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Public company info - EPS Creative Health Technology Group Limited , 03860.HK

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EPS Creative Health Technology Group Limited, 03860.HK - Company Profile
Chairman Chan Wing Kai
Share Issued (share) 500,000,000
Par Currency Hong Kong Dollar
Par Value 0.01
Industry Apparel
Corporate Profile Business Summary: The Group is principally engaged in the apparel supply chain management services selling knitwear apparel products to its customers. Performance for the year: Revenue of approximately HK$537.4 million was recorded for the year ended 31 March 2020; The Company’s basic earnings per share for the year ended 31 March 2020 was approximately 4.5 HK cents (for the year ended 31 March 2019: approximately 5.4 HK cents), representing a decrease of approximately 0.9 HK cents, or 16.7%, which is in line with the profit for the year attributable to owners of the Company, as compared to the year ended 31 March 2019. Total comprehensive income attributable to owners of the Company decreased to approximately HK$22.6 million for the year ended 31 March 2020 from approximately HK$27.1 million for the year ended 31 March 2019, representing a decrease of approximately HK$4.5 million or 16.6%. Business Review The Group recorded revenue of approximately HK$537.4 million for the year ended 31 March 2020, representing an increase of approximately 24.1% as compared to approximately HK$433.0 million for the year ended 31 March 2019. The increase in revenue of the Group was primarily attributable to (i) the substantial increase in purchase orders from a major customer headquartered in the USA which commenced generating revenue to the Group since August 2018; and (ii) the increase in purchase orders from customers based in Japan. The Group’s gross profit increased by approximately HK$8.7 million or 10.5% to approximately HK$92.2 million for the year ended 31 March 2020 from approximately HK$83.5 million for the year ended 31 March 2019. Such increase in gross profit of the Group was mainly attributable to an increase in sales of knitwear products to a major customer headquartered in the USA. The overall gross profit margin of the Group decreased to approximately 17.2% for the year ended 31 March 2020 from approximately 19.3% for the year ended 31 March 2019. Such decrease in the Group’s gross profit margin was mainly attributable to better pricing offered by the Group in return receiving greater portion of purchase orders from its customers. The Group’s total comprehensive income attributable to owners of the Company was decreased to approximately HK$22.6 million for the year ended 31 March 2020 from approximately HK$27.1 million for the year ended 31 March 2019, representing a decrease of approximately HK$4.5 million or 16.6%. If the non-recurring professional fee in relation to the Transfer of Listing of approximately HK$5.1 million for the year ended 31 March 2020 were excluded, the Group’s - 15 - adjusted total comprehensive income attributable to owners of the Company for the year ended 31 March 2020 would have been approximately HK$27.8 million, representing a slight increase of approximately 2.4% as compared to the total comprehensive income attributable to owners of the Company for the year ended 31 March 2019 despite of the continuing challenges and uncertainties in the global economy and trading environment. The Shares were successfully transferred its listing from GEM to the Main Board of the Stock Exchange on 12 December 2019. The Directors consider that Main Board is a premier board on the Stock Exchange and the Transfer of Listing will increase attractiveness of Shares to investors, broaden the Company’s investor base and attain higher trading liquidity for Shares, which is beneficial to the Company for its continued growth, financing flexibility and business developments, and is in the overall interest of the Company as it will create a long-term value to its shareholders as a whole. In addition, the Board also believes that the Transfer of Listing will (i) enhance the profile and promote market recognition of the Company amongst public investors, its existing and potential customers (such as large apparel brands and sourcing agents of apparel brands) which will, in turn, have a positive impact on its business developments and strengthen the confidence of its stakeholders; (ii) reinforce confidence of existing and potential customers and suppliers in the financial strength, corporate governance and credibility of the Group because in general, Main Board is perceived to be a more prestige status for listed companies and has more stringent requirements for listing as compared to GEM. This might be advantageous for the Group when negotiating contractual terms for its sales and purchases; and (iii) promote the corporate image of the Group, as such, it would be easier to retain and recruit experienced staff and to attract new customers. Prospects: The trade war (the “Trade War”) tensions and disputes between the PRC and the USA seems no sign to an end. A protracted Trade War has hampered on global economic sentiments and trading activities which negatively impacted the global consumption value chain including the apparel industry and may cause further downside risk to global economic outlook. Should the Trade War continues, the purchase orders from the major customer headquartered in the USA may be reduced or terminated entirely. There is no assurance that the Group will be able to secure new business from other customers for replacement. Nevertheless, in order to mitigate the risks resulting from the Trade War, including possible loss of the major customer headquartered in the USA and possible lowering of the average selling price offered to customers in the USA, the Group considered to take steps of (i) continuing and/or expanding business relationships with third-party manufacturers having manufacturing operations outside the PRC, such as Thailand and Cambodia; and (ii) identifying potential apparel manufacturers outside the PRC which could be accepted by the major customer headquartered in the USA as approved suppliers. The COVID-19 pandemic has caused severe disruption to economic activities worldwide and caused significant uncertainties in the current business environment. Amid the challenges and uncertainties of the COVID-19 pandemic, it is expected that there will be material adverse changes in the financial and operational conditions of the customers, and thus, demands for the Group’s products may drop significantly, which could adversely affect the operating results of the Group in the forthcoming year. The Board will continue to assess the impact of the COVID-19 pandemic on the Group’s operations and financial performance and closely monitor the Group’s exposure to the risks and uncertainties in connection therewith. The Group will take appropriate measures to adapt to the challenging environment when necessary including but not limited to cost control measures to reduce the operating costs of the Group. Looking ahead, the Group will continue to develop and create more promotion samples to cater to the existing and potential customers’ needs. The Group will actively promote its products in various ways including (i) display and promote sample products in showroom in Japan and in Hong Kong during customers’ visits; (ii) e-promotion via online platforms tailored for individual customers; and (iii) arranging sales visits and co-organising private exhibitions should a COVID-19 vaccine be developed in due course. The Group will continue to work closely with its customers in devising new product designs each season and delivering knitwear products according to their requirements and the customers can rely on the Group to fulfill their needs for a full spectrum of apparel supply chain management services. The Directors believe that regular communications with the Group’s customers allows the Group to better understand their needs and requirements, which in turn will strengthen the relationships between the Group and its customers. The Directors will continue to review and evaluate the business objectives and strategies and make timely execution taking into account the business risks and market uncertainties. The Directors will also continue to explore opportunities to diversify the Group’s operations so that the customer base of the Group could be further strengthened and diversified.

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