡§Casablanca¡¨ and ¡§Casa Calvin¡¨, achieved a continued rising trend with turnover increased by 6.0% from HK$368.3 million in 2011 to HK$390.3 million for the year 2012. During the year 2012, we renewed the licensing agreement with ¡§Elle Deco¡¨ (a famous French fashion brand) for exclusive franchise in the PRC and Hong Kong and Macau for the period from 2012 to 2015. We also reported satisfactory sales of other international brands including ¡§Tru Trussardi¡¨, ¡§Home Concept¡¨, ¡§Move¡¨, ¡§Centa Star¡¨ and cartoon products. The aggregated turnover of our licensed brands grew by 32.9% from HK$62.0 million in 2011 to HK$82.3 million in 2012.

Enhanced marketing and branding activities

In order to improve the brand awareness of our core brands, we organised a series of promotional activities in 2012, including placement of advertisements in home textile and fashion magazines and outdoor advertising on public buses and MTR carriages as well as platforms, TV commercials at Shenzhen airport and China-Hong Kong Port crossings, as well as online media advertising so as to boost our sales and marketing activities and enhance our brand exposure.

Future enhanced production facility

To cope with the needs of growing sales, we acquired a parcel of industrial land with an area of approximately 87,000 m2 at Dongjiang High Technology Park, Huizhou City, Guangdong Province, the PRC. The construction of phase I of Huizhou plant (¡§Huizhou Plant¡¨) with approximately 42,000 m2 of new production space was substantially completed at 31 December 2012, which is expected to increase the Group's existing production capacity by 30%. We expect that the new production base will be put into operation in the first half of 2013 according to schedule. The total investment budget for Huizhou Plant increased from HK$128.3 million to HK$170 million due to change of design for part of the premises and delay in certain work caused by rainy weather during construction. This project was fully financed by our internal resources and bank borrowings.

Business Outlook - For the year ended December 31, 2012

Looking ahead into the future, a better performance of the overall economy of the PRC is expected in 2013 as compared to 2012. The PRC government has announced to double the 2010 GDP and per capita income for both urban and rural residents by 2020, primarily rely on expansion of domestic consumption for driving economic development and continue to promote the process of urbanisation. We believe that the PRC domestic bedding product market will continue to sustain a healthy growth.

We will continue to expand our network and improve the operational efficiency in our core market. Hong Kong will remain as the most important market for the Group and we expect to achieve a steady growth in this area. We plan to continue expanding our sales network in the PRC at a pragmatic pace. In addition to traditional retail channels, we will proactively explore new sales channels including e-commerce and develop the commercial users market.

We believe that brand awareness and customer loyalty are critical to the establishment of a successful retail brand. We will strengthen advertising campaign so as to increase brand awareness of our proprietary brands and their market influence, especially in the PRC. In addition to placing advertisements on print media and public transportation, we are developing a series of new publicity measures, including micro films.

In line with our multi-brand strategy, we will introduce more international brands to our bedding products and further increase the market share of our proprietary brands so as to better serve the needs of consumers in different market segments and drive the same store sales growth.

The Huizhou Plant will greatly enhance our production capacity and logistics capability upon its targetted commencement of operation in 2013. We will complete the installation of POS systems in all our self-operated POS by the end of 2014, with an aim to provide sales information in a timely and accurate manner, and improve the operational efficiency of the Group.

In a challenging operating environment, we rely on the efforts and contributions of all our staff and their teamwork to develop our business and achieve our business goal. In the future, we will allocate more resources to support our staff in improving their professional skills.

Our management will use their extensive experiences to aggressively promote the implementation of the above strategies and measures so as to give full play to our competitive strength and seek various opportunities to achieve rapid development, and continue to bring good returns to our shareholders.

Source: Casablanca Group (02223) Annual Results Announcement
Chairman Cheng Sze Kin Issued Capital (shares) 201M
Par Value HKD 0.1 Market Capitalisation (HKD) 373M
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