九兴控股(01836) - 2025 - 中期业绩

Interim Results Summary The company reported a 0.7% revenue increase to $775.1 million, with strong net cash and a 10.9% operating profit margin Interim Results Summary (USD '000) | Metric | H1 2025 | Change | | :--- | :--- | :--- | | Shipments | +3.8% | Growth | | Revenue | $775.1 million | +0.7% | | Net Cash Position | $291.3 million | Maintained Strong | | Operating Profit | $84.7 million | - | | Operating Profit Margin | 10.9% | - | | Reported Net Profit | $78.1 million | - | | Adjusted Net Profit | $77.9 million | - | | Interim Dividend | HK$0.52 per share | Payout Ratio over 70% | Interim Condensed Consolidated Financial Statements This section presents the company's financial performance, position, and cash flows for the interim period, highlighting key changes and trends Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For H1 2025, revenue slightly increased by 0.7% to $775.1 million, but gross profit and operating profit declined, leading to a 14.7% decrease in profit for the period to $78.1 million, with basic EPS at 9.5 US cents Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (USD '000) | Metric (USD '000) | H1 2025 | H1 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 775,074 | 770,011 | +0.7% | | Cost of sales | (599,916) | (571,128) | +5.0% | | Gross profit | 175,158 | 198,883 | -11.9% | | Operating profit (before fair value changes of financial instruments) | 84,724 | 99,052 | -14.5% | | Profit before tax | 91,869 | 105,393 | -12.8% | | Profit for the period | 78,117 | 91,514 | -14.7% | | Profit for the period attributable to owners of the parent | 78,633 | 91,944 | -14.5% | | Basic earnings per share (US cents) | 9.5 | 11.5 | -17.4% | Interim Condensed Consolidated Statement of Financial Position As of June 30, 2025, total assets less current liabilities were $1.126 billion, a slight decrease from December 31, 2024, with net current assets at $588.6 million and a current ratio of 2.8, indicating a stable but slightly declining financial position Interim Condensed Consolidated Statement of Financial Position (USD '000) | Metric (USD '000) | June 30, 2025 | Dec 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Total non-current assets | 537,139 | 530,125 | +1.3% | | Total current assets | 916,307 | 893,241 | +2.6% | | Total current liabilities | 327,690 | 279,146 | +17.4% | | Net current assets | 588,617 | 614,095 | -4.1% | | Total assets less current liabilities | 1,125,756 | 1,144,220 | -1.6% | | Net assets | 1,095,977 | 1,117,539 | -1.9% | | Total equity | 1,095,977 | 1,117,539 | -1.9% | Interim Condensed Consolidated Statement of Cash Flows For H1 2025, net cash from operating activities significantly decreased by 96% to $3.9 million, primarily due to negative working capital changes, while cash used in investing and financing activities increased, resulting in lower period-end cash and cash equivalents Interim Condensed Consolidated Statement of Cash Flows (USD '000) | Metric (USD '000) | H1 2025 | H1 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Net cash flows from operating activities | 3,906 | 99,178 | -96.1% | | Net cash flows used in investing activities | (25,264) | (15,689) | +61.1% | | Net cash flows used in financing activities | (48,931) | (42,809) | +14.3% | | Net decrease/(increase) in cash and cash equivalents | (70,289) | 40,680 | - | | Cash and cash equivalents at end of period | 350,786 | 334,585 | +4.8% | Notes to the Interim Condensed Consolidated Financial Information This section provides detailed explanations and disclosures regarding the accounting policies, segment information, revenue, profit before tax, and other financial statement items 1. Basis of Preparation The interim condensed consolidated financial information is prepared in accordance with HKEX Listing Rules and HKAS 34, presented in USD using the historical cost convention - Financial information is prepared according to HKEX Listing Rules and HKAS 34, presented in USD, and uses the historical cost convention[10] 2. Changes in Accounting Policies and Disclosures Revised HKFRS accounting standards were adopted, with HKAS 21 (Amendment) on lack of exchangeability having no material impact as all currencies used by the Group are exchangeable - HKAS 21 (Amendment) regarding currency exchangeability has no impact on the Group's financial information, as all transaction currencies are exchangeable[11][12] 3. Operating Segment Information The Group operates manufacturing (footwear and handbags) and retail & wholesale (self-developed brands) segments, with manufacturing being the primary revenue source, generating $774.4 million in external sales and $87.75 million in segment results for H1 2025 - The Group primarily operates two segments: manufacturing (footwear and handbags) and retail & wholesale (self-developed brands)[13][15] Operating Segment Information (USD '000) | Metric (USD '000) | Manufacturing (H1 2025) | Retail & Wholesale (H1 2025) | Total (H1 2025) | Manufacturing (H1 2024) | Retail & Wholesale (H1 2024) | Total (H1 2024) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | External customer sales | 774,357 | 717 | 775,074 | 769,067 | 944 | 770,011 | | Segment results | 87,754 | (267) | 87,487 | 102,070 | (267) | 101,803 | | Segment assets (June 30, 2025) | 1,415,877 | 15,557 | 1,431,434 | - | - | - | | Segment assets (Dec 31, 2024) | 1,374,058 | 32,659 | 1,406,717 | - | - | - | 4. Revenue Total revenue for H1 2025 was $775.1 million, primarily from footwear and handbag sales, with North America as the largest market, followed by Europe and China, and all revenue recognized upon goods transfer Revenue by Product Type (USD '000) | Product Type (USD '000) | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Sales of footwear and handbags | 775,074 | 770,011 | Revenue by Geographical Market (USD '000) | Geographical Market (USD '000) | H1 2025 | H1 2024 | | :--- | :--- | :--- | | North America | 377,120 | 360,241 | | Europe | 181,314 | 189,606 | | China | 119,990 | 128,634 | | Asia (excluding China) | 69,743 | 69,456 | | Others | 26,907 | 22,074 | 5. Profit Before Tax Profit before tax for H1 2025 was $91.87 million, a decrease from the prior year, influenced by increased cost of inventories sold, a shift from fair value gain to loss on financial assets, significantly reduced severance costs, and a foreign exchange gain Profit Before Tax (USD '000) | Metric (USD '000) | H1 2025 | H1 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Cost of inventories sold | 599,644 | 572,005 | +4.8% | | Depreciation of property, plant and equipment | 24,436 | 23,668 | +3.2% | | Net fair value gain/(loss) on financial assets | (219) | 1,369 | From loss to gain | | Severance payments and other related costs | 4 | 1,337 | -99.7% | | Net impairment loss on financial assets | 329 | 6,208 | -94.7% | | Exchange differences, net | (4,276) | 238 | From loss to gain | 6. Income Tax Total income tax expense for H1 2025 was $13.75 million, a slight decrease year-on-year, with unchanged profit tax rates in China, Macau, and other regions, but increased current tax expenses in China and Macau and significantly reduced deferred tax expenses - China's profit tax rate is 25%, Hong Kong's is 16.5% (with a two-tiered system of 8.25%/16.5% for some entities), and Macau's is 12%[24][25] Income Tax (USD '000) | Tax Type (USD '000) | H1 2025 | H1 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Current tax expense (China) | 7,342 | 5,899 | +24.5% | | Current tax expense (Macau) | 3,997 | 2,381 | +67.9% | | Current tax expense (Other regions) | 803 | 1,146 | -29.9% | | Deferred tax | 1,610 | 4,453 | -63.8% | | Total | 13,752 | 13,879 | -0.9% | 7. Dividends Total dividends declared and paid for H1 2025 significantly increased to $113.2 million, including a final dividend of HK$0.50 per share and a special dividend of HK$0.56 per share, with the Board declaring an interim dividend of HK$0.52 per share Dividends (USD '000) | Dividend Type (USD '000) | H1 2025 | H1 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Final dividend declared and paid (HK$0.50 per share) | 53,390 | 63,415 | -15.8% | | Special dividend declared and paid (HK$0.56 per share) | 59,796 | 0 | New | | Total | 113,186 | 63,415 | +78.5% | - The Board has declared an interim dividend of HK$0.52 per ordinary share, approximately $55.708 million[27] 8. Earnings Per Share Attributable to Ordinary Equity Holders of the Parent For H1 2025, basic EPS was 9.5 US cents (74.3 HK cents) and diluted EPS was 9.3 US cents (73.1 HK cents), both decreasing year-on-year, calculated based on profit attributable to ordinary equity holders and weighted average ordinary shares Earnings Per Share Attributable to Ordinary Equity Holders of the Parent | Metric | H1 2025 | H1 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Profit attributable to ordinary equity holders of the parent (USD '000) | 78,633 | 91,944 | -14.5% | | Basic earnings per share (US cents) | 9.5 | 11.5 | -17.4% | | Basic earnings per share (HK cents) | 74.3 | 89.6 | -17.1% | | Diluted earnings per share (US cents) | 9.3 | 11.2 | -16.9% | | Diluted earnings per share (HK cents) | 73.1 | 87.8 | -16.8% | | Weighted average number of ordinary shares used in calculating basic earnings per share | 830,294,950 | 802,144,522 | +3.5% | 9. Property, Plant and Equipment In H1 2025, the Group's asset acquisition cost increased to $32.61 million, while asset disposals resulted in a net loss of $1.07 million, a shift from a gain in the prior year Property, Plant and Equipment (USD '000) | Metric (USD '000) | H1 2025 | H1 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Cost of assets acquired | 32,607 | 27,434 | +18.9% | | Net book value of assets disposed | 1,244 | 94 | +1223.4% | | Net loss/(gain) on disposal | 1,073 (Loss) | (44) (Gain) | From gain to loss | 10. Trade Receivables As of June 30, 2025, total trade receivables increased by 29.3% to $305.2 million from December 31, 2024, with the majority aged within one month, and standard payment terms typically ranging from 30 to 90 days Trade Receivables Ageing (USD '000) | Ageing (USD '000) | June 30, 2025 | Dec 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Within 1 month | 147,312 | 112,285 | +31.2% | | 1 to 2 months | 104,012 | 84,535 | +23.0% | | 2 to 3 months | 43,933 | 32,298 | +36.0% | | 3 to 6 months | 9,984 | 5,434 | +83.7% | | Total | 305,241 | 234,552 | +29.3% | - Total trade receivables include amounts due from associates of $41.492 million and an allowance for expected credit losses of $40.27 million[31] 11. Financial Assets at Fair Value Through Profit or Loss As of June 30, 2025, financial assets at fair value through profit or loss totaled $2.587 million, primarily listed equity investments, with a recognized fair value gain of $0.212 million for the period, indicating improved investment performance from a prior year loss Financial Assets at Fair Value Through Profit or Loss (USD '000) | Asset Type (USD '000) | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Listed equity investments | 2,575 | 2,363 | | Listed debt investments | 12 | 5 | | Total | 2,587 | 2,368 | - In H1 2025, listed equity investments recognized a fair value gain of $0.212 million (H1 2024: loss of $1.364 million)[32] 12. Trade Payables As of June 30, 2025, total trade payables slightly decreased to $91.995 million from December 31, 2024, with the largest portion aged within one month Trade Payables Ageing (USD '000) | Ageing (USD '000) | June 30, 2025 | Dec 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Within 1 month | 75,026 | 75,166 | -0.2% | | 1 to 2 months | 10,072 | 8,296 | +21.4% | | Over 2 months | 6,897 | 11,642 | -40.8% | | Total | 91,995 | 95,104 | -3.2% | - Trade payables include amounts due to a joint venture of $37.487 million, repayable within 90 days[33] Chairman's Statement The Chairman highlights strong demand in sports and high-end fashion, challenges in H1 2025 profitability due to high base effect and operational inefficiencies, plans for capacity expansion and handbag business growth, and an upgraded MSCI ESG rating - Despite macroeconomic uncertainties, demand in sports and high-end fashion categories remains strong, with non-customer-dedicated manufacturing facilities operating near full capacity[34] - H1 2025 profitability faced challenges primarily due to a high base effect from early shipments before the Paris Olympics in H1 2024 and initial operational efficiency issues during capacity ramp-up in Indonesia and the Philippines[34] - The company plans to expand total capacity by an additional 20 million pairs starting from 2025 and aims to develop the handbag and accessories manufacturing business into a significant long-term growth driver, having acquired a handbag factory in Vietnam[35] - The Board declared an interim dividend of HK$0.52 per share and will continue its excess cash return program, distributing an additional $60 million annually in FY2025 and FY2026[36] - MSCI ESG rating was upgraded from "A" to "AA", marking the second consecutive year of upgrade[36] Management Discussion and Analysis This section reviews the company's business strategies, performance, financial health, and future outlook, including operational highlights, cash returns to shareholders, and liquidity Business Strategies Stella International is renowned for its superior product design, craftsmanship, quality, and flexible production capabilities across diverse manufacturing bases, adopting a customer-centric model to offer integrated solutions including handbag and accessories manufacturing - The company is known for its excellent product design, craftsmanship, quality, and flexibility, with manufacturing bases across Vietnam, China, Indonesia, the Philippines, and Bangladesh[38] - Adopting a customer-centric business model, the company provides high-quality product development and customized manufacturing solutions, integrating handbag and accessories manufacturing to offer comprehensive solutions[38] Three-Year Plan (2023-2025) The company is implementing its 2023-2025 three-year plan focused on business growth and margin improvement, targeting a 10% operating profit margin and low double-digit post-tax profit CAGR, through category portfolio enhancement, production expansion, management optimization, and cost efficiency - The plan targets achieving a 10% operating profit margin and a low double-digit compound annual growth rate for post-tax profit[44] - Strategies include deepening cooperation with major global sports brands, expanding luxury and high-end fashion brands, and introducing fast-growing sports and fashion footwear brands[42] - Production capacity expansion involves increasing output at the new Solo, Indonesia footwear factory, collaborating with major brands to build dedicated sports footwear factories in Indonesia, and enhancing Bangladesh capacity[42] - Management efficiency optimization includes organizational restructuring, centralizing client management and factory operations, consolidating R&D teams, and linking management incentives to operational targets[42] - Enhancing cost efficiency and improving working capital involves strengthening the client portfolio to mitigate risks, improving inventory and cash flow management, and reinforcing cost control across all departments[45] Business Review In H1 2025, revenue slightly increased by 0.7% to $775.1 million, driven by a 3.8% rise in shipments, primarily from the sports category, but gross profit and net profit declined due to a high base effect and efficiency issues in new Indonesian and Philippine capacities Business Review | Metric | H1 2025 | H1 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 775.1 million USD | 770.0 million USD | +0.7% | | Shipments | 27.5 million pairs | 26.5 million pairs | +3.8% | | Average Selling Price | 27.4 USD/pair | 28.3 USD/pair | -3.2% | | Gross Profit | 175.2 million USD | 198.9 million USD | -11.9% | | Gross Profit Margin | 22.6% | 25.8% | -3.2 percentage points | | Operating Profit | 84.7 million USD | 99.1 million USD | -14.5% | | Operating Profit Margin | 10.9% | 12.9% | -2.0 percentage points | | Net Profit | 78.1 million USD | 91.5 million USD | -14.7% | | Adjusted Net Profit | 77.9 million USD | 92.9 million USD | -16.2% | | Adjusted Net Profit Margin | 10.1% | 12.1% | -2.0 percentage points | - Sports category sales grew by 8.2%, accounting for 48.5% of total manufacturing revenue; fashion and luxury categories combined saw a 3.5% revenue decrease; casual category revenue declined by 9.2%[46] - The decline in gross profit margin was primarily due to a high base effect from early shipments in the prior year and efficiency issues during the ramp-up of new capacities in Indonesia and the Philippines, leading to some production shifting to Vietnam and increasing costs[47] Strong Net Cash Position As of June 30, 2025, the company maintained a strong net cash position of $291.3 million, despite dividend payouts and additional cash returns, with a net gearing ratio of -26.6% Strong Net Cash Position | Metric | June 30, 2025 | June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Net Cash Position | 291.3 million USD | 326.1 million USD | -10.8% | | Net Gearing Ratio | -26.6% | -29.6% | Improvement | Industry Recognition and Awards The company's sustainability efforts continue to be recognized, with its MSCI ESG rating upgraded from "A" to "AA" in July 2025, marking the second consecutive year of improvement - MSCI ESG rating was upgraded from "A" to "AA", marking the second consecutive year of upgrade, reflecting the company's efforts in sustainability and transparency practices[53] Outlook Full-year 2025 shipments are projected for moderate growth, though H2 profitability remains constrained by the pace of efficiency improvements in Indonesian and Philippine manufacturing facilities, with plans to add 20 million pairs of capacity and develop the handbag and accessories business as a core growth driver - Full-year 2025 shipments are expected to grow moderately, but H2 profitability will be limited by the pace of efficiency improvements in Indonesian and Philippine manufacturing facilities[54] - Plans include adding an additional 20 million pairs of total capacity starting from 2025, achieved by increasing capacity at the new Solo, Indonesia factory, launching a second manufacturing facility in Bangladesh, and accelerating the construction of a dedicated factory in Indonesia for the largest sports client[55] - The company is firmly committed to making the handbag and accessories manufacturing business a core growth driver, having acquired a small handbag and accessories factory in Vietnam to enhance quality and efficiency[55] - The company is confident in achieving the Three-Year Plan (2023-2025) targets of a 10% operating profit margin and a low double-digit compound annual growth rate for post-tax profit[54] Cash Returns to Shareholders The Board declared an interim dividend of HK$0.52 per ordinary share, maintaining a payout ratio of approximately 70%, and committed to an additional annual cash return of up to $60 million to shareholders in 2025 and 2026 through share repurchases and special dividends - The Board declared an interim dividend of HK$0.52 per ordinary share, maintaining a payout ratio of approximately 70%[57] - The company committed to an additional annual cash return of up to $60 million to shareholders in 2025 and 2026 through share repurchases and special dividends, beyond regular dividends[57] Liquidity, Financial Resources and Capital Structure As of June 30, 2025, cash and cash equivalents increased by 4.8% to $350.8 million, but net cash from operating activities significantly decreased to $3.9 million due to working capital changes, while the current ratio of 2.8 indicates a sound financial position, with bank borrowings rising to $59.5 million and a net cash position of $291.3 million Liquidity, Financial Resources and Capital Structure | Metric | June 30, 2025 | Dec 31, 2024 | June 30, 2024 | Change (vs June 30, 2024) | | :--- | :--- | :--- | :--- | :--- | | Cash and cash equivalents | 350.8 million USD | 423.5 million USD | 334.6 million USD | +4.8% | | Net cash inflow from operating activities | 3.9 million USD | - | 99.2 million USD | -96.1% | | Changes in working capital | -106.3 million USD | - | -27.0 million USD | - | | Trade receivables | 305.2 million USD | 234.6 million USD | 304.4 million USD | +0.3% | | Current assets | 916.3 million USD | 893.2 million USD | - | +2.6% (vs 2024/12/31) | | Current liabilities | 327.7 million USD | 279.1 million USD | - | +17.4% (vs 2024/12/31) | | Current ratio | 2.8 | 3.2 | - | -12.5% (vs 2024/12/31) | | Bank borrowings | 59.5 million USD | 5.9 million USD | - | +908.5% (vs 2024/12/31) | | Net cash position | 291.3 million USD | 417.6 million USD | 326.1 million USD | -10.8% (vs June 30, 2024) | | Net Gearing Ratio | -26.6% | - | -29.6% | Improvement | - The significant decrease in net cash inflow from operating activities was primarily due to negative working capital changes, including increased inventories and a lower base of trade receivables[59] - Foreign exchange risk primarily relates to fluctuations in RMB and HKD against USD[63] - As of June 30, 2025, pledged assets were valued at $10.8 million, with no contingent liabilities[64][65] Significant Acquisitions and Disposals There were no significant acquisitions or disposals of subsidiaries, associates, or joint ventures during the reporting period; however, post-period, the company acquired a small handbag and accessories factory in Vietnam in July 2025 to support business growth - No significant acquisitions or disposals occurred during the reporting period[67] - Subsequent to the reporting period, in July 2025, the company completed the acquisition of a small handbag and accessories factory in Vietnam to support the growth of its handbag and accessories manufacturing business[67] Material Investments As of June 30, 2025, the Group held no material investments representing 5% or more of its total assets - As of June 30, 2025, the Group held no material investments representing 5% or more of its total assets[68] Future Plans for Material Investments or Capital Assets The Directors confirm that, apart from ordinary course of business, the Group currently has no plans for any material investments or acquisitions of capital assets - Apart from ordinary business operations, the Group currently has no plans for any material investments or acquisitions of capital assets[69] Major Customers and Suppliers The company considers customers and suppliers as core stakeholders, recognizing their success as integral to its growth, consistently ranking in the top 10% of supplier evaluations, and fostering strategic relationships for continuous improvement in craftsmanship, innovation, and efficiency - The company views customers and suppliers as core stakeholders, emphasizing that their success is inseparable from the company's growth[70] - The company consistently ranks in the top 10% in supplier evaluations and is committed to building strategic relationships with long-term partners to continuously improve craftsmanship, innovation, and efficiency[70] Employees As of June 30, 2025, the Group had approximately 43,400 direct employees and a total workforce of about 65,000, fostering a culture of care, sharing, and learning through leadership programs, share option schemes, and share award schemes to attract, train, and retain talent Employees | Metric | June 30, 2025 | Dec 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Direct employees | Approx. 43,400 | Approx. 42,600 | +1.9% | | Total workforce | Approx. 65,000 | - | - | - The company is committed to attracting, training, and retaining talent, fostering a culture of care, sharing, and learning through "Leadership Programs," share option schemes, and share award schemes[72] Events After Reporting Period No events with a material impact on the Group have occurred from the end of the reporting period up to the date of this announcement - No events with a material impact on the Group have occurred after the reporting period[73] Other Information This section covers the Audit Committee's review, interim dividend declaration, corporate governance practices, and publication details of the interim results announcement and report Review of Accounts by Audit Committee The Audit Committee has reviewed the Group's unaudited interim results and accounting policies, discussing risk management and internal controls with management, with no disagreements - The Audit Committee has reviewed the interim results and accounting policies, and discussed risk management and internal controls with management, with no disagreements[74] Interim Dividend The Board resolved to declare an interim dividend of HK$0.52 per ordinary share for the six months ended June 30, 2025, payable on September 19, 2025, with share transfer registration suspended from September 5 to September 9, 2025 - The Board resolved to declare an interim dividend of HK$0.52 per ordinary share[75] - The dividend will be paid on September 19, 2025, with share transfer registration suspended from September 5 to September 9, 2025[75] Corporate Governance The company is committed to high standards of corporate governance, complying with all code provisions of the Corporate Governance Code in Appendix C1 of the Listing Rules, advocating an integrated corporate and business governance model, and adopting a standard code for directors' securities transactions - The company has complied with all code provisions of the Corporate Governance Code set out in Appendix C1 of the Listing Rules[76] - The company advocates an integrated model of corporate governance and business governance, and has adopted a standard code for directors' securities transactions[77][78] Purchase, Sale or Redemption of the Company's Listed Securities During the six months ended June 30, 2025, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities - During the reporting period, neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities[79] Publication of Interim Results Announcement and Interim Report This interim results announcement has been published on the HKEX and the company's websites, with the Group's interim report for the six months ended June 30, 2025, to be published on the respective websites in due course - The interim results announcement has been published on the HKEX and the company's websites, and the interim report will be published in due course[80]