Turnover and Net Profit Up 31.9% and 71.9% Respectively
Continual Growth in Sales of Sports Wear and Domestic Market
Success in Worldwide Market Development Under Challenging Market Environment
FOR THE YEAR ENDED 31 DECEMBER
2008 2007 Change (%)
RMB'000 RMB'000
Turnover 4,822,596 3,655,613 31.9 %
Gross profit 1,149,072 813,860 41.2 %
Profit attributable to the equity
holders 699,380 406,882 71.9 %
Basic earnings per share (RMB) 0.56 0.33 69.7 %
Final dividend per share
(HK cents) 20 HK cents 16 HK cents 25.0 %
HONG KONG, March 26 /PRNewswire-Asia/ -- China's largest vertically integrated knitwear manufacturer, Shenzhou International Group Holdings Limited ("Shenzhou International" or the "Group"; stock code:2313), is pleased to announce the annual results for the year 2008.
Driven by the continuous and sharp increase in the sales of sports wear, successful expansion into the global distribution markets and the acceleration of the exploration of the domestic market, the Group achieved excellent performance against the backdrop of fluctuating global economy. Sales for the year ended 31 December 2008 amounted to RMB4,822,596,000, representing an increase of 31.9% from the previous year. Gross profit increased to RMB1,149,072,000, which exceeded RMB1,000,000,000 for the first time and represented a growth of 41.2% when compared to last year. Profit attributable to equity holders of the Company amounted to RMB699,380,000, a surge of 71.9% when compared with the year 2007. Basic earnings per share amounted to RMB0.56. The board of directors proposed to declare a final dividend of 20 HK cents (2007: 16 HK cents) per share for the year ended 31 December 2008.
Commenting on the Group's satisfactory annual results, Mr. Ma Jianrong, Chairman of Shenzhou International, said, "I am very delighted that the Group achieved encouraging results amidst challenging economic environment, thanks to its remarkable achievements in respect of its good management in manufacturing, production base layout, fine-tuned product portfolio and expansion to the global market. All these achievements have underpinned a solid foundation for our continual and sound growth for the future. In addition, the government also introduced a series of supportive policies for the knitwear industry, including the increase of tax rebates for textiles and apparels to 15%, inclusion of textile industry in its top ten industries rejuvenation plan, reformation on value-added tax, decrease of interest rate of bank loans and stabilized exchange rate movement between RMB and USD. With these policies, the garment industry has managed to grow well despite the fluctuating environment."
During the year, sales from sports wear further increased to 42.3% of the total sales to RMB2,042,315,000 while the Group worked more closely with leading sports brands. Sales from lingerie increased significantly by 68.3% year on year to RMB248,929,000. Rapid growth in sports wear and lingerie products have the extended products series of the Group and offered more comprehensive product selections for our clients.
With respect to market expansion, sales to Japan to the total turnover reduced to 50.5% while sales to Japan grew by 11.9% from 2007. Domestic sales to the total turnover in 2008 surged to 19.0% when compared to 10.8% in 2007. This was mainly attributable to the continual economic growth in Mainland China, the increase in consumer demand for the high-end sports wear and the increase in supply of sports wear to clients of internationally renowned brand names for domestic sale. Moreover, the Group achieved significant growth in the sales to the European market and other markets, which include Korea, Hong Kong, China and Australia. Globalization of the market has effectively lowered the influence of a single market on the Group's operation.
The Group enhanced proactively its production capacity and facilities in order to cope with the anticipated addition of orders and the needs for future business development. It also optimized advantages of the coastal and central areas respectively, along with the government policies to develop the central and western economy and increase domestic demand. During the year under review, the Group has established a new garment manufacturing base at Anqing City, Anhui Province, which is officially launched in the first quarter of 2009. A garment factory situated at Quzhou City, Zhejiang Province, is under construction and expected to commence production in the third quarter of 2009. While expanding the production capacity of garments, the adjustment of the manufacturing base layout has effectively leveraged on cost advantage of the local manpower and benefit from localization of the staff, which assured stability of our frontline production staff. Riding on excellent infrastructures, effective logistics and transportation and comprehensive facilities for the industry, the coastal areas in eastern China will be the most important processing basis in the world for the medium- to high-end garments in a very long period of time. Thus, this region will continue to be the Group's core production base.
In addition to enhancing production capacity and developing business, the Group achieved prominent progress in energy saving and reducing the discharge of pollutants. Furthermore, continuous measures of technological reform, equipment upgrade and technology optimization have reduced our consumption of energy and water resources throughout our manufacturing process, thus offsetting effectively the cost pressure from rising prices of resources and fulfilling the Group's social responsibility in respect to energy and the environment in its sustainable development. Pursuant to an agreement relating to the supply of water resources between the Group and the Government of Beilun District, Ningbo City, the supply of water resources has commenced in June 2008, thereby stabilizing the cost of water and ensuring the safety of water.
Looking ahead, despite a global economy fraught with uncertainties, the financial turmoil has also facilitated the upgrade and structure reorganization of the whole industry and provided good development opportunities for the leading apparel production enterprises. As a result, the Group looks forward to further development to come. Leveraging on our solid foundation built through market expansion and reorganization of our product and customer structure in the past few years, the Group will further tighten its cost control, improve production efficiency and further enhance the production management to increase the profit margin of the products.
As for the production and production capacity, the Group will strengthen the coordination and cooperation of each procedure, expand our garment production capacity by improving the efficiency of the existing equipment, balance the productivity of each procedure and maximize the utilization rate of its assets. The Group will strive for optimizing the structures of its production bases, fully leverage on the competitive strengths of different production bases, focus on the production procedures with high added value, technology intensive, high resource consumption and high requirements to the ancillary facilities in the coastal area and shift certain of the cutting and sewing procedures to the labour intensive central area. In 2009, the Group will ensure the full utilization of the productivity of the Anqing garment factory, further improvement of the production efficiency of the garment factories and completion of the new garment factory in Quzhou City, Zhejiang Province. The Group will also seek for other opportunities for the construction of new plant in an active approach.
For the products, the Group will continue to increase the investments in product research and development and promote high-end development of products, in particular, fully leverage on the competitive edges of the Group in fabric developments. On the marketing front, the Group will consolidate and further develop the market in Japan as one of its important distribution markets and also concentrate on the development of the distribution market in the PRC. Following the cancellation of the quota system for China's textile imports by the European Union in 2008 and duly the cancellation of the quota system for China's textile imports by the United States with effect from 1 January 2009, the Group will strive for achieving a balanced development in the EU, the US, Korea and Australia.
Mr. Ma concluded, "The changes in the global economic environment have sped up the reorganization of the garment industry. The Group will consistently implement diversified strategies for our products and markets, seize every development opportunity to increase our leading position in the industry and consolidate our status as the most competitive
vertically-integrated garments manufacturer in the PRC in a bid to create value our customers and bring about lucrative returns for our shareholders and investors with all our efforts."
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