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Public company info - Carry Wealth Holdings Ltd. , 00643.HK
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Carry Wealth Holdings Ltd., 00643.HK - Company Profile
Chairman Li Haifeng
Share Issued (share) 818,000,000
Par Currency Hong Kong Dollar
Par Value 0.1
Industry Textile & Apparels
Corporate Profile Business Summary: The Group manufactures and trades garment products and engages in securities investment. Performance for the year: For the year ended 31 December 2020, the Group’s revenue amounted to HK$290.5 million (2019: HK$331.7 million), and gross profit was HK$47.0 million (2019: HK$44.9 million). Loss attributable to equity holders was HK$15.3 million (2019: HK$14.8 million). The basic and diluted loss per share were both at 1.87 HK cents (2019: both 1.81 HK cents). Business Review Garment manufacturing and trading segment The Pandemic has changed the world economy and adversely impacted many industries, including the garment sector. Researches indicated that major buying countries’ imports from garment-reporting countries in Asia dropped significantly in 2020 due to collapsing consumer demand and government lock-down measures. In February, the Group's Heshan Factory was suspended from operation for approximately two weeks due to the Mainland China government’s healthcare measures. Furthermore, as aforementioned, the Group experienced a decline in production orders during the spring and summer periods due to the lock-down measures in overseas regions. Fortunately, thanks to the Group's staff’s effort, the business performance showed improvement in the second half of 2020. The production orders were returned to pre-pandemic levels for the Autumn and Winter seasons. For the full year, revenue from the garment manufacturing and trading segment decreased by 12.4% to HK$290.8 million (2019: HK$331.8 million). The US and Europe regions remained the predominant geographical regions of the Group's garment manufacturing and trading business and contributed 87.6% (2019: 86.3%) of segment revenue, amounted HK$254.7 million (2019: HK$286.4 million). In the US, the Pandemic cases and deaths had continued to climb since late March. The US government took fiscal stimulus aids to facilitate economic recovery, such as interest rate cuts and additional supports to corporations. The US Consumer Price Index quickly refill the gap in April and continue to grow. Meanwhile, the US consumption market had yet fully back to normal, and the US GDP for 2020 still recorded the worst performance since World War II. As a result, the Group’s revenue from US customers decreased by 11.2% to HK$169.3 million (2019: HK$190.6 million), accounting for 58.2% (2019: 57.5%) of the segment revenue for the year ended 31 December 2020. It might be worth mentioning that the further escalation of tensions between China and the US in the second half-year did not significantly impact the Group’s business as the related orders were allocated to overseas subcontracted factories. In the Eurozone, the regions recorded negative economic growth in the first six months of 2020. Although the massive monetary stimulus helped repair the economic damage in Europe, yet, it is still far from full recovery from the Pandemic as customers’ confidence and consumption sentiment always take time to recover. Revenue from European customers dropped to HK$85.4 million (2019: HK$95.8 million) for the year ended 31 December 2020 and accounted for 29.4% (2019: 28.9%) of the segment revenue. After considering the increasing production costs and the impact of US tariffs, the Group allocated more production orders to overseas subcontracted factories during the first quarter. Meanwhile, the outbreak of the Pandemic has led to the shift back of production to the Group's Heshan Factory. After all, the Group's Heshan Factory’s contribution to garment production had maintained at 62.8% (2019: 61.8%) for the year, in terms of segment revenue. In contracts, subcontracted factories' contribution in Cambodia decreased to 36.8% (2019: 38.2%). The production shift to Cambodia subcontracted factories and various costsavings measures had improved the overall gross profit margin to 16.3% (2019: 13.5%). Nevertheless, the segment had a segment loss of HK$0.7 million (2019: segment loss of HK$1.5 million) due to the unavoidable administrative expenses incurred for the spring and summer periods with limited productions. Securities investment segment The Hong Kong stock markets got a fluctuating performance during the year under review. Before the Pandemic outbreak, HSI rose and reached the 2020 peak of 29,175 points in January 2020. The Pandemic caused a bear market, and the HSI dropped to the lowest level of 21,139 points during March and April. Subsequently, the rebounds had been strong following the various fiscal stimulus carried out by governments, and the COVID19 vaccine breakthroughs. As a result, HSI decreased by 3.4% compared with 2019, closing at 27,231 points in 2020 (2019: 28,189 points). For the year ended 31 December 2020, the Group’s securities investment business recorded a fair value loss of HK$0.4 million (2019: HK$0.2 million) and a segment loss of HK$5.1 million (2019: HK$5.6 million). Because of the fluctuating stock performance during the year, the Group continues to adopt a conservative strategy to conduct its securities investment business. As of 31 December 2020, the Group’s financial assets at fair value through profit or loss amounted to HK$1.8 million (31 December 2019: HK$2.2 million), which comprised of one (31 December 2019: one) Hong Kong listed corporation that had been held since 2017. Prospects: With the Pandemic’s dormination on economic outlook, 2021 will continue to be a challenging year for the Group as the global economy is far from resumption to pre-pandemic levels. The new United States administration’s foreign economic policies do not seem to favour relieving the Sino-US trade dispute. the Group's garment business will be negatively affected if the China-US relations continue to worsen, as the US is the Group's largest geographical exporting region. Haven said that the Group has already taken advanced steps to cope with the potential impacts, such as engaging overseas subcontracted factories for US customers’ production orders. Furthermore, with recent vaccine launches, the global economy will gradually rebound and the management believes that it will lead to positive growth in the Group's customers’ orders for the upcoming year. To cope with the rising production costs in Mainland China and increase production capacity, the Group has explored garment production facilities in other South East Asia countries. Other than existing Cambodia subcontracted factories, the Group has engaged new Indonesia-based subcontracted factories during the last quarter of 2020. the Group shall monitor the outcome and adjust the production allocation strategy among the Group's own Heshan Factory / overseas subcontracted factories accordingly. As for the Hong Kong stock market, there are several positive prospects of the markets in 2021. The good news regarding COVID-19 vaccines is expected to improve market performance further. The Fourteenth Five-Year Plan’s Internal Circulation policy is also likely to increase traditional sectors’ stock value. Many leading companies in the new economy sector are also planning to complete the listing in Hong Kong in the near future. However, there are still several risk factors. The Pandemic is still worsening in some regions worldwide, which slows down the momentum of economic recoveries. The Sino-US trade tensions have not ceased and could impact investment as well. These factors cause uncertainties in the world economic environment and hence fluctuations on the stock market. As such, the Group will continue to take a cautious approach concerning its securities investment business. Looking ahead, the Group will continue focusing on the Group's existing garment manufacturing and trading business. the Group will monitor the impacts of the macroenvironment factors and adjust the Group’s operation strategies accordingly. Furthermore, the Group will continue to seek diversification into other potentially lucrative areas.

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