Xingquan International Sports Holdings Limited reported revenue reached RMB1.29 billion ($209 mm) in the fiscal year ended June 30, up 5.2 percent from fiscal 2014, but still well below its peak of RMB1.69 billion in fiscal 2012.
The growth was driven primarily by an increase in the Hong Kong company's sales of soles to Chinese footwear brands and manufacturers and a 16.9 percent increase in average selling price, which the company attributed to its outdoor casual wear brand Gertop.
Though based in Hong Kong and listing its shares in Malaysia, Xingquan earns virtually all its revenue from selling to customers in mainland China. Xingquan earned about half its revenue during the fiscal year from its Apparel and Accessories/Gertop segment, about 30 percent from its Casual Footwear/Addnice footwear segment and the remainder from selling soles to China's domestic footwear brands and manufacturers.
Apparel revenues, including sales of Gertop apparel, declined 2.5 percent to RMB640.5 million ($104 mm) due mainly to a decrease in sales volume from 4.0 million to 3.3 million pieces. Gross margin, however, increased 200 basis points to 37.2 percent.
Shoe revenues, which include sales of Addnice athletic, outdoor and other footwear, grew 17.0 percent to RMB391.5 million ($64 mm) mainly due to an 8.2 percent increase in average selling price, which reached RMB175.0 ($28) per pair. Gross margins rose 30 basis points to 30.0 percent.
Shoe sole revenues increased 11.8 percent to RMB234.0 million ($38 mm) mainly due to increase in sales volume from 12.9 million pairs to 15.1 million pairs. Gross margin reached 26.5 percent, up 290 basis points.
Consolidated gross margin was 36.1 percent, up 210 basis points from fiscal 2014. SG&A was 14.6 percent of revenue, down 20 basis points from a year earlier.
Profit before taxes grew 34.6 percent to RMB326.3 million ($53 mm) due to the growth in sales and an unrealized gain from shifting foreign exchange rates. Net profit reached RMB250.9 million ($41 mm), or RMB.74 (12 cents) per share, up 42.1 and 29.8 percent respectively from fiscal 2014.
While Xingquan declined to provide a forecast for fiscal 2016, it said it anticipates another year of growth.
“We are aware that the Chinese economic uncertainties may impact the spending pattern of the Chinese consumers which may then impact our business,” the company said. “As such, we will continue to be wary of the changes in the economic conditions,” the company states in its earnings report. “Nevertheless, our board of directors believes that the Group’s prospects for the financial year ending 30 June 2016 should remain positive due to the success of the Gertop brand which is in the outdoor casual wear segment as well as the market recognition of our shoe sole business.”
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Unaudited Condensed Consolidated Statements of Comprehensive Income |
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For the Fiscal Year ended June 30, 2015 and 2014 |
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6/30/15 |
6/30/14 |
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6/30/15 |
6/30/14 |
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(note a) |
(note a) |
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RMB'000 |
RMB'000 |
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RM'000 |
RM'000 |
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Revenue |
B1 |
1,292,858 |
1,229,418 |
|
723,966 |
688,441 |
|
Cost of sales |
(825,951) |
(811,442) |
|
(462,510) |
(454,386) |
|
|
Gross Profit |
|
466,907 |
417,976 |
|
261,456 |
234,055 |
|
Other income |
|
49,077 |
6,905 |
|
27,482 |
3,867 |
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Selling and distribution expenses |
B1 |
(142,908) |
(126,404) |
|
(80,025) |
(70,783) |
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Administrative expenses |
|
(45,720) |
(55,043) |
|
(25,602) |
(30,823) |
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Finance costs |
(1,067) |
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