Cirtek Holdings Limited (“Cirtek” or the “Group”; HKEX: 1433), a leading apparel labels and trim products manufacturer, today announced its annual results for the year ended 31 December 2021. With the global economy gradually stabilising, the Group implemented its global expansion strategy and achieved outstanding result during the year under review, making revenue higher than pre-COVID-19 pandemic levels with profit attributable to owners of the Company up more than nine times.
Review of operations
The apparel industry has sped up digital transformation amid the pandemic, which has driven the industry development and helped push up demand for apparel labels and trim products. Armed with an expansive global network and by seizing business opportunities in the recovering market, the Group’s revenue increased by approximately 39.8% year-to-year (“YoY”) to approximately HK$362.5 million. At various countries relaxing anti-pandemic restrictions, demand for and sales of the Group’s products increased and revenues from all major markets grew. The three markets leading in revenue growth were Vietnam, Bangladesh and Mainland China. The Group strictly controlled costs and optimised its production capacity structure, as a result, it was able to maintain gross profit margin at approximately 43.6% despite the surge of material cost. Profit attributable to owners of the Company achieved a year-on-year growth of over 9.1 times to approximately HK$15.0 million (2020: approximately HK$1.6 million). The Board has recommended payment of a final dividend of HK0.25 cents per ordinary share (2020: HK0.075 cents).
Mr. Barry Chan, Chairman of Cirtek, said, “Right from the beginning of the COVID-19 outbreak, we have been able to formulate strategy to cope with anticipated development of the market. Based on our huge sales network covering more than 40 major apparel markets in the Americas, Europe and Asia, we invested more resources in market expansion and gradually increased the capacity of each production base. Amid the pandemic, many apparel brands are seeking, or switching to cooperate with, sizeable and capable manufacturers as Cirtek, to ensure production efficiency and quality as well as timely delivery of products, which has been the driving force behind the significant increase in our order volume.”
In terms of sales, the Group expanded its geographical footprint to South America and Southern Europe by establishing sales offices in Guatemala, Mexico and Italy, and a factory in Turkey. Serving the apparel market picking up in Mainland China, the Group seized opportunities arising from revival of demand and expanded its business in the market, with two kids’ apparel brand clients, its first in Mainland China, secured.
As for production, the Group established strategic production facilities in the world’s three largest apparel manufacturing countries, namely Mainland China, Vietnam and Bangladesh. With foresight of the pandemic coming under control and the textile and apparel industry recovering in Mainland China, the Group added machines in advance, which has enabled it to bolster production capability and secure more orders from branded clients for its factories in Mainland China. Furthermore, the Group has commenced trial operation at its new production factory in India to enhance its overall production capacity for capturing post-pandemic business opportunities in different countries.
On the product front, the Group’s Radio Frequency Identification (RFID) products achieved solid sales performance, thanks to increasing recognition of the importance of retail inventory management. RFID products remained its best growth product . To fully capture opportunities arising from the adoption of RFID technology, the Group has formed a team dedicated to development of RFID solutions and technology, so as to provide complete supply chain solutions which attract various brands as its clients. The Group has also launched a wider variety of eco-products made with recyclable materials to respond to clients’ demands.
The challenging global operating environment speeds up an industry consolidation, which will be in favour of well-established enterprises like Cirtek, enabling them to gain market shares with their weaker competitors ousted. With a global business footprint that spans more than 40 markets worldwide and production bases in major apparel export countries, the Group is capable of achieving geographical diversification and capturing growth opportunities in adverse circumstances to expand business.
With a sales office in Spain and a factory in Turkey scheduled to start operation in the second quarter of 2022, and operation of its new factory in Bangladesh and Sri Lanka to start in the third quarter and the fourth quarter of 2022 respectively, the Group will have a strengthened foundation to support long-term development. Furthermore, RFID, likely to be widely used in emerging industries, such as intelligent logistics and new retailing, has huge development potential, thus the Group will further expand its RFID business. To enhance its technological advantages and competitiveness, the Group plans to file patent applications for its self-developed RFID products.
At the beginning of 2022, the Group announced the acquisition of Print100 Limited. The acquisition will allow it to take advantage of Print100 Limited’s business foundation and online platform to expand into personalised products and expand its business mode from B2B to B2C, allowing it to widen its business scope and clientele. Capitalising on its broad business network, the new business may expand into multiple geographical markets and generate synergies with the Group’s existing businesses, creating a brand new driver for the Group.
“2022 will be the year for the Group to leap future forward. Although the global market is still ridden with uncertainties, we remain cautiously optimistic about the outlook of our business with global economic activities gradually restarting and the apparel market moving back on track. The Group will almost complete its strategic deployment this year. With new business elements added, we are confident that Cirtek will achieve sustainable and steady development as well as rise above all challenges and come out stronger,” added Mr Chan.
About Cirtek Holdings Limited (HKEX: 1433)
Since 1991, Cirtek Holdings Limited has been manufacturing a wide range of apparel labels and trim products, including hang tags, woven labels, printed labels and heat transfer products. The Group has production facilities in the PRC, Bangladesh and Vietnam, and also offices in the U.S., Belgium, Hong Kong, the PRC, Bangladesh, Vietnam, India and Pakistan. Cirtek boasts its well-established geographical presence, and maintains strong relationships with apparel brands and their manufacturers, generating revenue from over 40 countries.
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