759 Stores Hong Kong
Financial Reporting & Analysis for Decision Making (2013)
Instructor: David Yip
Financial Analysis
CEC INTERNATIONAL HOLDINGS LIMITED
Stock Code: SEHK00759 / 759:HK
Author: Anthony Lam
City University EMBA 2013 Cohort
759 Store
CEC INTERNATIONAL HOLDINGS LTD.
Hong Kong Stock Exchange Code: SEHK 00759 / 759:HK
COMPANY
History
CEC International (CEC) was founded by Lam Wai Chun (the current Chairman) in 1979, as “Coils Electric Company”. Initially when the company was formed, it was a sole proprietorship company that assembled choke coils. In 1982, CEC established its first manufacturing facility in Zhongshan, China.
Manufacturing Business
In 1992, CEC began a full manufacturer of coils, and in 1997, the company started manufacturing ferrite cores, which is used as raw material for production of display tubes for IT services.
The company was listed in Hong Kong Stock Exchange in 1999.
Retail Business
In July 2010, CEC decided to branch out into retail business, opening their first “759 Store” in Hong Kong.
As of June 2013, it had opened 146 “759 Stores” in Hong Kong, recorded with more than 3,000 SKUs available, of which 54% were imported snack foods (as of FY13 sales).
However, of the alleged 3,000 SKUs, many of the SKUs are ad-hoc products that the Management parallel imported, and without continuation of supplies.
An advantage is that the customers will have fresh ‘surprises’ every time in their visit to “759 Store”, and will be trained to take a larger stock since the SKU may not be available in their next visit.
The disadvantage is that product loyalty and repeat purchase is limited.
Although it is reported in various interviews with the Management of CEC that they do not see local supermarkets and convenience stores as direct competitors due to differentiated product offerings, but looking at the product mix, we believe the stores are in direct competition with the following Chains: * Dairy Farm
Instructor: David Yip
Financial Analysis
CEC INTERNATIONAL HOLDINGS LIMITED
Stock Code: SEHK00759 / 759:HK
Author: Anthony Lam
City University EMBA 2013 Cohort
759 Store
CEC INTERNATIONAL HOLDINGS LTD.
Hong Kong Stock Exchange Code: SEHK 00759 / 759:HK
COMPANY
History
CEC International (CEC) was founded by Lam Wai Chun (the current Chairman) in 1979, as “Coils Electric Company”. Initially when the company was formed, it was a sole proprietorship company that assembled choke coils. In 1982, CEC established its first manufacturing facility in Zhongshan, China.
Manufacturing Business
In 1992, CEC began a full manufacturer of coils, and in 1997, the company started manufacturing ferrite cores, which is used as raw material for production of display tubes for IT services.
The company was listed in Hong Kong Stock Exchange in 1999.
Retail Business
In July 2010, CEC decided to branch out into retail business, opening their first “759 Store” in Hong Kong.
As of June 2013, it had opened 146 “759 Stores” in Hong Kong, recorded with more than 3,000 SKUs available, of which 54% were imported snack foods (as of FY13 sales).
However, of the alleged 3,000 SKUs, many of the SKUs are ad-hoc products that the Management parallel imported, and without continuation of supplies.
An advantage is that the customers will have fresh ‘surprises’ every time in their visit to “759 Store”, and will be trained to take a larger stock since the SKU may not be available in their next visit.
The disadvantage is that product loyalty and repeat purchase is limited.
Although it is reported in various interviews with the Management of CEC that they do not see local supermarkets and convenience stores as direct competitors due to differentiated product offerings, but looking at the product mix, we believe the stores are in direct competition with the following Chains: * Dairy Farm