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Tuesday, 29 November 2022, 17:55 HKT/SGT
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Source: Regina Miracle International (Holdings) Limited
Regina Miracle Fiscal 2023 Interim Results Revenue Reaches HK$4.61 Billion; Hitting a Record High for the Period, Net Profit Rose 23.1% to HK$313 Million
Growth in 1HF23 in Line with the Five-Year Plan
with Diversified Product and Brand Partners Portfolio
Laying a Solid Foundation for Long-Term Development

HONG KONG, Nov 29, 2022 - (ACN Newswire) - 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 interim results for the six months ended 30 September 2022 (the "period" or "1HF23").

During the Period, despite the impact of macroeconomic fluctuations, the Group continued its growth momentum from the previous financial year and recorded revenue of approximately HK$4,613.3 million (1HF2022: HK$4,080.6 million), representing a year-on-year increase of 13.1%. Gross profit grew correspondingly by 19.2% to approximately HK$1,168.4 million, with gross profit margin up by 1.3 percentage points to 25.3% (1HF2022: HK$980.6 million and 24.0%, respectively). Benefiting from the full implementation of the Five-Year Plan and effective internal control measures, operating leverage was increased, driving earnings before interest, taxes, depreciation and amortization (EBITDA) up by 24.6% to approximately HK$811.0 million, with EBITDA margin up by 1.7 percentage points to 17.6% (1HF2022: HK$650.7 million and 15.9%, respectively). The Group recorded a net profit of approximately HK$313.0 million for the Period, representing a year-on-year increase of 23.1%, with net profit margin up by 0.6 percentage points to 6.8% (1HF2022: HK$254.3 million and 6.2%, respectively). Excluding the share of net losses / profits of associates accounted for using the equity method, the adjusted EBITDA was up by 28.8% to approximately HK$860.7 million for the Period, with adjusted EBITDA margin up by 2.3 percentage points to 18.7% (1HF2022: HK$668.1 million and 16.4%, respectively; while the adjusted net profit was approximately HK$362.7 million for the Period, representing a year-on-year increase of 33.5%, with adjusted net profit margin up by 1.2 percentage points to 7.9% (1HF2022: HK$271.8 million and 6.7%, respectively).

The Group is in a sound financial position, with strong operating cash flows amounting to approximately HK$985.5 million during the Period (1HF2022: HK$422.9 million) and ample war chest. Its total cash on hand was approximately HK$872.1 million as at 30 September 2022 (31 March 2022: approximately HK$995.0 million). In order to share these fruitful results with shareholders, the Board has resolved to declare an interim dividend of HK8.5 cents per share for 1HF2023 (1HF2022: HK6.8 cents per share), 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 & Executive Director of Regina Miracle, said, "Benefiting from the earlier recovery in Europe, the United States and some Asian markets, as well as the diversified development of the consumer landscape in the domestic market, the Group recorded its best-ever business performance in 1HF23, laying a solid foundation for its Five-Year Plan of business development to be steadily achieved. Nevertheless, we also observed that due to the impact of macroeconomic factors, major retailers are still trying to strike a balance between logistical risks and inventory pressure and are choosing to consolidate their existing supply chain layouts. Although the Group's brand partners are still making every effort to maintain their close relations with versatile and core supply chain partners like Regina Miracle, we expect to face short-term challenges in the second half of the financial year as market pressures intensify. The Group will implement a series of measures to expand revenue and reduce expenses, including but not limited to: accelerating the promotion and penetration of products with innovative craftsmanship and technological aesthetics based on the successful experience of business breakthroughs with existing brand partners; adjusting the recruitment plans and staff rosters in the factories in Mainland China and Vietnam as appropriate; prudently evaluating fixed asset investment plans; and keeping the schedule of relocating to the Zhaoqing production base flexible. On the other hand, the establishment of the joint venture ("VS China") between the Group and Victoria's Secret & Co. ("Victoria's Secret") was completed and has since then been implementing its planned strategies to strengthen online operations and localization. Moreover, the Vietnam production base, as a pillar of the Group's export business, has timely optimized its organizational structure in view of market changes, and made full use of the advantages of cost reduction and efficiency improvement through innovative craftsmanship manufacturing, while also improving supply chain localization at the same time. So that to enable Regina Miracle to grasp the opportunities for market penetration amid the industry consolidation."

Business Review

Intimate wear: with continuous recovery in the European and the United States markets, strategies of differentiation and category expansion in the intimate wear segment have borne fruit
During the Period, this segment contributed approximately HK$2,464.3 million in revenue (1HF2022: HK$2,336.0 million), a year-on-year increase of 5.5%, accounting for 53.4% of the Group's total revenue, and remained the main source of revenue for the Group. The segment's gross profit grew by 14.5% to approximately HK$652.8 million, with gross profit margin up by 2.1 percentage points to 26.5% (1HF2022: HK$569.9 million and 24.4%, respectively). The growth was mainly attributable to the continuation of the earlier recovery in the European, the United States and Asian retail markets and the increase in unit prices of a number of products. During the Period, the Group continued to implement its strategies of differentiation and sub-category expansion on the basis of its industry-leading R&D capabilities, and achieved remarkable result. The Group continued to consolidate its market share with its existing brand partners, and jointly explore quality market opportunities.

Sports products: Sales remains strong with revenue rising by more than 40% year-on-year
This business segment contributed approximately HK$1,483.7 million in revenue during the Period (1HF2022: HK$1,036.4 million), a 43.2% year-on-year increase, accounting for 32.2% of total revenue. Segmental gross profit was approximately HK$358.0 million and gross profit margin was 24.1% (1HF2022: HK$243.4 million and 23.5%, respectively). Sports bras continued to record strong sales performance amidst the ongoing sports boom and became the main growth driver for this business segment. During the Period, the Group created functional and comfortable sports products with its innovative craftsmanship for its brand partners and the market. Among these, sports leggings were highly sought after and are expected to replicate the growth trajectory of sports bras.

Consumer electronics components: Diversified product mix and brand partner portfolio drives the segment revenue to increase by more than 10% year-on-year
Revenue from this business segment amounted to approximately HK$258.3 million (1HF2022: HK$232.7 million), a year-on-year increase of 11.0%, accounting for 5.6% of the Group's total revenue. The segment's gross profit increased by 11.0% to approximately HK$64.6 million (1HF2022: HK$58.2 million and 25.0%, respectively). The Group's commitment to bringing products with comfortable and skin-friendly features to the market led to steady growth in overall orders during the Period. The segment recorded mid-double-digit growth in sales year-on-year during the Period, which was mainly driven by keyboard, laptop and tablet PC accessories, and is seeing more diversified development. As for virtual reality (VR) headsets, the segment's revenue remained stable year-on-year, as the Group continued to expand its brand partner base during the Period, with orders from its brand partners in China gradually increasing. The Group has extended some of its proprietary technologies with cross-category innovations to the production and application of consumer electronics textile products that are suitable for prolonged use.

Production value of Vietnam continuously improves, multi-regional production capacity layout demonstrates the leading position in the supply chain market
As the market continues to consolidate and the supply chain becomes increasingly condensed, the Group's leading position in the supply chain has become evident. The Group continues to cater to the different needs of its domestic and international brand partners with agility and quick turnaround times. As an important production base of Regina Miracle, its factories in Vietnam have entered into an efficiency ramp-up stage. Leveraging the experience of optimizing the first three factories in Vietnam, the Group accelerated the production efficiency of all other factories in Vietnam so as to enhance its consolidated gross margin. During the Period, the average efficiency of the total six plants in Vietnam further improved, driving the growth in the Group's gross profit. As of 30 September 2022, the proportion of Vietnam's total production value to the Group's total revenue increased to 80%.

As for Mainland China, the Group's production base is expected to be relocated to the Zhaoqing New District Industrial Park in the Greater Bay Area as scheduled. As at the end of the Period, the Group had a total of approximately 39,300 employees in Vietnam, and percentage of local employees reached 85% following efforts in accelerating localization. Meanwhile, the Shenzhen factory in China, which is the Group's R&D center and production base, had approximately 6,200 employees.

Adhering to the long-term Five-Year plan development framework and diversify business to sustain steady and sound development

As a blueprint for the long-term sustainable development of the Group, the management formulated a Five-year Plan for Fiscal 2022-2026 at the beginning of last year, focusing on the following three objectives: 1) drive steady growth in sales through innovation and R&D; 2) expand marginal profit by launching high value-added and innovative products and enhancing management and production efficiency; and 3) maintain healthy operating cash flows and capital expenditures, gradually lowering the debt ratio in the mid- to long-term. Despite facing multiple challenges in the market environment, the Group still actively maintains the long-term development framework of its Five-Year plan, and strives to promote growth recovery by leveraging its innovative craftsmanship and advantages in production capacity.

Successive breakthroughs in craftsmanship innovation, accelerating the introduction of innovative products with technological aesthetics to the market
After two years of dedicated efforts in R&D, the Group has made successive breakthroughs in craftsmanship innovation. Besides enhancing the technological appearance and functionality of the products, it has also reduced the use of labor in the production process and significantly improved the cost efficiency of products under innovative craftsmanship. In particular, the Group's integrated seamless bonding solutions (RePersbond, ReSiltech), coupled with the Group's proprietary moulded cup technology (ReMatrixPad), have successfully opened up a novel and unique development path that differentiates from the sewing workmanship in the textile industry over the past 20 years, further consolidating the Group's differentiation advantages and competitiveness.

The Group is committed to enhancing the standardization of its innovative processes and leveraging the advantages of cost efficiency improvement to accelerate the adoption of its products at scale, so as to realize the further penetration of innovative processes in brand partners' products while driving changes in the industry's practices.

It is worth mentioning that in the first half of this financial year, the Group jointly launched with its major Japanese brand partner a series of flagship bra top products featuring its seamless bonding craftsmanship and innovative moulded cups. It also developed and launched a series of flagship products for the VS China joint venture, including the Double-Size 'Jelly-Striped' Bra Top, Leggings and "Anti-Gravity" bras. With their technological aesthetics and functional features, these products have been well received by consumers and are leading the way to the targeted introduction of such innovative craftsmanship to the products of its various intimate wear brand partners. With the products leveraging the Group's innovative craftsmanship proving to be well received by the market, many sports brand partners have shown keen interest in the Group's technological craftsmanship, and this success is expected to be duplicated in the sports category.

Such reform on innovative craftsmanship with technological aesthetics is a strategy proactively pursued by the Group in response to the current lackluster macro environment. Based on the current development progress of the Group with its brand partners, more breakthroughs at the business level with multiple brand partners riding on the Group's innovative craftsmanship are expected.

Capitalizing on regional and scale advantages of supply chain in Vietnam, accelerate the achievement of cost reduction and efficiency enhancement through innovative craftsmanship
After years of strategic deployment, the Group's production base in Vietnam has gained considerable regional and scale advantages with mature operations, orderly management, stable workforce and enhanced production efficiency as planned. The pandemic has also accelerated supply chain localization, enabling the Group to deploy its production capacity in a more coordinated and agile way, thereby shortening the delivery lead time and improving response time.

In respect of the application of innovative craftsmanship with technological aesthetics such as seamless bonding technology and injection moulded cups, the Group has established the world's leading and scaled production base in Vietnam. The base has helped to develop and broaden the advantages of seamless bonding technology in the development and manufacturing of innovative products, thus facilitating the timely integration of seamless bonding and moulded cup technologies, which is expected to provide the Group with vigorous momentum when the market picks up.

Establish strategic partnerships in supply chain, create unique entry through material and machinery innovation
Leveraging its sophisticated know-how about products and development of automated production machinery for its craftsmanship, Regina Miracle spearheads the R&D direction of its supply chain, among which, by virtue of years of strategic alliances that focuses on materials innovation, the Group has established inimitable supply chain partnerships in foam and fabric material developments that provides the advantages of tailored development and prioritized collaborations. This, coupled with its craftsmanship innovation, has allowed the Group to form and strengthen the entry barrier with its product uniqueness.

Product innovation advantages manifested by rapid development of e-commerce sales in China
As a major step in the Group's layout in the PRC market, since the formal establishment of and cooperation in the VS China join venture, both parties have fully leveraged their synergies and made encouraging progress on the sales performance during the Period. In the domestic market, the pandemic still poses challenges to store sales to a certain extent, so the joint venture has adopted a prudent strategy in developing stores and will invest in an orderly and appropriate manner depending on the pandemic situation. At the same time, VS China has gradually redefined its brand image to more effectively cater for the needs of Chinese consumers and stepped up its efforts in driving e-commerce sales. Several product collections jointly developed with Regina Miracle have achieved remarkable sales in the e-commerce channels, and, together with the rapid response capabilities of the supply chain, have led to a significant increase in sales and rankings on e-commerce platforms. In particular, at the Double Eleven Campaign (D11), VS China's gross merchandise volume (GMV) achieved encouraging results of exceeding RMB100 million for the first time on Tmall's "D11", with a year-on-year increase of 139%. In view of the huge potential of domestic e-commerce sales and the strong growth momentum in this area, the joint venture will place focus on developing e-commerce channels in the next three years, in an effort to sustain long-term growth of its business.

At the same time, the Group will continue to strengthen its collaboration with traditional and e-commerce brand partners in the domestic lingerie market to promote vigorous development for all. For the development of its businesses in China, the Group's R&D centre and production base in Shenzhen will be relocated to Zhaoqing in phases from mid-2023 onwards, with the relocation expected to be completed by the end of 2024. This move is expected to help strengthen the collaboration between the Group and its international brand partners in the domestic market, as well as to help seize new opportunities with traditional offline / emerging online brands in China and from other channels.

Regina Miracle fully appreciates the importance of ESG issues to its business development. Therefore, it has been effectively promoting its sustainable development strategies with the current three-tier structure of "leadership - decision-making - execution" since Fiscal 2022. Based on the United Nations' 2030 Sustainable Development Goals, the Group has formulated six key issues of concern, based on which it has set four goals for 2030, namely carbon reduction, waste management, sustainable innovation, and people and community. During the Period, the Group achieved outstanding results in the relevant performance indicators and will continue to create long-term value for all stakeholders in a responsible manner and assume social responsibility to achieve sustainable development.

Mr. Hung concluded: "In the first half of the financial year, the Group's business reached new heights and continued its steady growth. We will continue to deepen its seamless bonding technology and innovative craftsmanship with technological aesthetics in the future, so as to create trendsetting products in the market. We expects to face certain challenges in the second half of the financial year due to the headwinds in the macro environment, which may continue into June next year. However, the Group is confident that it will be able to withstand market changes and maintain solid business performance by leveraging its leading innovative R&D capabilities and inimitable strategic partnerships, coupled with the various advantages of its Vietnam production base in terms of scale, stability and agility. The Group will proactively rise to the challenge by timely optimizing its strategies to mitigate the short-term impacts, and endeavor to seize market opportunities in a bid to maintain growth momentum in the medium to long term. While sustaining business growth, Regina Miracle will also continue to make every effort to achieve its sustainability targets and create long-term value for its shareholders and stakeholders. We would like to express its sincere gratitude to its brand partners, supplier partners, business partners and shareholders for their unwavering support, as well as the management team and colleagues for their tireless efforts and dedication.

About Regina Miracle International (Holdings) Limited
Founded in Hong Kong in 1998, Regina Miracle International (Holdings) Limited is a global leader in the intimate wear manufacturing industry. By adopting an innovative design manufacturer ("IDM") business model and building on a diverse technology matrix with three core technologies: computer aided mold design and production, 3D compression molding, and seamless bonding, Regina Miracle is able to develop and produce market-leading products for its long-standing world-renowned brand partners which cover various key sectors comprising intimate wear (including bras, panties, shapewear) and bra pads, sports products (including sports bras, functional sports apparel), consumer electronics components, and footwear, and facilitate cross-sector and cross-category applications.


Topic: Press release summary
Source: Regina Miracle International (Holdings) Limited

Sectors: Fashion & Apparel
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