Stella International (1836) H2 2023 earnings summary

Executive summary

• FY23 revenue declined 8.5% YoY to US$1,492.7m as shipment volume fell, while higher ASP lifted gross margin and operating profit.

• Adjusted net profit rose 23.5% to US$147.6m; net cash reached US$287.4m and FY23 dividend was HK$1.03 per share.

Financial highlights

• Shipment volume fell 12.5% to 49.0m pairs; ASP rose 4.2% to US$29.7.

• Revenue was US$1,492.7m, down 8.5% YoY; gross profit increased 4.1% to US$366.7m.

• Operating profit rose 18.2% to US$159.4m; net profit increased 19.7% to US$140.3m.

• Adjusted net profit, excluding US$7.3m fair value loss in FY23 and US$2.3m in FY22, rose 23.5% to US$147.6m.

• EPS increased 19.5% to US$0.178; dividend per share rose 18% to HK$1.03.

Outlook and guidance

• FY23, the first year of the 2023–2025 plan, was ahead of original targets; strong momentum was expected to continue.

• FY24 outlook called for modest full-year sales growth while maintaining strong gross and operating margins.

• Three-year targets: 10% operating margin and low-teens net profit CAGR.

• Luxury and Fashion demand was strong; orders from a major Sports customer improved. ASP and volume were considered less indicative of margin performance amid category-mix changes.

• Factory ramp-ups and capacity expansion continued in Indonesia and Bangladesh; plans included a new factory for a major sports customer and further handbag growth.