16 Nov 2022

Man Wah reported its Sept ended 1HFY23 results with top line decreased by 8.0% YoY to HK$9.5bn and NP increased by 10.5% YoY to HK$1.1bn. Gross profit dropped by 2.5% YoY to HK$3.6bn with overall GPM increased by 2.6ppt YoY to 38.8%. NPM increased by 2.1ppt YoY to 11.8%. The company increased its interim DPS from HK$0.13 in 1HFY22 to HK$0.15, which represents a 54.0% dividend payout ratio vs 52.0% in 1HFY22. Revenue from China was down by 10.7% YoY to HK$5.7bn with 6,230 retail stores (end-Mar 2022: 5,968), accounting for 60% of total revenue (1HFY22: 62%). Online sales dropped slightly by 0.9% YoY in China, with sales in recent “Double Eleven” estimated to be flat YoY as a higher rate of goods returned wiped out a 20% growth in orders. Revenue from North America and Europe had increased by 0.1%/2.1% and accounted for 26.9%/7.0% of total sales, respectively. As for its Home Group business, revenue was down by 40% YoY and accounted for only 2.9% of its total revenue, due to the impact of pandemic and the Ukraine war.  According to mgmt., its production facilities in Ukraine have not been materially disrupted during the period.

CROSBY Research – Man Wah (1999 HK): Higher GPM on lower RM costs