Man Wah Delivers Superb FY11 Interim Results -- Dividend Payout Ratio Keeps at 35%

Man Wah Holdings Limited
2010-11-22 18:40 1413

HONG KONG and SINGAPORE, Nov. 22, 2010 /PRNewswire-Asia/ --

  • Revenue surged by 49.2% to HKD1,979.3 million
  • Gross Profit soared 59.0% to HKD 873.3 million 
  • Expects to reach 689 retail stores by FY2011

Man Wah Holdings Ltd ("Man Wah" or the "Company", together with its subsidiaries the "Group", HKEx: 1999), an award-winning Chinese enterprise with its "CHEERS" brand of recliner sofas, today announced its interim results for the six months ended 30 September 2010 ("1HFY2011").

Financial Highlights

                                       For the six months ended 30 September 2010
(HK$ in mn) 1HFY2011 1HFY2010 % change (yr-on-yr)
Revenue 1,979.3 1,326.6 49.2%
Gross Profit 873.3 549.4 59.0%
Gross Profit Margin 44.1% 41.4% 2.7 pts
Net Profit 371.5 262.2 41.7%
Net Profit Margin 18.8% 19.8% -1pt
Basic EPS (HK cents) 38.7 36.1 7.2%
Interim Dividend (HK cents) 13.4 N/A N/A
Dividend Payout Ratio 35% N/A N/A

Financial Review

Based on the unaudited management accounts, in 1HFY2011 the Group's revenue surged 49.2% year-on-year to approximately HK$1,979.3 million (1HFY2010: HK$1,326.6 million), the increase came from both export and domestic sales with big progress in all product categories. In the period under review, net profit rose by 41.7% to HK$371.5 million (1HFY2010: HK$262.2 million). The gross profit surged 59.0% to HK$873.3 million (1HFY2010: HK$549.4 million). Basic earnings per share were 38.7 HK cents, representing an increase of 7.2% as compared to the same period of last year. The Board of Directors recommended an interim dividend of 13.4 HK cents per share. This represents a payout ratio of 35%.

Thanks to constant improvement in financial controls and efficiency, the Group's financial position remains healthy with cash on hand and bank balances rising 217.5% year-on-year to HK$1,706 million, current asset largely increased by 142.6% to HK$2,597.6 million. Bank loans significantly dropped 72.6% year-on-year to just HK$47.1 million. This allowed the acid-test ratio to jump from 2.0 to 5.5.

Furnishing China's High-Speed Railcars

This July we signed a landmark RMB152.7 million contract to supply mainly sofas, sofa beds and related after-sales services to China Railway High-Speed (CRH). There are over 10,000 kilometres of high-speed rail line under construction, which show us tremendous growth opportunity and will bring more exposure for our CHEERS brand. 

Looking Forward -- Strong Growth Prospects

This year all market indicators pointed to a strong recovery in China's economy, despite major markets in the U.S. and EU returning slowly to economic recovery. There has been a gradual reluctance of customers in these markets to shell out top dollar for domestic name brand luxury sofas, which has created an opportunity for Man Wah and our more competitive selling prices to win market share. In 1HFY2011, our sofa export sales largely increased 60.5%. Additionally, thanks to continued domestic economic growth, PRC consumers are helping our PRC sofa sales grew 37.8%. And the strong growth is expected to continue both in home and abroad markets.

Mr. Wong Man Li, Chairman of Man Wah Holdings Ltd, said, "Over the past several years the Group has tirelessly strived to boost product quality, strengthen our retail network and establish our brand name, as well as the CRH contract gained, CHEERS' market leading position and brand awareness has been further strengthened. We are very pleased to be able to present to our shareholders the financial results for the first half of FY2011, and our efforts on these fronts have clearly paid off judging by our earnings results. Looking forward to the second half of FY2011 we are confident that we will ascend to an even higher level of performance."

"Over the period under review, the Group has seen a rapid expansion of its retail sales network. As at 30 September 2010, we had 353 CHEERS brand retail stores in the PRC, among which 107 were self-owned stores and 246 were distributor stores. The Group plans to have 400 CHEERS stores by the end of FY2011 to help us realize our sales objectives in the PRC market."

"Due to rapid economic growth in China, growing incomes of its citizens and the enhanced spending power that this brings, as well as the positive effects of a strengthening Chinese yuan, consumers in the PRC are increasingly willing to purchase durable goods and furniture as they constantly endeavor to improve their living and working environments amid rising living standards. In addition, the US recently launched its QE2 to help kickstart its economy, which expected to boost our export sales. Looking at a whole range of economic and market factors, all are very positive for us. From the strong orders we can see, CHEERS' market share will be further enhanced both in the PRC and U.S. markets. We are confident that the Group can maintain robust results going forward, and provide even better returns for our shareholders."

About Man Wah Holdings Limited (Hong Kong Stock Code: 1999 HK)

Established in 1992, Man Wah Holdings Ltd. is a home furnishing group, primarily engaged in the design, manufacture and sale of a broad range of mid to high-end recliner sofas (specialty sofas with features such as recline and footrests), which are sold through extensive distribution channels in Hong Kong and the PRC, and direct export to the international market such as U.S.A. and Europe under its well-known brand -- "Cheers". Man Wah is the No.1 recliner sofa manufacturer and retailer in the PRC and No.8 in U.S.A.

The "Cheers" brand had received the prestigious China Top Brand award in September 2007 from the PRC authorities. The Group currently operates two sofa and one bedding production facilities in the PRC. With the completion of Phase II of its Huizhou Daya Bay plant in December 2007, total sofa production capacity for the Group stands at 516,000 sofa sets per annum to meet the growing demand from its expanding clientele base.

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For further information, please contact:

Man Wah Holdings Limited
Ms Vivien Ho, Investors Relations
Tel:   +852-3915-2289

Aries Consulting Limited
Mr. Frances Leung
Tel:   +852-2610-0846

Ms. Pearl Peng
Tel:   +852-2610-0846

Mr. Mark Lee
Tel:   +852-2610-0846

Fax: +852-2610-0842

Source: Man Wah Holdings Limited