Hingtex Holdings Limited Announces 2018 Interim Results

Product name:Hingtex Holdings Limited

2018/09/01 update

Industry:Daily News

Proactively Enhances Production Capacity and Efficiency
Poised to Capture Growing Demand for Denim Fabric

HONG KONG, Aug 31, 2018 - (ACN Newswire) - Hingtex Holdings Limited ("Hingtex" or the "Group"; Stock Code: 1968), a long-standing and leading denim fabric manufacturer in Hong Kong targeting the middle- to high-end market segment, today announced its results for the six months ended 30 June 2018 (the "review period"), representing its first results announcement since listing on the Main Board of The Stock Exchange of Hong Kong Limited ("SEHK") in July 2018.

Although the growing trade tensions between the United States and the People's Republic of China have been worrisome, the Group was relatively unaffected during the review period, with revenue remaining stable at HK$383.2 million (1H2017: HK$379.4 million). Despite a general increase in the price of materials and rise in staff cost, gross profit margin remained stable at 32.3% (1H2017: 32.5%), while gross profit was approximately HK$123.8 million (1H2017: HK$123.4 million). Excluding the impact of the one-off listing expenses of HK$13.3 million that were recognised during the six months ended 30 June 2018 and the non-recurring imputed interest income on amounts due from related companies of HK$10.2 million recognised during the corresponding period in 2017, profit attributable to owners of the Company would have decreased by approximately 0.5% to HK$70.7 million (1H2017: HK$71.1 million).

Business Review
Hingtex specialises in the manufacturing of stretchable denim fabrics with various properties and its product development team has introduced over 300 types of stretchable blended denim fabrics over the past three years, amongst which, the Group's key product, stretchable blended denim fabrics, are made from stretchable synthetic yarn (stretchable fibre wrapped with synthetic fibres) and pure cotton yarn. During the review period, the stretchable blended denim fabrics segment contributed revenue of HK$344.8 million, representing a YoY increase of 12.9%, and accounted for approximately 90.0% of the Group's total revenue (1H2017: 80.5%).

Stretchable cotton denim fabrics are made from stretchable cotton yarn (stretchable fibre wrapped with cotton) and pure cotton yarn. This business segment generated revenue of HK$26.7 million (1H2017: HK$52.7 million) due to the Group's strategic focus on the sale of stretchable blended denim fabrics.

Non-stretchable denim fabrics are made entirely from cotton yarn. Segmental revenue was HK$10.1 million for the review period (1H2017: HK$21.0 million). The result highlights the increasing acceptance of stretchable denim garments by the general public (especially menswear), resulting in lower demand for non-stretchable denim fabrics.

Prospects
To seize opportunities and achieve long-term growth, Hingtex will strive to strengthen its leading position in the denim fabric manufacturing industry. Apart from securing orders from existing customers, Hingtex plans to broaden its customer base by penetrating the China market and expanding into the European market. The Group will also seek to raise production capacity and efficiency, as well as adjust the composition of raw materials used and optimise the production processes involved.

In addition, the Group will be strengthening its product development capability by purchasing dyeing and finishing machines. Such machinery are expected to be ready for installation and operation by the second half of 2019, and will enable the Group to be better equipped to develop new denim fabric items for expanding its product portfolio, as well as enjoy greater economies of scale. While such developments are proceeding, the Group will also pay close attention to the Sino-US trade war that has resulted in greater downside risks, and will make necessary adjustments to its logistics procedures if needed.

About Hingtex Holdings Limited
Founded in 1981, Hingtex is an established denim fabric manufacturer that specialises in design, manufacture and sales of denim fabrics, targeting middle- to high-end market segment. With longstanding relationship with over 30 apparel brands and over 120 customers, the Group primarily supplies denim fabrics for the production of denim garmet of certain reputable US apparel brands. The Group has rich experience in manufacturing a variety of denim fabrics including (i) stretchable blended, (ii) stretchable cotton and (iii) non-stretchable denim fabrics; and would present denim fabrics in the form of garment end-products such as denim jeans, jackets and skirts. Its design and product development capability have been widely recognised by its customers. For more details about Hingtex, please visit the Group's website: www.hwtextiles.com.hk

Media Enquiries:
Strategic Financial Relations Limited
Vicky Lee Tel: (852) 2864 4834 Email: vicky.lee@sprg.com.hk
Jessica Siu Tel: (852) 2114 2820 Email: jessica.siu@sprg.com.hk
Suzanne Leung Tel: (852) 2864 4873 Email: suzanne.leung@sprg.com.hk
Website: www.sprg.com.hk



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