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Dear Shareholders

On behalf of the board of directors (the “Board”) of Beijing Capital Grand Limited (“Capital Grand” or the “Company”, together with its subsidiaries collectively referred to as the “Group”), I am pleased to present the interim results of the Group as of 30 June 2019.

Since 2019, despite complex domestic and international economic situation, China’s national economy has continued to perform within an appropriate range and maintained a momentum of making progress while keeping general stability. GDP for the first half of the year reached RMB45.09 trillion, representing a year-on-year increase of 6.3% on the basis of comparable prices. The macro-control policy continued to unleash consumption momentum. Further steps were taken to optimize supply as a driver for steady consumption growth. Constant improvement of the economic structure has resulted in a continuously improving income structure for residents. Meanwhile, the structural upgrade trend in consumption remained the same. All these contributed to the sustained growth of outlets sales domestically.

During the period, focused on its objective for the year, the Group actively responded to the changes in external situation and consumption trend and achieved steady and positive business growth in general, thanks to such measures as optimizing types of operation and category portfolios, upgrading experiential consumption and developing distinctive Featured Block to boost customer visits and revenue. For the first half of the year, the Group realized a turnover of RMB3.64 billion in outlets operation, representing a year-on-year increase of over 54%. In particular, Beijing Fangshan Store conducted in-depth research into consumer demand and worked to deliver customer experience, based on which it constantly promoted the structural adjustment and upgrade of brands and commodities while carrying out differentiated marketing models, IP industrialization and cross-industry cooperation as a normal practice, which further bolstered the customer visits and brand influence. Holiday sales amounted to RMB350 million with a 76% year-on-year increase, while single-month sales kept reaching new highs and exceeded RMB200 million.

During the period, Jinan Project and Phase II of Beijing Fangshan Project staged their grand opening on schedule, constantly setting new records in consumer visits and sales. Specifically, Jinan Project adopted differentiated marketing strategies by focusing on customer bases, which contributed to over 300,000 customer visits and RMB38 million in sales for the first three days after it commenced operation. Phase II of Beijing Fangshan Project innovated its brand layout by adding cultural and travel contents and creating diverse experience scenarios to attract new and old customer groups. This brought in 170,000 customer visits and over RMB50 million in sales on the opening day, refreshing the daily sales record.

On top of its comprehensive operation upgrade, the Group further strengthened its ability in digitized operation and supply chain management. It carried out proactive infrastructure development in areas such as the digital transformation of new retail, omni-channel customer attraction, “membership economy” and construction of intelligent commercial complexes. Such efforts aim to build a new online-offline integrated platform for outlets operation with multiple contents, touch points and dimensions, to lead the reform and development of the business model of the outlets industry in China.

For the period under review, the Group recorded operating revenue of RMB1,265,581,000, representing an increase of 223% over the same period of last year; and net profit attributable to the parent amounted to RMB22,711,000. The Board has resolved not to declare an interim dividend for the six months ended 30 June 2019.

Although external economic environment remains uncertain for the second half of the year, it is expected that continuous execution of the supply-side structural reform and further implementation of the innovation-driven development strategy will keep unleashing the vitality of consumption innovation, with the consumption structural upgrade to continue as a trend. The Group will grasp the domestic development trends of the outlets industry proactively, continue its customer- centric innovation on products and services, pursue greater efficiency through optimized operation of existing projects, expand growth momentum by launching new projects on schedule, consolidate its foundation through technological empowerment, facilitate its development through diverse cooperation, and proceed with the projects in places such as Xi’an and Chongqing in an orderly manner so as to commence operation on time and with quality assured. At the same time, we will work harder to develop our digitized operation capability and tap into the integrated advantage of online-offline omni-channel platforms to meet diversified and personalized customer demands, build the character and connotation of Capital Outlets brands and lead the healthy and fast development of the outlets industry.

On behalf of the Board, I would like to express our sincere gratitude to all our shareholders, partners and customers for their care and support to Capital Grand. We will employ digital innovation as an entry point for breakthrough and smart operation as the means, to gain insight into consumer demands, provide well-considered goods and services, attain lower costs, higher efficiency and better experience, and never cease to create value for our shareholders, customers and partners.

Zhong Beichen
Beijing, 9 August 2019

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