Shoe Unit Price Increases Nine, Four Quarter Revenue Rises, Innovation High

Wednesday, nine Hing Holdings Limited (1836.HK) disclosed that the core business revenue was the highest in recent years, driven by the resumption of the average selling price of manufacturing business in the fourth quarter.

In the four quarter of December 31, 2018, the average selling price of manufacturing business increased to 24.8 US dollars from 24.3 US dollars in the same period last year, a 2.1% increase.

Sales increased by 4.9% to 15 million 100 thousand pairs annually, the lowest since the three quarter of 2017.

Manufacturing revenue rose 7.2% to $374 million 300 thousand compared with the same period last year. Group Chairman Jiang Zhigang emphasized that the purchase of fashionable sports shoes products in the four quarter and the whole year were flourishing, and the orders for leisure and fashion footwear products also increased.

2018 total manufacturing revenues totaled 1 billion 550 million 700 thousand US dollars in the year, up 2.7% compared to 1 billion 510 million 300 thousand US dollars in 2017. Sales increased from 56 million 600 thousand pairs in the previous year to 60 million 200 thousand pairs, reaching 60 million double targets, an increase of 6.4%, and the average selling price fell by 3.4% to 24.8 dollars over the same period, which is lower than the median figure expected by management.

"The global trade war has not had a significant impact on the operation of the group," Jiang Zhigang said in his earnings report. He also said that the group would continue to redeploy China's capacity to Southeast Asia and further boost production efficiency so as to achieve the goal of rising profit margins in the medium term.

American brands such as Michael Kors, Tory Burch, Deckers, Timberland and Alexander Wang account for about 50% sales of nine Xing holdings. At present, only a small number of shoes are exported from China to the United States, but many customers still want to change their production areas to other places.

The group has production lines in Vietnam, Indonesia and Bangladesh. By the end of 2017, Vietnam's new factory, which mainly produces fashionable sports shoes, was put into operation, and recently closed the Guangxi factory.

The cost of Guangxi customs plant may offset the rise in profit margins of Vietnam's new plant and the lifting of the depreciation of the renminbi to profitability.

Fourth quarter, nine Hing Holdings achieved total revenue of US $386 million 500 thousand, an annual increase of 8.2%, manufacturing business accounted for 96.8%, and 3 million 300 thousand US dollars from Stella Luna three private brand European retail business.

Annual revenue rose 1.6% to $1 billion 595 million 900 thousand compared to the previous year, excluding the Chinese retail business that had been sold, the increase was 3.3%.

Jiang Zhigang said the outlook for 2019 is expected to maintain a steady growth in demand for fashion sports shoes and continue to be the main driving force of the group. The demand for casual footwear business with Clarks and ECCO and other brand customers, including Prada Prada and Bally barley, will continue to be stable.

In the first half of the fiscal year, these three categories contributed about 1/3 to the group.

Nine Hing Holdings also announced the appointment of veteran Hongkong filmmaker Nansun Shi as an independent non-executive director.

The group had just changed its CEO in early January and replaced Chen Limin by Jiang Zhigang's nephew.

1836.HK Holdings Limited (HK) closed at HK $10.10 on Wednesday, rising 0.8% on a whole day, down 10.9% in the past 12 months. Nine.

HSBC securities, which lowered its target price from HK $9.4 to HK $8.6 after the three quarter results, raised the target price by 37.2% to HK $11.8 today, and the rating also increased from "holding" to "buying".

Nine Xing Holdings (1836.HK) rose 4.75% to 10.58 Hong Kong dollars on Thursday, with a total of 10.42 Hong Kong dollars a day, up to 3.2%.