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Corporate Info
Chairman’s Statement

Dear Shareholders,

  On behalf of the Board of Directors of Man Wah Holdings Limited (“Man Wah” or the “Company”) (Hong Kong Stock Code: 01999), it is my pleasure to present the interim results of the Company and its subsidiaries (the “Group”) for the six months ended 30 September 2012 (“1HFY2013” or the “Review Period”).


  During the Review Period, uncertainties have characterised the global economy. However, we are presented with both challenges and opportunities and various measures have been implemented to enhance our core competitiveness. The Group has allocated more resources to the research and development (“R&D”) of new products in response to market changes, while we have taken more steps to enter into both domestic and overseas markets, contributing to a continuous and stable growth of overall sales. On the other hand, the Group has further integrated production resources and raised the proportion of self-produced key components, which have enhanced our cost advantages. For internal management, our operating efficiency and effective cost control improved due to our strong information technology system.

  Overseas Markets

  The Group witnessed stable sales growth in the overseas markets during the Review Period. We believed that the only way to better distinguish us from major competitors and continue to grow our market share was to strengthen our core competitiveness. According to the report issued in May 2012 by Furniture Today, an authoritative furniture magazine in the United States (“US”), we are the only Chinese furniture company to be listed among the top ten furniture enterprises in the US. The Group’s advantageous position in the North American market was further enhanced through offering competitive and innovative products and expanded production capacity.

  Although total demand from the European market was still adversely affected by the European debt crisis, the impact was smaller in our major markets such as Germany and the United Kingdom (“UK”). As our products offer high cost performance and satisfy the strong demand from overseas consumers with sofas which are high value for money, we achieved stable growth in this challenging business climate. At the China International Furniture Expo which was held September this year and attended by our potential European customers, the Group received purchase orders worth more than US$3 million from customers from Europe including the UK and Germany.

  PRC Market

  Being the furniture market with the brightest potential in the world, the Chinese furniture market presents opportunities and challenges. During the Review Period, the Group’s sales growth in the first- and second-tier cities slowed down given a drop in the turnover of residential properties in those cities. On the other hand, sales for the third- and fourth-tier cities grew satisfactorily and on-line sales stood out as a real surprise. During a promotional campaign held in September this year on TMALL.COM, a total value of HK$14.8 million in sales orders were received in just four days, setting a new record for TMALL.COM for sales revenue of one-off single-item furniture promotions and Cheers became the first furniture brand which secured orders exceeding RMB10 million in a single event on TMALL.COM, which is really encouraging. The Group has adjusted the product mix with more products specifically suitable for customers in third- and fourth-tier cities and for on-line sales. As a result, higher sales growth is expected in the near term.

  Regarding internal operations, the overall operating costs were lower than the previous year as raw material costs of the Group did not fluctuate and the Group strictly implemented cost control measures to increase operating efficiency.


  With the roll-out of the third round of quantitative easing, or QE3, and the gradual recovery of the housing market in the US, the Group expects to see greater potential for sales growth in the North American market. In the European and other overseas markets, the Group’s reputation is spreading among leading retailers. More customers appreciate the value of our products, thus a steady and healthy growth of sales is also expected in those markets.

  In parallel with the continued economic development, consumers in China are experiencing a consumption upgrade as they shift their focus from price and appearance to brand value, health and comfort. We believe that brands with strong R&D support and excellent craftsman standards can earn the consumers’ loyalty and this is an advantage the Group has always had. There is great potential for our reclining sofas to become popular in Mainland China. Given the unabated demand in the housing market and the Group’s rising brand recognition, we are confident in the growth potential of the Chinese market.


  On behalf of the Board, I would like to take this opportunity to extend my heartfelt thanks to all the staff in our different departments for their contributions during the Review Period. I would also like to express my sincere gratitude to our shareholders and business associates for their extended support and trust. The Group intends to strive to strengthen its core competence and secure a leading position among reclining sofa producers and retailers around the world.


Wong Man Li
Man Wah Holdings Limited

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