Newtree Group profit down to HK$42mn

The group’s listing on the Main Board of HKSE and access to international capital markets lays a solid foundation for the Group’s long term development.

Newtree Group Holdings Limited (“Newtree Group”), a supplier with various patented production technologies and innovative product designs for hygienic disposables for clinical and household uses, on Sunday announced its interim results for the six months ended 30 September 2010.

During the period under review, the Group’s revenue increased by approximately 35.2% to approximately HK$233.2 million from approximately HK$172.5 million for the same period last year. The growth was mainly attributable to an increase in sales of the clinical application products. Gross profit grew from approximately HK$54.6 million in the last corresponding period to approximately HK$62.6 million. The Group’s gross profit margin dropped to approximately 26.8% (2009: 31.7%), primarily as a result of the changes in the product mix of the Group’s sales.

Net profit was approximately HK$ 42.0 million (2009: approximately HK$47.7 million). Excluding the listing expenses of approximately HK$ 8.1 million (2009: Nil) during the period under review, adjusted net profit was approximately HK$ 50.1 million. Earnings per share were HK 8.29 cents (2009: HK 9.41 cents).

Mr. Chum Tung Hang, Chairman of Newtree Group, said, “The listing on the Main Board of Hong Kong Stock Exchange on 13 January 2011 has marked a new milestone in the Group’s development. The management believes that access to international capital markets lays a solid foundation for the Group’s long term development while boosting its business growth and consolidating its leading position. With 18 patents for production technology and innovative product designs and the close long-term relationship with customers from Europe and the U.S., these advantages will help us to enter the medical consumables market in China which offers huge potential.”

During the period under review, due to the increase in the Group’s sales to its U.S. customers, the Group’s revenue from clinical application products has surged by about 171.1% to approximately HK$114.1 million from approximately HK$42.1 million for the corresponding period last year, accounting for about 48.9% of the total revenue. Gross profit of this segment soared by 186.1% to HK$17.5 million from HK$6.1 million for the corresponding period last year. The gross profit margin increased to 15.3% from 14.5% for the corresponding period last year mainly due to the decrease in the consumption of polyethylene.

As the Group shifted in focus on high-end products for household applications customers, its revenue from household application products during the period under review has decreased by 8.7% to approximately HK$119.1 million (2009: approximately HK$130.4 million), accounting for 51.1% of the total revenue during the period. Gross profit of this segment was approximately HK$45.1 million (2009: approximately HK$48.5 million). Gross profit margin increased to about 37.9% from 37.2% for the corresponding period last year.

The Group has maintained a sound financial position. As at 30 September 2010, its bank balance and cash were approximately HK$32 million (31 March 2010: approximately HK$9.2 million). As at 30 September 2010, the Group’s current ratio was 2.1 (31 March 2010: 2.1). As at 30 September 2010 and 31 March 2010, the Group’s gearing ratio was zero.

Looking forward, Newtree Group aspires to become a leading manufacturer of clinical consumables in China, Europe and the US through providing quality and patented products to its customers. The Group intends to focus on the clinical consumables market in China, which is expected to benefit from the tightened regulations implemented as part of the Chinese Government’s health care policies. The Group will continue to work closely with customers to develop innovative solutions that are tailor-made to suit their needs, according to a Newtree Grooup report.

To provide better service to its customers, the Group will endeavor to expand its product portfolio. To remain competitive and to stay at the forefront of the industry, the Group will continue to develop its proprietary technology. To accomplish these goals, it will increase its research and development capabilities.

Mr. Chum concluded, “Newtree Group will continue to adopt a prudent approach in respect of risk control, profit maximization and cost control as well as to maintain its focus on the Chinese, European and the US markets. We strongly believe the Group will continue to cement its firm foundation in the market and advance its position in the industry and thus deliver sustainable and promising returns to shareholders.”