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Public company info - Victory City International Holdings Ltd. , 00539.HK
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Victory City International Holdings Ltd., 00539.HK - Company Profile
Chairman Li Ming Hung
Share Issued (share) 2,331,000,000
Par Currency Hong Kong Dollar
Par Value 0.1
Industry Textile & Apparels
Corporate Profile Business Summary: The Group is principally engaged in the production and sale of knitted fabric and dyed yarn and garment products. Performance for the year: For the year ended 31 March 2020, the Group’s audited consolidated revenue was approximately HK$4,564 million, representing a decrease of approximately 15.7% as compared to the previous corresponding period (2019: HK$5,413 million). Gross profit decreased by approximately 24.5% to approximately HK$750 million (2019: 994 million). Profit attributable to owners of the Company amounted to approximately HK$173 million. Profit for core operations for the year ended 31 March 2020 was approximately HK$225 million after adjusting the above-mentioned non-operating gains and losses, representing a year-onyear decrease of approximately 22.1% (2019: HK$289 million). Basic earnings per share was HK22.7 cents (2019: HK55.9 cents). Business Review Textile Business For the year ended 31 March 2020, production and sale of knitted fabric and dyed yarn remained as the Group’s principal operation, accounting for approximately 94.2% of the Group’s consolidated revenue. Revenue for the textile segment was approximately HK$4,299 million, representing a decline of approximately 14.4% from the previous corresponding period (2019: HK$5,022 million). During the first half of the financial year, the downward trend of cotton price together with the slowdown in order book resulted from the trade war between the US and the PRC hit the revenue of the Group. The outbreak of COVID-19 since early 2020 has got great impact to global economic activities. The unexpected production disruption of the core fabric manufacturing base in Xinhui including the extension of the Lunar New Year holiday brought by the relevant government authorities led to the decrease in production output. In addition, the Group has experienced gradual cancellation of orders as well as delay in shipment of goods due to suspension of business operation of corporations and closure of shops across the world. Under such adverse business environment and market situation, the business performance for the first half of 2020 will inevitably be affected. Nanjing Synergy has ceased its yarn spinning production since early 2020 to cooperate with the land resumption policy of the People’s Government of Jianging District, Nanjing. All employees have been duly compensated and demobilized according to local rules and regulations. The machineries in the production plant were being sold or transferred smoothly and the process is expected to complete in the second half of 2020. As the production of the yarn spinning mill only catered for less than 10% of the monthly consumption of the Group, the stoppage of production in Nanjing Synergy does not have significant effect on the yarn procurement of the Group. Garment Business For the financial year ended 31 March 2020, revenue of the garment business was approximately HK$266 million, with a decrease of approximately 32.0% from approximately HK$391 million last year. The decrease was mainly attributable to the further consolidation of clientele to focus on customers providing steady order flows and profit margin. There was a net loss of approximately HK$16 million for the year ended 31 March 2020, compared to a net loss of HK$27 million last year. The decrease in net loss was mainly attributable to a non-recurring gain of approximately HK$9 million on fair value adjustment on investment properties and there was an amount of approximately HK$6 million of goodwill written-off for the production base in the PRC last year that did not occur in this reporting period. Prospects: The business environment for the year 2020/21 is full of challenges and uncertainty mainly due to the impact brought by COVID-19. The time taken for full recovery of the global economy is unknown. As said, business performance of the Group for the first half of 2020/21 will undoubtedly be affected. The management expects the rebound of fabric demands would take place when the worldwide economic activities are back to normal. The Directors will continue to closely monitor the situation and take effective measures to overcome the challenges. Facing such difficult business environment, the Directors decided to defer the expansion plan of constructing a new fabric manufacturing plant in Bangladesh. The expansion plan is anticipated to resume at the appropriate time. Given the recurring operating loss of the garment segment, the Group has made adjustments to its operating strategy. In the past two financial years, the Group disposed of two production bases in Indonesia and Cambodia respectively in order to reduce loss. In light of the ongoing COVID-19 that has significant impact on the garment businesses in the US, the Group will continue to critically review the garment customer portfolio and may make downward adjustments in the garment segment to mitigate the loss that negatively impacts the Group’s profitability as a whole. Under the current difficult business environment, the Directors made concrete adjustments to the Group’s operation strategy, optionally capitalised the production capacity and devoted more resources to developing and refining products. The Group is well-positioned to face all challenges ahead and to bring the most satisfactory return to the shareholders.

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