Rojukiss International : Management Discussion and Analysis Quarter 2 Ending 30 Jun 2022 (Revised)

Management Discussion & Analysis

As of 2Q/2022

ROJUKISS INTERNATIONAL PUBLIC COMPANY LIMITED

Management Discussion & Analysis As of 2Q/2022

Key Performance

• Revenue from sales and services was 191.9 million baht (+13.5% QoQ, -7.2% YoY)
• EBITDA was 40.4 million baht (+47.8% QoQ, -10.1% YoY)
• Net Profit was recorded at 30.7 million baht (+59.4% QoQ, -5.2% YoY)

	Key Financial Performance			2Q 2022		%			2Q 2021		%			%YoY			1Q 2022		%			%QoQ
	(Million Baht)
	Revenue from sales and services			191.9		100.0			206.8		100.0			(7.2)			169.0		100.0			13.5
Cost of goods sold	(86.2)		(44.9)		(92.8)		(44.8)		(7.0)		(80.4)		(47.6)		7.2
	Gross profit			105.7		55.1			114.1		55.2			(7.4)			88.6		52.4			19.3
EBITDA	40.4		21.1		45.0		21.7		(10.1)		27.4		16.2		47.8
	Net Profit			30.7		16.0			32.4		15.6			(5.2)			19.3		11.4			59.4
Earnings per share (Baht)	0.05				0.05							0.03

Executive Summary

• The revenue from sales and services in 2Q/2022 was 191.9 million baht, an increase of 13.5% QoQ but a drop of 7.2% YoY mainly from
  o Revenue from Skin Care category from Rojukiss Skincare brand and Color Cosmetic category from Sis2Sis brand continued improving. The primary growth of overall consumption has been rebounded after the COVID-19 pandemic has been under control. As a result, the consumption of Personal Care and Beauty Care products has started recovering.
  o Revenue from Domestic began to show signs of recovery with a 18.6% growth rate from the previous quarter especially in the Modern Trade channel, which increased by 30.0% QoQ.
• EBITDA was 40.4 million baht, an increase of 47.8% QoQ but decreased by 10.1% YoY. While Net Profit was 30.7 million baht, an increase of 59.4% QoQ but a decreased by 5.2% YoY. If compared to the previous quarter, the drivers were mainly from the recovery of sales and gross margin improvement. In addition, the Company recognized a net gain of 9 million baht from the acquisition of increased shareholding proportion in O2 Kiss Company Limited ("O2KISS").
• The Company's business outlook in 2022, KISS expects the overall Thai economy trend continues improving due to the COVID-19 outbreak has been under control. An increase trend of private consumption as well as easing the border entry restriction are key drivers of economic recovery. However, the Inflation rate is likely to advance and remain at a high level which the trend will be gradually recovery. As a result, KISS considers both economic and consumer behavior trend to reflect in the second half of 2022 Company's Strategy as follows:

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ROJUKISS INTERNATIONAL PUBLIC COMPANY LIMITED

Management Discussion & Analysis As of 2Q/2022

1. Enhance company product portfolio in Innovative Healthcare Product under Hibiocy aligned with the Company's Vision and Mission to be "A leading company in holistic Health & Beauty of Asia"., First product launch will be preventive COVID-19virus nasal spray under partnership - with Chulalongkorn University, Health Systems Research Institute (HSRI), Silpakorn University, and The Government Pharmaceutical Organization (GPO). This partnership will be recognized as Thailand and the first global innovative Nasal Spray by incorporating Monoclonal Human Antibody Cocktail technology to fight with COVID-19virus. This partnership strategy is aligned with our vision to support and promote Thai Researchers by utilizing feasible knowledge and knowhow and this effort will continue to build our future product portfolio. The Nasal Spray is under FDA 's License Registration Process and expected to be available around end of 3Q/2022 to the beginning of the 4Q/2022.

1. Strengthening Product Portfolio through technology & innovation in Health & Beauty

under our core brands (Rojukiss, Sis2Sis, Best Korea) and continue driving accessibility.

1. Focusing in the digital marketing investment strategy by holistic investing across digital

marketing channels and leveraging data analytic to enhance our engagement and reach to target consumers at the most effectiveness and efficiency.

1. Expanding current products of O2KISS (Qi, PhD K-Derma) under Direct-To-Consumer (D2C) channel to all distribution channels in order to drive more accessibility. Moreover, continue strengthening our products portfolio through innovative science by leveraging PhD K-DermaBrand for Derma Skincare and Qi Brand for food supplement/dietary (or future brand) to meet consumer insights on holistic health concern under new normal lifestyle

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ROJUKISS INTERNATIONAL PUBLIC COMPANY LIMITED

Management Discussion & Analysis As of 2Q/2022

Financial Performance

Table 1 : Statement of Comprehensive Income

(Unit : Million Baht)

	Consolidated Financial Statement	2Q 2022		%		2Q 2021		%			%YoY		1Q 2022		%			%QoQ		6M 2022	6M 2021		%YoY
	Revenue from sales and services	191.9		100.0		206.8		100.0		(7.2)		169.0		100.0		13.5		360.9		441.4		(18.2)
	Cost of sales and services	(86.2)		(44.9)		(92.8)		(44.8)		(7.0)		(80.4)		(47.6)		7.2		(166.7)		(196.3)		(15.1)
	Gross Profit	105.7		55.1		114.1		55.2			(7.4)		88.6		52.4			19.3		194.3		245.2			(20.8)
	Other Income	0.7		0.4		0.3		0.1		132.0		3.5		2.1		(79.8)		4.3		0.4		886.3
	Selling expenses	(34.4)		(18.0)		(42.8)		(20.7)		(19.6)		(32.6)		(19.3)		5.6		(67.1)		(84.8)		(20.9)
	Administrative expenses	(42.0)		(21.9)		(30.4)		(14.7)		38.2		(33.0)		(19.5)		27.2		(75.0)		(68.5)		9.5
	Gain (loss) from foreign exchange	1.5		0.8		2.6		1.2		(41.7)		0.0		0.0			N/A	1.5		6.3		(76.0)
	rate
	Loss sharing from Joint Venture	(3.0)		(1.6)		(2.0)		(1.0)		50.5		(2.1)		(1.3)		40.7		(5.1)		(2.0)		156.5
	Net profit sharing from acquisition	9.1		4.7		-		-			N/A	-		-			N/A	9.1		-			N/A
	of additional shareholders
	Total expenses and other	(68.1)		(35.5)		(72.3)		(35.0)		(5.8)		(64.2)		(38.0)		6.1		(132.4)		(148.6)		(10.9)
	income
	Profit before finance costs	37.5		19.6		41.8		20.2		(10.1)		24.4		14.4		54.1		61.9		96.6		(35.9)
	Finance costs	(0.6)		(0.3)		(1.2)		(0.6)		(52.3)		(0.3)		(0.1)		124.9		(0.8)		(3.1)		(73.5)
	Profit before income tax	37.0		19.3		40.6		19.6		(8.9)		24.1		14.3		53.3		61.1		93.5		(34.7)
	expenses
	Income tax expense	(6.3)		(3.3)		(8.2)		(4.0)		(23.4)		(4.9)		(2.9)		29.3		(11.1)		(17.9)		(37.9)
	Profit for the year	30.7		16.0		32.4		15.6			(5.2)		19.3		11.4			59.4		49.9		75.5			(33.9)

Overall

Thai economy in 2Q/2022: Thai economy continues recovery momentum from border relaxation, private consumption and service sector rebound after COVID-19 outbreak has been under control. However, the rise of Inflation rate which private consumption trend will be gradually recovery. Furthermore, the most people is back to new normal lifestyle and the Thai Government announced the mask relaxation, which drives the Consumption rate of Personal and Beauty Care products.

In 2Q/2022, KISS continues to invest in Digital Marketing activities aiming to constantly increase Brand Awareness to be Top of Mind of consumer by mainly focusing on the Rojukiss brand through Online media platforms such as YouTube, Facebook, Twitter, and TikTok, along with KOL Marketing (Key Opinion Leader).,Moreover, KISS has also promoted Dietary Supplement products under "Qi" through Out of Home media with more than 130 screens throughout the country for domestic market. While Sales from Overseas in both Indonesia and Vietnam continued strong growth from Rojukiss serum, Mask 5X, and Serum cleanser, a recently released product during 2Q/22.

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ROJUKISS INTERNATIONAL PUBLIC COMPANY LIMITED

Management Discussion & Analysis As of 2Q/2022

On 23rd July 2022, the Company successfully acquired additional 60% of O2KISS Share from Joint Venture Shareholder resulting to O2KISS becomes subsidiary of the Company (Fully Owned). This is a strategic action to strengthen company holistic portfolio into health and beauty segment by leveraging acquired Dietary Supplement products under "Qi" and PhD K-Derma skincare brand as well as building future innovation pipeline under this segment

Revenue from sales and services

Table 2: Revenue from sales and services by category

(Unit : Million baht)

Revenue by category	2Q 2022	%		2Q 2021	%		%YoY		1Q 2022		%		%QoQ
Revenue from sales
Skin Care	168.1		83.3		185.6			85.3		(9.4)		148.6	84.1	13.1
Color Cosmetics	28.3		14.0		26.6			12.2		6.4		18.2	10.3	55.3
Supplement	-0.6		(0.3)		1.9			0.9		(130.1)		2.2	1.3	(125.3)
Hair Color	6.0		3.0		3.6			1.6		(67.3)		7.7	4.3	(22.0)
Total revenue from sales and	201.8		100.0		217.6			100.0		(7.2)		176.6	100	14.3
services
Table 3: Revenue from sales and services by distribution channel
												(Unit : Million baht)
Revenues by distribution channel	2Q 2022		%		2Q 2021		%		%YoY	1Q 2022		%		%QoQ
Revenue from sales
Modern Trade	138.3		68.5		152.8		70.2		(9.5)		106.3		60.2	30.1
General Trade	15.4	7.6		27.6	12.7		(44.2)		22.2		12.5	(30.7)
E-Commerce	5.4	2.7		5.9	2.7		(8.0)		5.8		3.3		(6.3)
Export through Cross Border	7.3	3.6		8.6	4.0		(15.5)		6.4		3.6		13.9
Export through Foreign Distributors	34.9	17.3		18.7	8.6		87.1		31.8		18.0	9.7
Joint Venture	0.5	0.2		4.0	1.9		(88.3)		4.1		2.3		(88.5)
Total revenue from sales and	201.8		100.0		217.6		100.0		(7.2)		176.6		100		14.3
services
Remark:
Table 2 and 3 are revenue before deduction of trade rebate and discount and accounting estimation.

2Q/2022 Financial Summary

In 2Q/2022, Total Gross Revenue (before deduction of rebate and discount and accounting provision) was 201.8 million baht, decreased by 7.2% YoY, but recorded an increase of 14.3% QoQ due to the positive sign of improvement in the COVID-19 epidemic situation, including the Government announced the mask relaxation, resulting to the Personal Care and Beauty Care market has started rebounding. As a result, the Company recorded net sales from Skin Care, and Cosmetic product category increased by 13.1% and 55.3%, respectively. The growth in Skin Care product category was driven by Rojukiss which increased by 2.0% YOY and 14.6% QoQ. The underlying is mainly from the domestic recovery of Supermarket/Hyper Market, Beauty Stores and the continued strong growth in international sales from Indonesia and Vietnam, Moreover, the growth is further strengthen through Cosmetic category which increased 6.4% YoY, and 55.3% QoQ due to double Sis2Sis Mascara sales from previous quarter and the launch of the new collection Sis2Sis Ultra Moist Lip Tint at the end of 2Q/22 and continues selling in 3Q/2022.

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