Regina Miracle’s Revenue Increase s by 25.5 % to 5,868.0 Million with Net Profit up 146.0 % to 240.2 Million in FY2018

06/28/2018 | Corporate

Regina Miracle’s Revenue Increase s by 25.5 % to 5,868.0 Million with Net Profit up 146.0 % to 240.2 Million in FY2018

(Hong Kong, 28 June 201 8 Regina Miracle International (Holdings) Limited (“Regina Miracle” or the
“Company,” together with its subsidiaries, collectively the “Group”) (HKEX: 2199), a leading global intimate
wear company boasting an Innovative Design Manufacturer (“IDM”) business model, has announced its
annual results for the year ended 31 March 2018 (“FY2018” or the Year)

In FY2018, the Group recorded total revenue of HK$5,868.0 million, representing a 25.5% increase over that of FY2017 (FY2017: HK$4,676.9 million). The satisfactory increase in sales was mainly attributable to the steady growth of orders from certain major brands, as well as the close collaborative ties the Group built with certain new brand partners during the Year. Consequently, the Group’s gross profit grew by 36.2% to HK$1,247.1million (FY2017: HK$915.8 million), with gross profit margin lifted to 21.3% (FY2017: 19.6%). Net profit also surged 146.0% to HK$240.2 million (FY2017: HK$97.6 million), with net profit margin at 4.1% (FY2017: 2.1%). To share the fruit of the Group’s achievement with shareholders, the Board has resolved to declare a final dividend of HK3.8 cents per share. Together with the interim dividend of HK2.5 cents per share already paid, total dividend for the Year amounted to HK6.3 cents (FY2017: HK2.5 cents).

Mr. YY Hung, Chairman, Chief Executive Officer & Executive Director of Regina Miracle, said, “We devoted considerable resources to improving our innovative seamless bonding and molding technologies in order to bring higher value to our brand partners. These efforts were not only endorsed by our long-term brand partners, but also enabled us to gain a number of world-renowned casual wear and sports brand partners during the Year, which contributed to our revenue and profit growth, and gave the Group a more balanced customer mix. In addition, we are also delighted to report a maturing layout of our production capacity in Vietnam, which has allowed us to meet the high demand for our innovative products from existing and new brand partners and is expected to boost the Group’s long-term and sustainable business growth.”

Business Review

Steady growth in orders from major brand partners and strong demands from new brand partners

During the Year, bras and intimate wear remain ed the Group’s major source of revenue and contributed HK$ 4, 728.6 million ( FY 2017: HK$ 3,729.8 million ) in revenue, representing a year on year increase of 2 6.8 % and made up 8 0.6 % of the overall revenue of the Group . G r oss profit of the segment amounted to HK 1,019.5 million, with gross profit margin at 21.6 % FY 2017: HK$ 726.4 million and 19.5%, respectively).

Driven by the sports underwear market with a gr owing emphasis on comfort and functionality , the Group’s sports bras continued to record satisfactory revenue growth of over 20% y ear o n y ear during the Year.

Through technological innovation and breakthroughs , the Group has continued to develop innovative products with its long term brand partners, secure more orders, and establish close partnership s with new international casual wear and sports brands , thus diversifying its customer mix.

At the same time as it strategically invest ed more resources in more profitable finished goods, the Group continued to record stable revenue from the bra pads and other molded products business , which grew by 2.3 % to HK$52 4 7 million during the Y ear ( FY 2017: HK$512.7 million) and account ed for 8.9 % of the Group s total revenue. Gross profit and gross profit margin from the segment were HK 111.5 million and 21.2 %, respectively ( FY 2017: HK$107.0 million and 20.9%, respectively).

Orders for sportswear products gathering robust growth momentum Secured a new American partner for footwear products business

With capability to innovate that spans different product lines and sectors, the Group remained active in exploring functional sports products business during the Y ear. As a result, the segment recorded a year on year revenue growth of 41.5 % to 614.8 million ( FY 2017: HK$43 4 4 million), which represented 10.5 % of the total revenue of the Group . Gross profit of the segment amounted to HK 116.1 million, with gross profit margin at 18.9 % FY 2017: HK$82.5 million and 19.0%, respectively).

During the Year, Regina Miracle was recognised by a number of major sports brand partners for its high end molding and seamless bonding technologies, its ability to effectively incorporate innovative raw materials and apply such advanced technologies in its sportswear products , and as a result, order volume of its sportswear products nearly double d in FY2018 .

Regarding footwear products , the Group also made good progress. Aside from achieving stable order from its major sports brand partner during the Year , the Group also secured an American casual footwear brand partner who is dedicated to producing comfort able and eco friend l y products

Effectively expanded production in Vietnam Plans to build fifth facility in Vietnam to encompass sustainable footwear production and superior capabilities

During the Year, the Group’s production layout in Vietnam continued to mature . The first Vietnamese facility, mainly for producing bras and intimate wear products, has a planned annual production capacity of around 46 million pieces . It is close to reaching full production capacity and has been consistently improving production efficiency T he second facility which mainly produces bra pads commenced production in May 2017 and affords a production volume sufficient to support the Group s internal demand for bra pads. The third Vietnamese facility mainly produces bras, intimate wear and functional sportswear products . It has a planned annual production capacity of approximately 30 million pieces and officially began operation in April 2018. The facility targets to recruit 8,000 staff members by the third quarter of 2018. As at 31 March 2018, the three Vietnamese facilities together employed approximately 2 1 5 00 staff members.

Construction works of t he fourth facility in Vietnam , which will mainly produce bras and intimate wear and functional sportswear products proceeded smoothly during the Y ear , with phase I of the facility expected to start operation in the first quarter of 2019.

During the Year , the Group purchased another land parcel in Vietnam Singapore Industrial Park (“ VSIP in Hải Phòng Cit y for building its fifth facility which has gross floor area of approximately 106,000 sq.m. T he facility will not only have excellent expertise to cover footwear production which the management considers that Vietnam an ideal location for building footwear production due to the country s edge in cost and labour supply, and relatively lower footwear export tariffs , and thus it decided to gradually transfer its footwear production of capacity totalling approximately two million pairs a year from Shenzhen to Vietnam but the factory also will possess in house screen printing capabilities and production floors to support the Group ’s innovative seamless knitting production capability Phase 1 of t he facility is under construction and expected to officially commence production in 2019.

The Groups facility in Shenzhen continue s to perform the crucial responsibility of research and development , as well as supporting the Group’s production needs . It is actively developing premium products with high technology content and quick to deliver, while harnessing other regional advantages to fully cooperate with brand partners helping them develop business in the Chinese market. As at 31 March 2018, the Group s Shenzhen facility ha d a workforce of about 15,000 headcounts .

Moving onward, the Group will continue to optimise allocation of production capacity of its Shenzhen and Vietnamese facilities, taking into account a comprehensive host of factors such as cost competitiveness, policy, technical requirements and brand partners sales strategies. For the purpose of resource optimization and more proper allocation of its expanding production capacity, the Group will continue to examine the profitability of its existing product mix, maintain the strategy to select brand partners cautiously and establish win win relations, and make reasonable adjustments as appropriate, all in an effort to allocate resources more effectively and maximize profit.

Mr. Hung concluded, “ Looking ahead, m ore efforts will be made to boost the production capacity and efficiency to our Vietnamese facilities so that we can benefit the most from the favourable tax rates, the more competitive labour cost and robust labour market a s well as the strategic geographical advantage of Vietnam Moreover , we will develop more versatile products with superior comfort functionality and value proposition by striving for technological breakthroughs and drawing on our extensive experience in the industry of intimate wear and functional sportswear . In doing so, we will be able to strengthen relationship with our long term brand partners and build close collaborative ties with new brand partners . While the Group celebrates its 20th anniversary this year it will continue to apply its successful formula and pursue excellence by engaging in innovation across all aspects of its business thereby create long term high value returns for shareholders.”