HONG KONG, Oct. 03, 2024 (GLOBE NEWSWIRE) -- Fenbo Holdings Limited (NASDAQ:FEBO) (the "Company", "we", "our", "us" or "FEBO"), an established original equipment manufacturer (OEM) for a global home essential company, producing electrical hair styling products under the "Remington" brand which are sold to overseas markets, today announced its unaudited financial results for the six months ended June 30, 2024.
Fiscal Year 2024 First Half Financial Results Compared to Fiscal Year 2023 First Half Financial Results
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Revenues were HK$66.9 million for the six months ended June 30, 2024, a 14.2% increase from HK$58.6 million for the six months ended June 30, 2023;
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Gross profit was HK$14.9 million for the six months ended June 30, 2024, or 22.3% of revenues compared to HK$10.5 million, or 17.9% of revenues for the six months ended June 30, 2023;
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Net loss was HK$1.9 million for the six months ended June 30, 2024, compared to net income of HK$0.2 million for the six months ended June 30, 2023;
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Basic and diluted (loss) per share ("EPS") was (HK$0.17) per share for the six months ended June 30, 2024 compared to income per share of HK$0.02 for the six months ended June 30, 2023; and
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Cash and cash equivalents were HK$25.9 million as of June 30, 2024, a 44.1% decrease from HK$46.3 million as of December 31, 2023.
"I'm pleased to report our operating and financial performance of the Company for the six months ended June 30, 2024," said Mr. Siu Lun Allan Li, Chairman of FEBO, "The performance during the period was satisfactory as we were able to increase the revenue and gross profit by substantial amounts which was not sufficient to cover the significant increase in the administrative expenses. However, we have taken a number of actions to reduce costs, enhance efficiency and increase the diversity of customer base as we navigate market uncertainty. Our innovative products and diversified value-added services, strong cash flow and balance sheet as well as dedicated management are enabling us to navigate the market challenges."
"Our proven track record of operating history positions us to improve profitability and remain flexible in responding to the market. Our recently completed initial public Offering and listing on Nasdaq is a milestone for us that accelerates our efforts to expand our operation geographically and drive future growth. Looking ahead, as we anticipate challenges in the broader environment to persist during the second half fiscal 2024, we remain committed to providing cost effective packaging solutions to our customers. We are confident in our long-term strategy believe that we have the right team in place to generate sustainable long-term returns for our stakeholders," Mr. Li concluded.
Unaudited Financial Results for the Six Months Ended June 30, 2024 and 2023
For the six months ended June 30,
2023
2024
2024
HK$'000
HK$'000
US$'000
Revenues
58,567
66,887
8,566
Cost of sales
(48,088
)
(51,948
)
(6,653
)
Gross profit
10,479
14,939
1,913
Operating expenses:
Selling and marketing expenses
(949
)
(1,106
)
(142
)
General and administrative expenses
(8,660
)
(16,050
)
(2,056
)
Total operating expenses
(9,609
)
(17,156
)
(2,198
)
Income (loss) from operations
870
(2,217
)
(285
)
Other (expense) income:
Exchange gain, net
521
216
28
Loss on disposal of property, plant and equipment
(1
)
-
-
Interest income
10
253
32
Interest expense
(936
)
(304
)
(39
)
Government grant
-
140
18
Other income, net
59
87
11
Total other (expense) income
(347
)
392
50
Income (expense) before tax expense
523
(1,825
)
(235
)
Income tax expense
(285
)
(76
)
(10
)
Net income (loss)
238
(1,901
)
(245
)
Other comprehensive income
Foreign currency translation loss, net of taxes
(1,246
)
(600
)
(77
)
Total comprehensive loss
(1,008
)
(2,501
)
(322
)
Net income (loss) per share attributable to ordinary shareholders
Basic and diluted (cents)
2.38
(17.19
)
(2.20
)
Weighted average number of ordinary shares used in computing net income (loss) per share
Basic and diluted
10,000,000
11,057,005
11,057,005
Revenues
Revenue increased by HK$8.3 million, or 14.2%, to HK$66.9 million (US$8.6 million) for the six months ended June 30, 2024 compared to HK$58.6 million for the same period in 2023 primarily because of the increase in revenue for our flat irons and hair straighteners products.
During our six months ended June 30, 2024, the negative impact of the COVID-19 pandemic had greatly subsided, and industries, including consumer confidence, returned to normalcy as compared to the continued negative impact of the COVID-19 pandemic on businesses during the first half of 2023. Despite the COVID-19 pandemic has come to an end, geopolitical conflicts such as the Russia-Ukraine conflict and the Israeli-Palestinian conflict persisted. The consequent disruption of the global supply chain affected the recovery of economic activity and drove inflation up significantly. Moreover, major central banks' aggressive interest rate hikes significantly increased the complexity and uncertainty of the economic development environment. Against the backdrop of challenging macroeconomic conditions, the consumer goods and manufacturing businesses have been affected and the recovery in consumer demand has been slow. Despite the Company is affected by the weak consumer sentiment and pressure from retails sales, it would continue to put efforts on improving the competitiveness of its high quality products together with bolstering its research and development capabilities with an aim to enhancing its market share in its existing business and achieving a long-term relationship with its customers.
Cost of sales
Cost of sales included cost of raw materials (such as costs of electrical components, packaging materials, metal materials, plastic particles, and painting materials), direct labor (including wages and social security contributions), manufacturing overhead (such as consumables, depreciation, direct rental expense and utilities) and other taxes. We currently do not hedge our raw materials position, and we monitor raw material price trends closely to manage our production needs.
For the six months ended June 30, 2024, cost of sales increased to HK$51.9 million (US$6.7 million), representing an increase by HK$3.9 million from HK$48.1 million in the same period in 2023. The fluctuation of cost of sales was in line with the increase in our revenue during the same period.
Gross profit
As a result of the foregoing, gross profit for the six months ended June 30, 2024, was HK$14.9 million (US$1.9 million), an increase of HK$4.5 million from HK$10.5 million for the same period in 2023.
Selling and marketing expenses
Major components of selling and marketing expenses are packaging expenses, transportation costs and custom declarations. For the six months ended June 30, 2024, selling and marketing expenses was HK$1.1 million (US$0.1 million), which increased by HK$0.2 million from HK$0.9 million in the same period in 2023. The increase during the six months ended June 30, 2024 from the same period in 2023 was due mainly to an increase in overall level of shipping of products.
General and administrative expenses
General and administrative expenses consist primarily of staff costs for our accounting and administrative support personnel and executives, depreciation, office and insurance expenses, motor vehicles and travelling expenses, stamp duty and other taxes, utility expenses, office rental and management fee, legal and professional fee and auditor's remuneration and others. General and administrative expenses increased by HK$7.4 million from HK$8.7 million for the six months ended June 30, 2023 to HK$16.1 million (US$2.1 million) for the six months ended June 30, 2024. This increase was due mainly to the increase in (i) staff costs and insurance expenses to provide support for the business expansion and (ii) listing annual fee and legal and professional fees for post-listing administrative support during the six months ended June 30, 2024.
Income (loss) from operations
The income from operations decreased by HK$3.1 million from the income from operations of HK$0.9 million for the six months ended June 30, 2023 to the loss from operations of HK$2.2 million for the six months ended June 30, 2024. The deterioration in the financial performance from operations during the six months ended June 30, 2024 were primarily due to the combined effects of the increase of gross profit of HK$4.5 million and the increase of general and administrative expenses of HK$7.4 million during the six months ended June 30, 2024.
Other income (expenses), net
Major components of other income (expense) are exchange gain and loss, gain/loss on disposal of property, plant and equipment, sundry income, government grant and bank interest income. For the six months ended June 30, 2024, net income was HK$0.4 million (US$0.1 million), which increased by HK$0.7 million from net expenses of HK$0.3 million in the same period in 2023. The increase was due mainly to the decrease in interest expenses recognized during the six months ended June 30, 2024.
Net income (loss)
The net income decreased by HK$2.1 million from a net income of HK$0.2 million for the six months ended June 30, 2023 to a net loss of HK$1.9 million (US$0.2 million) for the six months ended June 30, 2024. The decrease in the net income during the six months ended June 30, 2024 was mainly attributable to the cumulative effect of the reasons set out above.
Earnings per Share - Basic and Diluted
Loss per basic and diluted share for the six months ended June 30, 2024 was HK$0.17, compared to earnings per basic and diluted share of HK$0.02 for the comparable period of 2023.
Liquidity and Capital Resources
The Company financed its daily operations and business development through cash generated from the operations of the Company's wholly owned subsidiaries, consisting of Able Industries Limited, Fenbo Industries Limited and Fenbo Plastic Products Factory (Shenzhen) Limited. As of June 30, 2024 and 2023, its cash balance was HK$25.9 million (US$3.3 ...
