HONG KONG TELEVISION NETWORK LIMITED

香港電視網絡有限公司
(SEHK stock code: 1137)

September 2017
Disclaimer
This presentation and subsequent discussions may contain forward-looking statements and information that involve
risks, uncertainties and assumptions. Forward-looking statements are all statements that concern plans, objectives,
goals, strategies, future events or performance and underlying assumptions and other statements that are other than
statements of historical fact, including, but not limited to, those that are identified by the use of words such as
"anticipates,'' "believes,'' "estimates,'' "expects,'' "intends,'' "plans,'' "predicts,'' "projects'‘, “target” and similar expressions.

The information included is solely for the use in this presentation and certain information has not been independently
verified. No representations or warranties, expressed or implied, are made as to, and no reliance should be placed on,
the fairness, accuracy, completeness or correctness of the information or opinions presented or contained in this
presentation. The performance and the results of operations of the Group contained within this presentation are
historical in nature, and past performance is no guarantee of the future results of the Group. Any forward-looking
statements and opinions contained within this presentation are based on current plans, estimates and projections, and
therefore involve risks and uncertainties. Actual results may differ materially from expectations discussed in such
forward-looking statements and opinions.

Certain information in this presentation is extracted from Google Analytics and rounded to the nearest thousand. The
computation method and basis of which have not been verified. The data could be overlapping (a) between TV
Programme Platform and Online Shopping Platform if the same user is watching our TV programmes and browsing the
online shopping mall at the same time; (b) between different type of devices among TV Programme Platform and among
Online Shopping Platform if the same user using more than one devices for watching TV programmes and/or browsing
our Online Shopping Platform at the same time; (c) or the same user using HKTVmall app to browse the HKTVmall web-
page. The information for the same period can be changed at different point of time when capturing the data as Google
Analytics performs the analysis on sampling basis. According to Google Analytics, the definition of “User” is “Users that
have had at least one session within the selected date range, which includes both new and returning users.” The above
data are unaudited and are not indicative of the Company’s business performance, financial condition or growth
prospect. Readers should not place reliance on these data.

For figures generated from internal systems and relevant platforms, which were rounded up to nearest integral
percentage or thousand, are unaudited and for reference only.

We are not required to correct or update any such statement or information to either reflect events or circumstances that
occur after the date the statement or information is made or to account for unanticipated events or otherwise.
 About HKTV – 25 Years Proven Track Record to Turn
Impossible to Reality
• Co-founded by cousins Ricky & Paul with 10 Talents and start-up capital of less than US$300,000
• 1st company to shatter the international Direct Dial (IDD) monopoly in Hong Kong
1992 • Listed in Hong Kong Stock Exchange Main Board (stock code: 1137)

• Over 3,000 Talents located in Hong Kong and Guangzhou with annual revenue over HK$1.5billion
• Hong Kong’s largest alternative and fastest growing residential broadband service provider up to 1 Gbps
2012 • Disposed the entire Telecommunications Business to CVC in April 2012, and focused on Multimedia Business

• Formally launched our 24-hour Online Shopping Mall - HKTVmall - in February 2015, providing one-stop-shop
services to consumers and merchants, including an online multimedia marketplace, delivery service, customer
experience, entertainment, multimedia production and marketing, big data analysis and machine learning
2015 • Stepping into the first phase – serving the people by tapping into the HK$440 billion retail market in Hong Kong
(source: Report on Monthly Survey of Retail Sales published in July 2017 by the Census and Statistics Department of Hong Kong Special Administrative
Region).

• Acquired Groupon HK operation in March 2017 to accelerate our expansion in the servicing segment and rebranded
into HoKoBuy in June. Together with HKTVmall, we have a secure foothold in the e-commerce marketplace and
make us becoming an unbeatable online shopping platform in Hong Kong
• On HKTVmall + HoKoBuy :
• Carrying more than 182,000 product items and on combined basis, partnering with more than 2,700 merchants
2017…. and suppliers;
• Expanded efulfillment centre from 15,000 sq. ft. to about 210,000 sq. ft, including frozen and chilled facilities.
• Average daily order number grew from ~ 1,300 in January 2016 to 6,200 in August 2017, about 370% increment
in less than 2 years’ time, with average order value of about HK$500 per order. (source: Internal systems and relevant
platforms)
3
 Senior Management Team
Started from Management
Trainee in 2003 and
progressed to Managing
Director for our shopping
and eCommerce business in
2017
Responsible for the Group’s
overall sales and merchant
relations management
Holds Bachelor of Social
Science degree from CUHK
and MBA from HKUST
Co-founder
Responsible for the Group’s
overall strategic planning,
and day-to-day management
Leads the Group’s technical
development in
telecommunications, media
and eCommerce industries
Holds a Diploma of Advanced
Programming and System
Concepts Design from
Herzing Institute, Canada
Background
Co-founder
Responsible for the Group’s
overall strategic planning and
management of the Group
Highly reputable in the
telecommunications, media
and eCommerce industries in
particular on sales and
marketing jurisdiction
Holds Bachelor of Science
degree and EMBA from
CUHK
Started with the Group
since 2003 and progressed
to CFO in 2012
Responsible for the Group’s
overall financial,
administration and talent
management
Fellow members in HKICPA
and ACCA
Holds Bachelor of
Commerce degree from the
University of Queensland
and MBA from HKUST
Started from Management
Trainee in 2004 and
progressed to COO in
2017
Responsible for the
Group’s logistics, e-
fulfillment and business
intelligence functions
Holds Bachelor of
Actuarial Science degree
from HKU
4
25-year Reputable History with High Brand
Presence in Hong Kong
25-year history embraces reverse thinking with “Pioneer” DNA

“David vs Goliath” - Crushed the IDD monopoly market in Hong

Kong by introducing “call back” technology back in 1992, with an
initial capital of US$300,000

“Invested” 7-year to build a fiber optical network before turning EBITDA positive

Became the largest alternative player capable of providing up to 1Gbps

Internet service in Hong Kong

Became a global showcase for being the largest triple-play telecom network
on Metro Ethernet technology

Sold to CVC Capital Partners for US$645mn in May 2012

5
Now – Ridding on High Brand Presence

• We are building the third Legend on !

• On 2 Feb 2015, we formally launched , an online

shopping mall including a OTT platform offering real time and
VOD drama and infotainment programs

• On 3 March 2017, we completed the acquisition of Groupon

HK business and rebranded into on 28 June 2017

• Why “ ” business? – because there is no

precedent in Hong Kong!

6
Our Positioning –
A “Branded-Product” Online Shopping Mall in the Region

CONVENIENCE
High
in one single
CREDITABILITY
order

COMPETITIVE
PRODUCT
PRICING at
VARIETY
LOWER
>182,000
RUNNING
product items
COSTS

7
Relatively Low Running Costs
Brick and Mortar Store Online Store2
HK$ HK$
Estimated daily revenue per Truck (45
Estimated Daily revenue per shop1 20,000 27,000
orders each with order value @ HK$600)

Estimated Major Daily Running Costs: -

Truck operating costs (estimated at
1 Operating lease rental1 3,180 296
HK$9,000 per month)
2 Staff costs for store operation (assume 3 staff Staff costs for delivery (assume 1 driver
per store, each at HK$18,000 all-in-salary per 1,776 and 1 courier, each at HK$20,000 all-in- 1,316
month) salary per month)
3 Depreciation on store renovation and
Truck depreciation (Estimated CAPEX at
equipment (assume HK$770,000 CAPEX with 641 260
HK$380,000 with 4 years depreciation life)
depreciation life of 3 - 5 years)
Estimated profit before considering costs of
inventory/sales and other minor operating costs, 14,403 25,128
such as product damage, utilities, etc

Remarks:
1. Estimates based on information extracted from 2017 annual report of CEC International Holdings Ltd (stock code: 759) and International Housewares
Retail Co Ltd (stock code: 1373)
2. Estimates based on internal systems and relevant platforms

• Product offering is limited by store space • No boundaries on product varieties

• Limited hours of operation • Opens 7 x 24
(10-12 hours/day) • Delivery cost efficiency improves
when number of orders increase in
the neighborhood area
8
Why Merchant Partners joining HKTVmall and HoKoBuy?
Top Sites in Hong Kong - as at 19 September 2017

Ranking in Hong Kong Sites

1 www.google.com.hk
2 www.youtube.com
3 www.google.com
4 www.facebook.com
5 www.yahoo.com
9 www.taobao.com
16 www.price.com.hk
18 www.tmall.com
25 www.amazon.com
90 www.JD.com
110 www.hktvmall.com.hk
356 Zalora.com.hk
360 www.hokobuy.com
814 www.fortress.com.hk
930 www.broadway.com.hk
884 www.ztore.com
944 www.parknshop.com
1196 www.sasa.com
1330 www.fingershopping.com
1398 www.watsons.com.hk
1622 www.wellcome.com.hk

Source: https://www.alexa.com/topsites/countries;2/HK
Remarks:
1. The sites in the top sites lists are ordered by their 1 month Alexa traffic rank.
2. The 1 month rank is calculated using a combination of average daily visitors and page views over the past month. The site with the highest
combination of visitors and page views is ranked #1. The site’s metrics are estimated and based on traffic patterns across the web as a whole and using 9
data normalization to correct for any biases.
Growing Traffic, increasing stickiness!
• Wide range of grocery products brings frequency of orderings and
increases the landing rate to merchant partners’ store pages – for 90
days ended 31 August 2017, HKTVmall has about 51.8% customers have
repeated purchases >/= 2 orders during the period (source: Internal systems and
relevant platforms)

• Multiple stores purchases – in August 2017, average 2.0 stores/order at

HKTVmall (source: Internal systems and platforms)
• Average daily traffic to HKTVmall and HoKoBuy in August 2017 was
132,000 and 60,000 respectively (source: Google Analytics)
10
We serve every aspect in life of our
customers !

11
Access to Our Platforms

• www.hktvmall.com
• http://www.hokobuy.com
• HKTV mall App
• HoKoBuy App

12
 HKTVmall and HoKoBuy - A One-Stop Shopping
Experience with Wide Spectrum of Products
As at 15 September 2017
On Combined basis: > 182,000 product items
From own FMCG inventory to Merchant offered varieties

Beauty & Music,

Supermarket Fashion Household
Health Video & Books
No of Product
22,000 35,000 27,000 13,000 29,000
Items

Mother & Digital & Toys, Games &

Outdoor & Sports Hot Deals Pets
Baby Electronics Stationery

4,000 6,000 7,000 21,000 7,000 11,000

Source: Internal systems and relevant platforms 13

Our Partners… HKTVmall and HoKoBuy have more than
2,700 stores on combined basis

14
Supermarket Products for Frequency of Orderings

• Over 22,000 product items to fulfill day-to-day food and grocery needs
• An effective way to maintain recurring orders and to bring consistent
upward traffic to merchant partners

15
From Grocery Shopping to High Value Multiple
Purchases…..
Beauty &
Health

Supermarket
Hot Deals
38%
24% Household

Digital and Others

Electronics
14% 26%
Digital and
Electronics

As a % of August 2017 Total Gross Merchandise Value (“GMV”)

which represents the total gross sales dollar value for merchandise sold
through a particular marketplace over a certain timeframe, before
deduction of any discounts offered by the marketplace, rebate used and
returns of merchandise sold. Source: Internal systems and relevant platforms 16
We deliver a delightful shopping
experience, and that’s how we
keep recurring business and
business referrals!

17
 X
• Delivered almost half A MILLION loyal, high spending & digital new
generation customers to merchants

HKTVmall Groupon HK/ HoKoBuy

High synergy
224,000 and 266,000
collaboration

The above figures represent number of unique customers for 12-month ended 31 August 2017

Source: Internal systems and relevant platforms 18

 X
An Unbeatable Platform, as at 15 September 2017 (unless
specified)

4,150,000 registered email 3,374,000 app download (source: 1)

subscriptions (source: 1)

2,834,000 combined unique Users in 880,000 Facebook likes (source: 1)

August 2017 (source: 2)
Source:
1. Internal systems and relevant platforms
2. Google Analytics 19
What we achieved since January 2016……..

• On 3 March 2017, HKTV completed the acquisition of acquired Groupon HK business and
rebranded into HoKoBuy on 28 June 2017
• From 4 March 2017, Average Daily Order Number and Average Order Value are the combined
results from HKTVmall and HoKoBuy; while before 4 March 2017, it represented HKTVmall
performance
• Transactions on HoKoBuy are on “deal” basis while HKTVmall are on “shopping cart” basis
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Source: Internal systems and relevant platforms
Our Logistic Team – we deliver Service, not only Product
• ~ 300 Professional warehouse and logistic talents
• ~ 120 + Car Fleet including 3-tempature Cool Trucks in operation
• The first “touch” point to our customers
- Better control the last mile delivery

- Stringent requirement on outlook & appearance

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E-Commerce Fulfillment Center
• Fleet of 120 +
trucks in
More than 300 operation;
professionals • Expansion plan to
increase to 150 –
200 in 2018

Food Factory at Kwai

Chung (frozen/chilled)
12,500 Sq Ft

Tseung Kwan O new

Tsing Yi eFullfillment headquarters with about 55,000
Center sq. ft. eFulfillment Center
144,000 Sq Ft

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One-Stop Integrated Platform
eCommerce
Platform

- CRM Multimedia
Production
- Machine Learning
e.g. Photo and video
- Big Data Analysis production for product
promotion

Customer Services Order processing

system

3-Tempature
Controlled Trucks Independent
operated by self-run Payment Gateway
Logistics Team

eFulfillment Centre
e.g. warehousing, pick/pack
functions
23
Major Plans in 2017 and
forward…

24
Traditional O2O Model

• The Familiar Online to Offline Model

Offline Sales
Online
Advertising

Drives offline sales through online promotions, advertisings &

notifications, thus transforming online users into offline customers

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Our O2O Model – a new way of retailing

Awareness &
Showroom Sales Service Point
Engagement

Arouse Public Order

Attention Pick-up
Display and show Point
product diversity

Handle
Order
Build Trust &
enquiries
Relationship
Sales Centre

Customer
Education
Our O2O Model
Example: South Horizons Store
• This offline-online interactivity is a new
way of retailing, adding value to our
customers via a 400-500 sq. ft. store
compared to a 20,000 sq. ft. retail
store

• Focuses on converting Visitors to

Shoppers - “We sell whatever you can
imagine”

• An effective marketing channel for

offline-to-online sales conversion!
• Order pick up point to cater for
different customers’ delivery
preference
3 months from opening of South
Horizons store:
• Number of orders and
customers from surrounding
residential areas soared by 5
times!
• Revenue from products sales
increased by 4 times
27
Source: Internal systems and relevant platforms
Our O2O Model
20 Oct 2016: Wharf Road, North Point
25 Jan 2017: South Horizons, Ap Lei Chau
20 Aug 2017: Robinson Road , Central
29 Aug 2017: Riviera Garden, Tsuen Wan
5 Sept 2017: Sham Tseng
10 Sept 2017: Mei Foo Sun Chuen
14 Sept 2017: Eldo Court, Tuen Mun

Together with HoKoBuy Concept Store at Causeway Bay,

a total of 8 stores!
Robinson Road, Central
South Horizons

HoKoBuy Concept Store

North Point
28
Our O2O Model More are under the pipeline ………
• Chi Lok Fa Yuen, Tuen Mun
• Plaza Ascot, Fo Tan
• Fortune City One Plus, Shatin
• Laguna Plaza, Kwun Tong
• Tsz Wan Shan Shopping Centre
• Paradise Mall, Chai Wan
• Island Resort, Chai Wan

~Expansion to 20-30 Stores by 2017

29
CAPEX Plan on Efficiency –
Robotic Picking and Conveying System
• Hong Kong’s largest robotic warehousing
system, introduced from Germany

• Fully automated system for storage, on-site

transportation, pick and pack to enhance
logistics efficiency

• To turn the current loss-making “highly

manual fulfilment process” into a profitable
“highly automated process” for a stable
operating environment and substantially less
reliance on human resources

• CAPEX plan to install at Tsing Yi and Tseung

Kwan O eFulfillment Centre, first phase to be
launched in last quarter of 2017

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Future Count on Machine Learning, Predictive
Intelligence and Data Analytics

Data – We are building the “Future of Retail” – in the past 31 months,

we collected a total of 2.5 million users’ behavior in HKTVmall
and HoKoBuy (source: Internal systems and relevant platforms), all these represent
our digital capabilities

Tools – With the gradual deployment of different predictive and

analytical tools, we are bringing them into reality:
• Increasing precision in predicting Consumer Need so as to build
trust and stickiness, create demand and be able to capture the
time of need
• Assist suppliers, brand owners, distributors and retailers for
more accurate product recommendations and target marketing,
and to increase cost effectiveness in placing digital
advertisements
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Future Count on Machine Learning, Predictive
Intelligence and Data Analytics
Capabilities – We are ready to assist our partners to groom
their businesses!

• According to the table extracted below from a recent whitepaper – “Smarter Digital
City” jointly published by Google and Nielsen, to benefit from the digital
transformation, retail corporates need digital solution partners

• We have most of the capabilities in providing

these solutions by ridding on
• Growing database on customer behavior
• Investment in future “Machine Learning”
technologies
• Solid experience in multimedia creative
and production; and
• Established eCommerce online platforms

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To Conclude…..
1. “Hong Kong is too convenient to shop” is a fallacy or an
misunderstanding!
• Real “convenience” kick-in by a mobile 24-hour shopping mall –
consumers can research and make purchases anytime, anywhere

• Benefit from lower online running cost, door-to-door delivery service

at your selected date and timeslot….

• Wide spectrum of product varieties - > 182,000 product items at

your choice! This is not only a supermarket, but a SHOPPING MALL
like Times Square, Festival Walk at your door…..

• Online shopping is complementary, not replacing Brick and Mortar

stores; same as Digital media vs Traditional media – we are here to
offer choices and varieties to suit different people’s needs at
different time

33
To Conclude…..
2. Expanding “Digital” crowds

• Though Hong Kong has 81% of its population connected to

Internet, it is still behind its peers in the region – Singapore,
South Korea, Japan in terms of digital transformation
(source: The Economist: http://connectedfuture.economist.com/article/connecting-capabilities/)

• This essentially represents a growing opportunity for

eCommerce business development, in particular, the Young
lifestyle generation is growing up while the Middle age and
Seniors are keen to catch up the world trend on digital city. It
is just a matter if you can capture the “time of need”.

34
To Conclude…..
3. To catch up the world trend to becoming a digital city, Hong Kong
consumers, retailers, distributors and brand owners need a Hong
Kong based “driver” which is creditable and scalable, embrace new
technology, have the guts to adopt, and are committed to invest
and develop the “forward looking technologies” – There are
HKTVmall and HoKoBuy!

4. Hong Kong is a HK$440 billion retail market, before considering

the potential in nearby region. By having an increasingly digitalized
addressable market embracing innovation, online shopping is an
inevitable business model to capture this digital transformation.

35
www.hktvmall.com http://www.hokobuy.com
Appendices

37
Continuous Customer Acquisition & Repeated Purchases

• VIP Programme enjoy at HK$250 for free

delivery service and benefit from VIP price

• Advertising panels along the MTR stations

• On-street promoters “Jetsoer” in specific

areas to push for HKTV mall App download
and initiate the first purchase

• Weekly regular promotions such as

$10/$20/$30 flashsale Tuesday

38
Unprecedented Advertising Campaign along MTR
Stations (Aug – Sep 2015)

• A boost up campaign for brand building and brand awareness purpose, covering more
than 3,000 advertising panels along the 119 tracks of 50 MTR
• Our aim is to strengthen the association between Shopping and HKTVmall in people’s
mind
39
$99 Crazy Meat Sets Campaign to welcome 2016
(Jan 2016)

• The third large scale brand awareness campaign on selected advertising panels along the
MTR stations … We woke people up at 6am and 1pm everyday during the campaign period
to “fight” for the $99 super value for money set!
• Our aim is to maximize the exposure of the newly launched frozen products for the new
target customer acquisition, as well as a new year reward to our existing customers!
40
Event Marketing

41