Company profile
MBV International is Malaysia's leading supplier of printable garments and gifts, with products sold in Malaysia and Singapore. The company's catalogue contains more than 200 different styles of printable clothing, each in up to 20 colors and 9 sizes, as well as more than 500 ╱ style gift products. Most of the printable clothing and gift products are produced by OEM manufacturers employed in China, Bangladesh and other countries. The company's Johor production facility in Xinshan, Malaysia is mainly tailored and sewn to customers' special product designs and requirements, with a total annual production capacity of about 540000 pieces. The storage facilities include two Johor warehouses with a total floor area of about 8800 square meters and storage space at various sales offices in Xinshan, Kuala Lumpur and other Selangor regions.
Sino-Thai viewpoint
The printable clothing market in Malaysia and Singapore is highly competitive: according to the Frost Sullivan report, the market size of the gift products industry in Malaysia and Singapore is expected to continue to grow at a compound annual growth rate of about 8.4% and 8.3% from 2019 to 2023. Due to the increase in per capita disposable income and participation in entertainment activities, and the need for printed clothing as an advertising and marketing tool, the demand for printed clothing continues to grow. The printed ready-to-wear market in Malaysia and Singapore will grow at a compound annual growth rate of about 8.9 per cent and 3.3 per cent from 2019 to 2023. However, the printable clothing market in Malaysia and Singapore is relatively scattered. The three major practitioners in the market accounted for about 32.4% of the total market share in 2018. Although the company ranks first with a market share of about 25.0%, it still has to face fierce market competition. The company needs to use its scale and effective inventory management, marketing strategy and diversified customer base to further expand its market share.
In terms of operating results: in the fiscal year 2016-2018 and as of September 30, 2019, the company's operating income was HK $290 million, HK $300 million, HK $320 million and HK $250 million respectively, of which the highest proportion of revenue from printable clothing was about 93.9%, 92.4%, 90.4% and 89.3%, respectively, and gross profit margins were 29.6%, 29.3%, 30.5% and 30.2%, respectively. The decrease in gross profit margin in 1919 was mainly due to the decrease in sales volume and the increase in sales cost due to the higher direct manufacturing cost of producing custom-made printable T-shirts; the return net profit rate was 13.3%, 12.4%, 13.3% and 10.3%, respectively.
Valuation: based on 600 million shares after the global public offering, the company's market capitalization is HK $502-553 million, which is higher than the average of its peers in Hong Kong. In terms of profitability, the 18-year ROE and ROA were 26.7% and 16.9% respectively, higher than the industry average, but the 18-year price-to-earnings ratio was about 12.8-14.1 times, and the price-to-book ratio was about 1.90-2.00 times, which was also higher than the industry average. Although sponsors rose in all three projects in 19 years, considering that the new stock market in the clothing industry fluctuated greatly on the first day, we gave it 53 points for caution, with a rating of "not applying for purchase".
Risk tips: (1) the risk of rising costs, (2) the risk of market competition, (3) the risk of customer preferences and changes in demand.