Regina Miracle Records Revenue of HK$7.02 Billion in Fiscal 2024
Declares Final Dividend of HK2.2 cents
Dividend Payout Ratio Reaches 48.7%

Prioritizes core segments Strives to develop bonding apparel business

Takes multi-pronged approaches to capture business recovery

(Hong Kong, 26 June 2024) — Regina Miracle International (Holdings) Limited (“Regina Miracle” or the “Company”, together with its subsidiaries, 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 twelve months ended 31 March 2024 (“Fiscal 2024”).

During Fiscal 2024, affected by macroeconomic uncertainties and sluggish consumer sentiment, the Group recorded revenue of approximately HK$7,016.8 million (Fiscal 2023: HK$7,879.3 million), representing a year-on-year decrease of 10.9%. Gross profit decreased by 16.7% to approximately HK$1,583.6 million, with gross profit margin decreasing by 1.5 percentage points to 22.6% (Fiscal 2023: HK$1,902.1 million and 24.1%, respectively). Earnings before interest, tax, depreciation and amortization (EBITDA) decreased by 22.8% to approximately HK$1,012.0 million, and the EBITDA margin decreased by 2.2 percentage points to 14.4% (Fiscal 2023: HK$1,310.0 million and 16.6%, respectively). The Group recorded net profit of approximately HK$143.2 million for Fiscal 2024, representing a year-on-year decrease of 62.6%, with net profit margin decreasing by 2.9 percentage points to 2.0% (Fiscal 2023: HK$383.3 million and 4.9%, respectively). Basic earnings per share attributable to owners of the Company was HK11.7 cents (Fiscal 2023: basic earnings per share of HK31.3 cents). Excluding restructuring costs, adjusted EBITDA decreased by 11.8% to approximately HK$1,185.3 million and adjusted EBITDA margin decreased by 0.2 percentage points to 16.9% (Fiscal 2023: HK$1,344.1 million and 17.1%, respectively). Adjusted net profit for Fiscal 2024 was approximately HK$316.5 million, representing a year-on-year decrease of 24.2%, with adjusted net profit margin decreasing by 0.8 percentage points to 4.5% (Fiscal 2023: HK$417.4 million and 5.3%, respectively).

During Fiscal 2024, the Group’s financial position was sound, with net current assets amounting to approximately HK$1,489.8 million (Fiscal 2023: HK$1,585.6 million). As at 31 March 2024, its total undrawn banking facilities amounted to approximately HK$3,480.5 million (31 March 2023: approximately HK$3,783.6 million). In order to share the results with shareholders, the Board has resolved to recommend a final dividend of HK2.2 cents per share for Fiscal 2024 (Fiscal 2023: HK1.8 cents per share), which together with the interim dividend of HK3.5 cents per share, makes a total dividend of HK5.7 cents, in line with the Group’s dividend policy of distributing no less than 30% of its net profit for the financial year.

Mr. YY Hung, Chairman, Chief Executive Officer and Executive Director of Regina Miracle, said, “We undertook a review of our business strategy in Fiscal 2024. As a cornerstone of Regina Miracle, our IDM business has allowed us to gain room for agile adjustment in an uncertain market environment. We established the business strategy of ‘prioritizing core segments and strengthening core operations’ during Fiscal 2024. On the one hand, we have streamlined and moderately adjusted the more dynamic business segments. One the other hand, we have strengthened the R&D and production capabilities of our two core segments – intimate wear and sports products – to provide our brand partners with better products for more diversified applications by leveraging our innovation in raw materials and craftmanship, in order to expand and solidify our partnerships. The joint venture established between Regina Miracle and Victoria’s Secret & Co. (‘Victoria’s Secret’) continued to deliver growth and profit in the second half, brining momentum to the Group’s business development in China. As our business bottoms out, we remain committed to agile operational capabilities and efficient capital allocation, in response to a dynamic business environment. The Group plans to reduce its debt over Fiscal 2026-2028, with the aim of lowering its net gearing ratio to a healthy level, in order to optimize its financial position and generate better returns for shareholders.”

Business Review

Intimate wear’s market consumption sentiment recovery underway
During Fiscal 2024, this business segment contributed revenue of approximately HK$4,121.4 million (Fiscal 2023: HK$4,424.8 million), a year-on-year decrease of 6.9% and accounting for 58.7% of the total revenue, and remained the Group’s main source of revenue. The segment’s gross profit decreased by 11.9% to approximately HK$976.9 million, with gross profit margin decreasing by 1.4 percentage points to 23.7% (Fiscal 2023: HK$1,108.4 million and 25.1%, respectively). During Fiscal 2024, consumer sentiment in the overall market was still recovering. Inventories of the Group’s intimate wear brand partners have not yet normalized, which has dampened order demand.

Sports products segment achieves double-digit sequential growth, shows good recovery momentum
This business segment contributed approximately HK$2,311.5 million in revenue during Fiscal 2024 (Fiscal 2023: HK$2,436.3 million), a 5.1% year-on-year decrease, accounting for 32.9% of total revenue. Segmental gross profit was approximately HK$493.7 million and the gross profit margin was 21.4% (Fiscal 2023: HK$566.5 million and 23.3%, respectively). During Fiscal 2024, as the destocking progress varies among different sports brand partners, the Group’s overall order volume and revenue in this segment were under pressure compared with last year. Despite this, this segment recorded a double-digit sequential recovery in the second half of Fiscal 2024, showing a good recovery momentum. Among the sports products, the patented bonding (“Bonding”) apparel segment stood out in performance, achieving double-digit revenue growth for the full year and further increasing its revenue share.

Vietnam and China production bases in steady progress
Seizing the opportunities arising from industry consolidation and supply chain concentration, the Group strives for continuous enhancement of its production processes through different key initiatives, including structure verticalization, management intellectualization, equipment automation and supply chain localization, to improve overall production efficiency. Vietnam, as an important production base for the Group, has strengthened its management capabilities during Fiscal 2024, with production efficiency of the Group’s core business segments reaching record highs. As orders began to recover at the end of Fiscal 2024, the Vietnam production base began to resume recruitment in the first quarter of this year.

In Mainland China, the relocation of the Shenzhen production base to the Zhaoqing production base is proceeding satisfactorily. The relocation of production lines for consumer electronics components, bra pads and other accessory products all completed during Fiscal 2024. As orders of intimate wear and sports products have picked up since the fourth quarter of Fiscal 2024, the relocation schedule of relevant production lines was adjusted to accommodate the order delivery and is expected to be completed by September 2024. Meanwhile, the relocation of R&D-related departments is expected to begin in the second half of 2025.

In Fiscal 2024, the Vietnam production base’s contribution to the Group’s total revenue reached 84% in terms of gross output. As of 31 March 2024, there were approximately 31,300 employees in Vietnam. In Mainland China, the Shenzhen production base had around 3,900 employees and the Zhaoqing production base had approximately 1,500 employees.

VS China closely aligns with prevailing fashion trends, maintains growth against broader headwinds
Leveraging the deep understanding of Chinese consumers and an agile supply mechanism, VS China’s brand positioning and differentiated products have closely aligned with the prevailing fashion trends. Despite an overall sluggish Chinese consumer market, it managed to maintain growth against the broader headwinds. VS China’s revenue amounted to HK$1,882.2 million in the Group’s Fiscal 2024, representing a year-on-year increase of 40.0%, and net profit amounted to HK$85.4 million, representing a year-on-year increase of HK$196.6 million. In addition, VS China has become a major brand partner of the Group, bringing a meaningful incremental lift to the revenue of the Group’s IDM business during Fiscal 2024.

Multi-pronged Approaches to Capture Business Recovery: To Strengthen Core Segments, Remain Committed to Innovation and Implement Stringent CapEx Control

As the Group enters Fiscal 2025, most consumer brands are in the later stage of the destocking cycle, and market conditions are expected to gradually recover. However, recognizing that the macro environment will continue to be affected by various factors, including the global economy, interest rates and geopolitics, the Group will closely monitor market trends to address potential risks and challenges. In view of the dynamic market environment, an increasing number of brand partners are inclined to shorten lead times when placing orders. Meanwhile, brand partners are more willing to pay premiums for innovative and differentiated products in order to stimulate consumption and lead the market, resulting in a clear differentiation in the industry’s supply chain ecosystem. The Group’s commitment to offering differentiated and mid-to-high-end products will be conducive to achieving better profit margins. Based on the Group’s long-standing edges in its core technologies, it has more clearly established its position as a unique and scarce supply chain partner among its major brand partners.
Following the business adjustment in Fiscal 2024, the Company is expected to see a recovery in order demand in Fiscal 2025, which will lead to a rebound in the total revenue.

Prioritize core businesses to strengthen market leading position
After careful evaluation of the market conditions, economies of scale and other factors, the Group made a proactive decision to streamline the footwear business during Fiscal 2024. In view of the fact that consumer electronics brand partners have returned to rationality in placing orders for products related to virtual reality (“VR”) headsets, the Group has made appropriate adjustments to its consumer electronics component business in order to agilely respond to market fluctuations. As orders in the intimate wear and sports segments have bottomed out and started to recover, the Group will continue to prioritize these two core businesses, capitalizing on the strengths of its core technologies and deepening collaboration with existing brand partners, i.e. the leading brands in intimate wear and sports products, to solidify the stability of its business foundation.
In recent years, the Group and its partners have continuously strengthened joint efforts in the R&D of raw materials such as foam, fabric and adhesives, and have achieved proprietary R&D results. Regina Miracle has continuously incorporated the application of industry-leading new materials, which, together with its unique and advanced craftsmanship, significantly enhanced the wearing experience of the products in its core segments of intimate wear and sports products. A number of these products are expected to be launched in the new fiscal year which will support business growth.

Focus on unique core craftsmanship to expand bonding apparel business for stable and sustainable long-term growth
Having long invested in the R&D of bonding craftsmanship, the Group has made remarkable progress in the areas of complementary materials and automated production, boasting a first-mover advantage and technological edge that is five to ten years ahead of the market. Through market research, the Group has identified buoyant demand for bonding apparel products and ample room to improve the quality of existing products in the market. After due evaluation, the Group clearly articulated its business strategy in the second half of Fiscal 2023, which is centered around its unique patented bonding craftsmanship, and focuses on the development of the apparel business as a long-term business growth engine through a differentiated path. The Group’s bonding apparel business has already been recognized by a number of target brand partners, with order growth accelerating and successfully attracting the attention of new partners. Given the vast market size and higher average unit price compared to that of intimate wear, the sportswear business presents greater potential for sales scale expansion. As the Group is at an early stage of development in this business segment, there is still room for increasing the business base and market penetration. The differentiated products it has developed are prioritized for cross-selling to our existing core brand partners with solid relationships. From a variety of perspectives, the sportswear business is expected to offset the decrease in revenue resulting from the streamlining of the footwear business, mitigate business fluctuations, and provide the Group with a more robust, predictable and sustainable growth momentum.

In addition to bonding craftsmanship, the Group has also focused on the Santoni seamless business chain and made effective breakthroughs in product R&D, production management and sales expansion during Fiscal 2024. Orders for Santoni seamless related products recorded double-digit growth, a step forward in the implementation of strategies to foster repeated purchases by core brand partners and expand cross-selling, and are expected to maintain growth momentum in the next year.

Leverage Zhaoqing production base to reinforce the path towards top-tier intelligent manufacturing
The Group regards the construction of the new Zhaoqing production base as a strategic measure to optimize its production layout in the PRC. From the start of construction, the overall planning of the production base has been designed to meet world-leading standards for modern and intelligent workshops through the introduction of automated production lines and advanced information management systems, with the aim of achieving data-driven and refined management. Compared with the original Shenzhen production base, the Zhaoqing production base has made significant progress in terms of modern construction, product positioning and sustainable development.

Leveraging the capabilities of the Zhaoqing production base, the Group will remain committed to developing towards the direction of top-tier intelligent manufacturing. Focus on its unique core technological advantages, the Group will chart a distinct product path to continuously enhance the added value of products and improve market competitiveness, aiming to target the Better & Best market positing in the PRC and provide consumers with higher quality and more distinctive product options.

As the operation of the Zhaoqing production base gradually matures in the future, its automated, digital and intelligent production equipment will further increase production efficiency and meet the local production needs of the Group’s growing business in the PRC. Meanwhile, the Zhaoqing production base will also provide important support for international brands, VS China, and other quality brands in their efforts to develop the PRC market, jointly promoting the development of the intimate wear and bonding apparel markets in the PRC.

Conduct comprehensive review on asset turnover with meticulous planning on capital expenditure
Regina Miracle understands that product innovation is the key to driving a company forward and maintaining its competitive edge. In this process, in addition to raw materials and innovative craftsmanship, the combination of unique equipment assets is also indispensable. Regarding innovation and development, the Group will fully integrate existing equipment to support product R&D, and allocate investment in new equipment more precisely so as to strike a proper balance between promoting innovation and controlling capital expenditure. The Group will also raise awareness of asset turnover in “research, production and sales” and strive to improve the efficiency of asset turnover through measures such as refining management, optimizing production processes and strengthening sales strategies, so as to release more operating cash flow as the business develops and to control the impact of depreciation on net profit in financial terms.

Optimize capital structure and increase shareholder returns by strengthening product positioning and balancing innovation, scale and efficiency
With the gradual recovery of the business, the Group will deepen its market insights and keep its finger on the pulse in terms of product positioning, and strengthening the introduction of high value-added products. In addition, the Group will place greater emphasis on the balance amongst product R&D and innovation, production scale, and efficiency in order to improve management and operational efficiency. While conducting R&D of pioneering and innovative products, the Group will rapidly integrate the results of innovation into high-efficiency large-scale production. At the same time, the Group will make full use of the advantages of automated and intelligent production of the plants in Vietnam and China, and optimize the existing management structure, aiming to reduce manpower by 20% based on the same production value of the Group to improve the personnel productivity, ultimately allowing innovation advantages to be better reflected in gross profit margin growth.

The Group hopes to further increase the level of operating profit and cash flow in the future through the efforts above, thereby laying a solid financial foundation for the optimization of its capital structure. The Group will strive to reduce its debt over Fiscal 2026-2028, with the aim of lowering its net gearing ratio to a healthy level, in order to optimize its financial position and generate better returns for shareholders.

Deepen deployment in the PRC market and drive business development of VS China
In view of the core position of the PRC market, the Group will further deepen its collaboration with VS China to drive its business development in all aspects through measures such as optimizing operational processes, developing differentiated products and enhancing brand image.

Taking advantage of the unique e-commerce environment in China, the best-selling products developed by the Group for VS China can be quickly tested and optimized to provide timely product reference for the international market. Currently, several products developed for the PRC market have been successfully introduced to overseas markets, opening up new growth opportunities for the Group’s IDM business.

Committed to sustainable development and in solidarity with all stakeholders for a better future
Regina Miracle has always recognized environmental, social and governance (ESG) as a core element of its development. By establishing a comprehensive governance framework of “leadership – decision-making– execution”, it has continued to improve the efficiency of ESG decision-making and implementation, actively promote sustainable development strategies, and integrate environmental and social responsibility into every aspect of group management.

Over the past year, the Group has achieved remarkable results in carbon reduction, waste management, innovative development, talent nurturing, and community engagement. Notably, the first phase of construction of its new factory in Zhaoqing has been awarded LEED (Leadership in Energy and Environmental Design) Gold certification, which not only demonstrates the Group’s commitment to sustainability, but also to meeting the expectations of international brands for green production. In addition, the Group has secured a position among the “Top 100 Sustainable Businesses in Vietnam”(越南可持續發展企業100強) for the third consecutive year and has been included in the “Top 10 Sustainable Businesses in the Manufacturing Sector” (製造業組別十大可持續發展企業) and “Top 5 Pioneering Businesses in Adopting and Promoting Diversity, Equality and Inclusion Values in 2023” (建立多元化、公平及包容價值觀五大先驅企業2023) lists for the first time, which is the best recognition of its continuous efforts.
To echo the goal of limiting global warming to 1.5 degrees Celsius proposed under the Paris Agreement, the Group plans to submit science-based emission reduction targets to the Science Based Targets initiative in Fiscal 2025, and will install solar power generation facility at its Hung Yen factory in Vietnam, Haiphong C factory (Phase II) and Zhaoqing production base to further promote the use of clean energy. The Group looks forward to joining hands with all stakeholders to create a better future.

Mr. Hung concluded, “ After two years of tough market challenges, the Group believes that the most difficult period is now behind us. While Regina Miracle has spared no efforts in overcoming the challenges, it has taken the opportunity to make profound strategic adjustments and business optimizations. The Group will continue to strengthen its market positions in its two core businesses, namely intimate wear and sports products, and leverage its unique craftsmanship to actively expand its bonding apparel business. This will allow the Group to achieve stable, sustainable and diversified growth in its core businesses. As the Group’s key pivot, the Zhaoqing production base will facilitate the Group to deepen its presence in the PRC market and accelerate the development of VS China’s business by leveraging its advantages in modern, top-tier and sustainable positioning. With the gradual recovery of the Group’s business and the expansion of new product categories, the Group is confident about its future growth. Regina Miracle will continue to adhere to the development philosophy of innovation, speed and quality, and create greater and more sustainable value for all stakeholders.”

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