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Gross Profit Surges by 55.1% to Approximately HK$38.7 Million
Strategically Transforming to be All-rounded Trendy Apparel Product Supplier |
HONG KONG, Mar 28, 2022 - (ACN Newswire) - CEFC Hong Kong Financial Investment Company Limited ("CEFC Financial", together with its subsidiaries, "the Group", to be renamed as "Virtual Mind Holding Company Limited"; stock code: 1520.HK) is pleased to announce its audited consolidated results for the year ended 31 December 2021 (the "Year").
During the Year, the Group was mainly engaged in the design, manufacture and trading of apparel, as well as provision of money lending services. Thanks to the continued revival of demand in apparel market during the Year, the Group embraced growth momentum in its apparel operation. Driven by its excellent business performance, revenue of the Group increased by approximately 22.1% to approximately HK$140.0 million (2020: HK$114.0 million) during the Year. Gross profit was approximately HK$38.7 million (2020: HK$25.0 million), increased by approximately 55.1%. The overall gross profit margin increased by approximately 5.9 percentage points to approximately 27.7% (2020: 21.8%), benefiting from revenue growth and the Group's strategic focus to shift to higher-margin own brand products in the apparel operation during the Year. With the increase in the Group's revenue and no impairment loss on goodwill incurred for the Year, loss attributable to owners of the Company significantly narrowed by approximately 32.1% to approximately HK$46.3 million (2020: HK$68.1 million).
Business Review
Apparel Operation
Apparel Operation is the Group's core business. Its revenue is principally derived from the sales of apparel products, namely own brand products and private label products. The U.S. was the principal market for the Group's apparel operation during the Year. With the rebound of the U.S. economy following the relaxation of restrictive social measures, coupled with fiscal measures and monetary support, the revenue from the Group's apparel operation increased by approximately 20.7% year-on-year to approximately HK$129.3 million (2020: HK$107.1 million), accounting for 92.4% of the Group's total revenue.
In view of the higher gross profit margin of its own brand products, the Group focused on the expansion of this segment during the Year. The segmental revenue thus increased by approximately 80.4% to approximately HK$91.7 million (2020: HK$50.8 million). Own brand products became the largest contributor of the Group's apparel operation and accounted for 71.0% (2020: 47.5%) of the total revenue from apparel operation during the Year. Gross profit registered strong growth of approximately 107.5% to approximately HK$27.7 million (2020: HK$13.4 million), with gross profit margin increasing from 26.3% in 2020 to approximately 30.2%.
As the Group strategically shifted its focus to its own brand products during the Year, revenue from private label products decreased to approximately HK$37.5 million (2020: HK$56.2 million), contributing 29.0% of the total revenue from apparel operation for the Year. Gross profit and gross profit margin amounted to approximately HK$416,000 (2020: HK$4.2 million) and approximately 1.1% (2020: 7.4%) respectively.
Money Lending Business
The Group's lending business primarily offers loans to individual customers and small businesses in Hong Kong. Hong Kong saw a strong recovery in 2021, attributable to the well-contained local pandemic during the Year and continued revival of global economic activities. During the Year, revenue from money lending operation increased by approximately 42.3% to approximately HK$10.6 million (2020: HK$7.4 million), accounted for 7.6% of total revenue of the Group.
Outlook
The Group is committed to exploring new business opportunities to expand its apparel design, manufacturing and trading business. In view of the recent development that the apparel industry has shifted towards the market segment of trendy culture well-received among younger generation, the Group aims to capture the huge potential of fashion and trendy apparel market. In order to diversify from its focus of manufacturing private label women apparel products, the Group plans to expand its design, manufacturing and trading of apparels business to become an all-rounded trendy apparel product manufacturer, tapping into the men and young adults markets. To align with its business development strategy and the vision of developing trendy culture apparel products, as well as to prepare for further developing trendy apparel business, the Group proposed its company name to be changed to "Virtual Mind Holding Company Limited" which was approved at the extraordinary general meeting on 25 March 2022. This will be implemented after the approval of the Registrar of Companies in the Cayman Islands.
Looking forward, the Group will promote the development of its apparel business from various aspects, and continuously develop a more diversified portfolio of trendy apparel and related products in order to open up new sales channels. In January 2022, the Group appointed the senior designer of the renowned world luxury product brand LVMH Group Dr. Zhou Yibing as Chief Creativity Officer, who will be responsible for managing the Group's product design team, developing its own brand trendy culture products and cross-over products with other brands, etc.
In addition, the Group constantly seeks to establish strategic cooperation relationship with other apparel enterprises. In January 2022, the Group has entered a strategic cooperation agreement with Qingdao Weiding Sports Supplies Company Limited, which is principally engaged in trendy sportswear and accessory products, with an aim of expanding the Group's business in the men's and women's sportswear market segment. The Group has also entered into a licensing agreement with Chengdu Dreamtoys Cultural Creativity Company Limited so as to explore the younger generation market. The Group was granted the exclusive right of use of the intellectual property (IP) right of four animated characters which will be used for the development, production and sales of apparel of the IP Characters. Furthermore, the Group is striving to explore crossover collaboration opportunities with other world-renowned brands, artists and designers, in order to build up self-developed brand image and further increase the variety of the self-developed brands and products.
In March this year, the Group entered into a sales and purchase agreement with world-renowned art brand Leblon-Delienne to purchase art collections and the relevant digital creation for Non-Fungible Token ("NFT") for market sales. This series of products was created by Mr. Jose Levy, the creative director of Hermes. We plan to invite famous Asian artists Mr. Takashi Murakami and Ms. Mika Ninagawa to participate in the re-creation in the future, therefore the art collection is expected to be of enormous collectable value. At the same time, young artists and fashion people from Asia, especially Hong Kong, will be invited to participate in its events, bringing vitality to the fashion capital of Asia.
Mr. Li Yang, Chairman and Executive Director of CEFC Financial said, "The Group has been deeply involved in the fashion design business for more than 20 years, and is committed to designing and producing high-quality fashion products. In view of the huge potential of the fashion apparel market, the management of the Group plans to gradually expand the trendy apparel manufacturing business, and strategically upgrade itself to become an all-rounded trendy apparel product supplier. The Group is confident in the prospects of its trendy apparel operation and we believe that the change of our company name will lead us to a new chapter. We expect that the economic activities will get back on the right track and the Group's business will experience optimistic growth after the pandemic. Looking forward, the Group will continue to focus on the development of trendy apparel with the strategic focus on the young market. We will also actively look for collaboration opportunities with different well-known brands and designers, in hopes of increasing the popularity of our own brand and seize the immense opportunities in global trendy apparel market in order to bring long-term returns for our shareholders."
About CEFC Hong Kong Financial Investment Company Limited
CEFC Hong Kong Financial Investment Company Limited (1520.HK) is principally engaged in (i) design, manufacturing and trading of apparel; and (ii) provision of money-lending business. The Group's apparel operation is classified into two categories, namely, private label products and own brand products. Private label products are those designed and manufactured under the private labels owned or specified by the Group's customers, while own brand products are those designed and manufactured under the Group's proprietary labels. To align with its business development strategy, the proposed change of Company name to "Virtual Mind Holding Company Limited" was approved at the extraordinary general meeting on 25 March 2022.
For more details, please visit www.cefcfi.com.hk
Topic: Press release summary
Source: CEFC Hong Kong Financial Investment Company Limited
Sectors: Daily Finance
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From the Asia Corporate News Network
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