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Public company info - Fuguiniao Co. Ltd. - H Shares , 01819.HK

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Fuguiniao Co. Ltd. - H Shares, 01819.HK - Company Profile
Chairman Lam Wo Ping
Share Issued (share) 1,215,000,000
Par Currency Renminbi
Par Value 1.0
Industry Footwears
Corporate Profile Business Summary: The principal activities of the Group are manufacturing and sale of footwear and business casual menswear in the PRC. Performance for the year: Revenue for the year ended 31 December 2015 amounted to RMB2,031.8 million, representing a decrease of 12.5% as compared to RMB2,323.0 million for the year ended 31 December 2014. Profit for the year ended 31 December 2015 decreased by 13.1%, or RMB59.1 million, from RMB451.2 million for the year ended 31 December 2014 to RMB392.1 million. Business Review: The company conduct the company business under two main models: a branded product business model, under which the company sell products under the company own brands, and an original equipment manufacturer (“OEM”)/original design manufacturer (“ODM”) business model, under which the company manufacture footwear products for third-party brands. The company products include men’s and women’s footwear and business casual menswear products sold under the company Fuguiniao, FGN and AnyWalk brands, as well as leather accessories sold under the company Fuguiniao brand. Sales and distribution network The company sell the company branded products through the company network of distributors and certain direct sales channels, including direct large-scale institutional purchases and online sales. The company primarily sell the company branded products on a wholesale basis to the company distributors, who then sell them to end customers through retail outlets they operate or which are operated by third-party retailers with whom they contract. The company also sell the company products directly to end customers through proprietary outlets the company operate. Retail network and inventory management The company require all of the retail outlets operated by the company distributors and third-party retailers to exclusively sell the company products. In order to provide uniform, quality services across the company retail network, the company set out in the company operations manual uniform standards for, among other things, store decoration and displays, marketing activities and daily operations for the company distributors and third-party retailers, and the company require the company distributors and their third-party retailers to obtain the company approval for the final location of each retail outlet. To further implement the company retail policies, the company conduct random on-site inspections at individual retail outlets to ensure that the decorations, displays and retail prices in each retail outlet comply with the company requirements. Through these inspections and visits, the company seek to ensure that the terms and conditions of the distributorship agreements are being complied with throughout the company distribution network. The company identify and inform distributors of any non-conforming individual retail outlets and require them to rectify the problems within a certain period of time. The company also require the company distributors to conduct regular site visits to the retail outlets operated by third-party retailers they have authorised to check whether the company operating standards are being followed. The company believe this system of uniform operating standards and periodic checks and visits helps us to ensure all retail outlets are efficiently operated and create a pleasant shopping experience to the company retail customers. The company are not aware of any breach of the company retail policies by the retail outlets operated by the company distributors and third-party retailers in 2015. The company also recognise that controlling inventory levels is important to the company overall profitability. Sales orders from the company trade fairs enable us to manage the company inventory of raw materials and finished products more efficiently. For this reason, the company typically have low inventory levels of unused raw materials and unsold or obsolete finished products at the end of the year. As at 31 December 2015, the company average inventory turnover days were 89.6 days, as compared to 64.5 days as at 31 December 2014. To facilitate the company distributors in managing their inventory levels, the company launched an in-house developed online trading platform, whereby the company distributors may, exchange with each other certain of the company products in their inventories that may be considered out-of-season or less popular within their respective authorised regions of operation. Product design and development The company have strong in-house research, design and development capabilities that have been critical to the company success. For each of the company brands, Fuguiniao, FGN and AnyWalk, the company have a separate research, design and development team. The company further subdivide the company Fuguiniao design and development team into Fuguiniao men’s footwear and women’s footwear teams. The company also have a menswear design and development team responsible for the overall product planning and design for the company business casual menswear products. Each of the company footwear design teams consists of one design director, one to two chief designers, three to ten senior designers, assistant designers and other staff and is responsible for creating designs for a wide variety of products for their particular market segment based on domestic and international fashion trends, distinctive features of the brand and market demand. As at 31 December 2015, the company research, design and development team comprised 174 members, including five design directors, six chief designers and several senior designers, who possessed an approximate average of 17 years of design experience in the footwear industry. In addition, each of the company accessories design team and the company menswear design team comprises one chief designer. The company conduct detailed product research involving the collection of market and fashion information to create a wide variety of products that are consistent with the contemporary international fashion trends and cater to the preferences of the company target consumer groups in China. Members of the company design and development team regularly attend domestic and overseas trade and fashion shows to obtain latest trends and market developments in terms of design, material usage and color schemes. To better understand consumer preferences, the company distributors and their third-party retailers periodically provide us customer feedback information. In June 2015, the Company was awarded as the “China Leading Leather Shoes King (中國真 皮領先鞋王)” by China Leather Industry Association (中國皮革協會). Based on the company detailed research on fashion trends, domestic consumer preferences and certain other relevant information, the company footwear designers and brand design directors typically determine applicable seasonal themes with respect to the styles, colors, materials and other features of footwear products to be developed. After the seasonal themes have been determined, the company design team commences the design of the collections by preparing drawings and sketches of a particular style and shoe last. The first batch of shoe plates would be created based on these drawings and sketches. Plates that passed the company preliminary selection process are matched with suitable colors and made into prototypes. The company technical team then analyses and approves the technologies used in making the prototypes before they are submitted to the prototype selection meetings. In a prototype selection meeting, the company consider a number of factors, including adherence to the company initial design concepts and suitability for mass production before the prototypes can be displayed at the company trade fairs. The company would also invite several representatives from the company distributors to participate in the company design processes to preview and evaluate the molds, styles and colors of the company new footwear products. The company are thus able to draw upon their market sensitivity and local knowledge in making products that cater to the varying tastes of the company end customers. With respect to design and development of the company menswear products, the company maintain a design and development process for the company jacket products and outsource the design and development of the company other menswear products, such as pants and sweaters. The company also design and make the company own ODM product prototypes in accordance with the company ODM customers’ requirements. The company believe by leveraging the company in-depth knowledge of the market and fashion trends and the preferences of the company target consumer groups in China, the company are able to transform the company designs into commercially viable, high-quality and widely accepted products. The company believe the company strong research and development capabilities enable us to maintain the company brand image, expand the company product portfolio and strengthen the company competitiveness in the PRC footwear and menswear industries. As at 31 December 2015, the company had the capacity to introduce over 1,500 stock keeping units (“SKUs”) into the market for the company branded footwear products and approximately 300 SKUs for the company business casual menswear products for each season. Prospects: Looking ahead to 2016, the management of the Company will focus on pursuing the four main strategies formulated by the Board: Firstly, carrying on with the “expansion strategy of the e-commerce sector”. The Company will (1) continue to cooperate with core e-commerce platforms; (2) continue to achieve synergistic development through a range of platforms, including the WeChat distribution platform and the social media promotion platforms; and (3) identify cooperation opportunities with footwear and apparel brands or teams with outstanding e-commerce elements to jointly strengthen and expand the e-commerce market of the Company. Secondly, persisting in pursuing the “product differentiation strategy” with a focus on the following new projects: (1) The “Fuguiniao Health Function Footwear” project. In 2016, the Company will launch a franchise recruitment campaign in full swing and advertise and promote the “Fuguiniao Health Function Footwear” series of products through different media; and (2) The “Zubu” brand project. The Company will carry out the “Zubu Venture Programme for College Students (足步大學生創業計劃)” and start recruiting franchisees throughout the country in 2016. Thirdly, embarking on the “specialized market segmentation strategy”. The Company will develop beyond the existing market to explore the specialized niche market. In 2016, with the school uniform market as the major breakthrough, the Company will design, sell and promote the mid-to-high-end Fuguiniao school uniform products and gradually enter into the kids’ wear and footwear and other niche work uniform markets based on market conditions. Fourthly, implementing the “plan of acquiring/cooperating with overseas brands”.The Company has been producing footwear products for certain famous foreign brands on an OEM basis. In 2016, the Company will identify cooperation opportunities with famous foreign brands to help them fully explore the market in China by utilising the advantages of the existing nationwide sales network of the Company.

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