Revenue Increased 26.4% to HK$6.02 Billion

Gross Profit Margin Expanded 3.6 Percentage Points to 30.8%

Profit Attributable to Equity Holders of the Company Climbed 32.3% to HK$537 Million

Financial Highlights

(26 March 2013 – Hong Kong) Vinda International Holdings Limited (“Vinda International” or the “Company”, together with its subsidiaries collectively known as the “Group”; stock code: 3331), a leading manufacturer and branded seller of household paper products in the PRC, announced today its annual results for the year ended 31 December 2012 (“the Year”).

Despite a vicious competition in the industry, the Group proactively enhanced the brand influence of the “Vinda” brand during the Year. It also improved its product quality through technological innovation; whilst adjusting product portfolio to consolidate its leading marketing position. During the Year, the Group’s revenue grew by 26.4% year-on-year to HK$6.02 billion while total sales volume increased by 26.7% year-on-year to 424,358 tons. Gross profit rose by 43.1% to HK$1.85 billion as gross profit margin expanded 3.6 percentage points to 30.8%. Profit attributable to equity holders of the Company amounted to HK$537 million, an increase of 32.3% year-on-year. Basic earnings per share were 54.6 HK cents (2011: 43.3 HK cents). The board recommended the payment of a final dividend of 11.3 HK cents per share. Together with the interim dividend of 4.3 HK cents, total dividend payout for the Year amounted to 15.6 HK cents per ordinary share (2011: 12.0 HK cents).

To satisfy the strong demand for quality household paper products, the Group had formulated comprehensive expansion strategies. During the Year, the Group’s production capacity increased by 70,000 tons to a total of 540,000 tons and added another 80,000 tons to reach 620,000 tons in January 2013. The Group is confident of timely completing various capacity expansion projects by end of 2013, including the new capacity at the Laiwu plant in Shandong Province, the Sanjiang plant in Guangdong Province and the Xiaogan plant in Hubei Province. Besides capacity expansion, the Group also strives to enhance productivity and efficiency of its logistics infrastructures. During the Year, fully automated processing and production lines as well as automated stereoscopic warehousing system arrangement were set up at the Group’s Sanjiang Plant. The logistics center of the Xiaogan plant will be under revamp and expansion in 2013 so as to enhance the efficiency of logistics and distribution in Central China. Design capacity at the end of 2013 is expected to reach 750,000 tons. The Group’s goal is to achieve the production capacity target of 1,000,000 tons for 2015 ahead of schedule so as to attain greater economies of scale. 

The Group reiterate brand-building as the core development strategy. Capitalizing on the rapid growth of softpack products, the Group has strived to consolidate its leading position in tissue rolls market and promote sales of its softpack products, with an objective of gaining bigger market share in mind. During the Year, the Group launched the ground-breaking “Ultra Strong” series and endeavoured to nurture the softpack as a “Star Product” which could enjoy the highest sales and attention. Among various product categories, performance of softpack was the most outstanding as its sales surged by 70.1% year-on-year. The Group’s cartoon marketing strategy proved to be a huge success. The Group collaborated with 20th Century Fox Film Corporation to promote the movie “Ice Age: Continental Draft” and launched its “Ice Age” products to attract the core customer group of families with children.

During the Year, the Group accelerated network expansion. In respect of provinces and regions where the Group has yet to establish our foothold, it has formulated comprehensive expansion strategies, which involve strengthening regional marketing management, as well as control and supervision of the sales channels. During the Year, traditional sales channels, modern sales channels and B2B accounted for 46.7%, 38.1% and 14.5% of the total revenue respectively. With the prevailing trend of online shopping for FMCGs, the Group has set up a dedicated e-commerce team to tap the online B2C market. As at 31 December 2012, Vinda International had 182 sales offices (31 December 2011: 155) and 1,374 distributors (31 December 2011: 1,174). 

As regards personal care products business, baby, feminine and elderly care product businesses are now under the umbrella of the Group’s associate, V-Care Holdings Limited (“V-Care”). During the Year, three production lines of the baby diaper products were up and running. The marketing campaigns focusing on direct market assess and sales through distributors and regional supermarkets resulted in satisfactory sales of “Babifit”. V-Care has also completed a study of feminine care product business. The pilot sale of sanitary napkins under the self-developed “VIA” brand has been launched in January 2013. Leveraging the Group’s two core competitive edges, namely the strong sales network and brand influence, the Group will rapidly enhance the brand awareness and improve the market penetration of “Babifit” and “VIA” while entering the elderly-care business according to its business planning, so as to create new growth drivers. 

Mr. Li Chao Wang, Chairman of the Group concluded, “The conditions for China’s economic development are changing as operating costs such as wages and raw materials costs have been surging, which corner companies running on old business models. Notwithstanding the challenges ahead, the Group is confident of outperforming its peers and emerging as a winner amid intensive competition by advancing in the value chain with a focus on product quality and added value. Looking ahead, with the ever-increasing demand for better product quality, Vinda International will embrace technological innovation as its core competence, centre around consumers’ needs when planning development direction and achieve new heights with its global perspective, with a view to developing the Group into a sizeable and strong enterprise and turning a small paper tissue manufacturing company into a large enterprise for long-term and sustainable development.”