Investment Rating - Trading Sell [2][14][30] Core Insights - The company experienced a sales drop of 12% YoY in 1HFY24, primarily due to a decrease in average selling price (ASP) by 12.9% in HKD terms, although sales volume remained resilient at approximately 19 million pieces, reflecting a 1.7% YoY increase [1][10] - Management anticipates a better performance in 2HFY24, driven by fast orders from Japanese clients, with an expected sales volume growth in FY24E at mid-single digits YoY, a revision from previous guidance of a mid-single digit drop [1][12] - The net gearing ratio improved significantly, declining to approximately 3.0% in 1HFY24 from 13.0% in FY23, allowing the company to raise its payout ratio to 75% in 1HFY24 [11][12] Financial Performance - The company's core net profit for FY24E is projected to reach HK0.87, indicating a potential upside of 21.1% from the current price of HK$0.72 [14] Operational Developments - The company is expanding its production capacity in Vietnam to reduce lead times and meet client demand, with expectations that Vietnam will account for approximately two-thirds of its total knitwear capacity [12][13] - The largest customer, Uniqlo, accounted for about 48% of the company's revenue in 1HFY24, and as apparel retailers begin to restock, sales are expected to increase significantly in 2HFY24 [12][13] Market Position - Nameson is recognized as one of the leading knitwear manufacturers in China, providing a comprehensive range of services from raw material development to timely delivery [2][10] - The company has diversified its clientele, supplying to internationally renowned brands such as UNIQLO, Tommy Hilfiger, Under Armour, and Lululemon [2][10]
Undemanding yield play in textiles universe