JS Global Lifestyle Company Limited (1691) Earnings Call Transcript & Summary

Dear investors and analysts, good morning. Welcome to this JS Global 2026 Interim Results Presentation. So I am the moderator today, Poppy. Today, our meeting will be conducted in Chinese. If you need English interpretation, please switch to English channel. [Operator Instructions] Before we get started, let me make a few reminders. First of all, this conference call will be recorded, and it will be published on the company's official website simultaneously. Welcome to consult after the meeting. Secondly, in the management's speech, there may be expectations for future operation and the forward-looking statements, which are uncertain and actual results may differ from the statements. We may also mention some non-IFRS metrics to better present the business performance. So for relevant definitions [indiscernible], please refer to the announcement and presentation materials. So now let's get started. Here is today's agenda. We will have the management team to briefly present the interim results and business progress, then we will come to the Q&A session to discuss with all the investors and analysts. So now let's introduce the company's management attending today's meeting. We have Ms. Han Run, Executive Director, CEO and CFO of the company; Mr. Liu Yin Qing, Chief Operating Officer and Head of Finance; Mr. Miao Minxin, the Secretary of the Board of Directors of Joyoung. So now let's enter the management presentation session. First, speaking by Ms. Han Run. She will present the key points of company's annual business report. So thank you.

Thank you, Poppy. Dear investors, good morning. Welcome you to this JS 2026 interim results presentation, and thank you so much for your continued attention and support for our company. So first, let me briefly walk you through the group's overall operating performance for the first half of 2026. In H1 2026, the group recorded revenue of USD 741 million, gross profit was USD 229 million with a gross margin of 30.9%. On the adjusted basis, revenue from third-party customers reached USD 711 million. Adjusted net profit was USD 14.8 million, up 9.6% Y-o-Y. Although revenue and gross margin in the first half were impacted by weaker consumer demand in Mainland China, business transformation in South Korea and intensified competition in certain markets, our group still has recorded a net profit of USD 13 million, turning from loss to profit compared with the same period last year with overall profitability improved. By business segment, SharkNinja APAC continued to demonstrate resilience in development. In H1, revenue from third-party customers grew 6.2% Y-o-Y. Excluding the impact of the software business transformation, the growth would be 31.4%. The NAZ market continued to perform well with steady growth in core categories such as cooking, beverage and cleaning. Japan market grew at constant currency. We also have made positive progress in emerging markets such as India and Southeast Asia. The South Korea market has also completed our transition to DTC and resumed our sales in the second quarter. We will also continue to strengthen our local operations and channel development to drive business improvements. From Joyoung perspective, in H1, the domestic small home appliance market continued to face challenges from the weak demand and intensified competition. In response to the market changes, Joyoung continued to drive product innovation and channel optimization around its core categories. Market shares in key categories such as soymilk makers and blender remained stable, while the share of direct sales channel also further increased. In H2, Joyoung will also continue to launch new products in core categories, continuously enhance product competitiveness and channel operational efficiency and share the improvement in market size and share. That's all for my brief introduction. I will hand over to Leon to give you further details on the performance of each business and regions. Thank you.

Okay. Thank you, Ms. Han. So now I will update to you about the overall performance of our group in H1. So now let's just first look at the overall financial performance. As mentioned by Ms. Han, our H1 revenue was USD 741 million, Y-o-Y decreased by 4.3% and revenue from third party was USD 711 million Y-o-Y decrease of 1.2%. Revenue performance was mainly affected by the weak demand of Joyoung business in China and transformation of the business in South Korea. And in terms of profitability, the group's gross margin was USD 229 million and Y-o-Y decrease of 7.7%. The gross margin was 30.9%, Y-o-Y decrease of 1.2%. So according to the third-party revenue, the gross profit was also USD 229 million, a Y-o-Y of 5.3%. Gross margin was 32.2%, decrease of 1.3%. Although we have pressure on revenue and gross margin, our net profit still has been achieved at USD 11 million in H1, turning a profit compared with the same period last year. And our adjusted net profit was 14.8%, increase of 9.6% Y-o-Y. And net profit adjusted margin rose from 1.7% to 2%. This mainly reflected our group's effort in expense management and nonoperating items changes and business structure adjustment. So for the next page, let's look at different segments. In H1 2026, Joyoung third-party revenue was $467 million, slight decrease compared with $490 million in the same period of time due to the relatively weak sales of blender, rice cooker and electric kettles. And it is offset by the decline by the growth of soymilk makers and cookware. So SharkNinja, our third-party revenue in Asia Pacific was $244 million with a Y-o-Y increase of 6.2%. The apparent growth was also mainly affected by the business transformation in South Korea, existing the impact of South Korea business, as Ms. Han mentioned. If we exclude that, the revenue in APAC actually increased by 31.5%. The growth was mainly driven by the strong performance of cooking and beverage categories, especially our air fryer, Crispi and our newly launched espresso machine, thanks to their excellent performance. So from the revenue structure, SN APAC percentage of the third-party revenue has increased from 31.9% to 34.4%. This has already shown this a continuous increase of our APAC revenue to the group's overall one. So in terms of regional distribution, ANZ is a major source of growth driver in H1 this year. The number has increased from USD 96 million to USD 129 million, mainly driven by the strong performance of air fryers. And the special machine was also launched at the end of 2025. It has brought about an overall positive performance in H1 of this year, and there was also continuous growth in cordless vacuum cleaners. Japanese market revenue decreased from USD 66 million to USD 63 million, mainly due to the depreciation of the Japanese Yen. Calculated at constant exchange rate, Japan's market revenue increased by 2.6% with very good growth in fans and air fryer. The cordless vacuum cleaner were affected by market competition and price pressure canceling each other due to this compensation of a different development. So South Korea's market revenue dropped from USD 58 million to USD 18 million, mainly due to the transition to a direct sales mode. So this sale in the first quarter was greatly affected by that. After the transition to direct sales in second quarter, sales also improved, but not enough to offset the impact of the first quarter's disruption. Revenue in other regions increased from USD 17 million to USD 44 million, reflecting the progress of our emerging market expansion. In Chinese market, it decreased from USD 483 million to USD 457 million. This is mainly due to the weak demand. So the next page is our gross margin from the third-party revenue in H1 2026 and it decreased from USD 241.6 million to USD 229 million. The gross margin dropped from 33.5% to 32.2%. When we break them down, we also can see that Joyoung's Y-o-Y impact on gross profit was negative USD 22.2 million, mainly due to the changes in product mix, government subsidy adjustments and it's also the increase of the transportation fee after the proportion of direct sales increase. SN APAC continued to contribute of USD 9.5 million in gross profit, mainly due to the launch of new products with higher gross margin and continuous product cost optimization. So generally speaking, group-wise, the decline of our gross margin mainly comes from the pressure of Joyoung business, which is partially offset by the improvement of SN APAC. So in the future, we will also continue to optimize the product mix and the supply chain and improve operational efficiency to continuously improve the profit quality. For the next page, for our operational efficiency in H1 2026, our entire inventory days of turnover was 57 days, lower than 59 days in H1 2025. It was slightly higher than the full year level of 2025. Our receivables and notes receivable turnover days were 101, higher than 97 in H1 2025. And accounts receivable and notes receivable turnover days were 198, relatively stable compared with last year. Overall inventory management remained relatively stable. We will pay continued attention to this for the accounts receivable and the notes receivable with our combination of business and channel structure changes. So in the second half of the year and beyond, the group will also continue to strengthen inventory planning, preparation and payment collection and the supply chain and support business growth as well as improving the efficiency of our capital use. For the next page, we also can see that the group continuously to maintain a balanced and prudent capital structure. H1 2026, our CapEx was USD 18 million, lower than USD 21 million in the same period last year. As of June 30, 2026, the group's interest-bearing loans amounted to USD 79 million, of which noncurrent loans were USD 44 million with a loan of USD 35 million and a debt-to-equity ratio of 0.15x. It has slightly increased from 0.14x, but it is still basically flat. So overall, it is still at a very low level. The current capital structure is mainly focusing on the group's continued expansion in investment in product innovation, market expansion, especially in the APAC region and daily operations. We will still continue to strike a balance between business investment, capital efficiency and financial stability. Next, we will move on to the APAC business updates. Sorry about it. H1 for different market performances were quite different. ANZ and emerging markets still maintain quite strong growth and the Japanese market still maintained a growth under the fixed exchange rate. After the conversion of the business mode, South Korean market has also seen a rapid advance. So now I will break them down by markets to share with you the new product launches and the second half of the year's product planning. ANZ market, the performance was very strong, and our third-party revenue increased by 34% Y-o-Y, exceeded USD 100 million, reaching USD 129 in the context of the overall pressure of the industry, the growth of the business mainly comes from the continuous product innovation and efficient market execution. In terms of categories, Ninja's Cooking & Beverage have increased by 124% Y-o-Y and Ninja Food Preparation increased by 14%. Shark Cleaning increased by 22%. And our beauty and home products grew by 73%. Shark growth are contributed mainly by floor cleaning and beauty products and the cordless vacuum cleaner maintained a good performance. And we also can see that the Shark CryoGlow with LED light mask has marked our brand entering the market skin care field and our special machine as well as our blender and Crispi air fryer have also been a hit, becoming the main growth drivers. We have more frozen categories, including the ice cream makers, the coffee makers some cooking products and beauty and hair care products, et cetera. Now let's take a look at the Japan market. The consumption environment of Japan is more precautious. The consumers pay more attention to the value to money of the products. So this is the trend we have observed in the first half of the year. And there is ferocious pricing competition of the cordless vacuum affected by that, the revenue of the cleaning products have been dropped by 14% year-on-year. For different price ranges and consumption demand, our company has been diversifying the portfolio for the cordless vacuums and we have introduced the differentiated products and the revenue have been improved. And in May and June, the revenue had been growing by 20% year-on-year. The categories of the other types had been performing very positively. The Shark beauty and home have been growing by 284% and Ninja Food Preparation grew by 4%. And in the second half of 2025, we launched the beverage products, and there is no comparable revenue. And we have seen a great performance since the launch of this product. And at the same time, with the TurboBlade of Shark and Ninja Crispi and some other new products, we are actively expanding the category coverage in Japan. And we will keep an eye on the improvement of sales of the market and to keep reacting to the changes. And these are the emerging markets and emerging markets had to become a new growth point for us in APAC. In first half year, there had been a contribution of $35 million with a year-on-year growth of 240%. And we accessed in Singapore, Malaysia, Philippines, Indonesia, Thailand and Taiwan, China. And in the first half of 2026, we also accessed into Hong Kong, China and India market. And since the launch of the products in India, we have seen a very strong momentum. And the trend of sales in India is outperforming other emerging markets. And as for Hong Kong, China, after the launch of the new products, we also have seen a good performance. We just get started in June in Hong Kong, China, and we have some pop-up stores offline and the online sales are also good. So we're still incubating and expanding in the emerging markets and priority now is to have the pace introduction of new products, establish and expand the local channels and better execute the market so that we can expand the consumer coverage. The efficiency of investment in various markets varies. And based on the operation foundation, we will have corresponding strategies. And next, I'd like to talk about NPD. New product innovation has become a very important driving point for the SN APAC expansion. And in the first half of this year, we had a series of new products launched. For example, we have the EvoPower, the lightweight cordless vacuum cleaner covering the growing market segment that is of cost effectiveness. And in terms of the coffee makers, we have the Ninja Luxe Café, which is a high-end all-in-one coffee platform and allowing the consumers to make coffee at a high standard. And the Ninja Crispi is a portable glass air fryer integrating the convenience and versatility, continue to be welcomed by the consumers in APAC. And the Shark TurboBlade, which is a power fan, blade-less fan, supports the customization mode and expands the home environment category. In Japan, Australia and New Zealand, it has been very popular. And we also have the CryoGlow, which is the scientific beauty product. So all in all, we have a comprehensive expansion of products, including coffee, cooking, home and beauty. We plan to continuously promote the product launch in the second half of the year. And in drinking products, we have promoted the Ninja BlendBOSS in several markets, it will enhance the small-scale blender market and the Slushi Max and Twist have expanded the highly successful slushi market. And the Ninja Crispi Pro, which is a larger machine with higher power and more cooking modes can meet the needs of family meals, snacks and side dishes. And in terms of the beauty products, we have the FacialPro Glow. It will further diversify the Shark beauty line. And for cleaning, we will introduce the PowerClean 360 Pro upgrade, which is a cordless vacuum cleaner. We also have the new upgraded automatic dock. So all of these products has reflected the expansion of the category and applications of the company corresponding to the market demand. And we will pace ourselves according to the performance and include the feedback of the consumers and the readiness of the local channels as well as the varying market environment. So we will keep the investors updated. In terms of Joyoung, the demand for small household appliances in Chinese market remained weak. Therefore, there have been some headwinds and the pressures. And Joyoung continued to focus on the core categories, efficiency and competitiveness as well as product innovation capabilities to enhance our operational efficiency. And next, I'd like to introduce the share of the core categories, the product innovation strategies and the DTC market channel development. Despite the pressure on revenue, Joyoung's online market share in multiple core categories remained resilient. For example, blender increased from 41.4% to 46%, up by 4.6 percentage points and soymilk maker increased from 38% to 46%, up by 8 percentage points and pressure cooker 9.8% to 12% and water purifier up from 2.1% to 3% and cookware up from 1.5% to 2% and rice cooker was about 10.9% in market share dropped slightly to 10%. So with the overall weak demand, Joyoung has maintained its strong competitiveness in several categories such as blender and soymilk maker. And we still have 3 pathways to optimize our innovation. The first is to keep pace with market trends and accelerate the R&D and go-to-market. The second is the expansion of the scenarios. Targeting on the demand of consumers, we have optimized the formats and enhanced the daily usage. And number three is the strengthening of the product content and the channels so we can explore how to create better hit products. And with these 3 methods, we can better meet the demand of the consumers and to improve the efficiency of go-to-market and commercialization. In terms of the channels, the 4 main online channels already have the DTC layouts and based on the GMV, JD accounts for 69% and Tmall 61%, both of them are over 60%. Douyin's DTC also account for 28% and the PDD 13%. The DTC operation basis for JD and Tmall are relatively stable and the company is penetrating more in Douyin and PDD. DTC us to better reach out to our consumers and to coordinate between the branding, product content and the channel operations. And it will also bring changes to the fulfillment, freight and operational investment. Therefore, we will continuously pay attention to quality of channel growth and efficiency of the expansion. So this is the basic construction of the financial and the business performance of the first half year. And overall, the revenue had been under pressure, but we strive to turn to a profit and adjusted net profit maintained continuous growth. And in APAC, excluding the transformation to South Korea, we have maintained rapid growth, and we have seen strong performance in New Zealand and Australian market. And with weak demand, Joyoung has maintained competitiveness and market share of the core categories and adjusted the product and the channel mix. Okay. Next, we can have further discussions.

Thank you, Madam Han and Leon for your sharing. Next, we will have a Q&A. [Operator Instructions] Now let's invite the first investor. Let's welcome [ Ruilin Feng ] from CLSA.

Can you hear me?

Ruilin, we can hear you fine.

I am from CLSA. I'm an analyst, and I have 2 questions. The first is related to the gross margin. And as in APAC, the revenue is slightly growing compared with the same period last year. But according to the industry data, there had been a cost increase of the raw material, but the gross margin of APAC has been growing great. So I have calculated it, there had been about 10% growth of the gross profit margin. And the gross margin also have been growing by 1% to 2%. So why is that so? And the second question is that in the first half, the group has turned to profit and the bottom line is also quite satisfying. And the adjusted profit have been growing by 9.6% year-on-year. So can you split the contribution by segment? That means the contribution from SN APAC and Joyoung separately. Okay. These are my 2 questions. Leon, please answer the question.

Thank you, Ruilin. Good question, indeed. The first question is about the gross profit margin and -- in 2026 first half. Indeed, the cost of the raw material and the components have been growing and we have faced certain pressure. On the one hand, we have seen the impact of the U.S. Iran war and there have been impacts on the oil price. The plastic parts have been more expensive and also for some commodity like copper and other metals, there have been some impact as well. But generally speaking, against this backdrop, we maintained a growth of about over 1 point in gross profit margin. So there are several reasons. The first is introduction of new products with high gross profit margin. And in the second -- in the year-end last year, we have launched some beauty products and coffee makers, the hair care products contributing to higher revenue and gross profit margin and some air fryers and beverage products like Slushi [ creamy ] have been growing steadily. And these categories not only contributed to the revenue, but also diversified our product lines, not only in cordless vacuum and cleaning, cooking products, but also to some new categories such as the beverage and food preparation and Shark and Ninja as a percentage in revenue have been also growing. The second reason is a more balanced development, especially in Ninja. We have an optimization of cost and have better sourcing in material and parts and optimize our product design as well. So actually, we have been doing that every year. But this year, we have seen a more effective results, and we have the VAE department that is optimization of engineering and design. So for the specific work, not just by lowering the product standard, but when we are ensuring the consumer experience and product performance, we are actually lowering the unit cost through VAE. And with the optimization of the products, it has also positively influenced the increase of the raw material price, and it is offsetting the promotional pressure. The third point is when we are expanding our business scale, the efficiency of our supply chain and operation have also been significantly improved as our APAC business scale expands, including the company's procurement and logistics because some of the transportation fee has been calculated as our cost, including storage arrangements and the distribution, we all have a better room for bargaining and the optimization space. So APAC has also picked down to simply expand its scale to the gradual shifting to more refined cost management and efficiency management. So to sum up, cost-wise, the same like other companies, we are under huge pressure, especially first half of this year. And with our sales and new product launches and the VAE, including our scale economy, scale effect and our continuous refined management, the lean management has improved our gross margin in H1 this year. This has also reflected that after 3 years after the spin-off, an APAC management capability is also mature. Previously, we have also mentioned in H2 2025, an important goal of 2026 is in APAC region, except for scale growth, we also hope to have more mature and more refined management. This is also in H1, what we have already seen here. And the second point is about net profit, adjusted net profit, as we mentioned, we have grown by 9.6%. Group-wise, it is -- last year, it was about USD 13 million. And this year, we have turned from loss to a profit. If we look at the breakdown, the Joyoung segment is still under huge pressure. We have also seen that last Friday, we have already released the interim report. The net profit still decreased by 40%. It's because of the product structure and what we mentioned about the closure of governmental subsidy policy and the improvement of this DTC has actually increased the transportation cost. So these have all added to our overall pressure on profit. And in response, Joyoung has controlled our administrative expense and improved operational efficiency. This has somewhat offset the pressure. But overall, we are still under pressure in H1 this year, soymilk maker and cookware categories have all achieved growth and the core categories like soymilk maker, rice cooker, pressure cooker and water purifier, as we mentioned, their market shares have all increased. Although the market has not fully stabilized. However, from our perspective, we think our corporate [indiscernible] are still having a strong competitive edge from a market perspective. So the current focus is still having the result of these market practices and new products to be fully translated into our advantage of our product mix. And later on our profit performance. So the products in APAC has also been continuously improving. First of all, the gross profit, as mentioned before, this growth, including the increase of the gross margin is actually it could be translated into our good improvement of the net profit. And additionally, for SN South Asia and by improving our market efficiency, including our investment in marketing in relatively mature markets such as ANZ, Australia and New Zealand, the market perception of our brands are already quite high. And our marketing efficiency, marketing control are also more in place, leading to better ROI. So all these measures have already made our business maintained a very high growth and our expense have also been under good control. Gross profit has also been improved, making the net profit of APAC being on the right track, so contributing to the overall growth. That's all for the answers of the questions.

[Operator Instructions] Now let's invite [ Junhao ] from Huatai Securities.

I'm having 2 questions. First of all, Joyoung, Y-o-Y speaking, you can also see that H2 last year was actually having a relatively low base. And as mentioned before, we'll continue to launch new products in H2 and optimize channel efficiency. So I would like to ask that in H2, would Joyoung have an opportunity to narrow the revenue gap? The second thing is about SN APAC, as we mentioned before, like blenders and coffee machine. And we also can see that Shark Ninja in North America and Europe, we have gradually seen the out-of-stock experience. I would like to say that if APAC region, if these new big hits also would have this out-of-stock crisis, how do we plan for that? Or if there is out-of-stock situation, how do we make it up?

So the first question about Joyoung, we will invite Mr. Miao Minxin to make the answer. He is the Secretary of the Board of Directors of Joyoung.

Junhao, I would like to answer this question. So first of all, domestic small household appliances, indeed, we have seen throughout H1, the demand is relatively weak, but the demand is also differentiated. The channel structure is changing rapidly and the competition is also intensifying. This is the objective market that we have already experienced. So Y-o-Y wise, our domestic sales has also declined by 11%. As I have already mentioned, this is subject to the lower sale of blender and rice cooker, et cetera. But as I said, the blender, we still have a very good market share, which is being increased. So we can see that when we are seeing this relatively poor data environment, we are still working hard to improve our capabilities so that our core categories can achieve some growth. For example, soymilk maker and cookware have also achieved quite good growth. At the same time, we have also made changes to our product mix, increased the proportion of DTC it will increase our transportation costs influence our gross margin. So you can see that in H1, our gross margin has also been under some pressure in H1. However, Joyoung, we will still continue to focus on soymilk maker, blended rice cooker, pressure cooker and water purifier. These core categories with strong brand foundation and our core competitiveness, we will still maintain our advantage in these categories. And in H1, with the backdrop of increasing market share in multiple categories, we still think there are some improvements. But we think overall, due to the environmental problem or because of the demand being weakened, we are still having relatively weak performance. Revenue is under short-term pressure. But market share-wise, we still hope to grow the share continuously. So from the retail perspective and market share perspective, we hope to achieve the growth of Joyoung as a brand. So this is for H1 or the direction for H2. And channel-wise, in JD, Tmall, Douyin and Pinduoduo, our DTC shares have also been relatively high. So as what Leon introduced in the previous slide, we can also see the same data. With DTC, it could help us to better understand the consumer data, including prices, inventory and other market dynamics. It will also make further improvements and lay a solid foundation for the improvement of the efficiency subsequent channels. In H2 this year, Jo-Young will still focus on the core categories to restore the declining categories and maximize the key categories volume for the categories with a small scale but beautiful promise, we will create some new hits and further improve our channel efficiency. Product-wise, we will also continue the strengthening of the features such as health materials, lightness, convenience, cleanliness, smart control and low noise. It will make our future users intuitively feel the improvements of the product value. We'll also make efforts from this perspective to make our success rate of core categories launches and conversion efficiency. And then it will actually make our ROE of the investment to be better and improve gradually. And we will also be on different platforms to make some product combination as well as resource inputs. For example, we will enhance our content e-commerce live streaming matrix of self broadcasting, including the instant retail and the synergy between traditional shelf e-commerce and the optimized the efficiency of DTC as a whole. And we also are very confident to increase the overall revenue, the performance in H2 and improve the year-round development, and we will also pay attention to the changes of the profit side.