Luk Fook Holdings (International) Limited

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25th March 2012

Luk Fook Holdings (International) Limited

Contents

1. Executive Summary...................................................................................................3

2. Terms of reference ......................................................................................................4

3. Introduction ...................................................................................................................5

4. SWOT Analysis …......................................................................................................6

5. Financial Analysis

5.1 Profitability ratio ...............................................................................................7
5.2 Efficiency ratio ..................................................................................................8
5.3 Liquidity ratio ....................................................................................................9
5.4 Financial ratio ...................................................................................................10
5.5 Investment ratio ................................................................................................11

6. Conclusion.....................................................................................................................12

7. Appendices
7.1 Financial Data of Lukfook..............................................................................13
7.2 Financial Data of TSL......................................................................................15
7.3 Definitions of ratios and calculations.............................................................19

Executive Summary

Results
From the year 2007 to 2011, the revenue of Luk Fook Holdings (International) Limited (“Lukfook” or “the Group”) keeps on increasing steadily with a growth 184.4% over the 5 years. The increase in the retail turnover was mainly due to the strong growth in the Hong Kong economy and rising income of consumers, sales of gold products stimulated by the traditional good-for-marriage year and the satisfactory growth in sales performance. Earnings per share kept fluctuating in the average of HKD0.53 and increased significantly by 93.2% to HKD1.08 in 2010 and 58.3% to HKD1.71 in 2011.

Dividend
Dividend per share kept fluctuating in the average of HKD0.13 and increased significantly by 133% to HKD0.28 in 2010 and 50% to HKD0.42 in 2011. Dividend cover kept increasing for around 13% from 2007 to 2009 and decreased by 17% in 2010 with a slight increase by 5% in 2011.

Overview
The overall performance in the year 2007 to 2011 was encouraging. The progressively increased in the overall performance was mainly assignable to the increase in sales. Due to the appreciation of Renminbi which led to a boost in PRC customers’ purchasing desire, the Group benefit from the spending of the PRC tourists who had a strong demand for luxury and quality jewellery items in Hong Kong.

Terms of Reference

Objectives
* determine the financial performance of Luk Fook International Group and attract new investors * prepare the Group for any expansion opportunities and minimise the threats

Parties
The parties to be involved in the preparation of the report are: • Luk Fook Holdings (International) Limited
• Tse Sui Luen Jewellery (International) Limited (“TSL”)

Methods & Process
• The report includes ratios of another company in the same industry, TSL, for comparing the performance made by the Group

• Calculate all the ratios that are needed to be analysed and compared by finding required data from annual reports of both companies

• Using vertical analysis to examine the performance of the Group from the year 2007 to 2011

• Divide analysis into five parts and discuss most useful ratios in order to assess the performance of Luk Fook International Group Inc

Outputs / Deliverables
State...
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