Friday, March 29, 2024
 
Columnist
Martin Hennecke
 
HUAFENG GROUP
HKEx Stock Code : 00364 
 
Corporate Profile
The principal activities are the provision of fabric processing services and manufacture and sale of fabrics and manufacture and sale of yarns and blankets.

Business Review - For the year ended September 30, 2012

During the Year, China's textile industry faced severe challenges due to the global economic slowdown, the European sovereign debt crisis and the consistent appreciation of the Renminbi (ˇ§RMBˇ¨). Decreasing demand for textile products, significant fluctuation in cotton prices as well as rising labor costs have brought enormous operating pressures to China's textile enterprises. However, leveraging on its good reputation and strong customer base, the Group overcame certain challenges and maintained a relatively stable development through commitment to customer relationship management, stringent cost control measures and flexible marketing strategies.

During the Year, the Group's production of blankets contributed a revenue of approximately HK$34.6 million during the Year, representing an increase of 5.8% as compared to last year (2011: approximately HK$32.7 million).

Although the domestic consumption market is sluggish, the Group is benefited from its extensive client base and proactive development in domestic market in recent years. Domestic sales of the Group continued to progress steadily. Average selling price of products was generally stable as well. This effectively mitigated the effects of volatile raw material procurement costs as well as rising wage levels. In addition, the Group consistently implemented its long-term strategy of diversified business development.

On 21 April 2010, the Group signed a memorandum of understanding (ˇ§MOUˇ¨) in relation to the proposed acquisition of 67.5% equity interest in a gold mine in Liaoning Province of the PRC. Subsequently, the Company terminated the proposed acquisition and the MOU lapsed on 20 January 2012.

Business Outlook - For the year ended September 30, 2012

Many uncertainties in the overall operating environment, especially the consistent appreciation of RMB will bring an adverse impact on China's textile export. Together with the rising prices of raw materials as well as growing domestic labor costs, it will bring great challenges to the future development of the Chinese textile industry. In view of this, the Group will dedicate efforts to maintain a steady development of its existing business in the domestic market through thorough implementation of flexible market strategies, capturing opportunities arising from continuous growth of the Chinese consumption market, so as to promote the long-term stable development of the Group's overall business.

Regarding its foreign operations, the Group has established a solid customer base in the Philippine market, which greatly mitigates the challenges brought by the shrinking export market of the textile industry. In addition, the Group will adopt its strategy of diversified market development, and will further develop its business in emerging markets. The Group believes that leveraging on its leading position in the textile industry, it will be able to effectively cope with the challenges faced by the industry, to grasp the business opportunities brought by industrial consolidation and to promote continuous business development. The Group will also actively implement its long-term strategy of diversified business development, so as to enhance its revenue sources and profitability, and ultimately create greater returns for the shareholders of the Company (the ˇ§Shareholdersˇ¨).



Source: Huafeng Group (00364) Annual Results Announcement
Chairman Cai Zhenrong Issued Capital (shares) 11,376M
Par Value HKD 0.01 Market Capitalisation (HKD) 2,412M
 
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