Economic Overview - The average GDP growth in the PRC for the first half of 2019 was approximately 6.3%, down from 6.8% in the same period of 2018[14]. - The International Monetary Fund revised the full year emerging market economic growth in 2019 to approximately 4.1%, marking a decade low[11]. - The global economic growth is expected to slow down to approximately 3.2% in 2019, the weakest pace of expansion for a decade according to the IMF[15]. - The current economic environment in the PRC is under pressure, with signs of a global economic slowdown affecting investment growth[11]. - The annual GDP growth rate in the U.S. dropped to approximately 2.3% in Q2 2019, compared to 3.2% and 2.5% in Q4 2018[101]. - The consumer price index (CPI) in the U.S. decreased to approximately 1.6% for the twelve months ended June 30, 2019, lower than the Federal Reserve's inflation target of 2%[115]. Trade and Export Performance - Exports from the PRC to the U.S. decreased by approximately 8.1% in the first six months of 2019 compared to the same period in 2018, reflecting the impact of the ongoing trade war[14]. - The company reported that the manufacturing and export companies in the PRC faced the weakest operating conditions in three years due to the trade war[9]. - The Group's internationalization plan, initiated in 2017, involved diversifying production bases into Vietnam and Sri Lanka, which is expected to enhance market share in the global apparel market[24][26]. Financial Performance - The Group achieved a record high revenue of approximately HK$1,602.8 million for the six months ended June 30, 2019, representing an increase of approximately 18.6% compared to HK$1,351.3 million for the same period in 2018[20][22][32]. - Revenue from sales of elastic fabric increased by approximately 34.2% to approximately HK$1,142.8 million during the Reporting Period, driven by expansion into lingerie, sportswear, and apparel fabric segments[22][27][32]. - The Group's gross profit for the Reporting Period amounted to approximately HK$392.0 million, representing an increase of approximately 21.4% compared to the same period in 2018[29]. - The profit attributable to owners of the Company was approximately HK$120.9 million, representing an increase of approximately 16.2% compared to the same period in 2018[29]. - Basic earnings per share increased by approximately 15.8% to approximately HK11.63 cents for the Reporting Period[29]. - Net profit for the six months ended June 30, 2019, amounted to approximately HK$121.2 million, representing an increase of approximately 17.9% compared to approximately HK$102.8 million for the same period in 2018[53]. Cost and Profitability - The gross profit margin increased by approximately 0.6 percentage points to approximately 24.5% for the Reporting Period[29]. - Overall operational costs continued to rise in both the PRC and Vietnam, but the depreciation of the Renminbi against the Hong Kong dollar eased some inflationary pressures[29]. - The increase in gross profit margin was attributed to economies of scale, RMB depreciation against HK$, and a decrease in unit prices of main raw materials[52]. - The Group recorded a stable net profit margin of approximately 7.6% for both the six months ended June 30, 2018, and 2019[53]. Investment and Expansion - Best Pacific will continue to invest in product innovation, people, and manufacturing infrastructure to leverage its competitive strengths[16]. - The company aims to take advantage of tariff concessions in Vietnam and Sri Lanka as part of its strategy for sustainable growth[16]. - The Group is committed to ramping up production facilities in Sri Lanka, which are expected to contribute approximately 20% to 25% and 10% to 15% of the Group's overall production capacities for elastic fabric and elastic webbing, respectively[109]. - The second phase of the Vietnam production site is expected to roll out in the second half of 2019, with anticipated rising contributions to the Group[108]. Shareholding and Corporate Governance - As of June 30, 2019, Mr. Lu Yuguang holds a long position of 640,500,000 shares, representing approximately 61.59% of the company's shareholding[128]. - Mr. Zhang Haitao has a long position of 77,794,000 shares, which accounts for approximately 7.48% of the company's shareholding[142]. - The Company has adopted two share option schemes, including the Pre-IPO Share Option Scheme[177]. - The Board has resolved not to declare any interim dividend for the six months ended June 30, 2019, consistent with the previous year where no interim dividend was declared[191][194]. - The unaudited condensed consolidated results for the six months ended 30 June 2019 have been reviewed by Deloitte Touche Tohmatsu, with no disagreements from the Audit Committee[192][196]. Challenges and Future Outlook - The group anticipates a complicated and challenging business environment in the future due to international trade conflicts and unfavorable manufacturing conditions in the PRC[100]. - The management believes that continuous investment in overseas operations will enhance the Group's competitiveness despite short-term pressure on operating margins[113]. - The company is focused on maintaining strong business momentum despite the challenging operating environment[121].
超盈国际控股(02111) - 2019 - 中期财报