Combine Will International Holdings (N0Z) H1 2023 earnings summary

Executive summary

• Revenue fell 16.0% YoY to HK$511.1m amid weaker demand; gross margin improved to 10.9% from 10.4%.

• Net profit declined 9.4% to HK$20.5m, while operating profit rose 6.9% to HK$36.6m; higher finance costs weighed on earnings.

Financial highlights

• Gross profit fell 12.4% YoY to HK$55.6m; other income rose 31.5% to HK$19.9m, including a one-off cancellation fee and inventory allowance reversal.

• Selling and distribution expenses declined 50.0% to HK$4.9m; administrative expenses fell 1.5% to HK$34.1m.

• Finance costs rose 59.9% to HK$13.9m amid higher HIBOR; average margin interest rate increased to 5.84% from 2.53%.

• Basic EPS declined 9.4% to HK63.46 cents from HK70.03 cents.

Outlook and guidance

• Short-term demand is expected to face pressure from high interest rates, inflation and weaker activity; management remained cautiously positive long term, particularly in Indonesia.

• Plush toy production in Indonesia was scheduled to start in Q4 2023; capacity expansion and product diversification aim to broaden revenue streams and support margins.

• Priorities include efficiency, product quality, new clients, customer diversification, carbon neutrality, manufacturing safety and supply-chain resilience.

• Barring unforeseen developments, a satisfactory FY2023 was envisioned, supported by prudent financial management, strategic expansion and operational excellence.