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Public company info - Evergreen Products Group Limited , 01962.HK
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Evergreen Products Group Limited, 01962.HK - Company Profile
Chairman Chang Yoe Chong Felix
Share Issued (share) 686,000,000
Par Currency U.S. Dollar
Par Value 0.01
Industry Cosmetics & Personal Care
Corporate Profile Business Summary: The Group is the manufacturing and trading of hair products. Performance for the year: During the Year, the Group’s turnover amounted to HK$777.4 million (2018: HK$732.2 million), representing a 6.2% increase from the year ended 31 December 2018. The Group’s operating net profit for the Year was HK$86.2 million, representing a decrease of HK$24.4 million, or 22.1%, as compared with HK$110.6 million for the year ended 31 December 2018. Business Review iNcrEasE oF miNimum WagE During the Year, revenue of the Group increased while gross profit and net profit of the Group decreased due to the sudden and significant increment of minimum wages of workers in Bangladesh since December 2018. We promptly issued an announcement on the website of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) informing the public of this on 27 December 2018. We believe that the wage increment was an isolated event and the authority concerned will not impose similar policies in the near future. cHaNgE iN The group's priciNg policy To cope with the sudden increase in wage cost, we have been adjusting various product pricing policies for the Year. For the first half of the Year, we have increased product selling prices and shifted the extra costs to customers. It turned out that the interim profit was maintained but the interim revenue growth was affected with an increment of 0.5% only, comparing to the same period of last year. The group's revenue momentum and market share have also been slightly affected. We decided to slightly adjust product selling prices downward in the second half of the Year. As a result, customer orders were regained in the second half of the Year and the total revenue for the Year achieved a 6.2% growth to HK$777.4 million, comparing with HK$732.2 million for the year ended 31 December 2018. cHaNgE iN The group's staFFiNg policy The group's Group has further streamlined The group's production costs by implementing some effective staffing policies in Bangladesh during the second half of the Year. There is a wage difference inside and outside of The group's Bangladesh export processing zone. Starting from the second half of the Year, we have stopped hiring new workers inside The group's Bangladesh export processing zone and hired more workers outside the zone where workers accept lower wages. These policies are proven to be effective in order to minimize the impact on the minimum wage rate increment. sHarE placEmENts aND improvEmENt oN gEariNg ratio During the Year, the Group raised funds from the equity market for the first time. The Group successfully placed 33,180,000 existing ordinary shares with a nominal value of US$0.01 each of the Company (“Shares”) to independent third parties on 26 September 2019 and issued new Shares by top-up subscription on 3 October 2019, raising HK$51.4 million. Moreover, the Group issued 12,902,000 new Shares to Evergreen Enterprise Holdings Limited, The group's controlling shareholder, under a specific mandate and raised approximately HK$20.0 million on 15 November 2019. The total amount of funds raised was approximately HK$71.4 million and has been used for repayment of existing bank borrowings. Details of the Share placements are set out in the announcements of the Company dated 20 September 2019, 26 September 2019, 3 October 2019 and 15 November 2019, respectively, and the circular of the Company dated 29 October 2019. After these fund-raising exercises, the gearing ratio of the Group for the Year has dropped by 8.0%, from 91.0% to 83.0%. Prospects: The construction of new facilities in Bangladesh was mostly completed in 2019. The Group will concentrate on product development and production efficiency enhancement especially for human hair products with high unit price and profit margin. The Group will keep reallocating workers inside and outside of The group's Bangladesh export processing zone in order to streamline salary costs. With the further minimizing production scale of the factories in the Mainland China, the Group expects the overall production costs will decrease. In the coming year, the Group will establish new wholesale offices in Asian countries for selling high-end human hair extensions under self-owned brands. Furthermore, the Group will put more effort on expanding The group's e-commerce platforms. On average, the retail price level of The group's products is around 300% higher than The group's factory price level. Having effective execution of these direct sales strategies, the gross profit margin and net profit of the Group are expected to elevate to the next higher level. That said, although the recent outbreak of the novel coronavirus pneumonia (“COVID-19”) and the subsequent quarantine measures imposed by the government of the People’s Republic of China (“PRC”) as well as the travel restrictions imposed by other countries in early 2020 has had no material impact on the operations of the Group up to the date of this annual report, given the unpredictability associated with the COVID-19 global outbreak and any further contingency measures that may be put in place by the relevant governments and corporate entities, we expect that the outbreak of the COVID-19 disease may affect the consolidated results of the Group for the remaining quarters of 2020.

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