Net profit of sportswear brand China Dongxiang surges
Source: China Dongxiang (Group) Co Ltd Date: 2008-04-09
China Dongxiang (Group) Co Ltd announced its annual results for the year ended 31 December 2007. China Dongxiang recorded impressive results for the year under review, with consolidated sales almost doubled to RMB1.71 billion. Profit attributable to equity holders rose 1.4 times to RMB733.6 million, outperforming the average market estimates. Basic earnings per share increased by 1.2 times to RMB15.89 cents.
In view of the encouraging performance, the board of directors of the Company recommends distribution of a final dividend of RMB1.09 cents per ordinary share. This is equivalent to a payout ratio of 37% for the period from our listing on 10 October till the end of December 2007, which represented a 25% payout as per our dividend policy plus a 12% payout attributable to one-off interest income from over-subscription monies to the IPO share offer, which the Group would like to share with the shareholders.
Commenting on the Company's strong results, Mr. Chen Yihong, Chairman of China Dongxiang, said, "The Kappa Brand, which is owned by the Group in the PRC and Macau, is one of the top international sportswear brands in the PRC. Its products, integrating sports and fashion elements, are warmly welcomed by the PRC' s fast growing and high potential consumers. We continue to benefit from our competitive advantages in 2007.”
“Gross margin and net margin attained high levels of 58.5% and 42.9% respectively. The unit average selling prices and total sales also showed remarkable growth. Meanwhile, we actively expanded our distribution and retail network by adding 807 Kappa retail outlets to bring the total to 1,945 retail outlets, covering all major provincial capital cities and many other large urban areas and towns in the PRC."
During the year under review, there was rapid growth across the Company's three product categories. Sales of apparel, footwear and accessories recorded encouraging growth of 88%, 136% and 127% respectively. The Company actively developed the footwear business in 2007 to strengthen its product mix. Accordingly, footwear has taken up an increased percentage of total sales from 20% to 24%, while contribution from apparel decreased from 76% to 72% and accessories maintained a stable ratio of 4.7%. In order to have quicker response to the market trend and to facilitate distributors' high volume orders for the four seasons, the Company increased the frequency of sales fairs for distributors from two to four times each year.
Looking ahead, China Dongxiang will continue to enhance its design and development capabilities through establishment of overseas design and development centers, as well as cooperation with well-recognized international design and development institutes. The Company will also continue to sponsor a number of selective sport and fashion activities which are well fitted to the image of Kappa Brand. Moreover, the Company will actively participate in a number of 2008 Olympic events in the PRC.
