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Vinda International Announces 2013 Interim Results

Revenue Increased 14.8% to HK$3.31 Billion
Gross Profit Up 6.1% to HK$958 Million
Profit Attributable to Equity Holders of the Company Grew 10.1% to HK$284 Million

Financial Highlights

For the six months ended 30 June

2013

(HK$ million)

2012

(HK$ million)

Change

Revenue

3,313.7

2,887.5

+14.8%

Gross profit

957.8

903.0

+6.1%

Profit attributable to equity holders of the Company

284.0

258.0

+10.1%

Basic earnings per share (HK cent)

28.4

26.7

+6.4%

Interim dividend per ordinary share (HK cent)

4.8

4.3

+11.6%

(28 August 2013 – Hong Kong) Vinda International Holdings Limited (“Vinda International” or the “Company”, together with its subsidiaries collectively known as the “Group”; stock code: 3331), a leading manufacturer and branded seller of household paper products in the PRC, announced today its interim results for the six months ended 30 June 2013 (the “Period”).

During the Period, the Group’s revenue grew by 14.8% year-on-year to HK$3.31 billion. Of the various product categories, performance of softpack was the most outstanding as its sales surged by 38.3% year-on-year. Traditional channels (i.e. distributors), modern channels (i.e. hypermarkets, supermarkets), B2B and e-commerce accounted for 47.9%, 37.7%, 12.8 and 1.6% of the revenue respectively. Total sales volume grew 17.6% to 236,126 tons. 

Gross profit rose by 6.1% to HK$960 million during the Period. Profit attributable to equity holders of the Company amounted to HK$280 million, an increase of 10.1% year-on-year. Basic earnings per share were 28.4 HK cents (1H 2012: 26.7 HK cents). The board resolved to declare an interim dividend of 4.8 HK cents per share (1H 2012: 4.3 HK cents)

In the first half of 2013, aggregate new annual production capacity of 80,000 tons were put into operation; whilst the fully automated production line and the automatic stereoscopic warehouse system at the Sanjiang plant in Southern China were up and running, thereby enhancing production and logistical efficiency. With a further 140,000 tons of capacity to be added in the second half of the year, the total designed annual production capacity is expected to reach 760,000 tons by the end of 2013, which will include 50,000 tons at the new plant in Laiwu City, Shandong Province. It is also the Group’s plan to add another 130,000 tons of capacity in the second half of 2014, indicating that its designed annual production capacity will reach 890,000 tons by the end of 2014. To enhance its liquidity and return on assets, the Group is now evaluating the viability of implementing a two-pronged development strategy, which fuses both the current investment-driven growth model and a brand new asset-light model together, starting from 2015. The prerequisite for adopting this new model is that it will bring cost advantage to the Group without sacrificing its product quality. The Group will select investors in the industry as its strategic partners and will contract out its mother reel production to them.

In light of the rapidly rising electronic sales platform, the Group approached all kinds of large B2C online shops actively so as to establish long-term partnerships. Looking ahead of the second half of 2013, the Group will strive to boost e-sales with a view to increasing the revenue proportion of e-commerce. In addition, the Group will expand overseas markets and sales of products with Vinda brand. 

In the second half of the year, the Group will step up its efforts in optimizing the product profile and allocated resources to the promotion of “Star Products” within each product category, especially the “Ultra-Strong” series. It will also reinforce the sales of wet wipes and kitchen towel which command high margins, and carry on the cartoon marketing strategy by launching a new product series featuring “SpongeBob SquarePants”, a world-famous cartoon character, in order to enhance its sales and profitability.

As regards the sales network, with its established market leadership in Guangdong, Hubei, Beijing and Hong Kong, the Group is ready to develop the markets of provinces and counties that it has yet to set foot on to expand Vinda’s market coverage. After the new plant in Laiwu City, Shandong Province goes into operation later this year, Shandong Province and its surrounding areas will become the Group’s focus for the second half of the year. In August, the Group became the only official paper supplier of “The 23rd Qingdao International Beer Festival 第二十三屆青島國際啤酒節”, facilitating the penetration of Vinda brand in Shandong market. As at 30 June 2013, Vinda International had 235 sales offices (31 December 2012: 182) and 1,457 distributors (31 December 2012: 1,374). 

As regards personal care products business, the sanitary napkin product “VIA” has been launched for pilot sales in Guangdong and Hubei in the first quarter of 2013. The initial response from the market has been positive. On the other hand, considerable efforts have been made to build the baby diaper brand “Babifit” brand, such as expanding its sales channels into nation-wide hypermarket chains like Wal-Mart. The Group will further expand sales channels of its personal care products to drive future growth.

Mr. Li Chao Wang, Chairman of the Group concluded, “Despite the challenging operating environment of the fast moving consumer goods industry in the first half of 2013, the Group adhered to its brand marketing and innovation strategies while solidifying its strengths to achieve steady growth during the Period and equip itself for the second half of the year. Looking ahead, the Group will adhere to and build on its strategies based on its brand and innovation so as to embrace product diversification, as well as deliver the best returns for our shareholders.”