Investment Rating - The report maintains a "Buy" rating for the company [5][8]. Core Views - The company reported FY2025H1 revenue of HKD 8.305 billion, a year-on-year increase of 7.1%, and a net profit attributable to shareholders of HKD 1.139 billion, up 0.3% year-on-year. Domestic sales remain under pressure, while international sales continue to show robust growth [2][5]. Summary by Sections Domestic Sales - Domestic sales revenue reached HKD 4.975 billion, a decline of 17.2% year-on-year. Offline channel revenue was HKD 3.487 billion (down 14.9% year-on-year), and online channel revenue was HKD 1.007 billion (down 21.6% year-on-year). The gross margin was 40.2%, a decrease of 1.0 percentage points, primarily due to a decline in average selling price (ASP). Sofa sales in the domestic market generated HKD 3.286 billion (down 15.6% year-on-year), while mattress sales were HKD 1.209 billion (down 18.9% year-on-year). The company plans to continue expanding its store network and enhance online and new retail channels [3]. International Sales - International sales revenue was HKD 2.887 billion, an increase of 12.3% year-on-year. North America generated HKD 2.154 billion (up 5.7% year-on-year), with a shipment volume increase of 18%. The European market saw revenue of HKD 733 million, a significant increase of 37.7% year-on-year, with a shipment volume increase of 45%. The gross margin in North America improved to 40.7% (up 4.8 percentage points), while Europe achieved a gross margin of 30.8% (up 3.4 percentage points) [4]. Dividend and Operational Efficiency - The company maintained a high dividend payout ratio of 51.1%. As of FY2025H1, inventory turnover days were 65 days (up 7 days year-on-year), accounts receivable turnover days were 39 days (up 7 days), and accounts payable turnover days were 27 days (down 2 days), indicating stable operational efficiency [5]. Profit Forecast - The company forecasts net profits attributable to shareholders of HKD 2.3 billion, HKD 2.48 billion, and HKD 2.67 billion for FY2025, FY2026, and FY2027, respectively, with corresponding P/E ratios of 7.9X, 7.3X, and 6.8X [5].

Financial Performance - Total revenue for the six months ended September 30, 2024, was HKD 8,471,446, a decrease of 7.4% compared to HKD 9,151,563 for the same period in 2023[4] - Gross profit for the period was HKD 3,280,649, down 6.0% from HKD 3,491,920 in the previous year[4] - Operating profit increased slightly to HKD 1,512,011, compared to HKD 1,509,417 in the prior year, reflecting a marginal growth of 0.1%[4] - Net profit for the period was HKD 1,194,555, a slight increase of 0.9% from HKD 1,184,579 in the same period last year[6] - Basic earnings per share for the period was HKD 29.37, up from HKD 29.05 in the previous year, indicating a growth of 1.1%[7] - Total revenue for the six months ended September 30, 2023, was HKD 8,937,569, a decrease from HKD 8,305,373 in the same period of 2022[25] - The company reported a net profit before tax of HKD 1,414,295 for the six months ended September 30, 2023[25] - Profit attributable to equity holders increased by approximately 0.3% from about 1,136,042 thousand HKD to about 1,138,925 thousand HKD, with a net profit margin of approximately 13.7%[81] Revenue Breakdown - Total revenue for the six months ended September 30, 2024, was HKD 8,305,373,000, with external sales from the sofa and related products segment amounting to HKD 5,816,974,000[23] - The segment performance for the sofa and related products generated a profit of HKD 1,187,298,000, while the bedding and related products segment contributed HKD 252,847,000[23] - Revenue from the China market (including Hong Kong and Macau) was HKD 6,069,863, representing a decline of 16.2% compared to HKD 5,047,547 in the previous period[30] - North America revenue increased to HKD 2,037,448, up 5.4% from HKD 2,153,816 in the previous period[30] - The company plans to expand its market presence in Europe, with revenue from this region increasing to HKD 548,199, up 38.8% from HKD 761,361[30] - Sales revenue in the Chinese market was approximately HKD 4,975,209 thousand, a decrease of about 17.2% year-on-year[52] - Sofa and related products generated revenue of approximately HKD 5,816,974, a decrease of about 5.8% from HKD 6,176,703 in the same period last year[59] - Bedding and related products revenue fell by approximately 18.9% to HKD 1,208,846, down from HKD 1,491,422 due to significant consumer downgrade in the Chinese market[61] - Home Group business revenue increased by approximately 24.5% to HKD 371,313, up from HKD 298,214, driven by increased demand in the European market[63] Assets and Liabilities - Non-current assets increased to HKD 12,116,697 from HKD 11,702,909, representing a growth of 3.5%[8] - Current assets rose to HKD 8,917,619, an increase of 10.0% compared to HKD 8,104,611 as of March 31, 2024[8] - Total assets reached HKD 21,034,316, up 6.1% from HKD 19,807,520[8] - The company reported a significant increase in cash and bank balances to HKD 4,283,927, compared to HKD 3,273,830, reflecting a growth of 31.0%[8] - The company’s total equity increased to HKD 13,772,744 from HKD 13,075,669, marking a growth of 5.3%[11] - Trade receivables and notes receivable net amount as of September 30, 2024, is HKD 1,896,227, an increase from HKD 1,746,892 as of March 31, 2024[40] - Total accounts payable and notes payable as of September 30, 2024, is HKD 811,624, up from HKD 710,214 as of March 31, 2024[43] Expenses and Costs - The cost of goods sold decreased by approximately 7.7% to HKD 5,024,724, down from HKD 5,445,649, with raw material costs declining more than revenue[67] - Sales and distribution expenses decreased by approximately 5.6% from about 1,604,156 thousand HKD in the first half of fiscal year 2024 to about 1,513,891 thousand HKD in the first half of fiscal year 2025, accounting for approximately 18.2% of revenue[74] - Advertising, marketing, and brand building expenses decreased by approximately 33.1% from about 308,418 thousand HKD to about 206,422 thousand HKD, representing about 2.5% of revenue, mainly due to reduced consumer spending in the Chinese market[74] - Administrative and other expenses decreased by approximately 30.8% from about 450,051 thousand HKD to about 311,617 thousand HKD, with administrative expenses accounting for about 3.8% of revenue[77] - Financial costs decreased by approximately 25.6% from about 98,266 thousand HKD to about 73,114 thousand HKD, primarily related to loan interest expenses[79] Legal and Tax Matters - The company has a provision for legal claims amounting to HKD 174,037 as of March 31, 2024, related to a lawsuit from a former supplier[43] - The company settled a legal claim with a former supplier for USD 8,250, equivalent to HKD 64,420, and reversed a provision of USD 10,693, equivalent to HKD 83,826[44] - The effective corporate tax rate in the U.S. is 21% as of September 30, 2023, with state income tax estimated between 0% to 9%[34] - The Macau subsidiary is subject to a 12% income tax on taxable income as of September 30, 2023[34] - The Hong Kong subsidiary is subject to a 16.5% profits tax on taxable income as of September 30, 2023[34] - Income tax expenses increased by approximately 6.6% from about 229,716 thousand HKD to about 244,796 thousand HKD, with the tax rate increasing from approximately 16.2% to 17.0% of profit before tax[80] Corporate Governance and Structure - The company has adhered to the corporate governance code, with a review of its governance practices conducted regularly[109] - The roles of the chairman and CEO are held by the same individual, which the board believes does not impair the balance of power and accountability[111] - The company has adopted the standard code of conduct for directors' securities transactions and confirmed compliance for the six-month period ending September 30, 2024[112] Employee and Market Strategy - The group had 27,246 employees as of September 30, 2024, down from 29,837 employees on March 31, 2024[93] - The group emphasizes the importance of employee training and development, maintaining a competitive compensation structure to motivate staff[93] - The group aims to enhance its market share in the domestic market as it recovers from a consumption downturn, focusing on brand and product competitiveness[99] - The group is focusing on R&D and technological innovation, having launched a "zero wall, zero gravity" sofa product, with a second technical iteration planned for 2024[96] - The penetration rate of functional sofas in the Chinese market increased from 7.2% to 9.7% year-on-year, with a forecast to exceed 13% within five years[98] - The North American market remains the primary consumer market for functional sofas, with continued order growth and significant expansion opportunities in Europe and other export markets[97] Dividends and Shareholder Matters - The company declared an interim dividend of HKD 0.15 per share for the six months ended September 30, 2024, compared to HKD 0.15 per share for the same period in 2023[38] - The board has declared an interim dividend of HKD 0.15 per share, payable on December 13, 2024[100] - The company will suspend share transfer registration from December 12 to December 13, 2024, for shareholders eligible to receive the interim dividend[105] Miscellaneous - The company has not made any significant investments or acquisitions in the first half of the fiscal year 2025 but continues to seek opportunities to acquire furniture companies[92] - There were no purchases, sales, or redemptions of the company's listed securities during the review period[101] - The audit committee consists of four independent non-executive directors, and the interim financial information has been reviewed by the auditors[102] - No significant events have been disclosed after the review period[103]

Investment Rating - The report assigns a positive investment rating to Minhua Holdings, highlighting its leading position in the functional sofa market and growth potential in the Chinese market [2]. Core Insights - Minhua Holdings has a market share of 53% in the Chinese functional sofa market as of the end of 2023, with a revenue of HKD 18.41 billion for the fiscal year 2024, reflecting a year-on-year growth of 6.1% [2][3]. - The company's net profit for the same fiscal year reached HKD 2.3 billion, marking a significant increase of 20.2% year-on-year [2][3]. - The report emphasizes the shift in consumer purchasing behavior from new home furnishing needs to a pursuit of quality of life, which benefits the functional sofa segment [1][15]. Summary by Sections Market Position and Strategy - Minhua Holdings is a leading player in the functional sofa sector, established in 1992 and headquartered in Hong Kong, with branches in key global economic regions [2]. - The company has adapted its strategy post-trade war by focusing on the Chinese market, increasing sales expenses, and establishing production bases in various locations to reduce costs [5][6]. Financial Performance - The revenue contribution from the Chinese market exceeded 65% in the fiscal year 2024, with a market penetration rate for functional sofas rising from 7.2% to 9.7% year-on-year [3]. - The company's gross margin has improved, reaching 39% in fiscal year 2024, attributed to cost optimization and favorable raw material prices [8][9]. Consumer Trends - The consumer demographic is increasingly younger, with over 75% of customers being under 35 years old, indicating a shift towards design and functionality in product offerings [15][16]. - The report notes that the functional sofa market in China is still in a growth phase, with significant room for expansion compared to Western markets [16]. Cash Flow and Dividends - Minhua Holdings has shown a notable increase in operating cash flow, with net operating cash flow and free cash flow reaching HKD 2.55 billion and HKD 990 million, respectively, for fiscal year 2024 [17]. - The company maintains a robust dividend policy, distributing approximately 50% of its net profit to shareholders, with a historical average dividend payout ratio of 52.2% [18][19]. Valuation - The report indicates that Minhua Holdings' price-to-book (PB) ratio is at a historical low, primarily due to the overall low valuation of the Hong Kong stock market and the furniture industry [21].

Investment Rating - The report maintains an "Outperform" rating for the company [4] Core Views - The company achieved total revenue of HKD 18.8 billion in FY2024, representing a year-on-year growth of 5.7%, and a net profit attributable to shareholders of HKD 2.3 billion, which is a 20.2% increase year-on-year [1][5] - The company is a leader in the furniture sector, particularly in functional sofas, which have maintained the highest global sales for six consecutive years [6] - The report forecasts net profits for FY2025 to FY2027 to be HKD 2.57 billion, HKD 2.79 billion, and HKD 2.96 billion respectively, with growth rates of 11.6%, 8.6%, and 6.0% [4][5] Financial Summary - FY2024 main business revenue was HKD 18.41 billion, with a year-on-year increase of 6.1% [5] - The gross profit margin for FY2024 was 39.4%, an increase of 0.9 percentage points year-on-year, primarily due to a decrease in raw material prices [6] - The company’s net profit margin for FY2024 was 12.5%, up by 1.5 percentage points year-on-year [6] - The report provides a valuation range for FY2025 of HKD 8.61 to HKD 9.94 based on a PE ratio of 13 to 15 times [4][8] Business Segmentation - The company's revenue from sofa and related products was HKD 12.66 billion, with a year-on-year increase of 2.9% [6] - Revenue from bedding and related products was HKD 2.99 billion, up 9.6% year-on-year, while other products saw a significant increase of 28.4% to HKD 1.82 billion [6] - Sales in Europe and other overseas markets for sofas and related products reached HKD 0.852 billion, marking a 10.5% year-on-year growth [6] Market Comparison - The report compares the company's valuation with peers, indicating that the average PE for comparable companies is around 12.4 times [8]

Company Information - The company's registered office is located at Victoria Place, 5th Floor, 31 Victoria Street, Hamilton HM 10, Bermuda[2][3] - The company's primary place of business in Hong Kong is at 10-14 Kwai Cheong Road, Kwai Chung, New Territories, Hong Kong[3] - The company's major banks include Hang Seng Bank, HSBC, Citibank, China Construction Bank, Agricultural Bank of China, Bank of China, and Industrial and Commercial Bank of China[3] - The company's website is www.manwahholdings.com[3] - The company's stock code is 1999[3] - The company's auditor is PricewaterhouseCoopers, located at 22/F, Prince's Building, Central, Hong Kong[2] - The company's share registrar and transfer agent in Bermuda is Ocorian Service (Bermuda) Limited[2] - The company's share registrar in Hong Kong is Hong Kong Central Securities Registration Company Limited[3] - The company's investor relations consultant is Strategic Financial Relations Limited[3] - The company's legal advisors are Deacons and Ocorian Law (Bermuda) Limited[3] Financial Performance - Total revenue for the fiscal year 2024 reached 18,798,633 thousand HKD, showing growth compared to previous years[15] - Gross profit margin improved to 39.4% in FY2024, up from 38.5% in FY2023[15] - Net profit attributable to equity holders increased to 2,302,366 thousand HKD, with a net profit margin of 12.5%[15] - Inventory turnover days decreased significantly to 49.1 days in FY2024 from 70.9 days in FY2023[15] - Accounts receivable turnover days improved to 33.2 days in FY2024, down from 40.4 days in FY2023[15] - Total assets grew to 19,807,520 thousand HKD in FY2024, up from 19,640,488 thousand HKD in FY2023[15] - Return on equity (ROE) increased to 19.1% in FY2024, compared to 16.6% in FY2023[15] - Cash and bank balances stood at 3,273,830 thousand HKD in FY2024, slightly lower than 3,738,234 thousand HKD in FY2023[15] - Earnings per share (basic) rose to 59.09 HK cents in FY2024, up from 48.80 HK cents in FY2023[15] - Dividend payout ratio remained stable at 50.7% in FY2024, compared to 51.2% in FY2023[15] - Revenue for the fiscal year reached HKD 18.41 billion, a year-on-year increase of 6.1%, with net profit attributable to the parent company at HKD 2.3 billion, up 20.2%[20] - Gross margin increased by 0.9 percentage points to 39.4%, and net margin rose by 1.5 percentage points to 12.5%[20] - Mainland China revenue grew by 8.1% to HKD 11.99 billion, with RMB-denominated growth of 12.8%[21] - North America market revenue increased by 2.3% to HKD 4.28 billion, while Europe and other overseas markets revenue grew by 2.9% to HKD 1.2 billion[22] - The company added 765 new stores in China, bringing the total number of brand specialty stores to 7,236[25] - Functional sofa penetration rate in China increased from 7.2% in 2022 to 9.7% in 2023, with a projected rise to 13% within five years[24] - The company maintained a dividend payout ratio of around 50%, with a dividend per share of HKD 0.15[22] - Home Group revenue increased by approximately 10.0% to HKD 674.1 million[26] - The company repurchased ordinary shares worth approximately HKD 230 million during the fiscal year[22] - Dealer rebates and incentives in China amounted to nearly HKD 100 million[21] - Total revenue and other income increased by 5.7% to approximately HKD 18,798,633 thousand (FY2023: HKD 17,788,864 thousand), with a gross profit margin of 39.4% (FY2023: 38.5%)[27] - Sofa and matching products revenue grew by 2.9% to HKD 12,658,825 thousand, with China market revenue increasing by 3.1% to HKD 7,781,477 thousand due to recovery from pandemic impacts[29] - North America market revenue for sofa and matching products increased by 1.1% to HKD 4,025,465 thousand, driven by the end of the inventory destocking cycle[30] - Bedding and matching products revenue rose by 9.6% to HKD 2,987,854 thousand, primarily due to recovery from pandemic impacts[32] - Other products revenue surged by 28.4% to HKD 1,819,602 thousand, driven by increased sales of iron frames and smart furniture[33] - Home Group business revenue increased by 10.0% to HKD 674,136 thousand, as the market gradually recovered from the impact of the Ukraine war[34] - Other income decreased by 11.5% to HKD 387,436 thousand, mainly due to a reduction in government subsidies[36] - Cost of goods sold increased by 4.6% to HKD 11,163,170 thousand, with raw material costs rising by 2.6% and employee costs by 15.5%[37] - Net profit attributable to equity holders grew by 20.2% to HKD 2,302,366 thousand, with a net profit margin increasing from 11.0% to 12.5%[44] - The company declared a final dividend of 15 HK cents per share for the 2024 fiscal year, with a total dividend payout representing approximately 50.7% of the profit attributable to equity holders[45] - As of March 31, 2024, the company's cash and bank balances amounted to approximately 3,273,830 thousand HKD, with significant portions held in RMB, EUR, and USD[46] - The company's short-term borrowings were approximately 4,113,203 thousand HKD, and long-term borrowings were 1,015 thousand HKD as of March 31, 2024, with weighted average annual interest rates of 5.78% for floating-rate loans and 2.56% for fixed-rate loans[48] - The company's capital-to-debt ratio was approximately 34.0% as of March 31, 2024, compared to 36.1% in the previous year[48] - The company reversed inventory impairment provisions of approximately 5,577 thousand HKD in the 2024 fiscal year, compared to a provision of 12,441 thousand HKD in the previous year[50] - The company recorded impairment losses on receivables and notes of approximately 38,752 thousand HKD in the 2024 fiscal year, compared to 14,578 thousand HKD in the previous year[50] - The company sold its 45% stake in a joint venture for approximately 50,677 thousand HKD, with no gain or loss recorded in the comprehensive income statement[55] Operational Performance - The company has 29,837 employees as of March 31, 2024, an increase from 25,832 in the previous year, with total employee costs amounting to approximately 3,193,022 thousand HKD[57] - The company's restricted bank balances were approximately 3,786 thousand HKD as of March 31, 2024, down from 7,394 thousand HKD in the previous year[51] - The company has no significant investment or capital asset plans for the upcoming year[56] - The company plans to conduct a second technical iteration of its "zero-wall" feature in 2024, aiming to enhance the comfort and fashion of its smart home products[58] - The company holds 1,433 core patents, with 406 new patents added in the 2024 fiscal year[58] - The company has been ranked as the global leader in functional sofa sales for six consecutive years, as certified by Euromonitor International[58] - The North American market remains the primary consumer market for functional sofas, with demand recovering rapidly after high inventory pressures eased[58] - The company is leveraging its scale production capacity, product quality, and cost advantages to expand its export market share[58] - The Chinese functional sofa and smart home market is characterized by low penetration and high growth potential[59] - The company aims to increase its market share in China's large existing market by leveraging its long-standing product, brand, and channel advantages[59] ESG and Sustainability - The company has established a comprehensive ESG governance structure, including a decision-making layer led by the board, a management layer composed of an ESG management team, and an execution layer composed of an ESG execution team[66] - The company has identified 19 material issues across environmental, social, and governance (ESG) domains, based on its business model and sustainability context[69] - The company's management is responsible for the final review of material issues and their prioritization, ensuring that identified issues are actionable and effective[70] - The company has established a comprehensive risk management system with the Board of Directors and Audit Committee as the highest decision-making bodies, ensuring stable operations and effective risk control[78] - The company conducted 2 cases of non-state employee bribery and 1 case of dealer fraud during the reporting period, with all parties involved subjected to criminal enforcement measures[79] - The company achieved a 100% signing rate for anti-corruption clauses with suppliers during the reporting period[80] - A total of 1,197 employees participated in anti-corruption training, accumulating 6.5 hours per person[81][82] - The company organized anti-corruption education activities for senior management, focusing on the importance of integrity and anti-fraud risk management[83] - The company implemented a whistleblower protection system to ensure confidentiality and fair handling of reported cases[83] - The company integrated green and low-carbon concepts into its operations, aligning with domestic and international environmental regulations and the "dual carbon" goals[84] - The company emphasized compliance, integrity, and anti-corruption, requiring suppliers to adhere to anti-bribery laws and regulations[80] - The company conducted regular internal audits and provided at least four professional training sessions annually for audit staff to enhance their capabilities[78] - The company actively engaged in rural revitalization and public welfare initiatives, contributing to community development[74] - The company used 17.4 million kWh of photovoltaic power generation, saving 5,246.10 tons of standard coal and reducing greenhouse gas emissions by 11,423.53 tons of CO2 equivalent compared to thermal power generation[86] - Total greenhouse gas emissions (Scope 1 + Scope 2) for the fiscal year 2024 were 68,443.40 tons of CO2 equivalent, with an emission density of 2.29 tons of CO2 equivalent per person[91] - Scope 1 greenhouse gas emissions were 17,720.94 tons of CO2 equivalent, while Scope 2 emissions were 50,722.46 tons of CO2 equivalent[91] - The company has obtained the Guangdong-Hong Kong Cleaner Production Partnership (Manufacturing) Label Certificate and China Environmental Label Product Certification, demonstrating recognition for its green initiatives[88][89] - The company has implemented a three-level environmental management system and obtained ISO14001 certification, integrating environmental management with production management[94] - The company conducted a joint fire safety evacuation drill and training with the Daya Bay Fire Rescue Brigade in March 2024, enhancing employee safety awareness and skills[97] - The company has established a "Water and Electricity Energy Conservation and Environmental Protection Management System" to optimize resource utilization and improve efficiency[99] - The company has not experienced any major environmental pollution incidents during the reporting period, maintaining strict environmental compliance[92] - Total water consumption in FY2024 was 1,137,295.90 tons, with a per capita water intensity of 38.12 tons/person[101] - The company used approximately 33,161.39 tons of various packaging materials in FY2024[101] - Energy consumption in FY2024 included 2,508,968.28 cubic meters of natural gas, 5,437,387.12 liters of diesel, and 88,939,965.24 kWh of purchased electricity[102] - Nitrogen oxide emissions in FY2024 were 0.60 tons, sulfur oxide emissions were 0.26 tons, particulate matter (PM) emissions were 5.89 tons, and volatile organic compounds (VOCs) emissions were 2.84 tons[107] - Non-hazardous waste generation in FY2024 was 18,819.74 tons, with a density of 0.63 tons/person[113] - Hazardous waste generation in FY2024 was 134.98 tons, with a density of 0.005 kg/person[113] Innovation and Intellectual Property - The company has a total of 1,433 patents as of FY2024, with 406 new patents added during the fiscal year. Among these, there are 7 invention patents, 93 utility model patents, and 1,333 design patents[118] - The company launched the 28910 Zero-Wall Patent in 2024, featuring a single motor design that allows the sofa backrest to achieve a complete zero-wall fit, with a backrest depth of 910mm and seat depth of 600mm[119] - Approximately 80% of the improvement and innovation proposals submitted by employees were proven effective after testing, covering areas such as management, processes, materials, and 6S improvements[120] - The company has obtained three management system certifications: ISO 9001 Quality Management System Certification, Shenzhen Quality Standard System Certification, and Customs Advanced Enterprise Certification (valid for 5 years)[121] - The company sources premium raw materials globally, including top-grain leather from Europe and America, FSC-certified wood from South America, and high-density, high-resilience foam developed in-house[125] - The company employs advanced manufacturing techniques, such as European leather cutting equipment and Italian CNC automated cutting systems, to improve production efficiency and reduce costs[127] - The company has established a digital traceability system to ensure the quality and safety of its products, with all materials meeting quality and environmental standards in Europe, America, Southeast Asia, and China[124] - The company conducts multiple quality inspections and tests throughout the manufacturing process, including third-party testing for raw materials, new product samples, and finished products[127] - The company has a dedicated IPR (Intellectual Property Rights) manager to oversee the entire IP management network, from R&D to market, ensuring comprehensive coverage of IP protection[117] - The company actively combats trademark and patent infringements, investing significant resources in personnel and funds to protect its intellectual property rights[118] Safety and Quality - Product recall rate for FY2024 was 0%[128] - Conducted 20 emergency drills and 396 safety inspections in FY2024[132] - Safety training conducted 395 times with 39,670 employee participations in FY2024[132] - Work-related injury loss days ratio was 0.08% with 56,333.62 hours lost in FY2024[132] - Company has 21 certified safety management personnel as of the reporting period[135] - No major safety incidents occurred during the reporting period[135] - Company has 2,126 suppliers in FY2024, including 1,906 from China (including Hong Kong) and 220 overseas[143] - Company passed ISO 27001 information security management system certification and conducted regular information security training[139] - No customer privacy violation complaints were received during the reporting period[139] - Company requires suppliers to comply with amfori BSCI code of conduct, focusing on environmental protection, intellectual property, and human rights[147] Employee and Workforce Management - Total number of employees as of March 31, 2024, is 29,837, with 66% being male and 34% female[153] - 86% of employees are on permanent contracts, while 14% are on fixed-term contracts[152] - 61% of employees are aged between 30 and 50 years, 31% are under 30, and 8% are over 50[153] - The company has a comprehensive salary and benefits system, including monthly and annual bonuses, performance bonuses, and stock options for managerial staff[154] - The company provides various non-monetary benefits such as 5A-grade office environments, gyms, basketball courts, and public-funded travel[155] - The company has a "Smart Weighing Line" in the employee cafeteria to improve lunch efficiency and ensure food safety[162] - The company conducts monthly "Employee Care Day" interviews to address employee concerns, with a 100% resolution rate for reported issues[163] - The "Books Have Golden Houses" project has provided 636 grants totaling 11,275 thousand HKD to 626 employees' children for educational support[164] - The company has established a comprehensive employee development system, including skill training, vocational skill level certification, and skill competitions, to enhance employee capabilities[167] - In 2023/2024, the company provided a total of 731,520 hours of training, with an average of 485.64 hours per employee[168] - 85% of male employees and 15% of female employees participated in training, with 89% of management and professional technical personnel and 11% of frontline workers receiving training[168] - The company conducted a one-week training program for reserve cadres in July 2023, combining professional lectures, field visits, and interactive exchanges[169] - The company has supported employee academic advancement for over a decade, offering incentives and creating a "work while learning" environment[170] - The company has implemented a 180-day rotation training program for new employees, including military training, onboarding, and practical experience in production bases and departments[171] - The company has a five-year career development plan for new hires, focusing on both management and professional growth, divided into four stages: integration, skill development, management entry, and management enhancement[172] - The company has obtained ISO45001 certification for occupational health management and has implemented various measures to ensure employee health and safety, including mandatory health check-ups and the establishment of personal health monitoring files[173] - The company has developed a psychological stress relief program for employees and regularly conducts mental health training[174] - The company actively participates in social welfare activities, including rural revitalization, education support, and disability assistance, and has received multiple awards for its charitable contributions[176] - The company donated HKD 32.65 million for the planning and construction of the Daya Bay Pingshan River Technology Innovation

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 8.69, based on a projected PE of 13.5x for 2025 [2]. Core Insights - The company achieved total revenue of HKD 18.79 billion for FY2024, reflecting a year-on-year increase of 5.7%. The main revenue was HKD 18.41 billion, up 6.1% year-on-year [2]. - The gross profit margin improved by 0.9 percentage points to 39.4%, primarily due to a decrease in raw material costs [2]. - The net profit attributable to shareholders reached HKD 2.30 billion, representing a year-on-year growth of 20.2% [2]. - The company increased its store count in China by 765 to a total of 7,236 stores [2]. - The report highlights strong growth in the sofa segment, with sales volume increasing by 26.6% [2]. Financial Performance Summary - Revenue (in million HKD) for the fiscal years is projected as follows: 2023: 17,789; 2024: 18,799; 2025: 20,396; 2026: 22,147; 2027: 23,967, with respective growth rates of -18.4%, 5.7%, 8.5%, 8.6%, and 8.2% [1]. - Net profit (in million HKD) is projected as follows: 2023: 1,915; 2024: 2,302; 2025: 2,524; 2026: 2,838; 2027: 3,124, with growth rates of -14.8%, 20.2%, 9.6%, 12.4%, and 10.1% [1]. - Earnings per share (in HKD) are projected to increase from 0.49 in 2023 to 0.80 in 2027 [1]. - The company’s dividend per share is expected to rise from HKD 0.25 in 2023 to HKD 0.40 in 2027, with a dividend yield increasing from 3.7% to 5.9% [1]. Market Outlook - The report anticipates stable growth in the Chinese market for FY2025, driven by consumer demand for quality living and an expected increase of 700-800 stores [2]. - The overseas market is projected to maintain double-digit growth, benefiting from the end of inventory destocking cycles and new customer acquisition [2]. - The report expects raw material and logistics costs to remain stable, allowing for a relatively stable gross margin [2].

Investment Rating - The report maintains a positive outlook on the company, suggesting active attention due to its strong position as a functional sofa leader and continuous product innovation [5] Core Views - The company achieved a 6.1% YoY increase in revenue to HKD 18.411 billion in FY2024, driven by growth in both domestic and overseas markets [2] - Domestic revenue in China grew by 8% to HKD 11.987 billion, with sofa revenue up 3.1% and mattress revenue up 9.6% [2] - Overseas revenue increased by 3.2% to HKD 6.153 billion, with North America up 2.3% and Europe and other markets up 3.2% [2] - The company expanded its store network to 7,236 stores, with a net increase of 765 stores [2] - The penetration rate of functional sofas in China reached 9.7% in 2023 and is expected to rise to 13% within five years, driven by younger consumer demographics [3] - The company is focusing on multi-channel sales strategies, including offline stores, e-commerce, and live streaming, while also strengthening its dealer network [4] - Overseas, the company is deepening R&D in functional sofas and expanding its product lines to cover high, mid, and low-end markets [4] Market and Industry Analysis - The domestic market is transitioning from new housing completions to a focus on existing housing stock, with 90% of homes built in the past 20 years [3] - The company anticipates a shift in China's new housing construction towards a model similar to that of Europe and the US, with slower growth in the future [3] - Functional sofas are expected to benefit from increased consumer spending on quality-of-life improvements [3] Strategic Focus - The company is leveraging its leadership in functional sofas and improving its overseas production capacity in Vietnam and Mexico to enhance overall competitiveness [5] - It is actively pursuing a multi-market, multi-channel revenue strategy domestically, while focusing on product innovation and market expansion overseas [4]

Investment Rating - The report maintains a "Buy" rating for the company [1] Core Views - The company reported FY2024 results that slightly exceeded expectations, driven by both domestic and international sales, with a revenue of HKD 18.41 billion, a year-on-year increase of 6.1% [4][9] - The company is expected to achieve steady growth due to the gradual easing of real estate policies, with a slight upward revision of FY2025 net profit forecast to HKD 2.60 billion [9] Financial Performance - FY2024 revenue reached HKD 18.41 billion, with a net profit of HKD 2.30 billion, reflecting a year-on-year growth of 20.2% [4][7] - The company plans to distribute a dividend of HKD 0.30 per share, with a dividend payout ratio of 50.7% [4] - The company’s gross margin improved due to a decrease in raw material costs, with FY2024 gross margin at 40.4% [8] Domestic Sales - Domestic sales for FY2024 reached HKD 11.99 billion, a year-on-year increase of 8.1%, with strong performance in the functional sofa segment [5] - The penetration rate of functional sofas in China increased to 9.7%, up 2.5 percentage points year-on-year [5] - The company opened 765 new stores in FY2024, bringing the total to 7,236 stores, focusing on expanding into lower-tier cities [5] International Sales - International sales showed significant recovery in FY2024, with North America generating HKD 4.28 billion in revenue, a year-on-year increase of 2.3% [6] - The company expanded its overseas sales team and optimized product offerings to enhance market share in new regions [6] Profitability and Cost Management - The company benefited from lower raw material costs, with significant price reductions in steel, leather, chemicals, and wood products [8] - FY2024 net profit margin improved to 12.5%, up 1.5 percentage points year-on-year, driven by cost management and efficiency improvements [8]

本报告仅供 Choice 东方财富 使用，请勿传阅。 公司快报 2024 年 05 月 22 日 敏 华控股(01999.HK) 证券研究报告 内外销稳步复苏， 家具(HS) 投资评级 买入-A FY24 业绩表现靓丽 维持评级 6个月目标价 9.10港元 事件：敏华控股发布 FY2024 年度报告。公司 FY2024 年实现营 股价 (2024-05-22) 6.93港元 收 184.11 亿港元，同比增长6.11%；归母净利润23.02 亿港元， 同比增长 20.23%。公司 FY2024H2 实现营收 94.74 亿港元，同比 交易数据 增长 17.5%；归母净利润11.66 亿港元，同比增长41.75%。 总市值(百万港元) 26,871.34 流通市值(百万港元) 26,871.34 海外市场快速修复，H2 线下市场持续回暖 总股本(百万股) 3,877.54 流通股本(百万股) 3,877.54 分地区看，FY2024全年中国市场、北美市场、欧洲及其他海外市 12个月价格区间 4.43/7.37元 场分别实现收入 119.87、42.84、11.95 亿港元，分别同比增长 8.1%、2.3%、2. ...

Investment Rating - The investment rating for the company is "Buy" and is maintained [9] Core Views - The company reported FY2024 results with a main revenue of HKD 18.411 billion and a net profit attributable to shareholders of HKD 2.302 billion, representing a year-on-year increase of 6% and 20% respectively [5][6] - Both domestic and international sales showed improvement, with domestic sales increasing by 8% and international sales by 3% [6] - The company is expected to continue benefiting from its strong brand, product, and supply chain advantages, with a focus on optimizing its product matrix and enhancing its competitive edge through design and marketing [7] Summary by Sections Revenue Performance - For FY2024, domestic sales grew by 8% while international sales increased by 3%, with the second half of FY2024 showing stronger growth at 18% and 42% respectively [5][6] - The furniture segment saw a 5% increase in domestic sales, with specific categories like sofas and mattresses growing by 3% and 10% respectively [6] - The company added 765 brand stores, bringing the total to 7,236 [6] Profitability - The company achieved an improvement in profitability despite domestic sales incentives, primarily due to lower raw material costs and significant manufacturing advantages [6] - The gross profit margin and net profit attributable to shareholders improved by 0.9 and 1.5 percentage points respectively [6] - The average unit costs for materials such as steel and leather decreased by 8% and 10% respectively, contributing to the overall profitability [6] Future Outlook - The company aims to enhance its product offerings in response to market trends, particularly in functional sofas and mattresses, while expanding its online and offline channels [7] - The positive trend in international sales is expected to continue, supported by the company's manufacturing and supply chain strengths [7] - Projected net profits for FY2025 and FY2026 are estimated at HKD 2.602 billion and HKD 2.995 billion respectively, with corresponding PE ratios of 11 and 10 [7][11]