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Public company info - Best Pacific International Holdings Ltd. , 02111.HK
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Best Pacific International Holdings Ltd., 02111.HK - Company Profile
Chairman Lu Yuguang
Share Issued (share) 1,040,000,000
Par Currency Hong Kong Dollar
Par Value 0.01
Industry Textile & Apparels
Corporate Profile Business Summary: The Group is principally engaged in the manufacture and trading of elastic fabric, elastic webbing and lace. Performance for the year: For the year ended 31 December 2019, revenue amounted to approximately HK$3,637.8 million, representing an increase of approximately HK$425.2 million, or approximately 13.2%, from approximately HK$3,212.6 million for the year ended 31 December 2018. The overall gross profit increasing from approximately HK$792.0 million for the year ended 31 December 2018 to approximately HK$872.8 million for the year ended 31 December 2019 . Business Review Trade figures for 2019 had not been encouraging before the U.S. and the PRC concluded their trade agreement in January 2020. According to the General Administration of Customs of the PRC, China’s export growth slowed down to a three-year low at 0.5% in dollar terms in 2019 which was the result of the trade tensions between the U.S. and the PRC and a slowing global economy. Specifically, exports to the U.S. in 2019 had recorded a decline by 12.5% in dollar terms, as compared to an increase of 11.3% for the corresponding period in 2018. For Best Pacific, the momentum in business expansion continued in 2019, where the total revenue for the year ended 31 December 2019 amounted to approximately HK$3,637.8 million, representing a growth of approximately 13.2% when compared to the year ended 31 December 2018. Our core value “Built on Innovation and Technology” remained the foundation and the vision of the Group and the sales revenue of sportswear and apparel fabric materials had registered a promising year-on-year growth of approximately 32.7%, in which such revenue increased from approximately HK$939.9 million for the year ended 31 December 2018 to approximately HK$1,247.1 million for the year ended 31 December 2019. As the overall lingerie market tended to be sluggish, business from the majority long-established lingerie customers did not seem to show supportive growth. Having said so, there was an increasing trend with intimate wear products which exhibited both comfort and modern fashion. Leveraging on Best Pacific’s high product quality, strong innovation and research and development capabilities, we were able to both maintain an overall stable business from the long-established customers and to secure more orders from new large-scale customers. With the intensive market competition and consolidation in the past few years, the Group had kicked off its internationalisation plan since 2017 and had successfully set up its production base in Vietnam and Sri Lanka. However, the relevant diversification into new geographical domains would not come without costs. The expansion, ramp-up and associated finance costs in funding these manufacturing capacities set up would inevitably pose a negative impact on the Group’s profitability in the short run. Overseas expansion – Vietnam According to the General Statistics Office of Vietnam, the export value of textiles and garments reached approximately US$32.9 billion in 2019, representing a significant increase of approximately 7.7% as compared to 2018 and remained as one of the top 3 export categories. Customers have shown increasing interests to our overseas capabilities in 2019, in which time Vietnam was perceived to be the key beneficiary of the U.S. – PRC trade war. Our operation in Vietnam, being the first overseas expansion project of Best Pacific, had been launched successfully and progressed as the management expected. Discounts in trade tariffs, local tax incentive and relatively more competitive manufacturing environment had certainly helped Best Pacific to grow its market share as well as to attain an improved profitability at the new establishment. Overseas expansion – Sri Lanka Our two joint ventures (the “JV(s)”) with the two reputable apparel and textile manufacturing market leaders, namely MAS Holdings (Pvt) Ltd and Brandix Lanka Limited, in Sri Lanka, had progressed according to our management’s expectation. With reference to Trischel Fabric (Private) Limited (“Trischel”), an overall net profit position had been achieved during the year under review. As to Best Pacific Textiles Lanka (Pvt) Ltd, another non-wholly owned subsidiary of the Company in Sri Lanka, the relevant trial production had officially been started in September 2019 and an overall loss of approximately HK$33.9 million was resulted for the year ended 31 December 2019. Nevertheless, we believe that the strategic partnerships with the JV partners will allow the Group to leverage on their well-established position in the global apparel market and to facilitate the development of these JVs and the Group in the long run. Prospects: Despite Phase One of Economic and Trade Agreement between the U.S. and the PRC had been concluded in January 2020, the World Health Organization (the “WHO”) had declared the COVID-19 epidemic an international public health emergency in late January 2020 and subsequently a global pandemic in March 2020, meaning that the WHO considered the disease as a serious global threat. The World Bank has then estimated that around 90% of the economic slowdown from the epidemic will be caused by people’s fear of associating with others, which in turn will lead to the closures of factories, offices and stores and ultimately pose an impact on the national logistic and supply chains. If such slowdown continues throughout the year, the weak consumer demand may adversely impact short to medium-term financial performance of the Group, of which it may not be practical for us to estimate such impact at the moment. As of the date of this annual report, the overall utilisation rate of the production capacity of the Group is still not significantly affected. The extent of damage depends on how long it takes for the virus outbreak to fade out, but the epidemic will certainly be expected to pose a negative hit on the retail market and as a result the general economy across the globe in the short term. In order to cope with the uncertainties caused by the Sino-US trade friction, Best Pacific will continue to pursue its internationalisation plan and to reinforce its strategy of close collaboration with its overseas garment customers, which are the top players in the relevant industry and the partnership is expected to drive further business potentials and market consolidation, especially amid the current challenging market environment. As at 31 December 2019, the overall designed production capacities of elastic fabric, elastic webbing and lace of the Group were approximately 197.7 million meters, 1,868.2 million meters and 39.7 million meters, respectively. Once all the existing three overseas factories are fully ramped up, we expect our Vietnam facilities to contribute approximately 20% to 25% and 10% to 15% of the Group’s overall production capacities for elastic fabric and elastic webbing, respectively. At the same time, our two JVs in Sri Lanka shall contribute altogether approximately 20% to 25% and 10% to 15% of the Group’s overall production capacities for elastic fabric and elastic webbing, respectively. Amid the global epidemic crisis and the associated economic turmoil, the Group will keep a close eye on both domestic and international markets. As of the date of this annual report, the reported COVID-19 confirmed cases in China have dramatically reduced as compared to the beginning of the year. The Group intended to seize more business opportunities from the newly established relationships in the PRC market, with an eminent focus on the sportswear and apparel sectors. On the other hand, with the lesson learned from the precedent of Severe Acute Respiratory Syndrome outbreak in 2003, the Group is also looking forward to a strong rebound in market demands and the potential stimulating effects on economy resulting from the counter-cyclical policies imposed by the governments around the world subsequent to the COVID-19 crisis. In the fourth-quarter of 2019, Phase II development of our Vietnam plant and the construction of BPTL’s factory were completed and relevant production had been commenced. However, the Sri Lankan government had publicly announced in late March 2020 to impose various measures and restrictions on corporates so as to curb the COVID-19 outbreak in the country. A prolonged epidemic around the world in the future may lead to the underutilisation of the Group’s production capacity. While foreseeing there are many uncertainties in the market for the coming year, Best Pacific is set to reduce its capital expenditure to the optimal and prioritise the ramp up of all new overseas production capacities as much as possible. Execution of costs controls and efficiency enhancement during the abnormal market time is paramount important and such strategies will also benefit the Group in terms of improving margins when the normal market conditions resume. Complemented by our well-established competitive strengths, our drive to stay ahead of the curve of the rapid expansion and changing market environments, Best Pacific strongly believes that only market leaders will continue to grow their market share, which in turn will underpin Best Pacific’s long-term sustainability and ensure its ability to deliver value for its shareholders in the long run.

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