Good afternoon, ladies and gentlemen. Welcome to the investor presentation of Sa Sa International Holdings Limited interim results year 2018/2019. Before the presentation, let me introduce the company representative on stage, Dr. Simon Kwok, SBS, JP, Chairman and CEO. Dr. Guy Look, CFO and Executive Director.
Hi, good afternoon.
The agenda today will begin with Dr. Kwok going through the interim results highlights, and followed by Dr. Look walking us through the financial performance, business review and outlook. There will be a Q&A forum afterwards. May we now invite Dr. Kwok to go through the interim results highlights with us. Dr. Kwok, please.
Okay. Good afternoon, ladies and gentlemen. Welcome to Sa Sa's interim results investor presentation for the six months ended 30th September 2018. The positive benefits of the Guangdong-Hong Kong-Macau Greater Bay Area developments have driven the continuous growth of mainland tourist arrivals. The group's turnover increased by 16% year-on-year to around HKD 4,147 million, against a lower base in the previous year. Our profit for the period achieved a more significant increase of 84% to around HKD 202 million, as operating leverage made an impact. In our core market of Hong Kong and Macau, the group expedited new trendy product launches during the period to boost sales. As such, the relatively slower growth of house brands products resulted in a decrease in sales mix, and therefore the gross profit margin declined to approximately 40%.
Yet, operating leverage was realized on the strength of higher sales growth to deliver a drop in various cost to sales ratios, including rental. This, in turn, led to an improvement of approximately 1.8 percentage points in the net profit margin over the period. The central government's robust development of the Greater Bay Area is beneficial to driving traffic within the region. The retail sector has already seen the benefit, with significant impetus being driven to the growth of Sa Sa sales and the number of transactions since the first quarter. Despite negative factors, including the Sino-U.S. trade war, RMB fluctuations and stock market volatility that affected foot traffic and consumption in the second quarter, the number of transactions by mainland Chinese customers still recorded double-digit growth. Our retail sales in Hong Kong and Macau increased by 18.5% for the period.
Tapping into the new retail trend, we continue to strengthen our information technology system to accelerate the checkout process and offer customers an enhanced shopping experience. In the mainland China market, we continued to optimize our store network, and we closed underperforming stores in remote locations to strengthen management. Nevertheless, business performance in mainland China was affected in the first half of the year owing to weakness in sales of house brand products, which led to a decreased gross profit margin during the period. We have improved management of our house brands, and as such, we saw a significant improvement in gross profit margin in October and November. Further improvements in gross profit margin are expected to come through in the second half. As part of the group's long-term business development strategy, we continue to focus on enhancing logistics operations and the shop experience for our e-commerce segment.
In the first half, we make concerted efforts to drive faster delivery at lower cost, with the long-term goal of supporting Sa Sa's website and mobile app. The overall aim is to provide a seamless customer shop experience via the strategic integration of online shopping and physical stores in mainland China, Hong Kong, and Macau. In Sa Sa's overseas markets, the group continued to build its store network in Malaysia and Singapore and to stabilize and strengthen the local management teams. We also enhanced our customer relationship management system, thereby further broadening our customer base. Looking towards the second half, the rise of the Greater Bay Area brings vast opportunities to support the group's long-term development. The early benefits can already be seen in the group's business performance in the first half.
We are currently studying the feasibility of opening new stores in tourist areas near the Hong Kong section of the Guangzhou-Shenzhen-Hong Kong Express Rail Link and the Hong Kong-Zhuhai-Macau Bridge. Consumption sentiment, however, is still likely to be affected by the Sino-U.S. trade war, RMB and stock market fluctuations. Overall, the group aims at faster product rollout, along with boosting traffic and sales through high-volume trendy products to offset the short-term negative impacts. In the era of new retail, we will take further steps forward with customer database integration to cover three business units, including stores in Hong Kong, Macau, and mainland China, as well as e-commerce. The synergy created across all three business units will enable customers to enjoy a seamless shopping experience spanning online and offline operations. Solid foundations will be laid for targeted promotions, cross-selling and loyalty enhancement initiatives.
The group values the enhancement of technology, e-commerce, and logistics, which are at the cutting edge of new retail in response to market changes. An enhancement of our in-store point-of-sale system will be carried out to further accelerate the checkout process through a much higher degree of automation. This will support the advanced functions required for the group to drive towards online and offline integration and further enhance our customers' overall shopping experience. System improvements in warehouse automation will also improve the overall operational efficiency. The operating environment in other markets is expected to remain challenging. We will enhance operating efficiency through optimization of our store network and product mix with the aim of narrowing losses. I am now going to give over the floor to Guy, who will explain in detail Sa Sa's financial and operational performance for the first half of the year. Thank you.
Good afternoon, ladies and gentlemen. Welcome to Sa Sa International Holdings Limited's interim results presentation for the six months ended 30th September 2018. Our agenda today covers our group's financial performance, business review, and outlook and future plans. First of all, the group's financial performance. Our turnover increased by 16.3% to HKD 4,147.2 million. Gross profit increased by 10.2% to HKD 1,668.2 million. This is despite a reduction of gross profit margin of 2.3 percentage points to 40.2%. Profit for the period, including discontinued activities, increased by 84.5% to HKD 202.9 million. Our earnings per share increased by 81.9% to HKD 0.067. We are declaring an interim dividend of HKD 0.07 a share, representing a 100% increase on last year and a 107% payout ratio. Our store number has increased by 11- 273 in the period. Our group turnover is contributed by a number of business units.
First of all, Hong Kong and Macau contributing 85% of our group turnover, or HKD 3,525.5 million. Malaysia contributed 4.6%, e-commerce 4.5%, Mainland China 3.3%, and Singapore 2.6%. This shows our group's financial position, which is very sound. Our cash and bank balance has only reduced marginally by HKD 38.5 million- HKD 1,159.2 million. We move on to business review. The Greater Bay Area development has boosted the consumer traffic from Mainland China.
As a result, overall retail sales has increased by 18.5%, while same-store sales has increased by 15.8%. In the first quarter, the number of transactions of Mainland consumers has increased by 27.5%, and this was further supported by a strong ASP growth of 11.7%. In the second quarter, transaction volume and ASP were affected by the Sino-U.S. trade war and renminbi weaknesses. But despite this, the Mainland consumer transactions has still grown, and remain strong at 16.7%.
In the first half, we began to get the early benefits of the Greater Bay Area development, with robust growth in same-day Mainland tourist arrivals starting from February 2018, providing a very favorable business environment. Our transactions with Mainland Chinese customers in our stores, represented by the pink line on the slide, has increased tremendously. If we compare that to the black line, which denotes the change in Mainland Chinese arrival in Hong Kong and Macau, it is clear that our transaction volume growth has beaten the benchmark, being the overall arrival figure in Hong Kong. This we would attribute to the attraction of our fast product launches. In the second quarter, the sales growth was slowed down, but the underlying traffic and volume remained quite strong. The Sino-U.S. trade war, weaknesses in stock market, and renminbi exchange rate has affected store traffic and ASP during this quarter.
Despite this, the PRC tourist arrivals and transaction volume at Sa Sa in the second quarter still recorded 12.1% and 16.7% growth respectively. In Mainland China, the house brand sales weaknesses has reduced our retail sales by 1.8% and our GP percentage by 2.8%. This also results in a slightly higher recurring loss, which has increased by HKD 2.1 million. Total loss has increased by a bit more due to write-back last year. We do not have this benefit this year. In terms of the store network, we have been cautiously optimizing and we are managing the store network with a focus on Greater Bay Area. We have closed underperforming stores and those in remote areas. We believe that stores in Greater Bay Area would potentially provide O2O synergies in sales and services within the region.
As a result, three out of four of the new stores that we have opened in the first half have clustered around the Greater Bay Area at Zhuhai, Dongguan, and Jiangmen. As at the end of the first half, we had a total of 16 stores across seven cities within the Greater Bay Area. For e-commerce, our recurring losses have continued to narrow. Our top-line growth was 4.6%, whereas our sales to mainland China has grown at a faster rate of 14.6%, being driven mainly by third-party platforms. We do have positive contribution at operating level, but at this stage, it is still insufficient to cover back-office costs. The recurring loss has continued to decrease and has decreased from HKD 18.8 million last year to HKD 11.8 million this year. We have suffered some recurring costs, including exchange losses of HKD 3 million, adding up to HKD 5.2 million.
As a result, our operating loss has increased marginally by HKD 0.7 million- HKD 17 million. We have continued to make progress in logistics. The cost as a percentage of sales has reduced from 16.6% of sales to 12.9%, whereas delivery time has been shortened to six days. In Malaysia, new stores and also new customer segment are helping to drive our sales growth despite challenging operating environment with multiple changes in consumption tax policy. We have continued to improve our store network.
The average number of stores has increased by three to 75, and we are targeting Malay customers. As you may know, they have slightly lower spending power, and so we have lowered our minimum spending requirement to become a VIP, and we have enhanced the makeup category with more affordable offerings. The top-line sales has increased by 7.1%, whereas on the same store basis, the growth is 3.3%.
In Singapore, we are building the local management team and improving our store network. The average number of stores has increased by 1- 21, and we are trying to open stores in suburban areas, and we are working to enhance our store contributions. The retail sales has grown by 5.6%, whereas same-store sales has increased by 1.7%. We move on to outlook and future plans. In Hong Kong and Macau, we are embracing new opportunities from the Greater Bay Area and from here on I will say GBA because I keep saying GBA. The Express Rail Link and Hong Kong-Zhuhai-Macau Bridge are really only two of 36 infrastructure projects. We can look at it this way, there are another 34 reasons why we should be optimistic about the growth of same-day PRC tourist arrivals.
The GBA's population is close to 70 million, which is 10x that of Hong Kong. According to the National Economic Research Institute, the GBA currently takes up about 5% of China's population, and according to them, this is expected to increase to 10 million. Obviously a lot of opportunities. For Hong Kong within GBA, we do have our unique edge. We are well trusted and our products are well known for their authenticity. We are also well known as a shopping paradise with no tariffs and fast product rollouts and with good selection. Regarding store opening, we are considering and studying to open new stores near the Express Railway Link station and also the new bridge, reflecting our positive view of the impact of the mega infrastructure on retail business. We are looking at new retail era in the face and moving towards it.
The integration of customer database across multiple touch points, including our physical stores in Hong Kong, Macau, PRC, and also our online operations, would help to provide a seamless online/offline shopping experience across Greater China. This would enable us to target specific customer segments and perform cross-selling, and such actions will improve customer loyalty. We are moving towards digitization and also IT improvements. Some of the things we're doing would include upgrading our points of sale system to speed up checkout process and also facilitate Internet of Things, and continuously improve our logistic operations and inventory management to enhance customer experience and reduce costs. We will engage in more usage of big data. For our Mainland China stores, they would play an important role in new retail strategy.
They would become an important touch point in the new retail era, enabling the group to attract more customers from Guangdong province and beyond. Our retail stores can provide local services when mainland tourists return home after shopping from our Hong Kong and Macau stores. After the reporting date, we have opened more stores, and we now cover eight cities in the Greater Bay Area. We are continuing looking for additional locations within GBA. Of course, we do so with prudency and we also need to improve our logistics further to support this expansion. We will continue to close down underperforming stores and those in remote areas and open in strategic areas where they are well managed. The logistic operations need to have further improvements to improve cost and delivery time, and the network of warehouse is gradually coming into place, to support stores in different clusters.
For e-commerce, the new retail role of our e-commerce operation is to provide online elements of customer experience. We would, of course, need to improve fulfillment, shorten delivery time, enhance customer experience, and lower logistic costs so that we can be more competitive. We engage in more big data analysis to strengthen our appreciation of our customer behavior and formulate sales strategies and optimize our marketing campaign. We are strengthening our e-commerce solutions, investing now to consolidate all our backend systems to a centralized clouds platform. This will be completed by the second half of next year. We're also looking to develop relationship with more third-party platforms. We do feel that there are more potentials there. In Singapore and Malaysia markets, in Singapore in particular, we feel that there's potential to operate about 30 stores in the next two years and increase the penetration into suburban areas.
We would, of course, have to manage the risk of expansion given the challenging operating environment. More efforts will be made to tap Malay customers and attract more domestic Chinese customers. We will target to open another four stores outside of the capital in the second half. We have to bear in mind, consumer sentiment may still be affected by future changes by the consumption tax policy. Thank you.