Pacific Textiles (1382) H2 23/24 earnings summary

Executive summary

• Revenue decreased by 7.0% year-over-year to HK$4,665.2 million due to a 2.1% increase in sales volume offset by an 8.9% drop in average sales price.

• Profit attributable to equity holders fell 37.8% to HK$167.1 million, impacted by higher net interest expenses, preliminary operating loss from a new Vietnam factory, and a HK$64.2 million impairment loss on an associate.

• Gross profit margin declined to 9.1% from 9.8% year-over-year.

• The Group remains optimistic for FY2024/25, expecting improved demand, increased utilization at the Panyu Factory, and full-scale production at the new Vietnam factory.

Financial highlights

• Revenue: HK$4,665.2 million (down 7.0% year-over-year).

• Gross profit: HK$423.6 million (down from HK$490.0 million).

• Net profit: HK$167.1 million (down from HK$268.6 million).

• EBITDA: HK$421.0 million (down from HK$491.3 million).

• Basic and diluted EPS: HK$0.12 (down from HK$0.19).

• Interim dividend paid: HK7 cents; proposed final dividend: HK5 cents per share.

Outlook and guidance

• Management expects lower average interest rates and net interest expenses in FY2024/25 due to refinancing.

• Anticipates increased demand as key customers have cleared inventory and utilization at Panyu Factory rises.

• New Vietnam factory began pilot production in April 2024, with full-scale production expected in H2 FY2025.

• Expects a rebound in sales and profitability in FY2024/25, followed by mid-term growth.