China-Hongkong Photo reports revenue decline but finances are stable

China-Hongkong Photo Products Holdings Ltd. reported a 7.5% decline in revenue to HK$536 million and a sharp drop in net profit attributable to shareholders to HK$7.1 million for the six months ending September 2024. Despite the dip, the company’s overall financial health remains robust with cash and bank balances of HK$274 million.

The company’s board has decided against declaring an interim dividend.

In the company’s Photofinishing and Imaging Services segment, sales (excluding revenue from the Hong Kong Disneyland Resort experienced a decline of 22.5% compared to the previous period, largely due to a high baseline resulting from the post-COVID business rebound. The primary driver of the decline from the previous period was a 31.0% decrease in ID photo sales, with print counts dropping significantly by 33.4% due to a slowdown in demand following an initial surge after the border reopening in early 2023. The heightened demand for ID photos related to entrance permits of the PRC and passport applications began to taper off in the third quarter of FY2023/24. Additionally, sales of photofinishing fell by 8.4%, with corresponding print counts decreasing by 21.6% as economic uncertainties led consumers to cut back on spending for non-essential items. Sales of the one-stop document solution, DocuXpress, also recorded a slight decline of 4.6%.

In response to these challenges, the segment implemented several strategic initiatives during the period, the company said. Two underperforming Fotomax shops were closed while two new FOTOMETA shops were opened, featuring a refreshed brand image aimed at younger generations and offering a variety of new imaging products. As of the end of September 2024, the total number of Fotomax and FOTOMETA shops remained at 54. Newly introduced value-added services, such as AI retouching for professional ID portraits and a brand-new pet photography service at FOTOMETA shops, targeted at families and captured the growing trend of pet ownership. Additionally, a new photo booth and a new photo cube were launched in the shop in AIRSIDE, and a new photo booth was launched in the shop in Pioneer Centre to encourage and enhance customer engagement.

In contrast to the overall segment performance, the imaging solution service at the Hong Kong Disneyland Park experienced a remarkable increase of 12.1% in sales. This growth was driven by a significant year-over-year rise in visitors from both the PRC and Southeast Asia due to the recovery of Hong Kong tourism after the pandemic. The opening of the new attraction, The World of Frozen, in the park in November 2023, along with a newly established photo-taking attraction at the Hong Kong Disneyland Hotel, significantly contributed to the increased photo-taking traffic. Additionally, the increase in the number of operational days from 157 days in the Previous Period to 175 days in the current period also contributed to the increase in sales of the imaging solution service at the Park.

In the Photography segment, sales were impacted by the limited availability of Fujifilm products. This segment recorded a notable decline in sales of digital cameras and lenses, with a decrease of 12.2%. Despite the enduring popularity of FUJIFILM’s offerings, this downturn could largely be attributed to the limited production capacity, which hindered its ability to meet the increasing demand, the company said. On the other hand, sales of instant cameras, printers, and films surged by an impressive 26.7% compared to the previous period. This increase was attributed to the resurgence in the number of inbound tourists and the rise in social gatherings following the end of the pandemic, the company said.

The group has a long-established business partnership with FUJIFILM Japan, operating as the sole authorized distributor of FUJIFILM photography products in Hong Kong and Macau since 1968. The group also operates retail businesses in Hong Kong, providing photofinishing and imaging solutions and products through its Fotomax retail chain and selling consumer electronics products and household electrical appliances under its AV Life, Life Digital and Wai Ming Electrical brand name.

CONDENSED CONSOLIDATED INCOME STATEMENT

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2024

For the six months ended 30 September

2024                     2023

(Unaudited)          (Unaudited)

Profit/(loss) attributable to:

• Owners of the Company 7,135   28,746
• Non-controlling interests (71)     826

7,064                  29,572