tradingnetprofit.PDF

Issued by: Test-Rite International Co. Ltd (Ticker: 2908 TT/ 2908 TW) Date: May 11th, 2017 Subject: Test-Rite 1Q17 earnings result announcement Test-Rite reports 1Q17 revenue of NT$ 9.7 bn, net income of NT$307 mn, and basic EPS of NT$0.6. Financial results slightly grew in the comparable period. The U.S. is the strongest market in the period. Test-Rite group had double-digit growth in the U.S. market due to continuously surging customers’ demands, leading robust growth of both traditional trading and agency business. Trading Revenue as well as profit had improved in terms of the original currency, however, the recent appreciation of Taiwanese Dollar had greatly influenced the consolidated results, resulting in 1.6% decrease YOY of trading net profit. Affected by the chill real-estate market in Taiwan, consumers’ demands for replacement of household items are lowered. In the mean time, the government policy to increase labors’ weekly holidays also increased the running cost in stores. Taiwan retail businesses, including TLW (DIY) and Hola Taiwan saw sales of NT$4.5 bn and a net profit of NT$ 236mn in 1Q17.To tackle the situation, Test Rite has implemented tight control of operating expenses. Besides, the success of private label products have contributed additional 1% gross margin which greatly balanced all the unfavorable factors. TLW Private Label products accounted for 14.5% TLW sales in 1Q16, along with 3.7% sales growth. On the other hand, HOLA Private Label products accounted for 31.8% HOLA sales, along with22.7% sales growth. HOLA China showed revenue of NT$ 0.7bn and net loss of NT$69 mn in 1Q17. The net loss has greatly improved by 29.0% due to continuously closing underperform stores. Operating expense has