Documente Academic
Documente Profesional
Documente Cultură
2 7.1 5
Vertically Established
63.2 3.0
integrated 2.0
online presence
3.1
3 6
Extensive Chow Tai Fook Lao Feng Xiang Authentic
retail network Chow Tai Seng Luk Fook design/ quality
Chow Sang Sang Cartier
Others
1 2 3
Increasing Changing
Growing
discretionary customers’
e-tailing trend
income needs
Implication
Determine where the
THREE HEADWINDS WILL
greatest opportunities lie
AFFECT CTF’S FUTURE…
1 Tailor
2 growth strategy to 3
Increasing capture opportunities
Changing by 2020 Growing
discretionary customers’
e-tailing trend
income needs
WHO
PRICE Below HKD 2,000 HKD 2,000 – HKD 100,000 Above HKD 100,000
WHO
UNTAPPED
18-25 YO, limited 26-39 YO, high Highly affluent
CORE DIFFICULT TO
OPPORTUNITY
discretionary income discretionary income customers
COMPETENCY COMPETE
LIMITED EFFORTS
Below HKD 2,000 HKD 2,000 – HKD 100,000 Above
PRICE EXISTING NOTHKD 100,000
WELL-
TO CAPTURE
EFFORTS WILL POSITIONED AS A
FULL
WORK LUXURY BRAND
PLACE OPPORTUNITIES
Mainly through Primarily through in- Through in-store channel
e-commerce channels store channel;
<10% of products are
sold through e-
commerce channels
Source(s): CICC Case, Company’s documents, Third Rock Analysis 7
SHARE OF URBAN
HOUSEHOLDS, %
54%
29%
16% Poor …Is CTF’s positioned to capture the
hearts and minds of this customers?
2012 2022
Source(s): McKinsey Global Institute; Third Rock Analysis 8
1 2 3
Marketing and Customer Membership
E-Commerce
Branding Programme
1 2 3
Marketing and Customer Membership
E-Commerce
Branding Programme
Key Issues
• Weak synergy •
Missing integration of • Missing CRM for
between online/offline e-commerce strategy younger customers
interactions1. How to strengthen your offering?
into overall corporate
strategy
2. How to bridge the gap between online
and offline consumption?
3. How to create lifetime loyalty?
Given the growing importance of e-commerce,
CTF Must Better Integrate E-Commerce Into Its Overall Sales Strategy
Source(s): Euromonitor, McKinsey Global Institute, BCG Analysis, Third Rock Analysis 12
FAIR
IMPLICATION
WORKING FOR THESE CITIES
More Westernized
TIER 2 PROPORTION OF
The Unique
MASS Middle
MIDDLE CLASSClassSlight
In Tier 3 & 4 for Zu Jin
Preference
Cities Presents An Opportunity For CTF
To Strengthen Its Offering:
SIGNIFICANT Less Westernized
TIER 3 PROPORTION OF
CUSTOMERS ASPIRE TO HAVE
Strong Preference
MASS MIDDLE CLASS
ENHANCED ONLINE-OFFLINE
A TASTE OF SUCCESS…
for Zu Jin
EXPERIENCE
SIGNIFICANTNEED TO STRENGTHEN OFFERING
Jewelry Purchases are
TIER 4 PROPORTION TO
OFCATER TO CUSTOMERS’ NEEDS
perceived as an Investment
MASS MIDDLE CLASS Opportunity
Source(s): Euromonitor, McKinsey Global Institute, BCG Analysis, Third Rock Analysis 18
Source(s): Euromonitor, McKinsey Global Institute, BCG Analysis, Third Rock Analysis 20
23
24
PERSONALISED
SERVICE TO PROVIDE
STYLE ADVICE (IN-STORE)
25
TAKEAWAY
HAND
• Leverage on existing Membership Card system
• Offered at early stage of consumer life
• To cultivate brand loyalty and to build
consumer lifetime value
YOUNG
MEMBERSHIP
PROGRAMME
AUGMENTED
REALITY:
吉祥柜
Fortune Chest
HAND
• Leverage on existing Membership Card system
• Offered at early stage of consumer life
• To cultivate brand loyalty and to build
consumer lifetime value
YOUNG
MEMBERSHIP IMPACT GENERATED
PROGRAMME
ATTRACT
BENEFITS FOR
CUSTOMERS TO
CUSTOMERS
E-STORE
AUGMENTED
REALITY:
吉祥柜
Fortune Chest DATA MINING
OPPORTUNITIES
Source(s): Third Rock Consulting 29
AUGMENTED
REALITY:
吉祥柜
Fortune Chest
1 2 3
Multi-sensory Personalised
Location
journey service
34
1 2 3
Multi-sensory Personalised
Location
journey service
35
3
Confident of their
SINCERITY . ENTERNITY
growth potential
37
Purchase charms
Perfect for a small
as you reach your
start
dreams
38
1 2
GRADUATION JOB PROMOTIONS
CTF’s eternity is
reinforced and
perpetuated
4 3
FIRST CHILD GETTING MARRIED
39
CTF Revenue
160
140
120 16.9 17.6 18.3
16.2
15.6 3.1 3.2
HKD ‘bn
41
HKD3.2bn
incremental
E-Commerce revenue
(18.2% of online
revenue)
If 25% are successfully attracted to
CTF stores by 2020:
Brick & Mortar
• Incremental purchases
• Repeat purchases
• Upgraded purchases
42
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Age 21 22 23 24 25 26 27 28 29 30
300
258.3
250
200
HKD
150
100
50 32.8
0
Current [Dream]
43
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Age 21 22 23 24 25 26 27 28 29 30
300 273.7
250
200 NPV of NPV of
HKD3.2bn HKD10.3bn
HKD
150
from repeat from young
100 occasion consumers
50 32.8 purchase trading up
0
Current [Dream]
44
NPV
200
174.3
147.4
150 131.7
HKD ‘bn
100
50
0
Worst Base Best
Stock Price
(Upside) HKD13.32 (+9%) HKD14.90 (+22%) HKD17.58 (+44%)
Conversion (E-tailing to
E-commerce, OTO, -10% - +5%
incremental purchase )
Market share among
young mass middle -50% - +20%
Incremental CLV -10% - +5%
Incremental purchase
when trading up -10% - +5%
45
TACKLE INCOMING
HEADWINDS
47
STEP 1
TACKLE INCOMING
HEADWINDS
Increasing discretionary
income
Market Leader Increased
Market
E-tailing trend Penetration,
and Maintain
Capture a NEW DREAM Market
Leadership
48
STEP 2
CREATE A DREAM THAT
CUSTOMERS TRULY WANT
PRESENT 2020
Strengthened our
offering for the target
customer group with the
Market Leader
greatest potential moving Increased
forward – Market
rising middle class Penetration,
and Maintain
Market
Leadership
49
STEP 3
DELIVER THE DREAM
THAT CUSTOMERS DESIRE
PRESENT 2020
50
STEP 4
CAPTURING CTF’S
LIFETIME OF DREAMS
PRESENT 2020
Created Customer
Lifetime Value by
building a strong offline
Market Leader experience and a new Increased
Market
product offering Penetration,
and Maintain
Market
Leadership
51
Dreaming And
Reinventing The Future:
Charting The Next Steps
For Chow Tai Fook
KEY ISSUES
RECO 1
RECO 2
RECO 3
54
Overcoming Barriers At Each Buying Stage
Customer Awareness
Recognizing the CTF brand
Brand Awareness
Brand Consideration
Detailed knowledge of CTF’s products
Brand Preference
Identifying with CTF’s spirit
Purchase Intention
Convenience and motivation to purchase
Purchase
Customer Loyalty
Post-sales support & value-added benefit
Customer Advocacy
55
Overcoming Barriers At Each Buying Stage
Brand Consideration
Detailed knowledge of CTF’s products
Brand Preference
BELOW-THE-LINE
Identifying with CTF’s spirit
Purchase Intention
MARKETING
Convenience and motivation to purchase
Purchase
57
Current Efforts Can Be Enhanced To Capture The
Full Potential Of The Middle Class
Tier 1
16% More consumers will purchase
40%
45% Tier 2
43%
15%
8% Tier 4
3%
2012 2022
Source(s): McKinsey Global Institute; Third Rock Analysis 58
Growing Middle Class Will Deliver The Biggest
Opportunity In The Future
Tier 1 6,819 18
Tier 2 4,922 17
Tier 3 4,624 21
Tier 4 4,467 27
80
81
Enhance marketing
Low adoption/interest Leverage on festivals to
efforts to boost
for mobile application introduce mobile application
awareness
Enhance marketing
Resilient to switching Integrate mobile application
efforts to communicate
from e-tailer with e-tailer
membership card benefits
Improve virtual
Virtual experience not Increase promotional efforts
experience through
effective in linking O2O to link O2O
further market research
83
Communicate use of
Not enough professional Increase pay to incentivize
appointment systems to
staff in stores staff to join
better gauge demand
84
Involve the
Ride on Internet
collective
trends
community
85
86
Limited edition
Daily QR code
Current items only on
promotion
eShop
Mainly price
Limitations Not sustainable
promotion
Proposed
Virtual eShop Experience | Fortune Chest
Additions 87
How does youth loyalty card program
work?
Encourage user
account creation
89
China’s mobile netizens
Tier 1-2
• Smartphone penetration more than 50%
Mobile Netizens
WACC Analysis
Beta Beta Debt Mkt Cap D/E Tax Unlevered beta
HK Luk Fook 1.86 0 15.85 0 17% 1.86
HK Chow Sang Sang 1.26 1.902 16.25 0.11705 19% 1.15096
China Lao Feng Xiang 0.68 2.703 11.72 0.23063 26% 0.58038
Beta 1.20
D/E 11.7%
Tax 20.0%
Risk Premium 6.18%
10Y Govt Bond 2.03%
Cost of debt 2.0%
Levered beta 1.31
Cost of equity 10.1%
WACC 9.3%
Source(s): 91
Income Statement (Base)
Income Statement (Base) 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Revenue 18,410.9 22,933.6 35,042.5 56,571.1 57,433.9 73,049.0 83,311.0 94,145.0 104,432.3 110,138.0 113,146.7 114,692.2
% growth 24.6% 52.8% 61.4% 1.5% 21.9% 10.9% 5.5% 2.7% 1.4%
Cost of Goods Sold (13,084.9) (16,378.6) (25,114.9) (40,123.2) (41,150.8) (53,017.0) (60,213.0) (69,394.0) (76,083.1) (80,239.9) (82,431.9) (83,557.8)
Gross Profit 5,326.0 6,555.0 9,927.6 16,447.9 16,283.1 20,032.0 23,098.0 24,751.0 28,349.2 29,898.1 30,714.8 31,134.3
Gross Profit Margin 28.9% 28.6% 28.3% 29.1% 28.4% 27.4% 27.7% 26.3% 27.1% 27.1% 27.1% 27.1%
Profit before taxation 2,223.5 2,718.6 4,619.3 8,165.9 7,095.0 8,907.0 10,357.0 12,110.0 13,049.9 13,762.9 14,138.8 14,332.0
12.1% 11.9% 13.2% 14.4% 12.4% 12.2% 12.4% 12.9% 12.5% 12.5% 12.5% 12.5%
Taxation (309.1) (511.8) (947.3) (1,595.0) (1,416.6) (1,823.0) (2,171.0) (2,509.5) (2,704.3) (2,852.0) (2,929.9) (2,969.9)
14% 19% 21% 20% 20% 20% 21% 21% 21% 21% 21% 21%
Profit for the year 1,914.4 2,206.8 3,672.0 6,570.9 5,678.4 7,084.0 8,186.0 9,600.5 10,345.6 10,910.9 11,208.9 11,362.0
Profit to NCI 17.7 68.2 134.9 230.3 173.1 216.0 251.0 292.5 315.2 332.4 341.5 346.2
% NCI 1% 3% 4% 4% 3% 3% 3% 3% 3% 3% 3% 3%
Profit to shareholders 1,896.7 2,138.6 3,537.1 6,340.6 5,505.3 6,868.0 7,935.0 9,308.0 10,030.4 10,578.4 10,867.4 11,015.8
# of shares 8,946.7 8,948.1 8,954.7 9,259.8 10,000.0 10,000.0 10,000.0 10,000.0 10,000.0 10,000.0 10,000.0 10,000.0
EPS 0.21 0.24 0.40 0.68 0.55 0.69 0.79 0.93 1.00 1.06 1.09 1.10
Source(s): 92
Income Statement (Dreams)
Income Statement (Dreams) 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Total Revenue 88,545.6 99,366.5 110,821.0 122,431.6 128,827.0 133,835.8 136,204.6
Base Revenue 18,410.9 22,933.6 35,042.5 56,571.1 57,433.9 73,049.0 83,311.0 94,145.0 104,432.3 110,138.0 113,146.7 114,692.2
Delivering A Dream 1,080.9 1,054.3 1,065.7 1,755.0 1,785.0 3,098.6 3,207.6
A Lifetime Of Dreams 14,415.8 15,001.2 15,610.4 16,244.3 16,904.0 17,590.4 18,304.8
Trading Up 14,166.5 14,741.8 15,340.4 15,963.4 16,611.7 17,286.3 17,988.3
Occasion Purchase 249.3 259.4 269.9 280.9 292.3 304.2 316.5
Total Incremental 15,496.6 16,055.5 16,676.0 17,999.3 18,688.9 20,689.1 21,512.4
Cost of Goods Sold (13,084.9) (16,378.6) (25,114.9) (40,123.2) (41,150.8) (48,767.4) (55,761.6) (65,009.8) (71,197.0) (75,166.6) (76,815.7) (77,718.1)
Gross Profit 5,326.0 6,555.0 9,927.6 16,447.9 16,283.1 24,281.6 27,549.4 29,135.2 33,235.3 34,971.4 36,331.1 36,974.1
Base Gross Profit 20,032.0 23,098.0 24,751.0 28,349.2 29,898.1 30,714.8 31,134.3
Incremental Gross Profit 4,249.6 4,451.4 4,384.2 4,886.1 5,073.3 5,616.3 5,839.8
Gross Profit Margin 28.9% 28.6% 28.3% 29.1% 28.4% 27.4% 27.7% 26.3% 27.1% 27.1% 27.1% 27.1%
Profit before taxation 2,223.5 2,718.6 4,619.3 8,165.9 7,095.0 10,796.5 12,353.0 14,255.1 15,299.1 16,098.2 16,724.1 17,020.1
Base PBT 8,907.0 10,357.0 12,110.0 13,049.9 13,762.9 14,138.8 14,332.0
Incremental PBT 1,889.5 1,996.0 2,145.1 2,249.2 2,335.4 2,585.3 2,688.2
12.1% 11.9% 13.2% 14.4% 12.4% 12.2% 12.4% 12.9% 12.5% 12.5% 12.5% 12.5%
Taxation (309.1) (511.8) (947.3) (1,595.0) (1,416.6) (2,209.7) (2,589.4) (2,954.0) (3,170.4) (3,336.0) (3,465.7) (3,527.0)
14% 19% 21% 20% 20% 20% 21% 21% 21% 21% 21% 21%
Profit for the year 1,914.4 2,206.8 3,672.0 6,570.9 5,678.4 8,586.8 9,763.6 11,301.0 12,128.7 12,762.3 13,258.5 13,493.1
Profit to NCI 17.7 68.2 134.9 230.3 173.1 261.8 299.4 344.3 369.5 388.8 403.9 411.1
% NCI 1% 3% 4% 4% 3% 3% 3% 3% 3% 3% 3% 3%
Profit to shareholders 1,896.7 2,138.6 3,537.1 6,340.6 5,505.3 8,325.0 9,464.2 10,956.7 11,759.2 12,373.4 12,854.5 13,082.0
# of shares 8,946.7 8,948.1 8,954.7 9,259.8 10,000.0 10,000.0 10,000.0 10,000.0 10,000.0 10,000.0 10,000.0 10,000.0
EPS 0.21 0.24 0.40 0.68 0.55 0.83 0.95 1.10 1.18 1.24 1.29 1.31
Source(s): 93
DCF Valuation (Base)
DCF Valuation (Base) 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Operating profit (EBIT) 2,292.0 2,703.6 4,651.7 8,440.1 7,316.7 8,956.5 10,490.0 12,301.5 13,199.9 13,921.0 14,301.3 14,496.7
Operating Profit Margin 12.4% 11.8% 13.3% 14.9% 12.7% 12.3% 12.6% 13.1% 12.6% 12.6% 12.6% 12.6%
Depreciation 160.5 225.8 246.8 390.5 494.7 595.0 645.0 654.5 848.5 1,018.1 1,167.9 1,415.4
22% 27% 21% 23% 23% 23% 27% 22% 24% 24% 23% 24%
Capex 405.7 355.0 540.6 749.2 1,061.8 1,160.0 870.0 980.0 1,347.8 1,499.4 1,775.2 2,161.2
57% 43% 46% 44% 49% 45% 36% 33% 38% 36% 36% 36%
Change in NWC 1,759.5 7,875.0 14,900.3 (3,645.7) 9,529.5 6,041.0 6,523.5 (1,054.1) 2,763.1 1,457.0 748.4
FCFF 814.9 (3,517.1) (6,818.9) 10,395.3 (1,138.0) 4,224.0 5,452.5 13,754.7 10,676.6 12,237.0 13,002.4
WACC 9%
Discount factor 0.96 0.88 0.81 0.74 0.68 0.62 0.57
Terminal growth rate 1%
Terminal value 148,998.3
Discounted FCFF (1,096.5) 3,724.6 4,401.5 10,155.5 7,214.1 7,567.0 91,655.0
EV 123,621.2
% terminal value 68%
Source(s): 94
DCF Valuation (Dreams)
DCF Valuation (Dreams) 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Operating profit (EBIT) 2,292.0 2,703.6 4,651.7 8,440.1 7,316.7 10,856.5 12,511.6 14,480.5 15,474.9 16,283.2 16,916.3 17,215.7
Operating Profit Margin 12.4% 11.8% 13.3% 14.9% 12.7% 12.3% 12.6% 13.1% 12.6% 12.6% 12.6% 12.6%
Depreciation 160.5 225.8 246.8 390.5 494.7 595.0 645.0 654.5 848.5 1,018.1 1,167.9 1,415.4
22% 27% 21% 23% 23% 23% 27% 22% 24% 24% 23% 24%
Capex 405.7 355.0 540.6 749.2 1,061.8 1,160.0 870.0 980.0 1,347.8 1,499.4 1,775.2 2,161.2
57% 43% 46% 44% 49% 45% 36% 33% 38% 36% 36% 36%
Change in NWC 1,759.5 7,875.0 14,900.3 (3,645.7) 9,529.5 6,041.0 6,523.5 (327.5) 2,850.6 1,236.9 668.6
FCFF 814.9 (3,517.1) (6,818.9) 10,395.3 762.0 6,245.6 7,631.5 15,303.1 12,951.3 15,072.1 15,801.4
WACC 9%
Discount factor 0.96 0.88 0.81 0.74 0.68 0.62 0.57
Terminal growth rate 1%
Terminal value 181,072.1
Discounted FCFF 734.2 5,507.2 6,160.5 11,298.8 8,751.1 9,320.1 111,385.0
EV 147,432.6
% terminal value 69%
Source(s): 95
POS Stores in China
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
POS 1,358.0 1,627.0 1,836.0 2,000.0 2,200.0 2,400.0 2,601.0 2,792.0 2,970.0 3,129.0
New stores 269.0 209.0 164.0 200.0 200.0 201.0 191.0 178.0 159.0
China 1,206 1,448 1,640 1,789 1,971 2,153 2,336 2,510 2,672 2,817
Tier I 188 207 227 240 256 272 288 303 318 330
19 20 13 16 16 16 15 14 13
% breakdown 16% 14% 14% 13% 13% 13% 12% 12% 12% 12%
Tier II 611 726 786 835 895 955 1,016 1,073 1,126 1,174
115 60 49 60 60 60 57 53 48
% breakdown 51% 50% 48% 47% 45% 44% 43% 43% 42% 42%
Tier III 407 515 627 714 820 926 1,032 1,134 1,228 1,312
108 112 87 106 106 107 101 94 84
% breakdown 34% 36% 38% 40% 42% 43% 44% 45% 46% 47%
HK/Macau/Others 81 93 103 111 121 131 141 151 160 168
12 10 8 10 10 10 10 9 8
Watch 71 86 93 100 108 116 124 131 138 145
15 7 7 8 8 8 8 7 6
Source(s): 96
CLV Analysis
CLV Analysis
1 2 3 4 5 6 7 8 9 10
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
E.g. 21 22 23 24 25 26 27 28 29 30
Item Trinket Trinket
HKD 2000 2000
Margin 12.50%
Retention rate 7.5% (given 15% for HK members, 22% for China members)
Discount rate 9.3%
1 2 3 4 5 6 7 8 9 10
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
E.g. 21 22 23 24 25 26 27 28 29 30
Item Trinket Trinket Graduation Promotion Marriage Child
HKD 2,000 2,000 6,000 7,000 15,000 3,000
Margin 12.50%
Retention rate 10.0% (given 15% for HK members, 22% for China members)
Discount rate 9.3%
Increase 8.33 x
Source(s): 97
Chinese Households Assumptions
Chinese Households 2012 2013 2014 2015 2016 2017 2018 2019 2020
Total 256 266 277 288 300 312 325 338 352
Affluent 7.68 7.99 8.32 8.65 9.01 9.37 9.75 10.15 10.56
% 3% 3% 3% 3% 3% 3% 3% 3% 3%
Upper middle 35.84 37.30 38.81 40.39 42.03 43.73 45.51 47.36 49.28
% 14% 14% 14% 14% 14% 14% 14% 14% 14%
Mass middle 138.24 143.85 149.70 155.77 162.10 168.68 175.53 182.66 190.08
% 54% 54% 54% 54% 54% 54% 54% 54% 54%
Poor 74.24 77.25 80.39 83.66 87.05 90.59 94.27 98.10 102.08
% 29% 29% 29% 29% 29% 29% 29% 29% 29%
Source(s): 98
Delivering A Dream – Revenue
Delivering A Dream (Results) 2014 2015 2016 2017 2018 2019 2020
Daily traffic ('000) 93.5 122.21 178.61 261.03 381.49 557.53 814.81
Annual traffic (mm) 34.1 44.6 65.2 95.3 139.2 203.5 297.4
15% 31% 46% 46% 46% 46% 46%
Customers purchasing daily 2,804 3,666 5,358 7,831 11,445 16,726 24,444
Annual customers (mm) 1.02 1.34 1.96 2.86 4.18 6.10 8.92
Annual online purchase 2,046.76 2,676.44 3,911.52 5,716.54 8,354.53 12,209.84 17,844.25
New online customers annually 1.02 0.31 0.62 0.90 1.32 1.93 2.82
E-tailing to e-commerce conversion 50% 50% 50% 60% 60% 70% 70%
Online-offline conversion 25% 25% 25% 30% 30% 35% 35%
Incremental purchase (up-sell/cross-sell) 2,000 2,000 2,000 2,000 2,000 2,000 2,000
Chance of incremental purchase 15% 15% 15% 20% 20% 25% 25%
Chance of subsequent purchase 15% 15% 15% 20% 20% 25% 25%
Price of upgraded purchase 15,000 15,000 15,000 20,000 20,000 30,000 30,000
% of upgraders 30% 30% 30% 30% 30% 30% 30%
Price of repeat purchase 3,500 3,500 3,500 3,500 3,500 3,500 3,500
% of repeat purchasers 70% 70% 70% 70% 70% 70% 70%
Incremental revenue from brick and mortar 1,080.88 1,054.31 1,065.66 1,754.98 1,784.97 3,098.64 3,207.61
Incremental over online sales 52.8% 39.4% 27.2% 30.7% 21.4% 25.4% 18.0%
WACC 9%
Discount factor 0.96 0.88 0.81 0.74 0.68 0.62 0.57
Source(s): 99
A Lifetime of Dreams (Trading Up)
A Lifetime of Dreams (Results) 2014 2015 2016 2017 2018 2019 2020
Mass and upper middle in tiers 2-4 242 252 262 273 284 295 307
Mkt share 10% 10% 10% 10% 10% 10% 10%
Young customers who trade up 7.3 7.6 7.9 8.2 8.5 8.9 9.2
New customers 0.3 0.3 0.3 0.3 0.3 0.3 0.4
Incremental purchase when trading up 50,000.0 50,000.0 50,000.0 50,000.0 50,000.0 50,000.0 50,000.0
Incremental revenue from trading up 14,166.5 14,741.8 15,340.4 15,963.4 16,611.7 17,286.3 17,988.3
WACC 9%
Discount factor 0.96 0.88 0.81 0.74 0.68 0.62 0.57
Source(s): 100
A Lifetime of Dreams (Occasions)
A Lifetime of Dreams (Results) 2014 2015 2016 2017 2018 2019 2020
Mass and upper middle in tiers 2-4 106 114 122 131 140 151 162
Mkt share 10% 10% 10% 10% 10% 10% 10%
Young customers 10.6 11.4 12.2 13.1 14.0 15.1 16.2
New customers 10.6 0.7 0.8 0.9 1.0 1.1 1.2
Incremental CLV of new customers 2,559.5 178.5 194.4 212.0 231.5 253.2 277.3
Expected revenue per customer per year 24.1 24.1 24.1 24.1 24.1 24.1 24.1
Expected incremental revenue from repeat occasion purchase 256.0 273.8 293.2 314.4 337.6 362.9 390.6
Sum 3,906
Source(s): 101
Total Costs
A Lifetime of Dreams (Costs) 2014 2015 2016 2017 2018 2019 2020
Scent development (Scentair) 0.5 0 0 0 0 0 0
Scent (distribution/usage) 1.2 1.3 1.4 1.6 1.7 1.8 1.9
# of shops 2,000.0 2,200.0 2,400.0 2,601.0 2,792.0 2,970.0 3,129.0
Cost per shop (distribution, usage) (HKD) 600.0 600.0 600.0 600.0 600.0 600.0 600.0
Chocolate 17.75 20.16 22.56 24.68 25.45 25.23 24.21
# of customers in shops 1,775,056 2,015,864 2,255,837 2,467,894 2,544,587 2,523,422 2,421,199
Cost per customer (HKD) 10 10 10 10 10 10 10
Music 0 0 0 0 0 0 0
Training (tier 3, 4) 2.00 2.30 2.59 2.89 3.17 3.44 3.67
# of tier 3, 4 shops/storefronts 714 820 926 1,032 1,134 1,228 1,312
# of employees per shop (greeters) 3.5 3.5 3.5 3.5 3.5 3.5 3.5
Cost per employee (HKD) 800 800 800 800 800 800 800
Development of bracelet design 2.00 2.00 2.00 2.00 2.00 2.00 2.00
Delivering A Dream (Costs) 2014 2015 2016 2017 2018 2019 2020
Website design 6.0 0 0 0 0 0 0
Augmented reality 1.0 0 0 0 0 0 0
Wechat 1.0 0 0 0 0 0 0
Source(s): 102