Quarterly Report For The Financial Period Ended 31 March 2018

Financials Archive

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Condensed Consolidated Statement Of Comprehensive Income (Unaudited)

Income Statements

Condensed Consolidated Statement Of Financial Position (Unaudited)

Financial Position

Analysis of Performance

Revenue & Gross Profit

Our Group’s total sales stood at RMB102.8 million for the current quarter under review, reduced by approximately 23.1% as compared to Quarter 1, 2017.

Analysis Of Performance

The moderation of sales performance during the current quarter under review was primarily due to lower sales volume as the industry players were generally more conservative about the market spending sentiments. Total quantities of sports shoes sold during the current quarter under review amounted to 1.41 million pairs (of which 0.76 million pairs were own-branding sports shoes), lower by approximately 23.0% as compared to 1.83 million pairs (of which 1.02 million pairs were own-branding sports shoes) sold in Quarter 1, 2017.

As a result of the decrease in sales, our Group’s gross profit reduced to RMB17.1 million during the current quarter under review, lower by approximately 22.3% as compared to RMB22.0 million reported in Quarter 1, 2017.

Profit Level

Our Group’s profit before tax (“PBT”) and profit after tax (“PAT”) for the current quarter under review stood at RMB6.5 million and RMB4.5 million respectively, improved by approximately 20.4% and 18.4% respectively as compared to Quarter 1, 2017. This was primarily due to lower administrative and other expenses incurred during the current quarter under review, in line with our Group’s cost control initiatives, particularly on advertising expenses.

Outlook and Prospects

Our Group believes that the prospects for the sportswear industry remain promising, although the industry outlook for the near term is anticipated to experience certain degree of volatility.

Looking ahead, demands for sportswear within the China market are generally expected to be on gradual growth momentum, backed by the following favourable factors:

  1. Supportive government policies and initiatives which, amongst others, including Several Opinions on Accelerating the Development of Sports Industry to Promote Sports Consumption announced by the State Council of the People’s Republic of China, the 13th Five-Year Plan announced by the General Administration of Sports of China and the National Fitness Campaign.

  2. These policies and initiatives are expected to contribute positively to the sports industry growth in the medium and long term and propel the nation to achieve the following development targets set for 2016 - 2020:

    • Enlarge the market size and employment size of China’s sports industry to exceed RMB3 trillion and 6 million people;

    • Increase the industrial value-added contribution of the China’s sports industry to 1.0% of the nation’s GDP;

    • Increase the service-based value-added contribution to more than 30% of the overall industrial value-added contribution of the China’s sports industry;

    • Expand the sports facilities and bases, per capita sports area to exceed 1.8m2; and

    • Increase the consumption value of sports to more than 2.5% of the disposable income per capita

  3. Huge and rising population in China particularly with the implementation of twochild policy, complemented by rising disposable per capita income; and

  4. Increasing popularity of sports and rising participation levels, in line with the growing awareness on healthy lifestyle. More consumers have started to undertake regular exercise, including retirees, working adults and students, giving rise to more frequent purchases of sportswear.

Demands for sportswear in the global markets are also estimated to be on positive growth momentum for the medium and long term, backed by the increasing participation in sports activity for health and fitness and increasing purchasing power; propelling the needs for ODM production service.

Barring any unforeseen circumstances, our Group expects the financial performance for the financial year ending 31 December 2018 to remain positive.