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Public company info - Sterling Group Holdings Limited , 01825.HK
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Sterling Group Holdings Limited, 01825.HK - Company Profile
Chairman Choi Siu Wai William
Share Issued (share) 800,000,000
Par Currency Hong Kong Dollar
Par Value 0.01
Industry Apparel
Corporate Profile Business Summary: The Group is principally engaged in the provision of manufacturing and trading of apparel products and licensing of trademark in the markets of the United States of America (“USA”), Italy and United Kingdom (“UK”). Performance for the year: Revenue for the year ended 31 March 2020 decreased by approximately 7.9% year-to-year to approximately HK$590,873,000, as compared with revenue of approximately HK$641,733,000 for the year ended 31 March 2019. Loss of the Group for the year ended 31 March 2020 amounted to approximately HK$58,638,000 (2019: loss approximately HK$22,670,000). Basic loss per Share for the year ended 31 March 2020 was 7.33 HK cents as compared with basic loss per Share of 3.29 HK cents for the year ended 31 March 2019. Business Review The Group’s apparel products can generally be divided into four categories, namely (i) outerwear (which includes mainly jackets, coats and blazers and are chiefly made from wool and wool blend), (ii) bottoms (which include pants, shorts and skirts, and are chiefly made from cotton, wool and wool blend), (iii) tops (which include mainly shirts, blouses and tank tops, and are chiefly made from cotton, polyester, triacetate and lyocell) and (iv) other products (which include mainly dresses, suits, gown scarf, jumpsuits and vests, and are chiefly made of cotton, wool and wool blend). During the Year, the sales volume of the Group amounted to approximately 2,750,600 pieces of finished apparel products (2019: approximately 3,830,000 pieces). The decrease in sales volume is mainly attributable to the decrease in bottoms. The sales volume of bottoms decreased by approximately 40.3% from approximately 2,297,000 pieces for the year 31 March 2019 to approximately 1,372,000 pieces for the Year, reflecting a significant change in product mix as a major portion of the Group’s own manufacturing capacity in Sri Lanka was dedicated to the airline uniform program compared with the larger volume and lower-priced cotton shorts and pants program of the previous year. The overall average selling price per piece of all apparel products in the Year was approximately HK$214.5 vs. HK$167.6 in previous year. The average selling price per piece of outerwear, bottoms, tops and others amounted to approximately HK$309.3, HK$144.8, HK$218.4 and HK$259.5 respectively for the year ended 31 March 2020, and approximately HK$334.3, HK$108.4, HK$180.3 and HK$l9l.4 respectively for the year ended 31 March 2019. Prospects: The year ahead is likely to be one full of challenges as COVID-19, which was first reported in China in early 2020, still shows no signs of being under control with the recent surge in new cases around the world, especially in the U.S. where its consumption demand drives a significant portion of apparel exports from the Asian countries. This pandemic has already caused widespread distress in the economy, more particularly in the retail sector as social distancing, business lockdown and stay-at-home orders are implemented everywhere. The Group encountered its own difficulty as a major customer filed Chapter 11 protection in the U.S. on 4 May 2020. However, it is widely anticipated that this customer will emerge from this heavily pre-negotiated Chapter 11 restructuring in about September 2020 as planned. The major impact of this restructuring is to convert all its bank debts into equity. As one of its important critical vendors going forward, the Group anticipates that future business with this customer will be relatively free of the credit risk once associated with a heavy debt load and its renewal after this restructuring. In the last few years, the Group while serving the needs of its existing customers has also focused on diversifying its customer base. From a very high sales concentration of over 90% with this major customer for many years, the Group have reduced its proportion of the Group’s total sales revenue to a range of 50% to 70% since about four years ago. Just in the last twelve months, the Group have added five new customers which are at various stages of starting up, order-processing and actual bulk shipments. However, the Group do not expect a meaningful contribution from these new customers to the Group’s sales turnover until after spring/summer 2021, not only because of the long selling cycle in the OEM manufacturing business but most retailers also have unsold inventory left over from spring/summer 2020 when the world was in the throes of the pandemic. Furthermore, the worldwide economic contraction from the impact of the pandemic continues to dampen retail spending and otherwise curtail/defer the buy plan of most apparel retailers. So, 2020 is the year to batten down the hatches. Against this backdrop of uncertainty, the Group has continued to shape its cost structure to meet the expected decrease in demand from its customers. Following the reduction in force (“RIF”) in the Group’s China factory last year, the Group’s Sri Lanka factory will also see RIF of about 300 employees, which commenced immediately after the lockdown in May 2020. A more severe retrenchment is planned for the Hong Kong head office reducing one third of its office space and RIF of 30 employees effective 30 June 2020, about one third of its headcount, as the Company migrate most of its merchandizing function to the Panyu office. In addition, the staff that remains will see their salaries further adjusted downward up to 33.3% to reflect the harsh economic environment the Company is faced with as every country struggles to recover from the impact of COVID-19. The annual savings of the Group’s austerity measures is estimated to be in excess of approximately HK$20,000,000. The Group will continue to look for ways to expand the Group’s sources of revenue while paring down the Group’s expenses. The Company, having endured the financial pressure from the Chapter 11 restructuring of its major customer, is committed to rebuilding from its base.

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