Kingmaker (01170.HK) announced that the company is expected to have a profit attributable to owners of approximately HKD 15-20 million for the year ended March 31, 2024, a decrease of about 60-70% year-on-year.

The decrease in profit during the expected period is mainly due to: (i) a year-on-year decrease of approximately 35% in group's revenue during the period, leading to a decrease in economies of scale; and (ii) a decrease in the profit attributable to the joint venture company located in central Vietnam. The decrease in profit was offset by: (i) an increase in interest income; and (ii) a decrease in estimated fair value loss from the revaluation of investment properties located in mainland China and Hong Kong.

During the expected period, soft retail sentiment caused by high interest rates and geopolitical instability weakened the group's efforts to optimize product portfolio and increase sales prices, resulting in a negative impact on revenue. Despite the current challenges, the group remains committed to pursuing a value growth strategy, maintaining a skilled workforce and upgrading facilities in response to strict customer requirements. Due to weak order pipelines, the group has adjusted its staff size and strictly controlled costs in the past fiscal year, but the decline in fixed manufacturing costs did not decrease proportionally with revenue, resulting in a decrease in gross profit.

Looking to the future, the group will continue to maintain its financial strength, actively develop high-end products, and carefully invest in facility upgrades and automation, accumulate strength and wait for opportunities to capture business opportunities in market recovery. The group is confident in its manufacturing capabilities and strong foundation, and will continue to prioritize value rather than volume growth, in order to strive for quality growth. The group remains optimistic about the long-term outlook.