Fri Jan 24, 2020 19:08
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LUEN THAI (311)

Principal Activities

Principally engaged in the manufacturing and trading of apparels and accessories. The Group has manufacturing plants in the People’s Republic of China (the “PRC”), Cambodia, the Philippines, Vietnam, Indonesia, Thailand and Myanmar.

Latest Results

The Group's profit attributable to shareholders for the 6 months ended 30-06-2019 amounted to USD 6.56 million, a decrease of 27.5% compared with previous corresponding period. Basic earnings per share was USD 0.0063. An interim dividend of USD 0.0019 per share was declared. Turnover amounted to USD 461.8 million, an increase of 22.1% over the same period last year, gross profit margin up 0.2% to 14.3%. (Announcement Date: 29 Aug 2019)

Business Review - For the six months ended June 30, 2019

Apparel

For the first half of 2019, revenue generated from the Apparel Division was approximately US$238,074,000. As compared to the corresponding period in last year, it decreased slightly by approximately US$276,000 or 0.1%. The negligible decrease of the segment revenue of the Apparel Division was mainly due to the mild increase in average selling price offset weakening demand from its brand customers.

Despite the decrease in segment revenue, the segment profit of the Apparel Division increased by 7.3% to approximately US$8,169,000 as compared to the same period of 2018. Such improvement was mainly attributable to the continuing restructuring and reorganization for enhancement of overall cost-effectiveness and efficiency within the Apparel Division.

Accessories

Sales revenue from the Accessories Division amounted to approximately US$223,689,000, representing an increase of approximately 60.0% as compared to the corresponding period in last year. Such increase was a direct result of the acquisition of the Universal Group.

The Accessories Division recorded a segment profit of US$4,096,000, with a decrease of approximately 40.8% from approximately US$6,918,000 last year. The decrease in segment profit was a combined effect of (i) positive impact of completion of the acquisition of the Universal Group in late 2018; and (ii) the one-off expenses relating to the downsizing of a factory as mentioned under the heading “Results of Operations and Overview” above.

Markets

Geographically, Europe and the United States of America (“US”) remained our key export markets for the period under review. The total revenue derived from customers in Europe and the US collectively accounted for approximately 75.4% of the Group’s total revenue in the first half of 2019.

The Group’s revenue from the Asia market (mainly the PRC and Japan) was approximately US$57,512,000, which accounted for approximately 12.5% of the Group’s total revenue in the first half of 2019.

Business Outlook - For the six months ended June 30, 2019

On 1 August 2019, US announced that a 10% tariff will be imposed on a final US$300 billion worth of Chinese imports on 1 September 2019, prompting the PRC to halt purchases of agricultural products from US. The PRC is also accused as a currency manipulator by the US. The ceasefire of the trade war was broken due to such announcement and a trade deal was not expected to be completed in the near future. Even though the US-PRC trade war has no direct impact on our business, as the Group has been reducing our PRC production capacities. However, the indirect impact remains unpredictable, as certain customers may intend either to reduce or postpone their purchasing orders.

In addition, the possibility of Hard Brexit is growing, as the Brexit deadline is imminent (i.e. 31 October 2019). The eventual impact of Brexit remain unknown and unclear, but the turmoil of the Hard Brexit was taking its toll. Under such circumstances, it is expected that the global economy will continue to be volatile and consumer sentiment will remain fragile.
Facing these challenges, The Group will continue proactively exploring appropriate location in Southeast Asian countries for establishment of a new production base with a view to improving our competitive edge and diversifying the geographical location.

On the other hand, as described in the section headed “Results of Operations and Overview” above, the Net Profit for the period under review decreased by approximately 27.5%. Despite the substantial decline, the Board would like to emphasize that the downsizing costs are non-recurring and one-off in nature, these expenses do not affect the normal operations of the Group. The Group’s financial position remains stable and the Group has adequate financial resources to fund its continued growth. The Board will closely review the Group’s operations and strategies with a view to improving its business performance and the Company’s shareholders’ return in the long run.

As disclosed in the latest annual report, the strategic acquisition of Universal Group was completed last year. Such acquisition allows the Group to own production facilities in four Generalized System of Preference (“GSP”) beneficiary countries (i.e. Philippines, Cambodia, Myanmar and Thailand) and enables the Group to increase its production capacity immediately to meet the growing demand of accessories products produced in those GSP countries. Hence, the Group’s competitiveness in the production of bags was further enhanced.

Source: Luen Thai Hold (00311) Interim Results Announcement

Business Nature

The Group¡¦s core activity is the manufacturing of apparel on an OEM basis, primarily of knit wear and woven wear. In addition, the Group produces sleepwear, intimate wear, pants and shorts, sports and active wear, ladies¡¦ fashion and children''s wear. The Group''s top customers consist of branded apparel makers, department stores and other retailers including: Dillard''s , Express,Limited Brands, Fast Retailing, Liz Claiborne and Polo Ralph Lauren.

Prospect

Customer Partnership: The Group will continue to grow as it gains new customers and develop closer partnership with its existing key customers through its D2S business model together with its multi product and co-location strategies. The Group¡¦s diversified manufacturing base will be important to its customers in mitigating country and political risks. Acquisitions and Joint Ventures: The Group will continue to strengthen its multi-country and multi-product strategy through selective and value-enhancing acquisitions and joint ventures with the view of achieving the same success as what it has in GJM, Tomwell, Yuen Thai and Tien-Hu.

Chairman
TAN Siu Lin
Contact Info
Company Address:
Rooms 1001–1005, 10/F, Nanyang Plaza, 57 Hung To Road, Kwun Tong, Kowloon, Hong Kong
Web: http://www.luenthai.com
Quote
HSI: 27,949.64 98.25
0.69
0.01 (1.4%)
As of16:15 24 Jan 2020
Open: 0.68 52Wk High: 0.96
Day High: 0.69 52Wk Low: 0.62
Day Low: 0.68 P/E: 3.909
Prev. Close: 0.70 Yield: 6.855%
Volume: 44K
Mkt Cap: 723.88M
Turnover: 29.93K NAV: 1.545
Quotes are delayed by at least 15 minutes.
Contact LUEN THAI
Company Address:
Rooms 1001–1005, 10/F, Nanyang Plaza, 57 Hung To Road, Kwun Tong, Kowloon, Hong Kong
Web: http://www.luenthai.com

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