Chervon (2285) H1 2026 earnings summary

Executive summary

• Achieved record-high first-half sales of $1.029 billion, up 12.8% year-over-year, driven by strong OBM business and customer restocking amid robust end-market demand.

• Gross profit rose 33% to $404 million, with gross margin improving by 600 bps to 39.3%, aided by high-margin OBM products, operational efficiency, and tariff refunds.

• Net profit increased 11.6% to $106.3 million; adjusted net profit surged 39.9% to $106.3 million, excluding a prior-year disposal gain.

• Marked recovery and normalization after a challenging 2025, with growth across core brands and regions.

• Interim dividend of HK$0.3258 per share declared and HK$150 million share repurchase plan launched, with 1.85 million shares repurchased.

Financial highlights

• Operating profit reached $134 million, up 11.8% year-over-year; operating margin stable at 13%.

• SG&A expenses rose 23.4% to $267 million, now 25.9% of revenue.

• Net cash from operating activities declined to $129.5 million from $256.7 million; cash and equivalents at period end were $372.2 million.

• Equity increased 6.9% to $1.09 billion; current assets up 7.6%.

• Capital expenditures totaled $47.2 million, focused on Vietnam production expansion and equipment upgrades.

Outlook and guidance

• Management expects continued recovery and growth for H2 2026 and mid-to-long term, with confidence in strong brands, global operations, and innovation.

• Strategic focus on product portfolio optimization, pricing, and global manufacturing expansion to drive sustainable growth.

• Focus on enhancing shareholder value with a HKD 150 million buyback plan and interim dividend.