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1Q18 Results
1
momo.com Consolidated P&L
P&L (NT$ mn) 1Q18A 1Q17A YoY 4Q17A QoQ
Revenue 10,183.8 7,581.5 34.3% 9,940.0 2.5%
Gross profit 1,054.9 833.6 26.6% 1,074.1 -1.8%
EBITDA 463.8 338.4 37.1% 469.6 -1.2%
Operating profit 393.0 313.3 25.4% 424.1 -7.3%
Income from LT investments 1.8 38.3 -95.2% 10.3 -82.5%
Other non-op income (6.4) 15.2 n.m. 6.2 n.m.
Pretax profit 388.4 366.7 5.9% 440.6 -11.8%
Tax 81.4 58.5 39.2% 78.7 3.4%
Net income 307.0 308.3 -0.4% 362.0 -15.2%
Less minorities (1.6) (1.7) -6.5% (1.7) -5.9%
Net income to parent 308.5 309.9 -0.5% 363.7 -15.2%
Adjustments 18.8 (8.8)
Recurring net income to parent 327.3 301.1 8.7% 363.7 -10.0%
Basic EPS^ 2.20 2.21 -0.5% 2.60 -15.2%
Recurring basic EPS 2.34 2.15 8.7% 2.60 -10.0%
Gross margin 10.4% 11.0% -0.6ppt 10.8% -0.4ppt
EBITDA margin 4.6% 4.5% +0.1ppt 4.7% -0.2ppt
Operating margin 3.9% 4.1% -0.3ppt 4.3% -0.4ppt
Pretax margin 3.8% 4.8% -1.0ppt 4.4% -0.6ppt
1Q18 Operational highlights momo’s 1Q18 consolidated revenue was NT$10.2bn, surpassing the NT$10bn mark for the
first time in a single quarter. The 34.3% YoY growth is the fastest on a quarterly basis since the
IPO in 4Q14. The growth is driven by accelerating growth of our B2C business and the recovery in
TV Home shopping sales. Mobile sales in B2C, saw an increase of 70.7% YoY and remains the
key driver to B2C’s growth as we continue to gain market share from E-Commerce peers and
other brick & mortar retailers. momo is now the largest B2C operator in Taiwan for two
consecutive quarters.
1Q18 EBITDA increased 37.1% YoY to NT$463.8mn and EBITDA margin increased 0.1 ppt
YoY to 4.6%. The growth of EBITDA can be attributed to:
1) TV Home shopping’s EBITDA growth of 173.5% YoY and recovery of EBITDA margin to 13.6%
vs. 5.4% in 1Q17; the EBTIDA margin expansion benefitted from increasing revenue and
lower cable related costs
2) B2C’s EBITDA fell 1.8% to NT$256.1mn and EBITDA margin declined 1.4ppt YoY to 3.0% in
1Q18; the decline in EBITDA margin is the result of lower product margins and higher logistic
expenses given the rise in our fulfillment rate. However, market share gain and scale remain
top priorities for our B2C business
1Q18 net income and basic EPS declined 0.5% YoY to NT$307.0mn and NT$2.20 respectively.
However, after adjusting for one time disposal gains or losses and impact from IFRS 9,
recurring 1Q18 net profit and EPS increased 8.7% YoY to NT$327.3mn and NT$2.34
respectively.
262.1
951.8
1,991.5
3,025.2 3,169.1
5,164.1
7.3%
22.0%
37.8%
48.8% 50.3%
58.3%
0%
10%
20%
30%
40%
50%
60%
70%
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
FY 2014 FY 2015 FY 2016 FY 2017 1Q18
Mobile Commerce GMV in B2C M-Commerce as % of EC Sales(NT$ mn)
April 26th, 2018
Topics in This Report
Operational highlights
P&L Analysis
Revenue Analysis
EBITDA Analysis
Balance Sheet Analysis
Cashflow Analysis
Financial Analysis
IR contact:
Gina Lu
CFO
Jack Chang
Senior Manager
Investor Relations
Casey Lin
Specialist
Investor Relations
*Based on B2C data
2
I. Revenue Analysis
Figure 1 – Consolidated Revenue Breakdown (NT$ mn) 1Q18A 1Q17A YoY 4Q17A QoQ
momoshop (B2C) 8,395.8 5,880.0 42.8% 8,193.4 2.5%
momomall (B2B2C) 15.0 17.3 -13.3% 16.1 -6.8%
TV home shopping 1,460.8 1,351.83 8.1% 1,468.9 -0.5%
Catalogue 290.4 320.3 -9.3% 244.1 19.0%
Others1 21.7 11.9 83.2% 17.4 24.8%
Total Revenue 10,183.8 7,581.5 34.3% 9,940.0 2.5%
Note 1: Other revenue consists of operating revenue from our 70%-held Fubon Gehua (Beijing) and 100%-held supporting
business units (travel agency and insurance distribution agent).
momoshop (B2C):
Revenue from momoshop increased 42.8% YoY to NT$8.4bn and accounted for 82.4% of
our consolidated revenue during the quarter. The accelerating growth is the fastest since
listing and enabled momoshop to expand its market share vs. major peers in E-Commerce
and brick & mortar retailers. The accelerating growth can be attributed to 1) strong CNY
demand; 2) strong growth in our mobile GMV of 70.7% YoY and a healthy growth of PC
based revenue of 16.3% YoY; and 3) category strengths in 3C Electronics and housholds.
3C Electronics and households are the two categories that saw the fastest growth,
increasing by 61.8% YoY and 37.2% YoY respectively and accounting for 37.1% and
28.2% of B2C’s revenue. 3C Electronics and households accounted for 32.8% and 29.3%
of revenue in 1Q17.
Figure 2 – Category Breakdown for B2C 3C Electronics Household Fashion & Luxury
Beauty & Healthcare Sports & Outdoors
momomall (B2B2C):
Commission and related income for B2B2C declined 13.3% YoY to NT$15.0mn as GMV
for our market place platform declined 26.5% YoY to NT$209.3mn. Unlike other B2B2C
platforms, momomall does not offer free shipping subsidies.
TV home shopping & Catalogue:
TV Home shopping revenue totaled NT$1,460.8mn in 1Q18, an increase of 8.1% YoY.
This was a second consecutive quarter of YoY growth, despite the termination of momo’s
third channel on January, 1st 2018. The recovery was aided by the broadcast of momo’s
channels 1 and 2 signals on the MoD platform and strong demand for fashion and luxury
items (+25.1% YoY) during the quarter.
Catalogue business, which has approximately 65-75% of its product listings are TV home
shopping products, saw revenue totaling NT$290.4mn in 1Q17, a decline of 9.3% YoY,
but an increase of 19.0% QoQ.
momoshop, our B2C
platform, generated
82.4% of 1Q18
consolidated revenue
vs. 77.6% in 1Q17
1Q18 Revenue
Breakdown by BUs:
Note: B2B2C 0.2%; Others 0.2%
B2C revenue driven by
higher mobile sales
(+70.7% YoY)…
… and strong growth for
3C Electronics (+37.1%
YoY) and household
items (+37.2% YoY)
TV revenue saw its
second consecutive
quarterly YoY growth
(+8.7%) since 4Q15…
…..despite the
termination of momo’s
third channel on Jan. 1,
2018.
1Q18
1Q17
32.8%
29.3%
18.0%
14.0%
5.9%
Catalogue 2.5%
B2C
82.4%
28.2%
13.2%
16.6%
37.1%
4.8%
TV
14.8%
(+61.8% YoY)
(+37.2% YoY)
3
II. EBITDA Analysis
Figure 3 – EBITDA Breakdown
EBITDA (NT$ mn) 1Q18A 1Q17A YoY 4Q17A QoQ
momoshop (B2C) 256.1 260.8 -1.8% 365.4 -29.9%
momomall (B2B2C) (5.2) (11.2) -53.4% (10.3) -49.4%
TV home shopping 199.1 72.8 173.5% 117.8 69.1%
Catalogue 20.3 20.0 1.8% 3.3 522.7%
Others1 (6.5) (3.9) 65.3% (6.5) -0.5%
Total EBITDA 463.8 338.4 37.1% 469.6 -1.2%
EBITDA Margin 1Q18A 1Q17A YoY 4Q17A QoQ
momoshop (B2C) 3.0% 4.4% -1.4ppt 4.5% -1.4ppt
momomall (B2B2C) (34.7%) (64.6%) +29.9ppt -63.9% +29.2ppt
TV home shopping 13.6% 5.4% +8.2ppt 8.0% +5.6ppt
Catalogue 7.0% 6.2% +0.8ppt 1.3% +5.7ppt
Others1 (29.7%) (33.0%) +3.2ppt -37.3% +7.6ppt
EBITDA margin 4.6% 4.5% +0.1ppt 4.7% -0.2ppt
Note 1: Other consists of operating revenue from our 70%-held Fubon Gehua (Beijing) and 100%-held
supporting business units (travel agency and insurance distribution agent).
momoshop (B2C):
B2C’s EBITDA declined 1.8% to NT$256.1mn and EBITDA margin declined 1.4ppt in
1Q18, given the lower product margins and higher fulfillment rate for deliveries from our
warehouse (fulfillment rate was 65.5% in 1Q18 vs. 61.9% in 1Q17 and 64.0% in 4Q17).
B2C’s EBITDA accounted for 55.2% of consolidated EBITDA in 1Q18. momoshop’s
primary focus continues to be market share gains from peers and brick & mortar retailers.
momomall (B2B2C):
1Q18 losses from our momomall, declined by 53.4% YoY to NT$5.2mn. This is a lower
YoY losses for the 7th consecutive quarter.
TV home shopping:
TV home shopping’s EBITDA increased 173.5% YoY to NT$199.1mn during the quarter
and EBITDA margin improved to 13.6%, an increase of 8.2ppt versus 1Q18. The EBITDA
margin expansion is the result of higher revenue and lower cable related costs.
Non-operating profit/(loss):
Non-operating loss totaled NT$4.6mn in 1Q18 versus a profit of NT$53.5mn in 1Q17.
However, this included one-time disposal losses, IFRS 9 (market to market) impact of a
loss of NT$18.8mn in 1Q18, and one-time disposal gains of NT$8.8mn in 1Q17. momo
also recognized lower earnings from Global Mall of NT$0.3mn in 1Q18, vs. NT$28.7mn in
1Q17, the decline was impacted by losses from Citrus TV, a joint-venture in Dubai since
3Q17. For TVD-momo, momo recognized a loss of NT$0.4mn in 1Q18 vs. a profit of
NT$2.8mn in 1Q17 as the subsidiary begins to ramp up its E-Commerce business.
Tax rate
momo’s tax rate as a percentage of pretax profit was 21.0% in 1Q18 versus 15.9% in
1Q17. This is the result of higher corporate income tax rate instituted by the government in
2018, versus 17% previously. momo is in the process filing to recognize tax benefit from
the capital reduction of Fubon Gehua and BOO tax credit from the construction and
equipment purchases of the automated warehouse.
Consolidated EBITDA
increased 37.1% YoY in
1Q18, driven by the
continued recovery in
the TV home shopping
business
Consolidated EBITDA
margin in 1Q18
increased 0.1ppt YoY,
benefiting from strong
margin expansion from
TV home shopping
business (+5.5ppt YoY)
B2C’s EBITDA margin
declined 1.4ppt in 1Q18
on lower product margin
and higher fulfillment
rate from warehouse
TV Home shopping’s
EBITDA increased
nearly 173.5% in 1Q18
on improving revenue
and lower cable cost
Adjustment of one-time
items were losses of
NT$18.8mn in 1Q18 and
gains of NT$8.8mn in
1Q17
momo is filing to
recognize tax benefit
from capital reduction of
Fubon Gehua and BOO
tax credit from
investment in automated
warehouse
4
III. Balance Sheet Analysis
Figure 4 – Balance Sheet NT$ mn 1Q18A 1Q17A YoY 4Q17A QoQ
Cash & cash equivalents 3,259.6 4,197.4 -22.3% 3,575.1 -8.8%
Accounts receivables 32.6 42.4 -23.1% 30.2 7.9%
Other receivables 692.8 499.0 38.8% 936.1 -26.0%
Inventories 1,142.5 388.3 194.2% 1,036.6 10.2%
Other current assets 202.1 208.8 -3.2% 105.8 91.0%
Current assets 5,329.6 5,335.9 -0.1% 5,683.8 -6.2%
Long term investments 1,273.5 1,283.2 -0.8% 1,300.6 -2.1%
PP&E 4,559.2 3,426.4 33.1% 4,565.3 -0.1%
Other non-current assets 254.9 184.7 38.0% 228.2 11.7%
Total non-current assets 6,087.6 4,894.3 24.4% 6,094.1 -0.1%
Total Assets 11,417.2 10,230.2 11.6% 11,777.9 -3.1%
Short term borrowings 63.5 59.9 6.0% 62.3 1.9%
Accounts payable 3,735.4 2,752.7 35.7% 3,695.5 1.1%
Other payables 302.9 471.7 -35.8% 1,254.7 -75.9%
Other current liabilities 860.2 653.9 31.5% 631.4 36.2%
Non-current liabilities 268.1 259.5 3.3% 266.5 0.6%
Total Liabilities 5,230.1 4,197.7 24.6% 5,910.4 -11.5%
Common stock 1,420.6 1,420.6 0.0% 1,420.6 0.0%
Capital surplus 3,057.7 3,175.6 -3.7% 3,057.7 0.0%
Retained earnings 2,227.1 2,104.6 5.8% 2,061.9 8.0%
Treasury share (397.2) (397.2) 0.0% (397.2) 0.0%
Other equity items (121.1) (271.1) -55.3% (257.5) -56.0%
Shareholders' equity 6,187.1 6,032.5 2.6% 5,867.5 5.4%
Cash & cash equivalents:
Cash position in 1Q18 was NT$3.3bn, lowered by 22.3% YoY and 8.8% QoQ given the
CAPEX earmarked for the automated warehouse and the working capital requirement
increased as the result of high inventory. momo ended 1Q18 with approximately
NT$3.3bn in net cash including 7.4% of cash equivalent items, or NT$22.8 per share
(142mn shares outstanding, including 2mn shares of treasury shares).
Inventory:
Inventory level was nearly 3.0x higher at NT$1,142.5mn in 1Q18 on a YoY basis. The
increase of inventory reflects higher inventory stocking for faster turn items and branded
products that momo owns outright. Currently, active SKUs in the warehouse is
~500,000SKUs, an increase of 50.6% YoY. In addition, momo began allocating additional
inventory to satellite warehouses to further enhance our delivery efficiency.
PP&E
PP&E increased 33.1% YoY to ~NT$4.6bn in 1Q18, reflecting the completion of the new
automated warehouse that commenced operation in 4Q17. There remain final payments
of ~NT$3.1mn from automated warehouse to be paid in 2Q18.
Decline in cash position
on YoY basis is the
result of CAPEX
earmarked for our new
automated warehouse
1Q18 inventory was
nearly 3.0x higher vs.
1Q17 as we have added
170,000 SKUs in our
warehouse to 500,000
SKUs
momo’s balance sheet
remains strong with
NT$3.3bn in net cash or
approximately NT$22.1
per share
The NT$4.2bn CAPEX
for automated
warehouse remains
NT$3.1mn of final
payments
5
IV. Cashflow Analysis
Figure 5 – Cashflow NT$ mn 1Q18A 1Q17A YoY 4Q17A QoQ
(+) Operating profit 393.0 313.3 25.4% 424.1 -7.3%
(+) D&A 70.8 25.2 181.0% 45.5 55.6%
ΔWC*-1 (during the period) (324.0) (86.9) 272.8% 378.5 n.m.
Others 677.3 (36.7) n.m. 109.2 520.2%
Operating cashflow 817.2 214.8 280.4% 957.3 -14.6%
Capex (559.8) (520.3) 7.6% (261.3) 114.2%
FCF 257.3 (305.5) n.m. 696.0 -63.0%
Other investing cashflow 58.6 770.8 -92.4% 95.7 -38.8%
Investing cashflow (501.2) 250.5 n.m. (165.6) -202.7%
Financing cashflow 0.3 (6.8) n.m. 5.6 -94.6%
Change in cash 316.2 458.4 -31.0% 797.3 -60.3%
FCF
In 1Q18, momo disposed financial assets to raise cash for CAPEX needs from the
automated warehouse, as a result, operating cashflow and FCF turned positive to
NT$257.3 mn vs. 1Q17’s –NT$305.5mn. If the disposal of financial assets had occurred in
2017, prior the implementation of IFRS 9, the cash in-flow would have been classified as
investing cashflow. The 181.0% YoY (+NT$45.6mn) increase of D&A expense is mainly
the result of higher depreciation amount from our automated warehouse.
CAPEX
+90% of CAPEX spend in 1Q18, 1Q17, and 4Q17 are earmarked for the automated
warehouse and in 1Q18 the amount was NT$559.8mn. There remains NT$3.1mn of final
payments and will be made in 2Q18.
Investing cashflow
The decline of NT$501.2mn in investing cashflow for 1Q18 is the result of IFRS 9. In
1Q18, the cash earmarked for CAPEX was generated from disposal of fund investments
which was recognized as funds in-low in operating cash flow. In 1Q17, however, momo
raised cash need for the payment for CAPEX from the release of certificate deposits,
which resulted in net inflow of NT$250.5mn from investing cash flow in 1Q17. If the
disposal of financial assets had occurred in 2017, prior the implementation of IFRS 9, the
cash in-flow would have been classified as investing cashflow.
Operating cashflow
increased 280.4% YoY
and FCF turned to
positive at NT$257.3mn
on higher operating
income and IFRS 9
impact on
reclassification of
source of funds raised
for our CAPEX needs
+90% of our CAPEX
spend was for the new
automated warehouse
6
V. Financial Analysis
Figure 6 – Financial Ratios Financial Ratios 1Q18A 1Q17A YoY 4Q17A QoQ
Current ratio 107.4% 135.5% -28.1ppt 100.7% +6.7ppt
Interest coverage (x) 541.8 420.4 +121.4 503.9 +37.9
Net Debt (cash) to equity -51.7% -68.6% +16.9ppt -59.9% +8.2ppt
Net Debt (cash) to EBITDA (x) (7.2) (11.6) +4.3 (6.7) -0.6
ROE (annualized) 20.5% 21.0% -0.5ppt 25.5% -5.1ppt
ROA (annualized) 10.7% 12.2% -1.6ppt 13.6% -2.9ppt
Recurring ROE (annualized) 21.7% 20.4% +1.3ppt 25.5% -3.8ppt
Recurring ROA (annualized) 11.3% 11.9% -0.6ppt 13.6% -2.3ppt
Financial Ratios and ROE
The YoY decline of current ratio in 1Q18 was result of lower cash position for payment for
our automated warehouse and higher inventory level resulting in higher accounts payable
during the quarter.
momo has a mere NT$63.5mn in interest bearing debt as of 1Q18 and remains in net
cash position (NT$22.8 per share) and net cash to equity ratio of 51.7%.
Annualized ROE in 1Q18 declined 0.5ppt YoY to 20.5%. On a recurring basis, however,
the annualized ROE in 1Q18 was 21.7%.
Figure 7 – Working Capital & CCC Days
Working Capital NT$ mn 1Q18A 1Q17A YoY 4Q17A QoQ
Accounts Receivable 725.4 541.4 34.0% 966.3 -24.9%
Inventories 1,142.5 388.3 194.2% 1,036.6 10.2%
Accounts Payable 4,013.6 3,210.1 25.0% 4,472.6 -10.3%
Working Capital (2,145.8) (2,280.3) -5.9% (2,469.7) -13.1%
ΔWC (YoY) 134.6 (151.1) n.m. (102.5) n.m.
CCC (days)
AR Days 7.5 7.4 +0.0 7.1 +0.4
Inventory Days 10.7 4.7 +6.1 8.3 +2.5
AP Days 41.8 44.0 -2.2 39.3 +2.5
CCC (days) (23.6) (31.9) +8.3 (24.0) +0.4
*Inventory Days’ calculation is based on data from cost of sales.
Working Capital:
Total working capital required for momo’s operation was –NT$2.1bn in 1Q18, an increase
of 5.9% YoY, given the increase in inventories of nearly 3.0x YoY to NT$1,142.5mn.
Cash Conversion Cycle (days):
momo’s Cash Conversion Cycle (CCC) remains at less than -23.6 days even though
inventory turnover days increased by 6.1days vs. 1Q17. The increase of inventory days
reflects higher inventory stocking for faster turn items and branded products that momo
owns outright.
Annualized ROE
declined 0.5ppt YoY but
on a recurring basis
ROE was 1.3ppt higher
at 21.7%
momo has net cash to
equity ratio of 51.7%
Total working capital
required momo remains
negative at -NT$2.1bn in
1Q18
Although inventory
turnover days increased
6.1 days YoY, momo’s
CCC remains at a
healthy negative 23.6
days
