恒富控股(00643) - 2025 - 中期业绩

Management Discussion and Analysis Company Overview and Performance Summary Hang Fook Holdings primarily manufactures and trades apparel for international brands and invests in securities, with H1 2025 revenue down 69.0% and gross profit down 89.7%, leading to a significantly widened loss due to reduced orders, macroeconomic pressures, and idle facility costs - Core businesses include manufacturing and trading apparel products for international brands, utilizing the Heshan facility and engaging overseas subcontractors. The securities investment business involves trading listed securities on the Hong Kong Stock Exchange, adopting a conservative investment strategy during the review period[4] Key Financial Data for H1 2025 (Consolidated Statement) | Metric | H1 2025 (million HKD) | H1 2024 (million HKD) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 86.9 | 280.8 | -69.0% | | Gross Profit | 3.3 | 32.1 | -89.7% | | Gross Margin | 3.8% | 11.4% | -7.6 ppt | | Loss for the Period | (29.7) | (12.2) | 143.4% (loss widened) | | Loss Per Share (HK cents) | (3.30) | (1.35) | 144.4% (loss widened) | - Key reasons for reduced revenue and gross profit include a significant decrease in orders from major US and European customers (due to changes in customer purchasing strategies and macroeconomic headwinds); a decline in gross margin (due to continuous inflationary pressure on supply chain and subcontractor pricing, and reduced sales volume of higher-margin children's wear); and the impact of idle costs at the Heshan facility (which has had no further production orders since completing existing orders in May 2024)[5][6] Market and Business Review This section reviews the performance of the Group's two business segments, with the Garment Manufacturing and Trading segment experiencing significant decline and shifting to overseas subcontracting, while the Securities Investment segment maintained a cautious strategy with no trading activities Garment Manufacturing and Trading Segment The Garment Manufacturing and Trading segment faced macroeconomic challenges in H1 2025, with revenue down 69.0% to HKD 86.9 million and loss up to HKD 22.7 million, shifting production to overseas subcontractors after Heshan facility cessation - Market challenges: The garment manufacturing industry faces macroeconomic challenges such as weak consumer demand, rising costs, and cautious inventory strategies by global retailers[7] Garment Manufacturing and Trading Segment Revenue and Loss | Metric | H1 2025 (million HKD) | H1 2024 (million HKD) | | :--- | :--- | :--- | | Revenue | 86.9 | 280.8 | | Loss | (22.7) | (3.4) | - Production strategy adjustment: The Heshan facility ceased production in May 2024, with all production orders reallocated to subcontracting partners in Cambodia and Indonesia, while the Heshan facility retains administrative and sample-making functions[8] Securities Investment Segment Given global market volatility and stagnant past performance, the Securities Investment segment maintained a cautious and conservative approach in H1 2025, holding or trading no listed securities during the period, and thus recording no fair value changes - Investment strategy: A cautious and conservative approach was maintained in H1 2025 due to global market volatility and stagnant past performance[9] - Trading activities and fair value changes: No listed securities were held or traded during the period, and no fair value changes were recorded (2024: nil)[9] Financial Review This section details the Group's financial performance, including expense changes, liquidity, capital expenditure, foreign exchange risk management, credit policy, asset pledges, and contingent liabilities, reflecting prudent financial management and a one-off restructuring for Heshan facility cessation Administrative and Other Operating Expenses Administrative and other operating expenses decreased by 13.7% to HKD 30.3 million, primarily because a one-off restructuring cost of approximately HKD 3.9 million related to the Heshan facility's production cessation in 2024 did not recur in 2025 Administrative and Other Operating Expenses | Metric | H1 2025 (million HKD) | H1 2024 (million HKD) | YoY Change | | :--- | :--- | :--- | :--- | | Expenses | 30.3 | 35.2 | -13.7% | - Main reason: A one-off restructuring cost of approximately HKD 3.9 million related to the Heshan facility's production cessation in 2024 was not incurred in 2025[10] Selling and Distribution Expenses Selling and distribution expenses as a percentage of garment manufacturing and trading revenue increased to 2.2%, primarily due to higher logistics costs from placing more production orders with overseas subcontractors and increased sample development fees to secure additional orders Selling and Distribution Expenses as a Percentage of Revenue | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Percentage | 2.2% | 1.9% | - Main reasons: Higher logistics costs from placing more production orders with overseas subcontractors, and increased sample development fees to secure additional orders[11] Finance Costs Finance costs significantly decreased by 76.2% to approximately HKD 1.2 million, primarily due to the repayment of bank borrowings in 2024 Finance Costs | Metric | H1 2025 (million HKD) | H1 2024 (million HKD) | YoY Change | | :--- | :--- | :--- | :--- | | Expenses | 1.2 | 5.1 | -76.2% | - Main reason: Repayment of bank borrowings in 2024[12] Net Other Income, Gains and Losses Net other income, gains and losses amounted to approximately HKD 5 thousand, a significant decrease from HKD 0.7 million in H1 2024, primarily derived from compensation for customer order cancellations Net Other Income, Gains and Losses | Metric | H1 2025 (thousand HKD) | H1 2024 (thousand HKD) | | :--- | :--- | :--- | | Net Amount | 5 | 700 | - Main source: Compensation for customer order cancellations[13] Treasury Policy, Liquidity and Financial Resources The Group maintains a prudent financial management approach and a healthy financial position, with cash and bank balances of HKD 88.2 million, working capital of HKD 83.2 million, and a current ratio of 2.2 as of June 30, 2025, and the Heshan subsidiary received an unsecured, interest-free short-term loan of HKD 47.8 million from a director - Financial position: Maintains prudent financial management and a healthy financial position[14] Liquidity Indicators | Metric | June 30, 2025 (million HKD) | December 31, 2024 (million HKD) | | :--- | :--- | :--- | | Cash and Bank Balances | 88.2 | 111.0 | | Working Capital | 83.2 | 106.2 | | Current Ratio | 2.2 | 2.5 | - Subsidiary loan: A director advanced a short-term loan of HKD 47.8 million to the Heshan subsidiary, which is unsecured, interest-free, and has no fixed repayment terms[14] Capital Expenditure During the review period, the Group's total capital expenditure was HKD 0.3 million, a significant decrease from HKD 2.1 million in 2024, primarily related to the replacement of office equipment Capital Expenditure | Metric | H1 2025 (million HKD) | H1 2024 (million HKD) | | :--- | :--- | :--- | | Total Amount | 0.3 | 2.1 | - Main use: Replacement of office equipment[15] Foreign Exchange Risk The Group's sales are primarily transacted in USD, while operating expenses are mainly settled in HKD, RMB, and USD, resulting in low USD foreign exchange risk due to the HKD's peg to the USD, and the Group will closely monitor other foreign currency fluctuations and enter into foreign currency forward contracts when necessary to mitigate risks - Transaction currencies: Sales are primarily transacted in USD, while operating expenses are mainly settled in HKD, RMB, and USD[16] - Risk management: HKD is pegged to USD, resulting in lower USD foreign exchange risk; other foreign currency fluctuations will be closely monitored, and foreign currency forward contracts will be entered into when necessary[16] Credit Policy The Group conducts business transactions with long-term stable customers on an open account basis, regularly reviews customer credit ratings, and adjusts credit limits as necessary - Credit period: Customers are granted credit periods ranging from 30 to 90 days[44] - Management: Customer credit ratings are regularly reviewed, and credit limits are adjusted as necessary[17] Pledge of Assets As of June 30, 2025, the Group had no pledged assets, following the full release on January 21, 2025, of Heshan land use rights and buildings previously pledged as collateral for a subsidiary director's loan on December 31, 2024 - June 30, 2025: No assets were pledged[18] - Historical situation: On December 31, 2024, Heshan land use rights (HKD 7.2 million) and buildings (HKD 37.3 million) were pledged as collateral for a subsidiary director's loan, which was fully released on January 21, 2025[18] Contingent Liabilities As of June 30, 2025, and December 31, 2024, the Group had no contingent liabilities - Contingent liabilities: As of June 30, 2025, and December 31, 2024, the Group had no contingent liabilities[20] Human Resources and Remuneration Policy The Group is committed to providing a harmonious work environment, enhancing employee professional skills through training, and determining remuneration based on market practices, individual experience, and performance, with discretionary bonuses to attract and retain talent, resulting in a decrease in full-time employees to 185 as of June 30, 2025, due to streamlining Heshan facility operations - Employee development: Provides a harmonious work environment, valuable career opportunities, and professional skills training programs[21] - Remuneration: Determined based on market practices, individual experience, and performance, with discretionary bonuses awarded[21] Number of Full-time Employees | Date | Number of Employees | | :--- | :--- | | June 30, 2025 | 185 | | December 31, 2024 | 213 | Reason for decrease: Streamlining of Heshan facility operations Environmental, Social and Governance (ESG) Responsibility The Group is committed to maintaining high ESG standards, with the Board assuming overall responsibility for effective risk management and internal control systems, and the management team overseeing ESG strategy implementation, risk alerts, and reporting to the Board, while complying with all relevant laws and regulations and encouraging stakeholder participation in environmental and social activities - ESG commitment: Committed to maintaining the highest standards of environmental and social responsibility to ensure business sustainability[22] - Board responsibilities: Assumes overall responsibility for ESG strategy, ensuring effective risk management and internal control systems[22] - Compliance: For the six months ended June 30, 2025, the Group complied with all relevant environmental and social laws and regulations related to its business operations[23] Business Outlook The global economic outlook remains uncertain, affected by geopolitical tensions, currency fluctuations, and weak consumer sentiment, particularly in the US and European markets, with US tariffs on imported goods introducing uncertainty, prompting the Group to remain cautious, monitor market developments, and continue strategic initiatives including transitioning to Southeast Asian subcontracting and investing in automation and sustainability - Macroeconomic challenges: The global economic outlook is uncertain, affected by geopolitical tensions, currency fluctuations, and weak consumer sentiment in the US and European markets[24] - Trade policy impact: US tariffs on imported goods create uncertainty, potentially affecting sourcing preferences, cost competitiveness, and order flow[25] - Strategic responses: Transitioning to Southeast Asian subcontracting to enhance cost flexibility and geographical diversification; evaluating potential opportunities to invest in proprietary facilities in ASEAN countries; continuously investing in automation, production tracking, and sustainability programs to enhance competitiveness[25][26] Dividend Policy The Board resolved not to declare an interim dividend for the six months ended June 30, 2025 - Interim dividend: The Board resolved not to declare an interim dividend for the six months ended June 30, 2025 (2024: nil)[27][47] Condensed Consolidated Financial Statements Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2025, the Group recorded revenue of HKD 86,947 thousand, gross profit of HKD 3,349 thousand, loss for the period of HKD 29,737 thousand, and basic and diluted loss per share of 3.30 HK cents Summary of Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income | Metric | H1 2025 (thousand HKD) | H1 2024 (thousand HKD) | | :--- | :--- | :--- | | Revenue | 86,947 | 280,835 | | Cost of Sales | (83,598) | (248,697) | | Gross Profit | 3,349 | 32,138 | | Loss Before Tax | (29,737) | (12,168) | | Loss for the Period | (29,737) | (12,168) | | Loss Per Share (HK cents) | (3.30) | (1.35) | Condensed Consolidated Statement of Financial Position As of June 30, 2025, the Group's non-current assets were HKD 54,547 thousand, current assets were HKD 154,828 thousand, current liabilities were HKD 71,580 thousand, and net assets were HKD 117,924 thousand Summary of Condensed Consolidated Statement of Financial Position | Metric | June 30, 2025 (thousand HKD) | December 31, 2024 (thousand HKD) | | :--- | :--- | :--- | | Non-current Assets | 54,547 | 60,402 | | Current Assets | 154,828 | 179,157 | | Current Liabilities | 71,580 | 72,921 | | Net Current Assets | 83,248 | 106,236 | | Net Assets | 117,924 | 147,923 | | Total Equity | 117,924 | 147,923 | Notes to the Condensed Consolidated Financial Statements Basis of Preparation and Principal Accounting Policies The condensed consolidated financial statements are prepared in accordance with Hong Kong Accounting Standard 34 and Appendix 16 of the Listing Rules issued by the Hong Kong Institute of Certified Public Accountants, adopting the historical cost principle, and the newly applied revised Hong Kong Financial Reporting Standards had no significant impact on financial position or performance - Basis of preparation: Prepared in accordance with Hong Kong Accounting Standard 34 and Appendix 16 of the Listing Rules issued by the Hong Kong Institute of Certified Public Accountants[31] - Accounting principles: Prepared on a historical cost basis, except for buildings and financial instruments measured at fair value[32] - Application of new standards: Revised Hong Kong Financial Reporting Standards were applied for the first time, but had no significant impact on the financial position or performance for the current and prior periods[32][33] Revenue and Segment Information The Group's revenue primarily stems from the Garment Manufacturing and Trading segment, which generated HKD 86,947 thousand in H1 2025, while the Securities Investment segment had no external revenue, with the Garment Manufacturing and Trading segment recording a loss of HKD 22,678 thousand, and the Securities Investment segment recording a loss of HKD 1,109 thousand - Revenue source: Primarily from the Garment Manufacturing and Trading segment, which generated HKD 86,947 thousand in H1 2025[35][38] Segment Revenue and Loss | Segment | H1 2025 Revenue (thousand HKD) | H1 2025 Loss (thousand HKD) | H1 2024 Revenue (thousand HKD) | H1 2024 Loss (thousand HKD) | | :--- | :--- | :--- | :--- | :--- | | Garment Manufacturing and Trading | 86,947 | (22,678) | 280,835 | (3,443) | | Securities Investment | – | (1,109) | – | (1,964) | | Total | 86,947 | (23,787) | 280,835 | (5,407) | Geographical Information The Group's external customer revenue primarily originates from the US and Europe, while non-current assets are mainly located in Mainland China and Hong Kong, with revenue from the US and Europe significantly decreasing in H1 2025 External Customer Revenue (by Customer Location) | Region | H1 2025 (thousand HKD) | H1 2024 (thousand HKD) | | :--- | :--- | :--- | | United States | 38,697 | 143,501 | | Europe | 28,932 | 98,895 | | Hong Kong | 6,061 | 14,245 | | Other Regions | 13,257 | 24,194 | | Total | 86,947 | 280,835 | Non-current Assets (by Asset Location) | Region | June 30, 2025 (thousand HKD) | December 31, 2024 (thousand HKD) | | :--- | :--- | :--- | | Mainland China | 44,732 | 50,007 | | Hong Kong | 6,633 | 6,894 | | Other Regions | 2,863 | 3,078 | | Total | 54,228 | 59,979 | Loss Before Tax Loss before tax is stated after deducting depreciation of right-of-use assets of HKD 993 thousand and depreciation of property, plant and equipment of HKD 5,291 thousand Depreciation Expenses | Item | H1 2025 (thousand HKD) | H1 2024 (thousand HKD) | | :--- | :--- | :--- | | Depreciation of Right-of-Use Assets | 993 | 1,026 | | Depreciation of Property, Plant and Equipment | 5,291 | 6,429 | Income Tax Expense The Group had no assessable profits subject to Hong Kong Profits Tax and China Corporate Income Tax in both H1 2025 and H1 2024, thus no related provision was made - Income tax provision: No income tax provision was made as there were no assessable profits in Hong Kong and Mainland China[42] Loss Per Share For the six months ended June 30, 2025, basic and diluted loss per share was 3.30 HK cents, calculated based on a loss attributable to equity holders of the Group of HKD 29,737 thousand and a weighted average of 899,846 thousand ordinary shares Basis for Loss Per Share Calculation | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Loss attributable to equity holders of the Group (thousand HKD) | (29,737) | (12,168) | | Weighted average number of ordinary shares (thousand shares) | 899,846 | 899,846 | | Basic and diluted loss per share (HK cents) | (3.30) | (1.35) | - Diluted loss: Diluted loss per share is not presented as there were no outstanding potential ordinary shares for both periods[43] Trade and Other Receivables As of June 30, 2025, total trade and other receivables amounted to HKD 30,211 thousand, with trade receivables at HKD 14,857 thousand, and the aging analysis of trade receivables shows that amounts within 30 days constitute the vast majority Composition of Receivables | Item | June 30, 2025 (thousand HKD) | December 31, 2024 (thousand HKD) | | :--- | :--- | :--- | | Trade Receivables | 14,857 | 26,189 | | Deposits and Other Receivables | 3,888 | 3,480 | | Prepayments | 11,466 | 1,248 | | Total | 30,211 | 30,917 | Aging Analysis of Trade Receivables | Aging | June 30, 2025 (thousand HKD) | December 31, 2024 (thousand HKD) | | :--- | :--- | :--- | | Within 30 days | 13,636 | 21,956 | | 31 to 60 days | 644 | 2,036 | | 61 to 90 days | 528 | 2,197 | | Over 90 days | 49 | – | | Total | 14,857 | 26,189 | Trade and Other Payables As of June 30, 2025, total trade and other payables amounted to HKD 22,370 thousand, with trade payables at HKD 17,153 thousand, and the aging analysis of trade payables shows that amounts within 30 days constitute the major portion Composition of Payables | Item | June 30, 2025 (thousand HKD) | December 31, 2024 (thousand HKD) | | :--- | :--- | :--- | | Trade Payables | 17,153 | 19,424 | | Accruals and Other Payables | 5,217 | 11,275 | | Total | 22,370 | 30,699 | Aging Analysis of Trade Payables | Aging | June 30, 2025 (thousand HKD) | December 31, 2024 (thousand HKD) | | :--- | :--- | :--- | | Within 30 days | 13,387 | 15,891 | | 31 to 60 days | 3,548 | 1,952 | | 61 to 90 days | 218 | 1,386 | | Over 90 days | – | 195 | | Total | 17,153 | 19,424 | Dividends The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 - Interim dividend: The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 (2024: nil)[47] Other Information Events After the Reporting Period As of the date of this announcement, the Board is not aware of any significant events occurring after the review period - Events after the reporting period: As of the date of this announcement, the Board is not aware of any significant events occurring after the review period[19] Purchase, Sale or Redemption of the Company's Listed Securities During the review period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - Securities transactions: During the review period, neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[48] Review of Interim Results The Audit Committee has reviewed the Group's unaudited interim results for the six months ended June 30, 2025, with the committee comprising three independent non-executive directors - Review status: The Audit Committee has reviewed the Group's unaudited interim results for the six months ended June 30, 2025[49] - Committee composition: Comprises three independent non-executive directors, including Mr. Cheng Wai Hei (Chairman), Mr. Lam Chi Wing, and Ms. Li Qian[49] Corporate Governance Code and Compliance During the review period, the Group complied with all code provisions of the Corporate Governance Code set out in Appendix C1 Part 2 of the Listing Rules, except for code provision C.2.1 regarding the Chief Executive Officer, whose duties are performed by executive directors on a rotational basis, an arrangement the Board believes ensures effective operation and a balance of power - Corporate Governance Code compliance: The Group complied with all code provisions of the Corporate Governance Code set out in Appendix C1 Part 2 of the Listing Rules, except for code provision C.2.1[50] - Chief Executive Officer position: No CEO has been appointed, and the role and functions are performed by executive directors on a rotational basis[50] - Board's view: The Board believes the current arrangement ensures a balance of power, facilitates prompt decision-making and execution, and effectively achieves company objectives[51] - Listing Rules compliance: Except for the disclosed matters, the Group has complied with the requirements of the Listing Rules[52] Directors' Securities Transactions The Group has adopted a code of conduct for directors' securities transactions, with standards no less exacting than those set out in Appendix C3 of the Listing Rules, and all directors confirmed compliance with the relevant code provisions during the review period - Code of conduct: A code of conduct for directors' securities transactions has been adopted, with standards no less exacting than those set out in Appendix C3 of the Listing Rules[53] - Compliance confirmation: All directors have confirmed compliance with the relevant code provisions during the review period[53] Publication of Interim Results and Interim Report This interim results announcement has been published on the websites of Hong Kong Exchanges and Clearing Limited and the Company, and the interim report, containing information required by the Listing Rules, will be dispatched to shareholders and published on the aforementioned websites in due course - Publication platforms: The interim results announcement has been published on the websites of Hong Kong Exchanges and Clearing Limited and the Company[54] - Interim report: The interim report, containing information required by the Listing Rules, will be dispatched to shareholders and published on the aforementioned websites in due course[54]