Mutai Textile (01382): Annual Net Profit Is Expected To Decline By About 53.1%

On the evening of June 14, Mutai Textile (01382) announced that the profit attributable to equity holders of the company may decline by about 53.1%, from HK $573 million for the year ended March 31, 2022 to HK $269 million for the year ended March 31, 2023 (the "reporting period").

The decline was caused by many factors, mainly due to (i) the sales volume and sales revenue decreased by about 24.5% and 17.3% respectively during the reporting period; (ii) The lower utilization rate of production facilities in Panyu plant leads to higher amortization of fixed costs; And (iii) the Company's investment in Teejay Lanka PLC (an associate of the Company whose shares are listed on the Colombo Exchange of Sri Lanka (the "associate")) resulted in an impairment loss of approximately HK $46.6 million. The impairment loss relates to the book value of the Company's investment in associated companies and is non cash in nature, so it will not have any impact on the Group's current and future cash flows and daily operations.

As far as the utilization rate of production facilities in Panyu plant is low, the management has tightened cost management and streamlined workflow on the one hand, and on the other hand is committed to expanding Chinese customer base to increase sales orders. In addition, the Group has been introducing new synthetic products to stimulate potential demand. Moreover, since the reporting period, the Group has been developing new products to break through the traditional clothing and fabric market. The recently developed non clothing fabrics (such as bedding and bedding) and auto cage fabrics have opened up new market opportunities for the group's potential spontaneous growth in the coming years. The Group will flexibly allocate resources among various products and markets to improve the efficiency of production facilities and optimize their utilization.