Capitalises Its Quality Services and Increases Market Penetration
HONG KONG — Winson Holdings Hong Kong Limited (“Winson” or the “Group”; stock code: 8421), a Hong Kong-based service provider specialising in environmental hygiene services and airline catering support services, has announced its first audited annual results for the year ended 31 March 2017 (“FY2017” or the “year under review”) since its listing on The Stock Exchange of Hong Kong Limited (“HKSE”) in March 2017.
During the year under review, the Group maintained stable performance and recorded a total revenue of HK$467.5 million (FY2016: HK$449.8 million). In the face of rising cost of labour, the Group managed to achieve stable gross profit at HK$67.3 million, while gross profit margin slightly declined to 14.4% (FY2016: 15.2%). Profit for the year amounted to HK$8.7 million, while net profit margin reached 1.9%, 4.1% if exclude listing expenses. The Group remained in a healthy financial position, with cash and cash equivalents of HK$71.4 million.
Business Review
Environmental Hygiene Services
Environmental hygiene services remained the principal revenue contributor of the Group, generating revenue of HK$432.6 million (FY2016: HK$415.3 million) and accounting for 92.5% of total revenue for the year ended 31 March 2017. Gross profit of HK$62.4 million was recorded, with gross profit margin at 14.4%. As at 31 March 2017, the estimated total value of the Group’s contracts in hand was approximately HK$772.6 million, of which HK$356.1 million was ongoing contracts. Furthermore, the Group had won 112 new contracts worth approximately HK$358.2 million in aggregate.
The Group is one of the top ten Environmental hygiene service providers in Hong Kong – ranked 6th in 2015 with 3.8%1 market share based on revenue. In the past year, revenue has risen principally due to customers of office and commercial centres. It has also attracted clients from both the public and private sectors, the former comprise municipal services buildings, while the latter include the management of shopping malls located in the central business district. However, with rising statutory minimum wage and an industry that is labour intensive, the Group’s profit has been impacted. Nevertheless, the management has remained resolute in controlling labour and other costs so as to maintain the Group’s competitiveness and bolster its market position.
Airline Catering Support Services
Leverage the Group’s existing client base, the management has been exploring new business opportunities and extending the service from environmental hygiene services to airline catering support services since 2013. Since then, the airline catering support services business continued to develop favourably during the review year, with revenue rising by 1.2% year on year to HK$34.9 million (FY2016: HK$34.5 million) and thus accounting for 7.5% of total revenue of the Group. Gross profit of HK$5.0 million was recorded, with gross profit margin hovering at 14.2%.
As at 31 March 2017, the estimated total value of the Group’s contracts in hand amounted to approximately HK$66.7 million, of which HK$50.0 million was ongoing contracts.
Prospects
Going forward, the management is cautiously optimistic about the development of the Group’s two business segments. Such an outlook is based on its awareness of public concerns for environmental hygiene. Furthermore, a healthy tourism industry and the increase in local and international firms establishing offices in Hong Kong are also factors that will continue to stimulate demand for high-quality hygiene services. In respect of airline catering support services, demand will be driven by steadily rising passenger volume as domestic residents continue to willingly spend more of their income on leisure travel. In addition, with fierce competition in the civil aviation industry, airlines are placing greater focus on in-flight services to achieve market differentiation, which includes providing quality catering.
Madam Ng Sing Mui, Chairperson and Executive Director of Winson, said, “The listing of Winson marked the beginning of a new era for us. Although the operating environment was challenging during the year under review, the management has remained resolute in controlling costs so as to maintain the Group’s competitiveness and bolster its market position. Going forward, the Group will capitalise on its quality services to move towards premium market segments where it can generate better income, thus bringing promising returns to shareholders in a long run.”