Training Industry is a leading manufacturer of hair products, including wigs, hair accessories, braids and human hair receiving products.
The company issued a profit warning for 2020, mainly due to the impact of the epidemic and non-recurrent items recorded during the period.
The company's performance is expected to recover significantly in 2021.
Given the location of the company's production facilities, the company is not expected to be affected by the trade conflict between China and the United States.
In the medium to long term, the company's new business will be the driver of its growth.
A leader in a unique market
Training Industry is a leading global manufacturer of hair products, including wigs, hair accessories, braids and human hair products.
Management said the company is one of the top five suppliers in the world. Training Industries ranks fifth in global sales of artificial hair products and accounted for 4.0 per cent of the global artificial hair production market in terms of revenue in 2016, according to Frost&Sullivan. Management believes that the company has gained market share, especially in 2019 and 2020, mainly due to the company's competitive production equipment. The company's main direct customers are wholesalers in the United States.
The negative factors of 2020 are a thing of the past.
Discipline Industries issued a profit warning on January 21, 2020 and is expected to record a net loss of approximately HK $15 million, mainly due to: a) the company offered special discounts when supplying products to customers; b) the company changed its product portfolio, with a decrease in sales of high-margin human hair receivers and lace wigs and an increase in sales of braids with lower profit margins. According to the announcement, the company expects turnover to grow 12 per cent year-on-year in 2020, meaning turnover rose 25 per cent in the second half of 2020 compared with the same period last year, up from-2 per cent in the first half of 2020. The company's results are expected to recover significantly in 2021, as the recovery continued in the first half of 2021 (business in hair salons and hair products stores has returned to normal), with orders scheduled for the middle of the second quarter of 2021, significantly better than the same period in history.
Competitive geographical location
The company has two production bases: China and Bangladesh. Bangladesh is the main production base, accounting for about 99% of total shipments.
The printing facility is the main one, which is located in the Utola Export processing Zone. As of December 31, 2020, the company had about 24691 workers in Bangladesh. In the future, the company will increase the number of employees outside the Utola Export processing Zone, as the average monthly salary of each worker in the area is about HK $1000, compared with HK $540 outside the area. As a result, the company will move labor-intensive jobs outside the Utola Export processing Zone. The company installed bleaching and dyeing facilities in Bangladesh on October 18. The second phase of bleaching and dyeing facilities and carbon facilities in Bangladesh are expected to be put into commercial operation in the second half of 2021 and the fourth quarter of 2021, respectively. The new facility will help the company reduce delivery time by four to eight weeks. The company's production facilities in Bangladesh also allow the company to maintain a competitive advantage with its Chinese counterparts. Given the geographical location of its production facilities, the company is not affected by the trade conflict between China and the United States.