HONG KONG, Aug 28, 2020 - (ACN Newswire) - Q P Group Holdings Limited ("Q P Group" or the "Group"; Stock code: 01412 ), the largest producer of paper-based tabletop games and related products and the second-largest producer of paper-based greeting cards in the PRC#, today announced its unaudited interim results for the six months ended 30 June 2020 ("6M2020" or "the Period").

During the Period, despite the substantial economic challenges inflicted by Coronavirus Disease 2019 ("COVID-19"), the Group was able to achieve significant growth in net profit of 86.8%, which amounted to approximately HK$39.2 million (for the six months ended 30 June 2019 ("6M2019"): 21.0 million). Excluding listing expenses, adjusted net profit* attributable to equity holders of the Company increased by 66.0% to approximately HK$40.4 million (6M2019: HK$24.3 million). The Group recorded revenue of approximately HK$505.6 million (6M2019: HK$564.9 million). The decrease in revenue was mainly attributable to a decline in original equipment manufacturer ("OEM") sales resulting from widespread economic disruption due to COVID-19 which affected several of its overseas customers. Basic earnings per share were approximately HK7.53 cents (6M2019: HK5.27 cents).

To share the Group's achievements with shareholders, the Board has resolved to declare an interim dividend of HK2.0 cents per ordinary share.

Business Review

Following the outbreak of COVID-19 in January 2020, the Group suspended the operation of its factories in the PRC for a short period, which gradually resumed operation starting from February 2020. However, COVID-19 has adversely affected the Group's OEM sales during 6M2020 as the business operations of several customers located in the United States of America (the "U.S.") and Europe requested the postponing of product deliveries and freight forwarding companies were slow in resuming operations. The Group therefore recorded a decrease in OEM sales of 15.8% to approximately HK$437.6 million (6M2019: HK$519.8 million). Nevertheless, the Group's web sales business yielded a remarkable increase in revenue of approximately 50.7% to approximately HK$68.0 million (6M2019: HK$45.1 million). In particular, the Group recognized a significant growth in sales from jigsaw puzzle products of approximately 480.2% year on year, through www.createjigsawpuzzles.com. The upsurge was due to the greater demand driven by the increased time spent on such products by people in the U.S. due to the social distancing measures imposed in the wake of COVID-19 in the U.S. that encouraged indoor activities.

Gross profit of the Group amounted to approximately HK$161.4 million, representing an increase of approximately 0.4% as compared with approximately HK$160.7 million for 6M2019, with gross profit margin increasing from approximately 28.5% for 6M2019 to approximately 31.9% in 6M2020. The rise was mainly attributable to an increase in proportion of web sales which has a relatively higher gross profit margin compared with OEM sales, the depreciation of the Renminbi against the Hong Kong dollar, and the reduction and exemption of corporate social insurance premiums for enterprises in the PRC during 6M2020.

Prospects

Adhering to its long-term business development strategies, the Group has been striving to continuously grow the web sales business and diversify sales in different markets. It is pleased to have witnessed some desirable outcomes, including the encouraging performance of the web sales business and the increases in both volume and proportion of sales in Europe in 6M2020. The Group will therefore continue devoting efforts and resources towards such strategies in order to further expand its customer base and increase revenue.

Expansion of manufacturing capacity outside the PRC remains a key strategy of the Group as well. Accordingly, the Group intends to set up a production site in Vietnam and acquire relevant machinery. The Group has already entered into a memorandum of understanding ("MOU") with a vendor in June 2020, pursuant to which it intends to acquire certain land, factories, machines and assets located in Hai Duong Province, Vietnam. The acquisition will allow the Group to set up its own production site to tackle the impact arising from the Sino-U.S. trade conflict, which includes performing end-to-end production of its principal products for customers in the U.S. as well as to diversify operational risks.

Amid continuously weakening market sentiment since the COVID-19 outbreak, the Group considers business growth and financial sustainability as uncertainties in the second half of 2020. Compounding matters is the Sino-U.S. trade conflict. Since a significant portion of the Group's revenue is generated from the U.S., its business performance is highly sensitive to Sino-U.S. trade ties. In response to the challenging business environment, the Group will continue to closely monitor market conditions, and has already implemented a series of cost control measures aimed at sustaining its performance.

Mr. Cheng Wan Wai, Founder, Chairman, Executive Director and CEO of Q P Group, said: "Although the global economic outlook appears sluggish, we are confident in the growth of the overseas tabletop games market, especially through online sales channels. The Group will employ additional staff and reinforce its resources for the web sales business segment in order to enhance our competitive advantage and further expand our customer base. In addition, the Group will continue to monitor the overall development of COVID-19, make timely adjustments in line with the changing market conditions and strive for better business performance, so that ultimately, the Group is able to maximize value for shareholders."

About Q P Group Holdings Limited (Stock code: 01412)Established in Hong Kong in 1985, Q P Group ranked first in the paper-based tabletop games and related products manufacturing market in the PRC, and second in the paper-based greeting cards manufacturing market in the PRC, both in terms of export value in 2018. It has established stable and long-term business relationships with major OEM customers including an international greeting cards publisher and multinational children educational products and toys brands. Its principal product categories include tabletop games, greeting cards, educational items and premium packaging, which are sold on an OEM basis or through online sales channels. It operates two key production sites in Dongguan and Heshan in the PRC.

The five major websites are:https://www.makeplayingcards.comhttps://www.boardgamesmaker.comhttps://www.createjigsawpuzzles.comhttps://www.printerstudio.comhttps://www.gifthing.com

For more information, please visit: https://www.qpp.com/

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