(Hong Kong, 27 March 2018) – Evergreen Products Group Limited (“Evergreen” or the “Group”; HKEX stock code: 1962), a leading global manufacturer of hair goods, has announced its annual results for the year ended 31 December 2017 (“FY2017” or the “Year”) with net profit notably having increased by 233.8% to approximately HK$109.5 million. This is its first annual results announcement after its listing (the “Listing”) on the Main Board of The Stock Exchange of Hong Kong Limited on 12 July 2017.
In FY2017, Evergreen’s revenue amounted to HK$647.3 million, representing an increase of 8.7% year-on-year, attributable to the long-standing stable business relationships with its existing clients and the strong overall market demand for its wigs and hair products. Benefitting from the competitive labour costs from the Group’s production base in Bangladesh, gross profit increased positively by 8.9% year-on-year to HK$230.2 million, while gross profit margin remained stable at 35.6% (FY2016: 35.5%). Net profit for the Year recorded a significant increase of 233.8% to HK$109.5 million. If excluding the two one-off and non-recurring Listing-related items including the listing expenses and a gain from the change in fair value of redeemable convertible preferred shares, the Group’s adjusted net profit for the year increased by 7.7% to HK$92.7 million, which was equally encouraging. Basic earnings per share were HK24 cents. The Board has recommended the payment of a final dividend of HK8.13 cents per share to share the harvest of the Group’s success with its shareholders.
Mr. Felix Chang, Chairman, Chief Executive Officer and Executive Director of Evergreen, said, “Through our strategic planning in factory deployment, the production facilities in Bangladesh have housed our principal manufacturing capacity and contributed significantly to the Group’s profitability during the Year. With the completion of the phase III production facility in the Uttara Export Processing Zone (“UEPZ”) in Bangladesh, we will continue to leverage our production advantage and expand production capacity, meeting additional production demand and introducing a greater variety of human hair goods to our customers.”
Evergreen, as a leading hair goods manufacturer, accounted for approximately 4.0% share of the global synthetic hair goods manufacturer market revenue in 2016. It boasts a comprehensive product portfolio including wigs, hair accessories and others, high-end human hair extensions and Halloween products that target different ethnic groups and the Halloween market. In FY2017, the United States remained as the Group’s principal market which accounted for 80.5% of its total revenue.
Wigs, hair accessories and others remained the key growth driver of the Group’s business, accounting for 69.0% of its total revenue. Revenue from this segment rose by 9.1% to HK$446.6 million, mainly due to more sales of high margin products such as lace wigs. Gross profit margin increased slightly to 31.1%.
Revenue from high-end human hair extensions rose by 13.1% to HK$160.0 million, with higher sales volume resulting from the increased production capacity in the Bangladesh factory. This segment’s gross profit margin was 51.0%. Revenue from Halloween products decreased by 9.4% to HK$40.7 million for the Year, primarily due to more costs incurred such as discounts being offered to boost sales of Halloween products in particular due to the fact that Halloween fell midweek in the Year. Moreover, additional costs were spent to set up additional Halloween design units in the Bangladesh factory. Gross profit margin of this segment was 24.0%.
To capture the business opportunities arising from the growth in the hair goods industry, Evergreen will continue to expand its product portfolio and customer base as well as improve its production efficiency through consolidating its raw material processing and hair goods production functions in Bangladesh, thereby facilitating sustainable profitability. It has been expanding the production and scope of its operations in Bangladesh to include human hair sourcing, bleaching and dyeing, printing and package cartoning. In particular, the construction of one of the Group’s new production facilities in Bangladesh (the “GT Hand Tie Facility”), which will be principally engaged in hand tie production, is close to completion. Meanwhile, the Group also had commenced construction of two other production facilities (the “Bleaching and Dyeing Complex” and the “UEPZ Printing Facility”) during the Year, and the construction of the production facility for package cartoning will commence in 2018.
The Group targets to increase market share and enhance revenue sources and profitability by introducing a greater variety of human hair goods to existing customers and further developing the product segment of high-end human hair extensions through the Bleaching and Dyeing Complex. With the resulting expansion of its production capacity, the Group is able to increase penetration of its Halloween products in the market.
Mr. Chang concluded, “We are happy to see the construction of production facilities in Bangladesh progressing smoothly. With the addition of new production facilities in Bangladesh and increased production capacity, Evergreen will further bolster its leading position in the market, supporting its long-term sustainable growth, thereby creating greater value for its shareholders”.
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About Evergreen Products Group Limited
Evergreen is a leading global manufacturer of hair goods, including wigs, hairpieces, braids and high-end human hair extensions. Since 1962 when its founder commenced trading of wig products, Evergreen has kept growing and ranked fifth in synthetic hair goods sales globally with an approximately 4.0% share of the global synthetic hair goods market by revenue in 2016. It operates on a comprehensive business model covering various aspects of the hair goods business, from initial design, research and development to final delivery. With two production centres in Bangladesh and three productions centres in China, the Group benefits from its low labour costs and large labour pools, thus it enjoys economies of scale. For more details about Evergreen, please visit the Group’s website: www.epfhk.com
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