Poya International Co Ltd (寶雅國際), which operates 204 outlets selling cosmetics, lingerie and stationery, is in September to launch its first hardware store with a special focus on men.
The company plans to open more than 10 Poya Home (寶家) stores next year and up to 25 stores in 2021 to increase economy of scale, Poya said at an investors’ conference on Tuesday last week.
The new home-improvement and hardware business is to compete with Show Ba (小北) in the local market, which is worth NT$60 billion (US$1.95 million) in annual sales, Poya said.
Show Ba is the nation’s largest hardware store chain, with 114 stores.
There are 1,329 hardware department stores in Taiwan, but the market is fragmented, with independent stores comprising 82 percent and the remaining 18 percent held by various chain stores, Poya said.
Capital expenditure for Poya Home is about NT$12 million per store and its gross margin could initially reach between 37 percent and 38 percent, lower than the 43.8 percent Poya reported for last year, analysts said.
However, Poya said it is confident that gross margin would improve in the long run, driven by the economy of scale.
The company aims to open 30 stores this year and increase its total number of stores to 400 over the next five years, it said.
Poya already has a logistics center in Kaohsiung, and a logistics center in Taoyuan, which was launched in January, would help lower the required number of staff per store to 16 this year, down from 25 in previous years, while improving inventory management, analysts said.
“We are positive about Poya Home’s prospects as the new business has more products to offer and can provide a better in-store experience than independent stores, so we expect the new business to gain market share,” KGI Securities Investment Advisory Co (凱基投顧) analysts Angus Chuang (莊政翰) and Jenny Liu (劉昃恩) said in a note on Tuesday.
“However, as the new business is to contribute less than 5 percent to Poya’s total sales in 2020, we believe investors should still focus more on Poya’s same-store sales growth,” they said.
With a recovery in same-store sales growth, Poya reported consolidated revenue of NT$1.297 billion in January, up 17.87 percent from a year earlier.
Last year, revenue grew 6.2 percent annually to NT$14.08 billion, company data showed.
“So far this year, the company’s same-store sales growth has reached 1 to 2 percent, an obvious improvement from the minus-2.3 percent of last year,” KGI analysts said. “We predict the company’s revenue this year will grow 15.3 percent year-on-year, driven by the recovery in the same-store sales growth and the opening of new stores.”
Poya’s net profit grew 19 percent year-on-year to NT$1.71 billion last year, with earnings per share of NT$17.5.
The company’s proposal to distribute cash dividends of NT$15.75 per share would represent a payout ratio of 90 percent and a dividend yield of 5 percent, compared with its share price of NT$315 on Wednesday last week, the last day of trading in Taipei before the 228 Peace Memorial Day holiday weekend.
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