Lingerie giant Virginia tech earned more than hk $6.2 billion last year

- Jul 11, 2019-

     One of the world's largest lingerie manufacturers, Victoria's international holdings LTD. (2199.hk), saw revenue rise 6.7% to HK $6.263.3 billion last year.The shenzhen company said revenue growth mainly benefited from optimizing its brand and product mix.

     Revenue from core bust and lingerie products reached hk $4,874.6 billion, up 3.1% from hk $4,718.6 billion in 2017, accounting for 77.8% of the total revenue.Segment gross profit increased 6.1% year-on-year to hk $1.0703 billion and gross profit margin increased by 70 basis points to 22.0%.

     Revenue from breast cups and other molded products increased by 1.2% to hk $530.9 million annually. The revenue from sales of breast cups and other molded products to brand partners of the group remained stable due to the strategy of retaining most of the breast cups for production in the Vietnam factory.The business segment maintained a 21.0% year-over-year gross profit margin in 2019, with a slight 1.2% increase in gross profit to hk $111.6 million.

Functional sports products, which have expanded rapidly in recent years, accounted for 13.7 per cent of group revenues last year, up 39.5 per cent to hk $857.8m.The gross profit of the division was hk $160.1 million, up by 39.5%. The gross profit margin was unchanged at 18.7%.Sales growth was boosted by the acquisition last year of a new U.S. casual footwear partner, partly offset by a drop in orders due to the end of a shoe relationship with another customer this year, Virginia said.As for sportswear, the group recorded strong double-digit sales growth through the use of unique seamless bonding technology.

     During the reporting period, the group's gross profit increased by 8.8% to hk $1,341.9 million, and its gross profit margin improved by 40 basis points year-on-year to 21.4%.

After achieving a reasonable balance between business development and profit optimization, its full-year net profit surged 17.6% to hk $282.4 million from hk $240.2 million, and its earnings per share increased from hk $19.6 to hk $23.1.Therefore, the company intends to slightly increase the final dividend by 5.3%, from 3.8 to 4.0 Hong Kong cents, and the annual dividend by 7.6 Hong Kong cents, with a year-on-year increase of 20.6%.

     In view of the current global environment, Virginia said that some brand partners adjust their purchasing strategies in response to the changing trade situation, and the group will try its best to coordinate with shenzhen and Vietnam by the end of the year to make corresponding adjustments to mitigate the potential impact of the changing situation.

    According to the shenzhen company, the existing and upcoming production facilities are enough to drive the steady increase of annual production capacity in the next two or three years. Currently, there are no plans to invest in additional production facilities in the next two years, but the company has successfully improved its competitiveness through technological breakthroughs and innovations, and paved the way for the improvement of automation and production efficiency.

    Virginia said two of the company's three factories in the Singapore industrial park in Vietnam have become more mature in the past two to three years, with an increasing proportion of skilled workers and increasing productivity.Currently, the Vietnam factory has a total of about 30,000 employees, and the capacity accounts for 60% of the group's revenue, up about 40% year-on-year. The other two more automated plants are expected to start production in June and September this year.

     As for the shenzhen factory, as the r&d center and production base of the group, it will continue to play the role of driving the innovation of the company, developing and producing high-tech products as well as cross-industry products.In addition, in line with the brand partners' development strategy to explore the Chinese market, the shenzhen factory will also focus on the domestic sale of Chinese products for these brands. In the fiscal year ending in March, the shenzhen factory has about 10,000 employees.

      After that, nomura issued a report, significantly raising its target price of Virginia tech by 15.9%, from hk $6.3 to hk $7.3, and upgraded its rating from "neutral" to "buy".Daiwa also raised its target price to hk $5.90 from hk $5.50 and maintained its' hold 'rating.

     Nomura, with strong functional sports products, her income last year in line with expectations, but the gross margin and net profit is lower than expected, group management capacity is expected to Vietnam income than further improve to 80% this year, trade friction factors have little effect, and gross margin is expected to improve, so optimistic about the future, is expected to 24% in fiscal 2022.

Shares closed down 2.11% at hk $6.02 on Tuesday, almost unchanged from the start of the year.