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Public company info - Win Hanverky Holdings Ltd. , 03322.HK
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Win Hanverky Holdings Ltd., 03322.HK - Company Profile
Chairman LI Kwok Tung Roy
Share Issued (share) 1,284,000,000
Par Currency Hong Kong Dollar
Par Value 0.1
Industry Apparel
Corporate Profile Business Summary: The Group is principally engaged in the manufacturing, distributing and retailing of internationally renowned sports, fashion and outdoor brands. Performance for the year: The Group reported total revenue of HK$5,069.7 million (2018: HK$4,137.9 million) from continuing operations in 2019, representing an increase of 22.5%. Profit attributable to equity holders was HK$64.2 million for 2019 (2018: HK$42.3 million), representing a 52.0% increase over the previous year. Business Review The financial performances of the business segments are summarised below: Manufacturing Business Our Manufacturing Business comprises “Sportswear Manufacturing Business ”, “High-end Functional Outerwear Manufacturing Business ” and “e.dye Business ”. Sportswear Manufacturing Business The Group’s Sportswear Manufacturing Business operates mainly through OEM arrangements for a number of internationally renowned sports brands. Most of the Group’s products are exported and sold to Europe, the United States and Mainland China. The Group has a long history and a distinctive position in sportswear garment manufacturing and has established long-term business relationships with its key customers. Revenue from Sportswear Manufacturing Business increased by HK$316.0 million to HK$2,839.6 million (2018: HK$2,523.6 million), representing an increment of 12.5%. The increase was mainly due to rebounding orders from a major customer and revenue brought in by certain new customers. In August 2019, the Group’s sportswear manufacturing factory in Heyuan city, Mainland China, was relocated to another site within the same city due to the expiry of lease. To facilitate the relocation and securing a stable labour force, the Group had agreed with most of the factory’s employees to terminate their existing employment contracts and enter into new ones simultaneously. Staff compensation for termination of existing employment contracts together with other relocation costs amounting to a total of HK$46.1 million was incurred. In addition, a net gain (before taxation) of HK$77.1 million (2018: HK$131.5 million) which mainly arising from disposals of certain subsidiaries was recorded during the year. Operating profit decreased to HK$98.2 million (2018: HK$147.9 million) which included the staff compensation and factory relocation costs and the gain mainly arising from disposals of certain subsidiaries as mentioned above. Excluding the impact of these one-off items, operating profit would have been increased to HK$67.2 million (2018: HK$16.4 million) as a result of cost rationalisation initiatives having taken place during the year. High-end Functional Outerwear Manufacturing Business Since the acquisition of Sport Field Group in the first half of 2018, High-end Functional Outerwear Manufacturing Business has become one of our major segments in Manufacturing Business. In order to develop the business of this new segment, we have invested in setting up a new factory in Mainland China and conversion of existing production facilities in Vietnam. Revenue from High-end Functional Outerwear Manufacturing Business increased by HK$75.4 million to HK$441.8 million (2018: HK$366.4 million) while operating loss decreased to HK$62.0 million (2018: loss of HK$70.4 million). Sport Field Group has successfully developed its domestic customers in Mainland China which contributed to the growth in revenue. The operating result of the whole segment was also improved by the profit generated from the acquired business of Sport Field Group, which was partially offset by the additional costs incurred for setting up production lines in the new factory which had yet to achieve optimal production efficiency. e.dye Business Revenue from e.dye Business increased by HK$8.1 million to HK$35.4 million (2018: HK$27.3 million), representing an increment of 29.7% while operating loss during the year reduced to HK$45.9 million (2018: loss of HK$48.8 million). High-end Fashion Retailing Business The Group’s High-end Fashion Retailing Business has fashion retail networks through “D-mop ” stores to sell several self-owned brands, as well as imported brands, in Hong Kong, Mainland China and Taiwan and “J-01 ” stores in Hong Kong and Mainland China. In addition, it has distribution rights for brands including “Y-3 ” in Mainland China, Hong Kong, Macau, Taiwan and Singapore, “Thomas Sabo ”, “Tara Jarmon ” and “Heron Preston ” in Mainland China, Hong Kong and Macau. It also operates licensed stores in Mainland China for the brands “Champion ” and “DAKS ” and in Hong Kong for the brands “New Era ” and “Marcelo Burlon ”. Revenue from High-end Fashion Retailing Business increased by HK$532.3 million to HK$1,753.0 million (2018: HK$1,220.7 million), representing an increment of 43.6%. In 2019, High-end Fashion Retailing Business continued to expand its presence rapidly in the Mainland China market by opening new stores. As at 31 December 2019, the total number of offline stores increased to 252 (2018: 181), of which 206 stores were situated in Mainland China, 36 stores were in Hong Kong and Macau, and 10 stores in Taiwan and Singapore. On the other hand, global uncertainties together with continued China-US tensions were among the external factors negatively affecting Hong Kong’s general economic well-being in 2019. The sharp drop in spending by a drastically reduced number of visitors to Hong Kong was further exacerbated by a fall in local consumption arising from intermittent closure of shops brought on by the social unrest. The revenue from the Hong Kong market saw a full year decline of 29.3% as compared to 2018. Having said that, the overall performance in 2019 still achieved a significant growth which was attributable to continuous expansion of retail networks in Mainland China. Operating profit generated from the business reached a record high of HK$173.2 million (2018: HK$137.1 million), representing an increment of 26.3%. Prospects: The global economy in early 2020 has been severely affected by concerns over the coronavirus epidemic, particularly in the Mainland China and European markets which are the major markets of the Group. The business activities of the Group have also been affected to a certain extent. Despite the number of difficulties ahead, we will focus on maintaining operational resilience in unpredictable times and challenges for both Manufacturing Business and High-end Fashion Retailing Business. Manufacturing Business The Group’s production facilities are situated in Vietnam, Cambodia and Mainland China. Following the coronavirus outbreak in early 2020, a series of precautionary and control measures have continued to be implemented as required by the local governments, particularly in Mainland China. Important measures included extension of the Chinese New Year holiday nationwide, postponement of resumption of work after the Chinese New Year holiday, stringent restrictions and controls over the travelling of people and traffic arrangements, quarantine of certain residents and areas, and stricter hygiene and epidemic prevention requirements in factories and offices. Suppliers’ delivery of certain raw materials for production has also been delayed in the short term as affected by the precautionary and control measures as well as logistic impediment. As such, the productivity of the Group’s factories in Mainland China, which represents approximately 20% of the production capacity of Manufacturing Business, could not achieve normal level but it is expected that the impact should be temporary. In order to minimise the adverse impact, the Group has actively coordinated relevant resources and adjusted production arrangements in a timely manner. As of mid-March of 2020, approximately 90% of the operating staff have returned to factories and our production in Mainland China is substantially restored. Sportswear Manufacturing Business Sportswear Manufacturing Business has returned to the growth track in 2019 but it is believed that the business will be adversely affected by an indeterminate sportswear market in 2020 since the outbreak of coronavirus. In Europe, certain premier soccer leagues and tournaments have been suspended which may affect the demand of soccer jerseys. Due to the global outbreak of coronavirus, many shopping malls and retail stores are closed, with areas in lockdown and people quarantined as part of the precautionary measurements. These conditions will eventually affect our business as a consequence of shrinking market demand. Giving the uncertain market situation, we are more cautious on deployment of our resources and capital expenditure. As such, we have conducted a comprehensive review for our new factory developments in Vinh Long, Vietnam and the development is temporarily on hold. High-end Functional Outerwear Manufacturing Business High-end Functional Outerwear Manufacturing Business has become one of our major business segments within Manufacturing Business after the acquisition of Sport Field Group. Since then, the Group possesses technologies and licensed facilities to produce high-end functional outerwear for certain internationally renowned brands. Sport Field Group has successfully developed its domestic customers in Mainland China but it will be affected by the unfavorable market situation since the outbreak of coronavirus in early 2020. Looking ahead, we will continue to improve our production efficiency and enhance cost control in our factory in Mainland China and production facilities in Vietnam in order to reach optimal utilisation level. e.dye Business As part of our strategic initiatives, we will continue to expand our partnership with international brands to promote eco-friendly production and play an important role in green production. We are actively working with certain renowned brands of sportswear and outerwear in seeking a revenue breakthrough. At the same time, we will reinforce cost control in order to maximise cost effectiveness of production. High-end Fashion Retailing Business Mainland China will remain as the major market of our High-end Fashion Retailing Business. However, the spreading of coronavirus at the beginning of 2020 is undermining the business. At the beginning of February 2020, 170 out of 208 offline shops were temporarily closed. The situation is subsequently improved and up to mid-March 2020, only 4 offline shops are remained close mainly in Wuhan, Mainland China. We estimate that consumers will be cautious and continue to hold off spending even though the stores are re-opened. The negative impact will continue to affect our business in the first half of the year and it is believed that 2020 is set to be an extremely challenging year. As such, we have started to cut back purchase orders for 2020 summer products and put the establishment of new shops on hold. In Hong Kong and Macau, the impact arising from the outbreak of coronavirus is also severe. The ongoing social unrest in Hong Kong would continue to damage the retail market. In order to diminish the impact, we are negotiating with landlords for rent concession and also revisiting the profitability of some retail shops across the region. Subject to the outcome, certain retail shops would be closed down when necessary. Multi-branding is one of our key strategies to tap the full potential of the Greater China market. Apart from the existing brand portfolio in the young and light luxury fashion segment which including several internationally renowned brands, “Champion ”, “Y-3 ”, “Tara Jarmon ”, “DAKS ”, “Thomas Sabo ”, “New Era ”, “Marcelo Burlon ” and “Heron Preston ”, we will continue to approach and gain distribution rights for young and high-end fashion brands to further enrich and rationalise our brand portfolio. In addition, the Group will continue its efforts to promote the retail presence of our existing stores and will enhance the shopping experience for our customers. Taking into account the remarkable business development and financial performance of the Shine Gold Group, the operation arm of High-end Fashion Retailing Business, it is considered that it would be beneficial for the Group to acquire more shareholding interests in Shine Gold Group to gain more control of the business. As such, the Group acquired 27% equity interest from a non-controlling interest holder of Shine Gold Group in December 2019. After the acquisition, Shine Gold Group is owned as to 97% by the Group.

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