Modern Beauty takes aim at mainland as earnings surge

PUBLISHED : Thursday, 14 December, 2006, 12:00am
UPDATED : Thursday, 14 December, 2006, 12:00am
 

Shares of Modern Beauty Salon Holdings surged to a new high yesterday after the company posted a 71 per cent increase in interim net profit and announced plans to tap the mainland's spa and beauty market.


The company said it aimed to open 20 spa and beauty centres in Beijing, Shanghai and Guangzhou in two years with total investment of about 40 million yuan, according to chief financial officer Hung Fan-kwan.


Modern Beauty, which has yet to open outlets in China, said it was awaiting government approvals for the licences to operate in the three cities.


The expansion plan was unveiled yesterday after the company posted net profit of HK$83.9 million for the six months to September, compared with HK$49.1 million a year ago. Turnover rose 29.2 per cent to HK$291.7 million, mainly driven by growth in spa and massage services, from HK$225.8 million a year earlier.


Earnings per share rose to 11.66 HK cents from 9.09 HK cents a year ago. The company declared an interim dividend of seven HK cents and a special dividend of one HK cent per share, representing a payout of 69 per cent in total.


Sales of its spa and massage segment jumped 60.5 per cent to HK$75 million, accounting for 25.7 per cent of total revenue, while revenue from beauty and facial treatments rose 31.2 per cent to HK$113.2 million, accounting for 38.8 per cent of turnover.


The company added five outlets during the reporting period and had 22 outlets in Hong Kong at the end of September, with total gross floor area of 245,000 square metres. The number of customers grew to 166,000 in September from 142,000 a year ago.


Modern Beauty opened three outlets in Hong Kong last month and plans to open one more before the end of March.


The company, which had 6,300 male customers in September, said it would widen its reach to the men's beauty and skin-care market by adding men's salons.


Shares of the company, which was listed on the main board in February, rose 8.43 per cent and closed at HK$1.80, after surging as much as 10.2 per cent after the earnings announcement. Modern Beauty, which sold its shares at HK$1 each in the initial public offering, raised HK$180 million.


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