Evergreen Products Group Announces 2017 Interim Results

(Hong Kong, 28 August 2017) – Evergreen Products Group Limited (“Evergreen” or the “Group”; HKEX stock code: 1962), a leading global manufacturer of hair goods, announced its first interim results for the six months ended 30 June 2017 (the “Period”) after its listing on The Stock Exchange of Hong Kong Limited on 12 July 2017, with net profit surging 32.2% to HK$46.7 million.
During the Period, the Group’s revenue amounted to HK$305.8 million, representing an increase of 1.2% year-on-year, due to the long-standing stable business relationships with its existing clients as well as the strong overall market demand for its wigs and hair products. Thanks to the low labour costs from the production in the Group’s production base in Bangladesh, gross profit increased by 6.6% year-on-year to HK$106.3 million. Gross profit margin amounted to 34.8%, up by 1.8 percentage points. Net profit for the Period jumped to HK$46.7 million, up by 32.2% year-on-year. Increase in net profit for the Period was primarily attributable to a gain of HK$16.8 million from change in fair value of redeemable convertible preferred shares (30 June 2016: Nil) and net off against the listing expenses of HK$11.5 million (30 June 2016: HK$4.9 million). Without taking into account of the listing expenses and the change in fair value of redeemable convertible preferred shares, the Group’s adjusted net profit for the period was HK$41.4 million, representing an increase of 3.0% from approximately HK$40.2 million for the corresponding period in 2016. Basic earnings per share was HK14 cents.
Mr. Felix Chang, Chairman, Chief Executive Officer and Executive Director of Evergreen, said, “The listing of Evergreen not only marks an important milestone of the Group, but also further enhances our financial resources and capital strengths to pursue our business development. By adhering our strategic planning in factory deployment, the production facilities in Bangladesh have also contributed significantly to the Group’s profitability during the Period and housed our principal manufacturing capacity. We believe that our production base in Bangladesh, which has a large pool of low cost labour, will continue to support our growth. ”

Business Review

Evergreen boasts a comprehensive product portfolio including wigs, hair accessories and others, high-end human hair extensions and Halloween products that target at different ethnic groups and theHalloween market. The United States remained as the Group’s principal market which accounted for 81.3% of its total revenue during the Period.
As at 30 June 2017, the Group had three production centres in China and two production centres in Bangladesh. In January 2017, it completed the construction work of the phase III production facility in the Uttara Export Processing Zone (“UEPZ”) in Bangladesh, which is used for the production of wigs and related products, and had commenced operation and production thereafter. The new facility allows the Group to meet additional product demand from its existing customers.
During the Period, wigs, hair accessories and others remained as the Group’s key products and accounted for 67.4% of its total revenue. Revenue from this segment slightly decreased 1.4% to HK$206.1 million due to less production for relatively low gross profit margin products such as braids. Its gross profit margin recorded an increase of 3.3 percentage points to 30.4%.
Revenue from high-end human hair extensions increased by 7.8% to HK$71.0 million, thanks to the higher sales volume driven by increased production from the Group’s Bangladesh production base. Gross profit margin of this segment slightly decreased by 3.7 percentage points to 46.9% for the Period, due to an increase in sales of high-end human hair extensions under other brands during the Period, which recorded lower profit margin than similar products sold under the Group’s own brands. Also, revenue contributed by Halloween products increased by 5.4% to HK$28.7 million, primarily due to early delivery of finished goods during the Period as compared to the corresponding Period in 2016. Its gross profit margin remained stable and increased slightly by 0.1 percentage point to 35.9%.

Business Outlook

Looking ahead, in order to meet the increasing demand and to capture business opportunities arising from the growth in the hair goods industry, Evergreen intends to further expand its production capacity and the scope of its operations in Bangladesh to include human hair sourcing, bleaching and dyeing, printing and package cartoning. It plans to complete the construction of four new production facilities in Bangladesh by the end of 2019. Among them, the construction of the GT Hand Tie Facility is close to completion, leaving only interior decoration before its commencement of production. In addition, the Group has started the construction of two other production facilities, namely the Bleaching and Dyeing Complex and the UEPZ Printing Facility, while the construction of the package cartooning facility will begin by the end of 2017.
With the addition of the new facilities in Bangladesh, Evergreen will be able to meet additional product demand from customers, shorten the production lead time and improve production efficiency through both consolidation of raw material processing and hair goods production functions in Bangladesh as well as increased production capacity. The Group plans to increase market share and enhance revenue sources and profitability by introducing more human hair goods to existing customers and further develop the product segment of high-end human extensions with the Bleaching and Dyeing Complex in Bangladesh currently under construction. Moreover, with the expansion of its production capacity, the Group will further penetrate into the Halloween products.

Mr. Chang concluded, “Going forward, Evergreen will join hands with existing customers to expand product portfolio and target new markets, with an ultimate aim to increase our market share. With our strong innovation, research and development capabilities, we will design, develop and manufacture products that capture changing fashion trends at competitive prices, strengthen our core competence and explore new opportunities in order to maximise the value of the Group, thus bringing the best returns to 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 enjoys economies of scale. For more details about Evergreen, please visit the Group’s website: www.epfhk.com

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