JS Global Lifestyle Co Ltd
HKEX:1691
Earnings Call Analysis
Summary
Q2-2023
The company highlighted its substantial progress and foresees improved performance ahead. Specific to the Asia-Pacific regions, the product lineup has been tailored to local market demands, with strong sales in categories like ice cream makers in Australia and New Zealand. The focus is on high success rates for new product launches, not just speed. Consumer preferences vary widely across developed regions like Japan and South Korea versus Southeast Asian markets, which poses unique strategic challenges. Different approaches to sales models, such as direct-to-consumer (D2C) or distribution, are adopted based on market maturity, impacting gross margins and profitability. Meanwhile, the company has used a special cash dividend from SharkNinja to repay all interest-bearing loans, bolstering its financial position. The company is optimistic about its growth in APAC, where revenue has already doubled, though it acknowledges a current market undervaluation of its stock.
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Dear investors and analysts, good morning. Welcome you to JS Global 2023 Interim Presentation. Before we start, please allow me to introduce the management of JS Global. They are Madam Han Run, Executive Director and Chief Financial Officer of JS Global; Mr. Liu Leon, Financial Director of JS Global; Mr. Kan Jiangang, Chief Financial Officer of Joyoung; and Mr. [indiscernible], Secretary of the Board; and [indiscernible] of Investor Relations department. So without further ado, let's take to Madam Han Run to make an opening speech.
Distinguished analysts and investors, good morning. Welcome you all to participate in this 2023 interim results presentation. First, I would like to represent JS Global. Thank you so much for the long-term support and attention. So for each one of this year, we still have like a different complicated situation domestically and internationally. We have like a big fluctuation of the currency and has also influenced the overall operational business of our business.
We can also see that we're still having all these being complicated, so we also have seen that JY still focusing on our internal business competence and then trying to support all the different customer needs. We have already got several different products dealing with this pain point of the consumers. For example, like this entry-level solution and also top technology ones. At the same time, we also constantly improved our digital supply chain management. We hope to have this flexible, agile and lean management. So for channel perspective, JY is constantly having all those different departments. And then we also are expanding our new staff, and we also constantly promote this content e-commerce and then trying to focus on that.
So from this SN's APAC, you can also see that, SharkNinja, this is also very good for this business results. I will not expand too much. So because of this spinning off of this American and the European business of SN has already been finished at the end of July, so for H1, we still include the performance of that. However, in order for you to have this better understanding of the spinoff, so today, we will focus more on the sustainability and SN APAC's vision and development. Except for that, we also will talk about this structure and the related transaction after the spinoff. First of all, so welcome, Leon, Financial Director of JS Global to introduce this H1's financial performance.
Okay. Thank you, Madam Han. Good morning. I'm Leon. Welcome you all to this JS Global 2023 Interim Results Presentation in H1. On a whole, our balance sheet and the reports still performed strongly. So we have this net income of the company, including SN's USD 2.294 billion, up by 2.8% Y-o-Y. If we calculated on this constant currency, we have about 5.6% Y-o-Y and then the revenue was USD 2.358 billion. So for gross margin, we reached USD 975 million in H1, up by 13.1% Y-o-Y. This should be attributed to this optimization of our product mix and the decline of cost. So for this total adjusted EBITDA and EBITDA rate was USD 335 million and 14.6%, respectively, up by 5.3% and 0.3%, respectively, while the adjusted net profit was USD 210 million, up by 1.4%, respectively. So the adjusted net profit margin rate was 9.1%. So in terms of EPS, the earnings per share in H1 was USD 0.037, down from the same period of last year. This is actually, as we mentioned, the fluctuation of the currency. And then we also have this onetime spin-off fee. And we also have this marketing investment of this SN side. So now let's look at the overall performance of JS, so the continued business in H1. So revenue side, we have reached USD 574 million, down by 18.5% Y-o-Y. And H1, the gross profit was USD 179 million with the increase of 1.1%. The adjusted EBITDA was USD 79 million, down by 18.8% Y-o-Y. EBITDA rate was 15.8%, which was flat Y-o-Y. So adjusted net profit was USD 52 million. The adjusted net profit margin was 9.1%. And then the earnings per share in H1 was USD 0.01. Next, for this continued business for the performance, let's do the analysis. Among that, SharkNinja APAC revenue in H1 increased by 73% Y-o-Y. According to constant currency, it increased by 84.6%, almost 85%. So our APAC business, we have this great vitality. So the main growth points are the Japanese vacuum cleaners, the constant growth effect and then some other strategic merger and acquisitions of other countries of APAC. In Joyoung, the revenue of H1 dropped by 23.2%, so down by 17.3% at the fixed exchange rates, the constant currency. We can also see that there's a weak consumer demand in market and fierce competition of the domestic market. So for this macro economy of the whole industry is not very ideal. This has led to our revenue decline to a certain extent. For faster growth of SN APAC, we have made the proportion of the revenue for this JS continuous business. Compared with same period last year, it has been increased to 9% for this year.
So now let's see the revenue of different regions. According to constant currency, the revenue of China dropped by 16.5%, but the increase of Japan is as high as 40.5%. This is also because, as I said, the effective business strategy and our constant improvement of the cordless vacuum and then the technology has also been optimized constantly. And this has also been favored by Japanese consumers. While the different regions, this has reached about 28.6%. This mainly comes from Australia and the New Zealand growth from the new markets. Now let's keep going. This is about the gross profit and gross profit margin rate of this continued business. In 2023 H1, the gross profit margin in procurement service was 33.2%. So it is up by 1.1%. It is also mainly, as I said, is actually due to this product mix of high gross margin. Operational perspective in H1 this year, we have done certain optimization for this inventory turnover. So it has been decreased by 7 days to 22 days from 29 days in the same period last year. So the turnover days has also been decreased from this 95 days to 88 days for this accounts receivable. So the turnover days of this account payable so to be decreased from 114 days to -- from 117 days to 114 days by 3 days. So our CapEx, it is USD 64 million in H1, so USD 2 million for the continued operations. Until June 30, the company's book interest-bearing loan was USD 770 million, a continuous decline from USD 857 million at the end of last year. And then at the end of July, we have already paid it in full. So the debt-to-equity ratio has dropped from 0.46x at the end of 2022 to 0.4x in the semi-annual period, and we will continue to reduce that at the end of this year. The return on investment is 11.4%, which is lower than the end of last year. It's actually due to the decline of net profit, including this loss of exchange rate and then the onetime spin-off expense. And then let's carry on, we will also see the dividend update. We plan to issue about HKD 136 million. This actually like this 50% of the share benefit of H1. So JS Global's dividend policy will adhere to the principle of maximize the shareholders' interest and adhere to our high dividend basis as we always did in the past. And also consider this expansion and capital usage experience and efficiency to continuously bring return to the shareholders. We can see the dividend distribution of JS Global 2019 is a special dividend after listing. And then the 2020 to 2021, the dividend payment is definitely at the top of this loan restriction terms.
In March 2022, our annual performance report due to that we are carrying out this big spin-off. So we need to keep this capital structure stable, so we fail to pay the annual dividend. As the biggest composition of JS continued business, Joyoung has already paid dividends for 18x in the 15 years since the listing in 2008. So we also have as high as 96.3% of this dividend rate in the past 5 years. So you can see the historical data and our promise to the investors. Dividend will definitely give this a very good return to the shareholders. Now let's have with us, Secretary of Board next, Mr. [indiscernible], to share this update of JS Global's business.
Hello, I'm [indiscernible]. Now let me talk about H1's Joyoung's business. Since this year, we still stick to this 1 plus 3 strategy, focusing on small kitchen appliances while focusing on this development of water appliances, the cleaning appliances and cooking one. So in H1 of this year, Joyoung launched some new series of high technologies, focusing on mid- and high-end products. We have this B1, the acquired blender. We also have got this brushless variable frequency, high-speed motor, which fundamentally solved this pain point of this loud noise. And then we have already got the double layer soundproof cut to noise reduction as low as 37 deciles. So Joyoung has actively laid out this N1S, the first ever zero-coated nonstick rice cooker. So we also had this Joyoung's original unique air-cooled water moisturizing membrane technology. Combined is the 200,000 micro-sized latest pits on the inner wall, so to make the structure of this water motion membrane to more stable and further improve the last peak effect. So this has increased the Joyoung's growth of revenue and the market share increase.
In order to better adapt to this changes of the market, Joyoung has also increased the investment in this innovative technologies and launched this entry-level products such as we have this Romantic Life and then this domestic fashion series to have this differentiated competition. We also know that the competition advantage has already been upgraded from this single advantage to this competition of this comprehensive advantage and the supply chain advantage. And on the basis of adhering to the dependent research and innovation, Joyoung has also improved our operation efficiency and the quality of this efficiency and supply chain. So for the long time, Joyoung has achieved this large scale cost reduction and efficiency improvement through resource focusing management optimization and collaborating empowerment. And we also have got this continuous improvement of this brand image. So we can't have this company's repair rate, and the turnover rate have also been gradually reduced.
So our NPS value among the Joyoung consumer has also been significantly improved. Of course, relying on this global development background of the group, Joyoung actively executed its advantage in R&D and supply chain management under this domestic A share. So Joyoung's export business income increased by 49.2% Y-o-Y. And this has also shown Joyoung's synergy with SharkNinja, which has been maximized constantly. At present, Joyoung has provided OEM business covering air fryer, blender, sprinkle -- sparkling beverage machine, et cetera, and gradually become one of the main suppliers of SN. In the future, Joyoung will not only export high-quality products to SN. We also will export differentiated products with high value. Especially in APAC market, we will have more localized and differentiated products. So because cooking and dietary habits of consumers in APAC, they are closer to domestic consumers. So the synergy between Joyoung and SN APAC will be better developed. For channel perspective, you can also see that we have this constantly developing channels being developed in China. And then we try to control the channel better to have a more synergized channel operating system to have this synergized development of the shelf e-commerce and content e-commerce. In H1, we constantly focused on this mainstream channels to rapidly develop our direct sales channel to improve the proportion of that. Until the end of this year, we hope to have over 20% of our direct control sales. At the same time, we also focused on this content e-commerce to develop Xiaohongshu and so in TikTok to have this content e-commerce to have like content creation, food, live streaming and then this photographing team and the editing team to have this quite complete matrix of live streaming. We also have this closed loop of planting the seed and then purchasing and finishing the transaction. We can also see that this early start advantage, considering this constant changes of this content platform, is actually quite weak. So this is an opportunity for Joyoung as well. We believe content e-commerce will become one of the major sources of our revenue for offline channel. Currently, we have still like 30% of this offline business. So we also can see that we also have achieved this positive growth. So we also have this better performance compared with our competitors in the market. And recently, this offline channel has also been changed significantly, so their traditional sources -- the traditional channels of KA to go to some new retail channels. For example, it has also brought about some new opportunities, for example, like cooker and water purifier. They still have over 50% of the percentage in the offline channel, and they're faced with this complicated and ever-developing and changing channel. We have already got the strategic layout and then the risk prevention, and we have already got this quite safe and highly competitive revenue channel. So we always emphasize this demonstration of the products and communicating with our consumers. We have already got improvement of this revenue of retail and then to increase this offline business. In order to cater to this current sales market, we not only have this counselors training, we also got this direct sales construction and then the similar for direct sales channels. So I hope to have this better sales or better. Now let's have [ Max ] to share with us about this SharkNinja APAC.
So hello. We are very happy to share with you this SharkNinja APAC. So we have taken over 40% of this global population. It's about 870 million families, which will be very amazing, and their purchasing power is also rising steadily. Our strategy is focused on this top 25 major cities in the region. It will include the 75 million families. So it is worth noticing that these 75 million families account for about 50% of the GDP of APAC. Now we have entered Japan, South Korea, Australia and New Zealand in these existing markets. So the annual retail terminal sales are about USD 7 billion according to our existing product mix. With our proven strategy in the next 3 to 5 years, we are confident that we will have about USD 4.7 billion of this SN APAC sales target. Speaking of our vision, we are having this unshakable belief that is actively improving the quality of every life in every family, every day. So now I will talk about specific strategy. First of all, we always stick to this standard. We not only sell products, we also provide solutions in order to better meet this needs of different customers. In APAC, we will deeply understand their living habits and preferences. As a new player in this region, we also think it's very important to improve the brand awareness and image. We will introduce our excellent products to consumers through our strong marketing. So the growth pillar, we'll still stick to this 3 different strategies. The first one is to have this continuous excellence of this existing core categories. And then the second one is the expansion of the new categories. We're not only will be satisfied with existing ones, we will also have some new fields. The third is actually to have this market expansion to enter new areas and release the potential of these areas. So now I'm going to share with you like how do we implement in APAC. The first one is the pillar is to maintain leadership in the existing ones. For example, for the cordless vacuum is a very good example. In June, this one, we have this CleanSense iQ+, and this is a brand-new like lightweight cordless vacuum cleaner as we all can see that this one helps Shark to further improve this market share of Shark in Japan. We also have like a bigger position, better demonstration. That means that our partners, especially the major retail partners, are full of confidence of our products. This is not only their recognition of our products, but also like a high trust of our brand. Now I would like to share with you how do we realize the second growth pillar. For these new categories, we hope to achieve that. So we also can see that for Ninja Creami, we're able to provide very different experiences of the Creami ice cream making. But only within excellent product, it's not enough. We need to allow more people to understand it and experience that it's equally important, and we have the very distinct social media strategies, which help us to very successfully promote Ninja Creami that become a household product. And in Australia, it has become the best-performing products. Next, let me share with you our star profit -- star product, Shark FlexStyle. For SharkNinja APAC, hair care is a brand new category, and we have high expectations that this product will bring better product experience for the APAC consumers. Whether you have the straight or curly hair, FlexStyle can help you to dry your hair quickly and to style it perfectly. And with the business development of SharkNinja APAC this month, in September, Shark FlexStyle launch event in Singapore has been well received. Actually, it should happen in August. And in September, very soon in Japan, we will also launch the market -- launch the product in the market officially. And in the previous test use and service, we have received great feedback. So we are fully confident in FlexStyle performance in the Japanese market. And in the first half of the year, FlexStyle was very successful in its launch in Australia, and we believe that it is suitable for all the hair styles. It is not a tagline. It represents our confidence of the market and the great commitment towards the consumers. And from the online media to the conventional press medias and to the TV news, we have been collaborating with the best in this field and to make sure that in every corner in Australia, Shark FlexStyle will raise attention and discussions. And next, let me share with you our third growth pillar that is the expansion of the new market. In April this year, in Australia, New Zealand, Singapore and Malaysia, we had a strategic M&A. And it is not only an M&A, but more importantly, it had opened a new gate for us. Take Singapore as an example, it is a very dynamic and a potential region. There are over 800,000 target families, and each of those families may make their lives better because of our SharkNinja products and for these emerging markets. When we look into the second half of the year, there are several key operational goals. The first is to improve our brand awareness. And the second is to collaborate closely with the influential retailer partners. And thirdly, to make sure that we have very strong visibilities in offline stores and e-commerce platforms. Next, let's review the first half performance of SharkNinja APAC. And as in terms of the revenue, there is a 73% of year-on-year growth and Japan has hit 33% -- 32% of the growth. And if we exclude the foreign exchange fluctuation influence, then the actual increase in Japan had hit 40.5%, and we didn't stop there. And in Q2, through M&A, we created more opportunities for SN APAC. And in Australia, Singapore and Malaysia, we had setup of our operation team, and we had achieved some progress. So we are fully confident that in the second half, we will maintain high-speed growth, and the revenue of Japan will mainly rely on the cordless vacuums and the hair style products with an expected growth of 30%. And in South Korea, with the more sales channels development and the greater potential release in these new markets, we expect it to have a growth of over 50%. All of these accomplishments and plans represent our new journey in SharkNinja APAC, and we'd like to write this new chapter together with all of you.
Next, after the breakout, we had went through these connected transactions. So I hope that you can understand more about related party transactions after the spinoff. Let's take a look. First, JS Global Lifestyle Hong Kong provide the supply chain added value services. And during the transition period, this company would assist SN Group to make strategic plannings at the supply chain level and to provide analysis and guidances. For example, the relationship and maintenance and development of the OEM channels and the negotiation of the pricing terms, development and subtraction plans, inventory management and IP protections, et cetera. The transition period will last for about 22 months, and we will charge the service fees by 4% of the procurement amount in the first 12 months since July 31 and then the follow-up 6 months charged by 2% and the last 6 months charged by 1%. And the second item is related with the 3 supports of SN Group for JS Global. The first is the brand authorization; and the second, product development; and the third is the transition of the operation. So the first, brand authorization. We had received the franchise of Shark and the Ninja brand in APAC regions and Greater China with the period of 20 years. And for this authorization, JS Global is to pay 3% of the authorization fees equivalent to the net sales of the SharkNinja brand product sales. And we will also enjoy the product development service provided by SN considering the great experiences of SN.
In APAC integrated China, we are going to leverage its consumer insights. And based on the needs, we are going to develop a new product, and this service will last for 3 months. And each year, the development fee will not exceed USD 1 million. And in order to guarantee the smooth transition after the spinoff in the following 24 months, SN Group is going to provide comprehensive operations support, including IT, finance, HR, et cetera, so that we can better operate as an APAC business. And for the transition service, we expected to pay annually USD 3 million to SN.
And the third item is the Joyoung segment to provide a procurement basis to the SN Group, which is the ODM business of Joyoung. And this will continue the previous model and continue to grow. And the establishment of these related transaction not only had guaranteed business transition after the spinoff. For both SN Group and for JS Global Lifestyle, we had avoided the possibilities of the stagnation in the supply chain and operation. And these related transactions will also have the bigger synergies of both sides and promote the co-development of the party. And next, I'd like to invite the Executive Director and CFO of JS Global Lifestyle. Madam Han to introduce the update of ESG in the first half and to recap our performance in the first half.
Thank you, [ Max ]. Dear investors, to fulfill our social responsibility is the foundation to promote the healthy and sustainable development of JS Global Lifestyle. And as a listed company, it also mirrors our in-depth values in the longer run. And we are very happy to share with you that JS Global Lifestyle long ago have been included in S&P Global Sustainable Development Yearbook. And we are the only company listed as the family durable industry player, and so we have been titled as the Best Progress Company in the industry.
And this month, in the issued Hang Seng ESG 50 indicated constituent stocks JS is also included, and we are one of the top 50 Hong Kong-listed companies in terms of the ESG performance. So all in all, in the first half, with the efforts of the whole team, we had finished the successful and the strategic SN America and Europe business spinoff. And we have hit a greater performance in the first half of the year, and this belongs to the great efforts of all the teams and it also is due to your support and confidence. And next, we are very confident in recovered operational performance of Joyoung and to grow our SharkNinja APAC business. And the management will also fully dedicate our jobs to the works and operations and continuously provide innovative small home appliance products, which will increase the lifestyles of the consumers. And thank you very much.
So now it has come to this QA session. [Operator Instructions] So while we are waiting for that, we would also first ask the secretary to tell the investors on the telephone line to see whether they have some questions or not. [Operator Instructions] So now we will have [ Sakura ] from CICC to raise the questions.
I would like to thank you so much for this very complete introduction, and this is also like a quite impressive improvement. I think that SN APAC is definitely like a very good surprise to the market because for SN APAC, you have already mentioned that you have this presence in many different countries in Japan, New Zealand and Australia. You have reentered Singapore and Malaysia. You have already achieved certain results. I would like to know that how do you coordinate the different countries, staff and then the following strategy as well as this resource allocation. This is the first question. The second one is, as you mentioned, that you will continue being -- the dependence on the 3 growth pillars. I would like to know that how do you plan for the new products in H2 this year?
Okay. Thank you so much for the questions. So for H2 for new product plan, we will continuously promote some new products, not only about this Japanese market within, like have this SN APAC will come to this Hair Care products. We also will promote more products to be expanded to the entire APAC region. So for current new product marketing and promotion plan has not been disclosed. I'm sorry, I cannot disclose too much. Thank you so much for the question.
Okay. And we have another question that is for different regions. Among different countries, how do we allocate the staff and how do we manage and coordinate the layout and presence of different countries? Thank you.
Okay. Thank you. So for this question, I will like our Financial Director, Leon, to answer the question.
I'm sorry. Maybe the connection was a little bit cracky. Can you tell your question again?
I would like to ask for SN APAC, because previously, SharkNinja, it was mainly about Europe and America. So for the markets were quite similar. But now for SN APAC, you may have like Japan, Asia and Southeast Asia and New Zealand and Australia. The markets might be quite different. So I want to know that for these more segmented markets, how do you manage and coordinate different countries relationships? And then for different markets for the different demands, how do you plan to do the adjustments accordingly?
Okay. Thank you so much for the question. And because in APAC, as you said, and -- so we also can see that this is actually more like connected. And then the next thing is we are faced with some different cultural backgrounds of different Asian countries and for this consumer habits are quite different. Maybe Australia and New Zealand are more closer to the European American countries. And then for this China, Japan and Korea, we are with similar backgrounds and -- based on different countries and for local channels. So we have already mentioned like for the different consumer habits. So also based on their different shopping habits and shopping pattern for focused markets, we will have some strategic strategies to be formed, including the sequence of products entering different markets. For example, you have already seen that via SN products. When they are promoted in market, they will definitely be very well received. In APAC, we will definitely stick to this strategy. As I said, for the 3 different APAC SharkNinja growth pillar, we will definitely stick to that. We will cautiously analyze all the situations mentioned by me before, and we will control the product launch pace to enter the markets cautiously. So for example, in Japan, we have talked about this cordless vacuum cleaner. The market share is actually on the rise constantly. So for cordless vacuum cleaner, we are the brand with the top market share. So for SN products, for Shark's cordless and handheld products, and we all have already got this localization improvement, including the control of noise and the weight as well as the overall look.
So we also have got this collab with Disney in Japan. We have this Star Wars series. And then we also have got this Japanese style of Japanese painting. So these are all very well received. We believe with our existing SharkNinja APAC team and the team that we are constructing, we definitely have the confidence to have better consumer insight of the local consumers. So this is also one of the secrets for SN's success. And for different countries to promote different products and then manage Joyoung's advantage in China, we could have the synergy to facilitate this APAC's localized development, and we could better serve the overall market. I hope I have already answered your question.
And I have two more questions. I would like to ask the leaders. The first one is about channel. The other one is about products because previously, when we enter a new market, I understand, is actually online and offline, we all have a lot of marketing campaign to go with that. However, now for SN APAC, so for Southeast Asia, I want to know that for different channel, do we have some different focuses because I know that you have already procured a retailer in Southeast Asia? This is about the channel change. And then another question is how can we focus on this water tank and the robot? And for mop, how do you think about the market potential in Southeast Asia?
Okay. Let me first answer the question about channel. So for channels perspective in Southeast Asia, so for the entire APAC market, we mainly focus on this offline retailer, online e-commerce platform. TV shopping as a major channel, so in order to focus on different markets. So for Japan and Australia and New Zealand, 80% of the revenue coming from offline retailer. So 10% to 20% coming from online and DTC. So for Korea, it's mainly about e-commerce and TV shopping channels. These are mainly the channels we have for this SharkNinja Asia. And so we also can see that we have a certain potential for SharkNinja APAC, especially for those countries that we have just entered. We have already seen this JS data. We still have a certain potential that we could [ harden ].
Okay. Thank you so much. So no more questions. Thank you. So let's broadcast way of raising questions again. So now let's have [indiscernible] from Shanghai [indiscernible].
I have three different questions. The first one is about dividend. We have already seen that our interim dividend ratio is 50%. I want to know that with this supply chain of APAC, so for this dividend ratio, will it be like increase the 1 year after another, 50%? Is this like our sustainable business, this standard for that? Is this like a standard?
Thank you so much for the question. For this long-term strategy, we think, for JS Global, dividend is not just coming from this short period of time of this financial revenue. For this overall APAC SharkNinja, we also have this ability to do this dividend issuing. As I introduced it to you before, this is actually on the basis of this high dividend and then we also have to consider about this cash flow and operation demand. So we are also confident that we're going to give you the long-term return to the shareholders.
Okay. So I have something else to add because previously, we have like disclosed this HKD 400 million dividend plan. We still have about HKD 240 million of this buyout plan so that is not used. So do you still have this buyback opportunity?
So when it is actually suitable in timing and suitable in the price positioning, we will consider to do the buyback. So for later half of the year, we hope to introduce more measures to invest in our business instead of like focusing on buyback.
So the next question is I know that for Joyoung, for H1 this year for Joyoung's own business, we still have like quite big negative growth. I would like to know that what is like the trend of recovery? So when will we come to this quite ordinary level? And from the long term compared with our competitors like media and super, so our competitive edge and the strategy, what is that?
Okay. So I would have our CFO from Joyoung, Kan, to answer that.
Thank you so much for the question. Indeed, for H1 this year, because the entire domestic consumption market and we also have quite core category like air fryer, we have seen this significant decline of the business. So you can already see our business as disclosed by us. So focused on this, company is also actively from internal part of our company to do this upgrade and revolution. So the first part is about our products. We have conducted, as we mentioned, that we needed to do better development of the products as our foundation. So from customer-oriented technological improvement to comprehensively set up the direction of our category and the product mix. On the basis of this, we also will improve our supply chain confidence as one of the core competencies of Joyoung, and it's mainly through like a better and faster synergy with our supplier and then jointly do the innovation with our suppliers to try to grasp the opportunities of some emerging categories. The second aspect is also focusing on this, what we have already seen in the supply chain and the channel. We have really seen this with the decline of the shelf e-commerce, this status quo of the industry. And for this brand operation aspects, we will also promote the continuous revolutions of this brand operation. And then the next thing is we will use our space technology 2.0, which is very well received in H1. We will strengthen and promote that to strengthen and promote Joyoung as health and innovation as our brand image. On the other hand, the brand and product operation will be more integrated so that we can have a better brand operation.
And thirdly, in the first half of the year, we are already trying to do that. And in the second half of the year, we're going to roll it out, that is the channel change and the transformation. So to be more specific, in the conventional e-commerce platforms in order to deal with the drop of the traffic and higher cost of gaining new traffic, we're going to continuously use the lean operations to magnify our direct-to-consumer capabilities. And on the other hand, on Joyoung, the content-oriented e-commerce and some other similar platforms are developing very quickly, and Joyoung is also leveraging its growth opportunities. And in content-oriented e-commerce platforms, we have identified some successful business models. And over the past few months, we had gained great result with a 3-digit growth. So going forward, this will still become our priority, and we will do it in a larger scale.
And just for off-line business, we have seen that right now the traffic on the channels are changing and the conventional terminals have relatively limited traffic, but the stores in the shopping malls and other markets are still providing us with sufficient traffic. So we're going to highlight the new categories such as water purifier and the cleaning appliances, such as washing machines and new robotics. With that, we are able to improve our business offline. So with these 3 things combined in the second half, we are going to make active efforts and improve our business so that the performance can be better quarter-by-quarter. Thank you.
And SharkNinja is already included in the balance sheet of Joyoung. And I want to know that, in China, what is the development plan for SharkNinja China?
Thank you for the question. Let me continue to answer that. Shark, in the first half, there are a lot of changes. Just as you know, it is within the balance sheet of Joyoung. And before we have the steamed and electric mop as its main products, and our capacity of these categories, market share and scale have been dropped quickly. And this year, in the first half, we have launched some new Shark floor care products, the hydro cleaners. And with this model, combined with our online operations, in Q2, we have a higher 2-digit growth. That is very good. And also the positioning of the brand Shark, we will continuously make it an expert of the floor care in China, and we're going to stay focused on the premium market with a premium price range. And going forward, in the cleaning appliance categories, we're going to have more new products such as robotics and the floor care appliances. And we're also going to explore the personal care categories, which is quite new.
And to summarize, with the optimization of operation method and the channel layout as well as the improvement of the product portfolios, we have gained great progress. So going forward, we will have more performances that are better.
All right. I have the last two questions about the SN APAC. I have observed that SN Europe and American business, the proportion between Shark and Ninja are quite similar. But in APAC regions, it seems that the proportion of Ninja is a bit small. What is the reason for that? Is it because that the situation in different markets are different? So can you talk about the developments of Ninja in APAC regions?
Okay. Thank you for the question. I'd like to answer this question. And I have checked about the market scale and potentials. And as for the categories SN have in APAC regions, take Japan as an example, the air fryer is not a big market. It does not have a big amount in Japan, and that had resulted in us not developing this category in Japan.
And in the newly entered Australia and New Zealand, there's a big amount of winning these products. For example, the ice cream makers, as we had mentioned. In the short term of 3 months, it has become the largest selling categories in Australia. And for air fryers and food preparation appliances in Southeast Asia and Australia and New Zealand are all very popular. And now we started to explore development of APAC regions of SharkNinja. And what we pursue is not the speed, instead is the success rate of the new products that we launch. And that is in line with the style of SN over the past periods. And for every new product we launch, we hope that it can be a sensation in the market and can be popular among the consumers. So this is my answer about SharkNinja's development in APAC.
Next, let's welcome [indiscernible] to raise the question.
My question is mainly about SN APAC. Two questions. The first is as well organizational management for developed regions like Japan and South Korea and also in Australia and New Zealand and some emerging Asian markets, what are the differences of the consumers in these 2 different regions? And in terms of the go-to-market strategies, what are the differences? And what are the challenges as well? And the second question is in terms of the sales models, I have noticed that there is a transformation of the APAC region sales models. And some of you have entered into the D2C through M&A such as Australia, New Zealand, Singapore and [ Mainland ]. And for some of the other regions, you still mainly rely on the distribution. So what are the differences of D2C and the distribution in terms of the gross margin or the profitability? So this is second question.
All right. Later, I'll ask Leon, our Financial Director, to answer the second question. And I'm going to address the first question about the differences of consumers in Japan, South Korea and the other Southeastern Asian countries. So for consumers independent last year, it really focused on the high-quality, advanced technologies and unique designs and stay focused on the details of the products and experience of aftersales and their loyalty to the brands will be higher. The challenges in South Korea and Japan is that there is also already some existing brands. And for the newly entered brands, they may don't be very welcoming. So what we need to do is to offer them very unique products that has high values. And as for the consumers in Southeastern Asian countries, actually, we cannot summarize the features in one word because they still differ from each other. And in some of the regions, they still rely on the conventional sales models. But the digital sales is growing very quickly. The proportion of the young people in Southeastern Asia is actually higher compared with Japan and South Korea. And for these young generation, they pursue the new trends and technologies. And the challenges for this market is we have to get an insight of cultures, languages of regions and understand the consumer needs in different places and to learn about the complicated business rules and to have the plans for warehousing and logistics. So these are the differences and challenges in those markets. And Leon, please answer the second question. Thank you.
All right. I'd like to make some extra comments about the first question as well the differences in different countries and regions. Actually, in our presentation, when we were introducing the APAC business is we mentioned that we will focus on this region. And we have a city-by-city strategy, and that vary on different consumer groups. We have 25 top cities but, of course, that is excluding Chinese cities, and that 25 key cities had accounted for 50% of the market share. So apart from the national differences and the regional divisions in APAC regions, we will be more targeted on different cities. So in those 25 cities, what are the unique features and demands and the changes of consumer behaviors?
And now let me answer your second question about the D2C and distribution models first. When we enter into a new market, we would take a more precautious way of distribution. And in terms of channels, they have more ready channels there. And compared to that, it's more mature. So in comparison, the gross margin would definitely be lower. And equally, our OpEx would also be lower with the distribution mode. So in terms of the business model, in the newly accessed market, we may start with the distribution mode. But as you can see, still, we have the variations of different modes in newly entered markets. So suppose there is already a very mature and the capable distributor in this region, then we would definitely opt for that. But if there is no such distributor, then we do have our sales and marketing capabilities and we do have the capability of accessing the new channels. So if that is the case, we will opt for D2C. So that is our consideration. But of course, the GP -- MPG would be different. So the gross profit margin will be different. That is the distribution side will be lower.
Now let's check the questions from Zoom. Most of the questions have been covered just now. And a frequently asked question is about the cash of the company. So the question is that in the interim report, we had paid back all of the loans, their interest. And are we using the special cash dividend of the USD 375 million from SharkNinja? And is it a recorded already? And do the company already have the onetime dividend payout already? Now Leon, please answer this question.
Thank you for the question. And I believe that all of you care about this issue a lot because this is a large amount. Indeed, we told you that we had paid back all of the loans-bearing interest. So USD 375 million of the special dividend is used for the payback of the loans. And in the end of July -- to be more exact -- on July 21, we had paid back the loans in advance. And then as you can see, in Joyoung, there is an announcement about -- and in the plant, we have done that already. We have paid the loans. So we have finished that part of the work.
Okay. Due to the interest of the time, we're going to take the last question. And the last question is about the investment in Hong Kong Stock Exchange on Joyoung and to invest in a stock. What are the changes? What are the differences?
And let me answer this question. In terms of the fundamentals, we do have the SN APAC regions, which is more centered in its growth, and it's very promising. And in the first half of the year, just now Leon had mentioned that the APAC revenue and its share in our total revenue have been doubled. So I believe that with further access into the new markets and the launch of the new products with a higher penetration as an APAC will be a big amount of our business. And in terms of the transactions evaluation, right now has not been [indiscernible] by the market, and there is also a big discount of the share prices. So we believe that it's quite safe to invest in this. And for different types of investors, both for JS and Joyoung, have their long-term values. Therefore, for different types of investors, we had provided different types of preferences for their options. And this is my answer to this question.
And due to the interest of the time, this is the end of this interim results announcement. And thank you very much all the investors and analysts for your participation, and I hope that you can continuously pay attention to our growth and support us. And looking forward to more communications with you in the future. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]