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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
[Foreign Language] Good morning, ladies and gentlemen, and our guests from the invest -- capital market.
Welcome you all for a time to attend today's Honma Golf Limited financial year 2018 and '19 result presentation.
First of all, it's my great pleasure to introduce to you senior management who has been presented to the briefing this morning.
So our -- the Chairman of the Board, Mr. Liu Jianguo, due to his severe back pain, he cannot personally attend the briefing today, but he has been dialing in from Shanghai, and he will be talking to us and answering all questions today.
So today, on the stage, we have the group CFO, Ms. Veronica Bian. Mr. Ito Yasuki, Executive Director of Honma Golf and President of Japan operation. Mr. Zuo Jun, Executive Director and President of Greater China business.
So if you don't mind, I'll switch to English because we have people on the line who don't speak Chinese. So as usual, I'll be conducting the analyst briefing in English.
So all of you must have received once you have entered into this room, the investor announcement results. As usual, the presentation is going to be divided into 3 sections. We will be touching on the financial highlights, give you a business review by market and also by product. We will then also focus on -- or give a few words on the company's outlook for the next year.
So when we move into Slide 3, I think this is the usual opening slide that we always have. Just to recap where we are. HONMA is the #1 premium golf brand, which was founded in 1959. I think to those of you who are new to HONMA, we will be celebrating our 60 years anniversary this year. There will be a number of marketing activities across different markets, and we will also be celebrating the 60th anniversary with some special products as well.
So for the last 60 years, HONMA has been dedicating itself to quality and also craftsmanship. And this has given us a very unique opportunity in the super premium and also premium performance segment, which is very, very relevant and also high-growing in the main markets, for example, U.S. and also Japan. I think Mark later on, once he has joined us online, he will be speaking about his passion for HONMA in the U.S. and also the opportunity he sees with HONMA in the U.S. market.
So HONMA was listed on the Hong Kong Stock Exchange in October 2016. As of today, our market share is about HKD 4.6 billion. And then when you look at the key stats of Hong Kong -- of HONMA, we still maintain a very high-quality and also stable team of skilled craftsmen and R&D personnel. This really separate us from the rest of the competitors in that we are vertically integrated. We in-house design, develop the products and also manufacture the products in order to combine the most advanced technology with the Japanese craftsmanship in delivering the best performance products to our golf passionate.
The HONMA products are being -- still being sold in 50 markets across the world. When you look at the 3 pie charts, it gives you a high-level impression of how these sales are being divided by products, by region and then also by channel.
When you look at the product by -- sales by product chart, you will see that the club is still accounting for 80% of our total sales, which is coming down year by year because of the fact that the non-club sales has been growing at well above-company average and also the average growth rate of the clubs.
By region, Japan is still the #1 largest market for HONMA, but its value share has come down to 51% because other markets have been growing faster.
By channel, third-party channel continued to show robust sales growth. For the last financial year, third-party retailer have contributed to 78% of the sales with a growth rate of 28%. This is also well above the self-operated stores that we operate ourselves.
So these numbers showed quite some deviation or changes versus the number that we presented to the investors at the time of the IPO. At the time of the IPO, I think the golf clubs account for 85% of the sales. Now it's down to 80%. At the time of the IPO, Japan accounts for 60% of the total sales. Now it's down to 51%. And by channel, third-party channel used to account for 50% of the top line. Now it's up to 78%. So all of this basically said something about the fact that we are on track to deliver the growth strategies that we have announced to the investor at the time of the IPO.
And when you look at Page 4. Here, you will see a high level key financials of the company. So when you look at Slide 4, you will see that in terms of net sales, we have recorded $250 million net sales last year, which shows a year-on-year increase of 5.6%. Gross margin, I think there we had a decline of 3 percentage points. We will be talking about where this down -- decline came from.
Operating margin year-on-year shows a decline of 14%. Net profit rose by 7%. And we also have experienced a very strong net cash flow increase of 34%, which is in line with the growth in net profit and also continued improvement in working capital.
As at March 31, 2019, the net cash position of the company remains strong, USD 98 million. And we are also proposing a dividend for the second half, which will add the total dividend yield to about 3% and the total payout to 50% full year.
Now for the next 2 slides, 5 and 6, we will be speaking about the 4 key financials of the company and also the developments over the last 5 years. HONMA, as we always said, is a company in transition. When the Chairman acquired the company in 2010, the company barely had USD 100 million top line, which has increased to $200 million at the time of the IPO in 2016. And over the last 3, 4 years, we have been executing the growth strategy of what we call transformation. I think what we intend to achieve with the transformation is to bring HONMA to the international markets. So from an Asian-focused brand to an internationally known market, known brand and also by delivering the HONMA brand awareness and also product awareness in the international markets by nurturing and also growing a non-club segment, which eventually, we hope to capture 40% of the top line.
So when you look at the revenue over the last 10 years -- 5 years, the CAGR has been about 10.7%, which is solid amidst all the different changes that we are trying to instill in this company. Gross profit has grown by 10%. I think in terms of the gross profit margin, we have seen a somewhat steady, but also continued declining trend, mainly because of the continued negative impact from product and also mix and -- product mix and also channel mix impact.
And one thing to note from last year's 3 percentage points decline. I think maybe 1.5% was attributable to the usual product and also channel mix impact. And the other half was relating to some one-off impacts from clearance of the apparel sales, have the launch of the SS19 series. The other was due to a repositioning of our entry-level players club, which we will speak about in conjunction with the U.S. strategy.
Now turning to Slide 6. You will see that operating profit, we have shown a continued growth CAGR of 28% for the last 5 years, which is stronger than the sales top line growth. I think this is on one hand, due to the solid gross margin that we have been able to deliver, thanks to the brand positioning, and on the other hand, due to continued reprioritization of our SG&A and also scale of economy.
Net profit. I think FY '19 has shown a 7% increase versus the year before. Net profit margin has relatively remained stable.
And then the lower part of the slide shows the SG&A and its development over the last 3 years. You will see that SG&A has continuously edged lower by 2 percentage points as compared to FY 2019. And within the SG&A, the 40%, let's say, percentages, by and large, there are 5 different buckets. So employee benefits has been about 11%, down from 13% 2 years ago. And the next biggest spend is about A&P. A&P is the only SG&A element, which is growing in percentage and also value. And the others are basically rent, administrative expense, which includes R&D and also rental fees.
When you go to Slide 7, you will see some cash flow-related KPIs. So net cash flow has remained strong. Cash on hand remains steady, about $98 million, as I mentioned before.
Interest-bearing liabilities have shown a slight increase between 2018 and 2019, mainly because of the fact that the -- let's say, the dividend payout has to be rolled up from the lowest operating units, and the majority of the profit sits in Japan. So we have been raising some funding in Japan to fund the dividend payment, but also the working capital facilities because we still maintain the factory in Japan, and also 50% of the sales comes from Japan. And in terms of gearing, it has now improved to 13%. But the company is somewhat underleveraged, if you will.
Now Slide 8. This slide speaks about the 3 main KPIs for working capital, receivables, payables and inventory turnover days. So receivable has shown a 22 days increase, but the overall receivable, let's say, value has come down as compared to the year before. In terms of payables, we have seen a 9 days increase in line with industry norm. We have put together a supplier management team since 1.5 years. They have been standardizing, regulating our principal, let's say, trading terms with our suppliers.
In terms of inventory days, it has come down by 8 days to 224. It's still far from ideal. I think our target is to reduce the inventory days to 180 days, and we will be speaking about the measures that has been put in place, but also the measures that we intend to put in place going forward.
And on the inventory days, I think what we wanted to emphasize again is that HONMA is a vertically integrated company, and the inventory days included inventory days that sits in our 68 self-operated stores, and also includes the inventory that sits in our factory.
Now let's move into the second section, the business review. I think on Slide 10, you will see some of the highlights that we have called out already during the earlier presentation.
So I think for HONMA, it's all about, let's say, passion. So we have a slogan, which is called Pure HONMA, Pure Golf. So the brand is being -- let's say, was created for the pure passionate, and it will continue to serve the pure passionate. So in the last 12 months, I think, to the left of the slide, you have seen the tremendous growth that we were able to deliver with the TOUR WORLD family, which is designed for the passionate golfers. Sales on the full year basis has grown by 30%. Golf balls, which is continuing the fifth year of growth, double-digit growth, well above 50%. Now it's to 57%.
In terms of the third-party channels, they have contributed to close to 80% of the sales and let's say, the sales growth in the last one year is about 28%.
And then of all the different markets, I think Europe grew by 65%, North America by 17%. And let's say, Korea continue growing by double-digit growth, 16%.
And now moving to Slide 11. I think the brand -- for any brand, which has been in existence for 60 years, I think the brand image always requires revamping from time to time. I think the -- over the last 1.5 years, through many different measures, I think we have been redefining the HONMA brand as a very dynamic, modern and also global brand resonating to the golf passionate and also the Internet-savvy younger golfers. I think of all the things we have done -- I think, a few things that we would like to call out is that we have been improving our tour presence by adding the #1 tour player Justin Rose as our Global Brand Ambassador. We have also been regaining control -- even though we are reducing the number of self-operated stores year-on-year, we are regaining control in many different and also creative ways with our consumers. So we are updating our retail experiences. I think we have already opened 6, 7 new stores in China even though in the financials, you have seen that we have closed 16 stores in China. But in the meantime, I think well beyond the numbers in the financials and also in the annual results, we have opened 7 new stores in China.
So the upper-left image was basically the new store that we just opened last week in Shanghai at one of the most prominent driving ranges in Shanghai. And on the opening day, we delivered CNY 1.5 million sales just on that very day.
So the retail experiences is a very, very important touch point with our consumers that we are trying to revamp. We have also relaunched the global site, which used to be 6, 7 different sites in November 2018 and also updated our social -- global social media accounts in January 2019, following the announcement of Justin Rose, as our Global Ambassador. And the CRM systems are being revamped in China, in Japan, in North America, including all other e-commerce capabilities. We were also the title sponsors for 2018, Hong Kong Open, which some of you participated.
Now moving to Slide 12. I think I would like to speak about the -- some of the changes that's undergoing in the company about the product strategy for the clubs. I think we have always been defining our consumer into 9 different segments. So the lower right part shows you the 9 segmentation that we have been telling the investors. So we have been traditionally looking at investors based on their skill levels or passion and based on their price sensitivity. And the 2, let's say, segment represents our traditional super premium segment, where we have various products. And the 6, 7 was new to HONMA, but something that we had been conquering since 2011. So this is where we have the TOUR WORLD series. And then in 2013, we have moved into segment 5, which is the entry-level players.
I think over the last 3 years or so, we have realized that the 2 is a segment that we will continue to remain strong. For the segment 6 is a segment, especially with the new strategies for U.S. and also for Europe, an underpenetrated market, lots of product segment for HONMA. So instead of having just 1 product for the real good player, we are going to extend it by a second product, which is called XP, just targeting the performance enhancement golfers. Because when you go around, especially in the financial sectors, a lot of people love to play golf, but they don't have the time to play golf. And their, let's say, skill levels have not really improved over the last couple of years. They often need a performance enhancement club to help them play better even though officially, they would never admit that they are not single handicappers. So they will always tell you that they were single handicappers. But in fact, they were actually ranging from 8 to 20. And for those, let's say, group of players, first and foremost, it accounts for 30% of the golf population globally. And secondly, I think our traditional TOUR WORLD products is too difficult to be played by them. So in connection with the U.S. strategy and also in consultation with Mark King, we have decided to extend the TOUR WORLD family to include a second product called XP. The new XP will be launched in September, this year, primarily in Japan and also in U.S. and will be the main driver in the expansion of the TOUR WORLD family, but also the growth of HONMA in the U.S. market.
So just to recap, I think we are changing from a 3-product kind of strategy into a 2-product strategy, but at the same time, with a much stronger focus on the TOUR WORLD family really to deliver what we have been communicating to you, to make TOUR WORLD the second hero products, accounting for 40% of the sales when we double our sales in the next 5 years.
So on Slide 13, I think this is about the apparel business and also the ball business, the so-called non-club business that we have been trying to nurture since we launched the -- let's say, got listed in Hong Kong. For the ball sales, you have seen that for the last 5 years, the CAGR has been 52%, continued to be very strong. This is thanks to a very dedicated distribution strategy for the balls, primarily in China and also in Japan. We are adding Korea to the play. So as we speak, we are adding people in Korea. We have also taken back the distributorship for the balls from our long-term partners in Korea. So from this year onwards, you will be seeing, let's say, the ball business and also the apparel business in Korea, being managed by HONMA in itself. We believe that such a strategy will help us to deliver and also accelerate growth in an important market such as Korea.
And for the apparels, we have announced a partnership with ITOCHU in January 2018. And since then, even though you have not seen a lot of developments through the numbers, but we have already worked on 3 product collections. So we have already had, let's say, the products of SS19 in the shop. I think you'll be able to see those products already. We have also done the trade show for FW19. So the products will be in the shop from September onwards. We have seen a very robust, let's say, pre-book for the fall/winter '19 collections. And in 2 weeks' time, we'll be hosting the trade show for the 2020 SS collection. So the number shows a little decline because of the first collection that we activated with only -- has only a 3-month impact on the full year sales. Not big enough to offset the stock clearance that we have done in the course of the year ahead of the new product launches, but the product pipeline has remained very strong. We have seen the pre-book for fall/w '19 double in the year before. We are also hoping to triple the pre-book for 2020 SS collection. So in a year's time, when we sit down here again, we should be able to show you an apparel sales growth, which at least will double what you have seen this year.
So when you go to Slide 14, I think that gives you a very general impression on the apparel line. So the apparel lines consist of 3 labels: black, targeting the super premium consumers; red label, targeting people who would like to wear those [ clothes ] on the clothes; white label is more for Japan and also -- sorry, for non-Japanese market for markets where fashion athletic has its own, let's say, trend and also development. And to the right, you will be seeing some of the POPs for the SS19 collections. So very, very dynamic, young and very different from the traditional HONMA images that you have been seeing.
And also, Slide 15, I think this is about the self-operated stores that we've been talking about. I think we continue to drive very strong robust growth from third-party retailers. Last year, third-party retailers contributed to 78% of the sales, and the sales grew by 28% year-on-year. But the self-operated stores has gone through its own, let's say, changes. So at the very top, you will be seeing the new store in Seoul, which was opened in February. To the very left, as I said, the new store opening in May 2019 in Shanghai. And to the lower part is the images from the new store expected to be open in this month in Japan. So we are opening 2 new stores in Japan just this month, one in downtown Tokyo, the other in Chiba, where we believe that 2 million of the golfer lives. So these images all try -- all conveys the new HONMA values and also the new HONMA, let's say, brand impressions that we wanted to leave on the consumers.
So Slide 16 is all about the continuation of redefining the HONMA brand. I think Justin has bring a lot of vibe energy into the HONMA brand. We've been able to really leverage on his large followings in -- on social media. He has 1.5 million followers on social media. And then we have been seeing, let's say, a lot of the traffic onto the HONMA website, on to the HONMA social media and also e-commerce platform because of the Justin hashtag and also because of the Justin following. So very, very positive.
Slide 17, very briefly, is about the images from last year's, HONMA Hong Kong Open as well as the results that were achieved by the HONMA team members, players.
Slide 18, the new social media. You'll be seeing the first impressions. Again, very, very different from the old HONMA images, very clean, chic, modern. I think the products are very nicely presented with user-friendly, let's say, introductions, informations on the products. We are also extending all of these webs with a new, what we call, visualized product customization tool, which is going to be live from September onwards this year. So that would allow consumers and also third-party retailers to be ordering customized products online. This is a very big project for us, and we are hoping to gradually scale up the customization products, the sales contribution to the group as a whole.
Now I think from Slide 18 is about the business overviews by market. I think we will be touching on the 4 main markets, Japan being the first one, 51% sales contribution. Second largest equipment market in the world with 1.2 million (sic) [ $1.2 billion ], let's say, retail sales values. 2,000 plus golf facilities. We have seen a lot of news releases with Abe and also Donald Trump playing golf over the weekend. I think both are playing with HONMA clubs at least from time to time.
So in terms of Japan, I think Japan will remain the largest market and the home market to HONMA and will grow at a mid-single digits as we have seen over the last couple of years, but with a stronger gravitation towards the TOUR WORLD family, towards golf balls and also towards third-party sales channels. Third-party sales channel in Japan grew by 30%, which is also above the company average, 27%.
And then on the Korea. Korea is a very interesting market in that it's small. Nobody actually thought that this is the third largest market in terms of equipment. So we estimated based on the Golf DataTech information that the market depth is about $600 million. And it's also interesting in that the market shows highest number of population, in golf population, in relation to the total population. So in Korea, or in most of the other mature markets, usually 10% of the population plays golf, whereby in Korea, about 15% of the golf population plays golf. That explains the continued high growth that we were able to generate in Korea. It's because of the market demographics and also because of the continued effort of HONMA and also the brand images that we enjoyed in Korea. So Korea, for the sixth year has been growing at well above 15%. And the TOUR WORLD family sales grew by 100%, which almost doubled the year before. We have been continuing with our intense TV and also social media campaign. The exclusive partnership with Kolon, which is also different from the year before is that in Korea, will be started to generate sales in balls and also in apparels under the HONMA P&L. So in -- from this year onwards.
China. China is kind of a mixed picture. On one hand, this is, by far, the largest market in terms of total population, but on the other hand, the least underpenetrated market. China today, together with Hong Kong, contributed to 14% of the top line. In terms of the sales growth, you have seen very mixed picture, golf balls doubling its sales. Sales from apparels came down because of the reason that I mentioned before.
In terms of the channel mix, you will see that the sales from third parties grew by 56%. The sales from self-operated stores was down by 52%. So we had a lot of reorganization of our footprint, retail footprint in China ahead of the apparel activation in last year. So in terms of the total numbers, we have closed 16 stores in China, but on the other hand, we are expecting to open 35 stores in China. So all of these stores will have a new image. They will be, let's say, at a different location. So at a different -- better, let's say, locations. Going forward, the stores in China will basically be concentrated in 2 channels. One is on the course. So there will be actually -- we will be actually updating the stores next to the golf courses, but also driving ranges. On the other hand, we will be moving into shopping malls rather than department stores. So moving away from street side stores and also department store type of counters, we're moving into department stores, so where foot traffic is stronger. We will also be -- I mean, in the nuances, moving, let's say, away from the men's floor and into the sports' floor because this is where the fashion athletic consumers will typically buy their products from.
And for those of you who are often in China, we are happy to provide you with, let's say, a continued new list of our stores, which you can also find from our website so that you can do a visit together with us or without us. You are more than happy to experiment the new consumer experience centers that we are creating in China.
So in terms of the U.S. market, I think this is by far the largest market. I think last year, we grew by 16%. We have been, let's say -- we have gone through a lot of discussions, changes, debates with the U.S. team led by Mark King. I will not go into the details because Mark will be giving you his views on the U.S. market later on.
In Europe, a very strong sales growth in the last financial year. Sales grew by 62%. We have been, let's say, driving sales per POS, but also at the same time, increasing the number of POS, primarily in U.K., and this will continue in 2020.
Now moving to the last 2 slides that I will be giving you some introductions on. Slide 26 is basically our view on the golf industry. I think in all of the conversations that I have had with the investors engagements as well, I think most people had a very pessimistic view on the golf industry. I think here, we remain pessimistically optimistic in that. First and foremost, about 10% of the population play golf in U.S. and Europe, in Korea and also in Japan. We do feel that the HONMA brand, with our current size, we have a lot of potential to capture the super premium and also premium performance segment. Both segments are showing faster-than-market-average growth as we have been telling you before.
We also felt that the -- the fact that the Tiger Woods is back on field, the fact that golf has been included as an Olympic game will further, let's say, renew people's interest in golf as a sport. We also believe that golf is a very healthy sport. There is no sport where one can play from teenager, all the way up to 70 years old, and there is no one sport where people can play with family members and also play with friends, business associates and et cetera. So we do feel that, let's say, in spite of, let's say, the millennial impact where people started to play video games rather than being on the field, we feel that the sports does have a steady following and also a consumer base.
And then in terms of our outlook for 2020, I think all of these 5 points were basically the growth enablers that we have been announcing to the investors reconfirming to the investors over the last 2, 3 years. So it's all about the, let's say, penetrating deeper in our home markets, let's say, scaling up the new markets, being Europe and U.S., and also by nurturing and creating, let's say, revamping the non-club categories. And that's all about my presentation. Thank you all for bearing with me and for bearing with us on the facility issues.
So we have now reconnected Mark and Mr. Liu online because we have started almost without giving them a greeting and them giving us a greeting. Let me just see if they are back online again.
[Foreign Language]
[Foreign Language]
[Foreign Language]
Hi, Mark, this is Veronica. Are you online?
I'm on the line, Veronica. Yes.
Hi, Mark. So I'm sorry that you can't join us with video conference. But before we move into Q&A, would you mind giving the investors here in the room but also on the line your views on HONMA in the U.S. and also, let's say, the -- what we have planned to execute in the U.S.?
Yes, I'll try to do it briefly and then if there's any questions, I can field those questions.
So I think the HONMA brand, given its history of craftsmanship and beauty and performance is really suited -- really well for the North American market because the one thing that's very true about the North American market is that the premium segment is the only segment that's growing. And the HONMA brand in the way it's positioned, both on the premium and the performance side, I think, is uniquely positioned right now to make great inroads in the U.S. market.
We decided with Mr. Liu and Veronica, myself and the team that we would have a very unique approach to the market versus our competitors. Our competitors all use the same model. It's all performance product. It's mass distribution. Basically, they all run the same type of model of making products and distributing them. And we've decided that we would really focus on the premium side, not only in the way we present the brand, the distribution model, but also how we deal directly with consumers. So we are planning to -- wherever we present the HONMA brand, it will be in a large, upscale presentation versus our competitors. We're building out approximately 30 to 50 big shop-in-shops in the 20 major markets in the U.S. We're looking at opening what we will call HONMA hub, which is basically our own store located on a golf facility that we will run and operate. We will increase the number of retail doors that we have to begin to build more distribution points, and then we will definitely build out an e-commerce site, working directly with consumers.
I think over the next 3 years, there's 3 distinct things we want to accomplish. In 2019, the year that we're currently in, it's really a launch HONMA in the United States and North America. And the campaign that we're running right now is called Discover HONMA. So we need to build awareness. Although HONMA is a legendary brand throughout the world, it has very little awareness in the United States and Canada today. So 2019 is around building awareness and building an infrastructure that will allow us for rapid growth as we get into 2021 and '22.
2020 will be a year of taking advantage of our increased distribution, our direct-to-consumer model and also launching product in the TOUR WORLD category that we have co-created with Tokyo and Sakata. Very exciting products for the North American market are coming the back half of '19 and into 2020.
If we execute properly in '19 and '20, then we will really be able to see much rapid sales growth in '20 and '21 as we will now have the brand awareness, we'll be creating demand, and we will have the infrastructure to be able to have sales grow at a rapid pace.
So Veronica, I will stop there, and we can come back to any specific questions.
Thank you, Mark.
Thank you, Mark, and thank you, Veronica, and also Mr. Liu for the presentations. Okay. Now we will present -- now we'll proceed to the Q&A sessions. So firstly, let me invite any questions on the floor, and then we will follow by the questions from the dial-in investors.
This is Lai Carlton from Daiwa. If I may, I'd like to ask Mark King a couple of questions. First off, maybe some high-level insights into just the golfing market in general in the U.S. Can you just give us some idea of what the participation rates are, where the industry is heading? Just overall, are we seeing more consolidation in terms of brands?
And then the second question related to that would be, what would a realistic market share be, you think, that HONMA can capture in the U.S.? And what is the key bottleneck do you think for HONMA golf right now? Is it just the brand awareness? Is it the point of sales?
And lastly, how many more golfers do you think -- PGA golfers do you think we need, if any, to increase that brand awareness?
Mark?
Yes, was that all directed at me, Veronica? I'm kind of getting in and out there.
Yes. They were all directed to you. So the question came from Carlton.
Okay, all right. So because there were about 5 questions, can you start with the first question again?
Well, in whatever sequence you like? I think that's very -- well, Carlton is from Daiwa. He covers HONMA. So he knows, let's say, a bit more than HONMA than the other investors, so he will usually ask these questions in the -- so he can actually drop you the questions one by one.
Sure, yes.
Yes, one at a time. I'll take them one at a time.
Sure. My first question really is just high level in terms of the golfing market in the U.S., changes in participation rates, where the industry is heading? And just -- are we seeing more consolidation in terms of brands? That's the first question.
Okay. So about 2 months ago, the National Golf Foundation, which is the industry research element, had a conference. And they really -- it was the first time in many years where the feedback from the foundation, from National Golf Foundation was actually positive. We're seeing an uptick in participation, albeit small, but there is an uptick in participation. The participation is more diverse. There's more women, there's more minority and there's -- the fan base for golf is very, very strong. So although I don't think the industry is growing rapidly, I do think we've seen the bottom. And I think we're starting to see the industry grow again.
As far as consolidation of brands, I actually think it's the opposite. I think, between 2010 and 2017, I think we saw massive consolidation at brands, whether it's apparel, ball, equipment. I think you're now starting to see other brands like HONMA have an opportunity to grow in the United States and in Canada. So although I think the uptick is small at this point, I think it's more positive than it's been in the last few years.
And my second question is regarding what you think is a realistic market share that HONMA can capture in the U.S.? I know you mentioned that premium brands is the only segment that's growing. But I understand that we also do have a few other premium competitive brands out there, too. So how do we differ from that? And how confident are you in terms of growth of our market share?
Yes. Well, so I'm really confident in the growth of HONMA over the next 5 years. And I say that for a couple of reasons. One is we're starting from a very, very low base. I mean, to date, from a market share standpoint, we don't even really register. So let's say, today, we're less than 1% of the total equipment market. I think we can get to 5% over the next 5 years. I think there's great opportunity both in BERES and TOUR WORLD, and the way we're creating products now with great collaboration between market feedback and the resources that we have in Sakata. I think there's really good strong opportunity to be a significant brand, and I'm just going to say 5% at this point.
I think midterm, you also have an opportunity to grow categories like golf ball because from a strategic standpoint, we really said, number one, we have to establish the brand, so that people are aware of the HONMA brand. Two, we have to then really capitalize on the expertise of the company, which is in equipment and the heritage and the craftsmanship. But as we build awareness, build the brand, build an equipment business, it will allow us then the opportunity to add golf balls, to add apparel, to add accessories. So I think short term, I think we can see 5% in the equipment business. And midterm, we can see good growth in the other product categories. So I see nothing but potential, upside potential for the brand.
Got it. And just last question before I jump back in the queue would be, are we aiming for more PGA sponsorships? And how many PGA golfers realistically do you think we need to establish a solid presence?
Well, I think as we go forward, we will need additional tour players. I think Mr. Liu and Veronica and myself have been very cautious about adding people that represent the brand. And when you think about tour players, there's 2 ways to do it. One is to just have quantity of players, which in today's world, I'm not sure it works that well, and it's very expensive. But I think when you add someone like Justin Rose, who represents both lifestyle, premium and performance, it's a real statement about the HONMA brand. And I think as we go forward, we will be looking for key influencers, could be on tour, could be a cultural icon, people that influence consumers. So I think we will be looking for key players. But I think it will be a cautious approach and one where the players really fit the brand and the model.
Thank you for the question, Carlton. Thank you, Mark. So now it's open for questions. Do we have more questions from the floor? Or do we have more questions from the line?
There seems to be no questions from the audio.
Okay. Thank you very much. So I guess that here, we'll be wrapping up the briefing today. And if you have any more questions, just feel free to contact us any time at ir@honma.hk or please welcome to visit our website at honmagolf.com any time. Thank you very much for your time today.
Thank you.