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China Creative Home Group Records Encouraging Revenue and Net Profit Growth of 23.4% and 15.9% Respectively in FY2013
- Revenue from Sales of Electric Fireplaces Surged by 57.2%
HONG KONG, Mar 24, 2014 - (ACN Newswire) - China Creative Home Group Limited ("China Creative Home Group" or the "Group"; stock code: 1678), a leading manufacturer of branded electric fireplaces and home decor products in the PRC, has delivered a satisfactory business performance in 2013, reporting encouraging turnover and net profit growth of 23.4% and 15.9% respectively.
For the year ended 31 December 2013, the Group's revenue was RMB1,195.5 million, a strong rise of 23.4% from 2012. Gross profit jumped 23.7% to RMB529.5 million and gross profit margin surged to 44.3%. Profit attributable to equity shareholders grew by 15.9% to RMB303.2 million, 2.8% higher than the profit forecast of RMB295.0 million stated in the Group's Global Offering Prospectus.
Basic earnings per share were RMB21 cents. The Board of Directors proposed payment of a final dividend of 3.8 HK cents per share for the year ended 31 December 2013. The Group's financial position remains strong and healthy. As at 31 December 2013, its net cash and cash equivalents stood at RMB936.7 million and its gearing ratio was a remarkably low 3.6%.
Mr. Chen Fanglin, Chairman of China Creative Home Group, said, "The year 2013 has opened another exciting new chapter in the Group's history. First, we are very pleased that our business delivered sound results in 2013. The efforts and investment we have made in the electric fireplaces business in the past have begun to bear rich fruit. Revenue from this business grew by 57.2%. Secondly, the listing of our shares on the Stock Exchange of Hong Kong on December 20 2013 marks a giant step forward, not only enhancing our corporate governance and branding, but also providing us with sufficient capital to spur our rapid business development in all markets"
Business Review & Prospects
Revenue from the sales of high margin electric fireplaces soars by 57.2%
Revenue of electric fireplaces has increased by 57.2% to RMB$686.9million, accounting for 57.5% of the Group's total revenue. Among the product series, revenue from the sales of framed wood and non-framed electric fireplaces were RMB342.2 million and RMB80.5 million, skyrocketing rises of 99.5% and 216.3% respectively, mainly due to the increasing recognition of the "Allen" brand and greater market demand.
Due to the production capacity of the Group, it has adjusted and allocated more resources to develop and promote electric fireplaces which has higher gross profit margins compared to home decor products. As a result, the revenue of home decor products slightly decreased by 4.4% to reach RMB508.6 million, accounting for 42.5% of the Group's total revenue.
Revenue from the Mainland China market accounting for 91% of sales grew by 37.2%
During the year under review, the Group's sales in the PRC have risen significantly benefitting from the strong demand for electric fireplaces and creative furnishing products aided by the rapid urbanization of China. Sales generated from the PRC market accounted for approximately 90.9% of the Group's total revenue (2012: 86.8%).
Sales from overseas markets accounted for approximately 9.1% of the Group's total revenue during the year, reaching RMB108.7 million. In 2013, the Group successfully tapped the South America market, while the sales contribution from Eastern Europe grew significantly from RMB1.5 million to RMB21.9 million.
Looking ahead, urbanization in China, a recovering property market in the U.S. and the increasing purchasing power of consumers in both countries especially in China together present a growth opportunity for the Group's electric fireplaces and home decor products. Going forward, the Group will leverage its leading "Allen" brand to further increase penetration of the PRC and overseas markets.
The Group will collaborate with selected customers to establish seven creative home furnishing concept shops in Beijing, Shanghai, Guangzhou, Chengdu, Chongqing, Fuzhou and Changsha. The Group will also strengthen ties with existing customers in coastal regions and Southwestern China, secure new customers in Southwestern and Northwestern China, including Tibet, Xinjiang and Yunnan in order to further penetrate the PRC market. With regards to the overseas market, the Group aims to grasp opportunities from a recovering U.S. economy, which, owing to an increasingly healthy property market has created greater purchasing momentum.
The Group plans to expand its Luojiang production facilities and upgrade existing production facilities, as well as construct new production facilities in Anhui Province. The expansion of Luojian production facilities and the construction of Anhui production facilities are expected to be completed by mid-2014 and the end of 2015 respectively. By then, the Group's total annual production capacity of electric fireplaces is expected to substantially increase by approximately 126% from 277,500 units in 2012 to approximately 627,500 units by the end of 2015. This will enable the Group to satisfy surging demand for its products while at the same time benefitting from greater economies of scale, including enhanced profitability.
On the R&D and new product front, the Group has been working with the University of Shanghai for Science and Technology to further develop innovative multifunctional electric fireplaces with air purification and cooling functions. The testing result of the new product has been encouraging.
Mr. Chen concluded, "After the successes of 2013, and with continued market momentum on the horizon, we are prepared to extend our lead by utilizing the newly raised capital for the expansion of our business. With environmental protection gaining increasing importance in China, we are currently developing a new product that combines the functions of air-purifier and electric fireplace to capture the immense potential from the rising health-conscious consumer market. As we continue to stride forward, we will look for ways to promote the "Allen" brand, increasing sales of our products in the Southwestern and Northwestern region within the PRC market in particular. We will also eyeing on overseas markets including USA and Europe. We remain committed to the effective management of China Creative Home, leading to its successful path to market leadership in providing world-class electric fireplaces and home decor products."
Contact:Strategic Financial Relations Limited
Ms. Brenda Chan +852 2864 4833 brenda.chan@sprg.com.hk
Ms. Beatrice Wong +852 2114 4953 beatricehy.wong@sprg.com.hk
Mr. Sunny Wang +852 2114 4956 sunny.wang@sprg.com.hk
www.sprg.com.hk
Source: China Creative Global Holdings Limited
Sectors: Daily Finance, Daily News
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