The principal activities are the manufacture and trading of sportswear and garments. The major markets are Mainland China, Japan, South Korea, and Hong Kong.
The Group's profit attributable to shareholders for the 6 months ended 30-09-2019 amounted to HKD 159.1 million, an increase of 57.3% compared with previous corresponding period. Basic earnings per share was HKD 0.299. An interim dividend of HKD 0.2 per share was declared. Turnover amounted to HKD 1.89 billion, an increase of 28.1% over the same period last year, gross profit margin up 3.2% to 19.1%. (Announcement Date: 13 Nov 2019)
Business Review - For the six months ended September 30, 2019
Multinational manufacturing platform
During the period under review, the Group worked closely with its customers in response to their requirements by turning its overseas factories into production bases for U.S. orders. The Group’s production bases in Vietnam and Indonesia reported improvements in production efficiency and delivered sound results after introducing a higher percentage of mechanical production equipment and optimizing the production processes, while at the same time ensuring cost stability.
In view of the excess production capacity at the China domestic factories following the reassignment of U.S. orders to overseas production facilities, the Group has been actively developing new customers among middle-to-high-end domestic sporting brands to unveil new prospects in the market of China domestic branded products.
Sales to the U.S. market as a percentage of total revenue, following the reallocation of orders in view of China-U.S. trade conflicts, fell slightly from 28% for the corresponding period last year to 27% for the current period. On the other hand, the China domestic sales had nearly doubled, accounting for 43% of total revenue. The Group capitalised on opportunities amidst the crisis situation and flexibly deployed resources to increase the Group’s overall competitiveness and earnings.
Contribution of newly-acquired factories
Last year, the Group acquired the production facilities located in Ho Chi Minh City of Vietnam and Hubei Province of China (the “New Acquisitions”). The New Acquisitions greatly increased the production capacity and introduced new China customers to the Group. It helped expanding the customer base and the sales volume in China, thus alleviating the impact on the U.S. exports orders for the Group’s China factories due to Sino-US trade war. During the period, the New Acquisitions generated HK$590 million to the Group’s sales. The synergy effect increased the Group’s profit for the period, as well as injected new impetus to the productivity and profitability of the Group.
Business Outlook - For the six months ended September 30, 2019
Looking ahead, the business environment is expected to be more challenging than ever, as uncertainties continue to prevail in the global economy. Nevertheless, the Group holds cautious optimism for the future. On the back of its domestic and overseas production bases, professional management team with proven track records and strong financial conditions, the Group will be fully prepared to address any changes in the market.
Source: Eagle Nice (02368) Interim Results Announcement