Evergreen Products Group Announces 2018 Annual Results

(Hong Kong, 27 March 2019) – Evergreen Products Group Limited (“Evergreen” or the “Group”; HKEX stock code: 1962), a leading global manufacturer of hair goods, has announced its 2018 annual results, which has been highlighted by sustained revenue growth and improving profitability during the year ended 31 December 2018 (“FY2018” or the “Year”).

For the Year, Evergreen’s revenue amounted to HK$732.2 million, representing a 13.1% increase year-on-year, thanks to its long-standing and stable business relations with existing clients and the strong overall market demand for wigs and hair products. The Group continued to enjoy low labour costs by conducting production at its Bangladesh Factory, which help to maintain stable gross profit margin at 34.9%. Net profit for the Year was HK$110.6 million. Without taking into account of any one-off, non-operating or non-recurring items, the Group’s adjusted net profit for the Year surged 15.4% to HK$107.0 million. The board has recommended the payment of a final dividend of HK$2.50 cents per share for the Year, plus the interim dividend of HK4.2 cents per Share already declared and paid, making a total dividend of HK6.7 cents per shares (2017 total dividend: HK 8.13 cents).

Mr. Felix Chang, Chairman, Chief Executive Officer and Executive Director of Evergreen, said, “During the Year, the escalation of the US-Sino trade war added more uncertainties to the global economy. We took the pre-emptive step of seizing opportunities in Bangladesh, successfully moving the majority of our production capacity to the country and thereby enabling us to avoid the impact of US-Sino trade tensions. With the completion of the Bleaching and Dyeing Complex in Bangladesh during 2018, we will expand our full range of human hair products, which will lead to greater sales volume in the coming years.”

Business Review
Evergreen offers a comprehensive product portfolio including wigs, hair accessories and others, high-end human hair extensions and Halloween products that target different ethnic groups as well as the Halloween market. During the year, the United States remained as the Group’s principal market, which accounted for 81.2% of its total revenue.

As at FY2018, several production complexes and facilities were completed in Bangladesh, including the Bleaching and Dyeing Complex and the UEPZ Printing Facility. The Bleaching and Dyeing Complex enables Evergreen to manufacture all kinds of human hair products, and provide a robust platform for introducing a greater variety of human hair goods to its customers. As for the Self-built UEPZ Printing Facility, it has allowed the Group to shorten production lead-time by eliminating the need for associated materials to be shipped to the Group. Moreover, costs for the storage of sufficient inventory of printing materials is saved, which enhances the Group’s flexibility to take urgent orders and swap production schedules to meet market demands. Evergreen continues to adhere the deployment strategy and the Bangladesh Factory, housing the Group’s principal manufacturing capacity, accounted for 92.3% of its total revenue for the Year. The Bangladesh Factory also contributed significantly to the Group’s profitability.

Wig, hair accessories and others remained as the Group’s key product segment. Its revenue increased 17.9% to HK$526.6 million for the Year. Gross profit margin for this segment remained stable at 31.1%. Revenue from high-end human hair extensions increased by 3.5% to HK$165.6 million, because of higher sales volume driven by increased production at the Bangladesh Factory, with gross profit margin at 48.8%. Revenue from Halloween products amounted to HK$40.0 million, with the gross profit margin up by 4.3ppt to 28.3%.

Business Outlook
With the addition of new production facilities in Bangladesh, the Group will be able to meet the additional product demand from existing and new customers and shorten the production lead time, as well as improve production efficiency by both integrating raw material processing and hair goods production functions in Bangladesh and increasing production capacity. While further raising production capacity. Moreover, by integrating the Bleaching and Dyeing Complex and the Group’s human hair production operation with the existing facilities in Bangladesh, utilisation of all the Group’s production facilities in Bangladesh will be further enhanced. Besides optimising production, training different levels of workers is now in full swing, and will continue to ensure that they are well equipped with the skills to meet demand in the coming years.

In respect of facilitating downstream integration, the Group will be setting up offices in Asian countries to sell self-owned brand high-end human hair extension to boost sales and profit margins. The Group is also planning to set up several one-stop hair care centres so that tailor-made toupees can be offered to customers in Asian countries such as China and Japan.

Mr. Chang concluded, “Looking ahead, we expect construction of our other facilities in Bangladesh will continue in full swing until the end of 2019. Besides bolstering production, we will direct our attention to sell self-owned brand through e-commerce in Asian countries, specifically directing sales to end users, and also with end users in mind, the Group will set up one-stop hair care centres. Furthermore, with greater effort placed on downstream integration in the marketing and sales of our comprehensive range of human hair products, we are confident that the Group’s profitability will rise and thus maximise returns for our 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 its founder commenced trading of wig products in 1962. 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 three 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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