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Bottom line substantially lifted
First Green Factory in Cambodia marked a new milestone
Expect to launch complete new product with higher average selling price |
HONG KONG, Aug 28, 2013 - (ACN Newswire) - Addchance Holdings Limited ("Addchance" or the "Group", stock code: 3344.HK) , a leading manufacturer of dyed yarns and knitted sweaters, today is pleased to announce the unaudited results of the Group for the six months ended 30th June, 2013. During the reviewing period, the business environment of the whole textile industry remained challenging and volatile, under which the Group's consolidated revenue decreased by approximatel16.0% to HK$511.0 million.
Results Highlights
-- Revenue decreased by around 16.0% to approximately HK$511.0million.
-- Gross profit margin for the period under review was significantly improved to approximately 33.0%.
-- Profit for the year substantially increased by nearly 70% to HK$34.8million (2012 1H:HK$20.4million)
-- Profit attributable to equity shareholders derived from the core business of the Group increased by approximately 89% to around HK$41.6 million (2012 1H: HK$22.0million), achieving net profit margin of approximately 8.1% (2012 1H:5%).
-- Total comprehensive income for the period substantially increased by nearly 60% to HK$42.8million (2012 1H:HK$26.8million)
-- Except for the effect of the fair value loss of those derivative financial instruments of amounting HK$9.8 million, the net profit derived from core operations was approximately HK$44.6 million
-- The directors recommend the payment of an interim dividend of HK$2.0 cents per share
However, in face of the tough market environment, the Group has successfully leveraged on the cost advantage of the production base in Cambodia and optimization of our product mix, the Group's performance for the first half of 2013 was improved significantly. The Group is also able to pass part of the cost onto end-customers by raising the average selling price of knitted sweaters products. The Group has also improved the operation efficiency as well as factory utilization rate. With all these efforts, during the reviewing period, profit attributable to equity shareholders derived from the core business of the Group was approximately HK$41.6 million, achieving net profit margin of approximately [8.1]%. The gross profit margin has been increased to approximately 33.0% from 23.6% in corresponding last year.
Profit for the year substantially increased by nearly 70% to HK$34.8million (2012 1H: HK$20.4million) Total comprehensive income for the period (Exchange differences on translation of financial statements of foreign operations) substantially increased by nearly 60% to HK$42.8million (2012 1H: HK$26.8million). Except for the effect of the fair value loss of those derivative financial instruments of approximately HK$9.8 million, the net profit derived from core operations was approximately HK$44.6 million with net profit margin of 8.7%. The Group will continuously overcome the challenges by sharpening its competitive edge.
Sweater business is still the most profitable business of the Group and we have been continuing to increase our production capacity to cope with the recovering demand. Although turnover of the sweater business decreased by approximately 40.1%, from approximately HK$327.5 million to approximately HK$196.1 million during the year under review, which mainly due to the delayed knitted sweaters shipment. We are confident that the with the establishment of the Green Factory in Cambodia, by using environmental friendly materials and implementing green production process, we aim to achieve better energy conservation and minimize daily disposals. The factory will receive all recognized environment-related permits by the third quarter in 2013. Upon full operation of our green factory, we expect to launch a complete new product with higher average selling price which is favorable to our overall pricing strategy.
New customers were gained from Europe, Australia and Japan strategically. Our sweater business is being benefited vertically from our upstream spinning arms by utilizing the raw material at a controllable and stable cost, which in turn tto improve our profit margin. The Group continues to expand our customer base to reduce its reliance on some customers. We also gained largest sales order from our Japanese customers during the period under review whilst the PRC domestic sales also increased under the rebound of China domestic cotton prices. With the expectation of the growing demand for middle and high-end textile products, our PRC domestic sales are expected to increase further.
Sales generated from the production and sales of dyed yarn increased by approximately 17.3%, from approximately HK$193.8 million to approximately HK$227.4 million for the period under review, representing approximately 44.5% of the Group's total turnover. The rather steady performance of dyed yarn was again due to the picking up of cotton and cotton related raw materials. Revenue generated from the sales of cotton yarns decreased slightly by approximately 3.9% to approximately HK$61.1 million.
Revenue generated from the sales of cotton yarns decreased slightly by approximately 3.9% to approximately HK$61.1 million. Sales volume of cotton yarns was kept stable whereas the average selling price recorded a decrease of approximately 5.1%. The external utilization rate of the cotton yarn was kept at around 43%.Revenue generated from the provision of dyeing services increased from HK$12.6 million to approximately HK$21.4 million for the first half of 2013.
Net cash and cash equivalents increased to approximately HK$145.0 due to the 2nd installment payment received on the transfer of the operation right of Luoding Addchance Limited.
Mr. Sung Kim Wa, Chairman of Addchance Holdings Limited is confident that, "Our first green factory in Cambodia was completed by the end of 2012 and has commenced operation in the first quarter of 2013. The factory will receive all recognized environment-related permits by the third quarter in 2013. As the pioneer in term of green textile manufacturing, we will use our best endeavour to optimize the overall production efficiency as well as making contributions to create a greener and more environmental-friendly industry in the future."
Looking ahead, the global economy will undoubtedly remain uncertain. However, with our focus on developing our business in Cambodia, we can, not only hedge against the difficulties of continuously rising production costs in the PRC, but also sharpen our competitiveness on procuring orders from EU and Japan. The long established spinning arms in SuSong and Xinjiang also bode well for the Group on the upstream raw materials supply. Demand for middle and high-end textile products is expected to grow with the growing China domestic consumption. With the better industrial environment, we believe that China will continue to be one of the largest countries in the world for textile production and exports, bringing in huge business opportunities for the players.
By combining expertise in production and efficiencies in production capability through full vertical integration, we are capable of delivering an innovative portfolio of products and services with unsurpassed quality. Further, by leveraging on our new cash flow stream from the Operation Right Transfer Agreement, we believe that we are in a much better position to capture any market opportunities, to mitigate the impacts of the market's current volatility and maintain our leading position in the global cotton textile industry.'
Contact:
LBS Communications Consulting Limited
Joanne Chan (852-9616 2676), Pauline Fu (852-9831 3226) / Stella Chan (6892 3143)
Tel: (852) 3752 0431 / (852) 3679 3671
Fax: (852) 3753 2899
Email: jchan@lbs-comm.com / pfu@lbs-comm.com / schan@lbs-comm.com
Topic: Press release summary
Source: Addchance Holding Limited
Sectors: Daily Finance, Daily News
https://www.acnnewswire.com
From the Asia Corporate News Network
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