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Man Wah’s FY2016 Interim Net Profit Reaches a Record High   2015-11-17

(Hong Kong-17 November 2015) - Man Wah Holdings Limited (“Man Wah” or the “Group,” stock code: 1999) has today announced its interim results for the six months ended 30 September 2015 (“1H FY2016” or the “Review Period”). The Group has maintained steady revenue growth through development of a global market presence and the increasing competitiveness of its products during the period. The growth of its profit from core businesses again exceeded its revenue growth and spurred its profitability for the interim period to a new record high.

During the Review Period, total revenue grew by 15.1% to HK$3.68 billion. Benefitting from the decline in the prices of raw materials, gross profit rose by 18.6% to HK$1.36 billion year-on-year and gross profit margin increased to 37.0%. Moreover, thanks to the Group’s continued improvement in internal operating efficiency, administrative expenses as a percentage of revenue continued to decrease, enabling profit attributable to the owners of the Company to increase by 10.4% to HK$614 million. Profit from its core businesses jumped by 21.0% year-on-year. Basic earnings per share climbed by 8.1% to HK31.6 cents.

As at 30 September 2015, the Group’s bank balance and cash amounted to approximately HK$2.08 billion and its current ratio was 2.1, reflecting the Group’s sound financial position buttressing its future business development. The Board proposed an interim dividend of HK16.0 cents per share to reward shareholders for their long-term support.

Dr. Wong Man Li, Chairman of Man Wah, said, “During the Review Period, we have further improved our core competitiveness through product innovation, improvements in production processes, expanding sales channels and enhancing management efficiency. Consequently, we have continued to outperform our industry peers. In view of the continued recovery in the North America market and the persistently strong purchasing power in China, we have seized the opportunities to launch innovative products, thereby driving the Group’s interim results to record heights.”

Business Review

Sales of branded sofa products and other products continued to rise steadily

During the Review Period, revenue from sofa products continued to grow. Sales value increased by around 12.3% to HK$3.19 billion, accounting for approximately 86.6% of the Group’s total revenue. Revenue from other products such as bedding and ancillary products, sofa ancillary products and furniture components rose by 37.3% to HK$490 million, mainly driven by significant growth in the revenue from furniture components.

Sofa market in China

With rising disposable incomes in China, its consumer market still presents outstanding growth potential. In light of this, the Group has tapped the trend of consumers upgrading their products, bolstering its efforts on product promotion and adjusting its product structure to meet the demand of different regions and consumers while enhancing its production capacity and logistics supply system. During the Review Period, the Group has offered greater choice of quality products to consumers by launching three new recliner chair series in the China market, namely the “Cheers – Nordic Leisure Chair Series,” “Cheers – Urban Chair Series” and “Cheers – Director Chair Series.” Sofa products revenue derived from the China market grew by 18.0% to HK$955 million year-on-year, achieved a satisfying revenue growth once again.

The Group has continued to expand its network. As at 30 September 2015, the Group had a total of 1,578 “CHEERS,” “ENLANDA” and “MOREWELL” self-operated and distributors’ retail stores in China and achieved a net increase of 137 stores in the China market within the first half of the year.

As for online sales, the Group has continued to sell sofa and ancillary products to consumers through internet platforms such as TMALL (www.tmall.com) and TAOMEIJU.COM (www.taomeiju.com), complementing the merchandise found in the Group’s retail stores and realizing greater synergies.

Sofa market in North America

Due to a favourable economic environment and higher disposable income, the Group has increased the proportion of high-price products during the Review Period. At the same time, the Group has continued to create value for its customers through product innovation. For example, the sofa with a brand new synthetic fabric material “BOLERO” newly launched at the beginning of the year has been well-received. To bolster its sales, the Group has introduced more than 50 new sofa models to customers through regular participation in furniture exhibitions. During the Review Period, the Group’s revenue derived from the North America market rose by 18.9% to HK$2.09 billion year-on-year while it has secured 12 new customers there.

Sofa markets in Europe and other overseas

Overall economic conditions in this geographical market remained weak and the pace of economic recovery was below the market expectation. The depreciation of the Euro has also exerted pressure on the demand of imported products. The Group has proactively adjusted its product structure to maintain its competitiveness in the market. During the Review Period, revenue derived from Europe and other overseas markets amounted to HK$411 million.

Prospects

With the ongoing recovery of the U.S. economy facilitating the stable growth of the furniture market, the Group is capturing opportunities to further enlarge its market share in North America. As the economy in Europe has recently shown signs of recovery, the Group is stepping up its sales efforts there and in other overseas markets and continuously launching competitive products in a bid to achieve sales growth. In September this year, the Group has debuted a sofa made of a revolutionary synthetic fabric “BANNER,” a testimony to the Group’s outstanding product design and R&D capability. The product is widely recognition in overseas markets and is set to become a new growth driver in the future.

In the China market, as consumers demand healthier and more comfortable furniture products, product upgrade and replacement purchases should become an impetus for the long-term growth of the furniture market. The Group is actively enriching its product portfolio. After launching the ”Cheers Urban” series of stationary sofas and ”Enlanda Home” series of bedding and ancillary products in September last year, the Group has launched three new series of recliner chairs to meet the rising demand of domestic consumers. These new sofa products are expected to become new sales growth drivers and reinforce the Group’s leading position in the China market.

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