Man Sang Holdings, Inc. said Friday that net sales for fiscal year 2008 rose 59.1 percent to HK$633.7 million ($81.2 million), consisting of HK$405.4 million ($51.9 million) attributable to pearl operations and HK$228.3 million (29.2 million) attributable to real estate sales.
Gross profit for the year was HK$281.5 million ($36 million), consisting of HK$124.5 million ($15.95 million) attributable to pearl operations and HK$157 million ($20.1 million) attributable to real estate sales. Gross profit for pearl operations for fiscal year 2007 was HK$112.7 million.
Net income for fiscal year 2008 increased by 42.8 percent, to HK$39.9 million ($5.1 million), year-over-year.
For fiscal year 2008, net sales to United States decreased 8.7 percent, year-over-year, to HK$104.2 million ($13.3 million), while net sales to European customers increased by approximately 8.8 percent, year-over-year, to approximately HK$168.6 million ($21.6 million). Together, this resulted in a net increase in sales from pearl operations of 1.8 percent, to HK$405.4 million ($51.9 million).
Sales of South Sea pearls stayed even with 2007 at approximately HK$149.5 million ($19.1 million), or 36.9 percent of total sales. Sales of jewelry products increased by 8.5 percent to HK$223 million ($28.5 million).
Gross profit increased by 10.5 percent, year-over-year, to HK$124.5 million ($15.9 million) for 2008. Gross profit margin increased from approximately 28.3 percent in fiscal year 2007 to approximately 30.7 percent in fiscal year 2008. The increase in gross profit margin is mainly due to cost reductions on the production line of assembled jewelry sectors following the implementation of effective cost controls and the enhancement of production efficiency.
Real Estate Operations
The group launched sales of phase one market centers in CP&J City in the fourth quarter of fiscal year 2008 and recorded net sales of approximately HK$228.3 million $29.2 million), representing 32 percent of the total planned saleable area of the project. The group recorded rental income of approximately HK$6.8 million ($871,284), consisting of approximately HK$5.5 million ($704,717) attributable to the property rental in Man Hing and approximately HK$1.3 million attributable to property rental in CP&J City. As of March 31, 2008, the occupancy rate, representing leasing area of property in Man Hing and CP&J City, was 71.9 percent and 20 percent, respectively.
“Emerging weaknesses relating to recent developments in the subprime lending market in the United States and the impact of such developments on the United States economy may threaten market conditions in the United States and globally,” the company said. “Despite negative developments in the subprime lending market, we expect to meet expected growth estimates for the year. We are diversified geographically and are well-positioned to react to fluctuating market conditions. We therefore expect to maintain steady growth in our pearls and jewelry segment.
The company added, “Reviewing the performance of phase one of the CP&J Project, many potential purchasers have signed contracts for their preferred units. The market feedback has met our expectations. In this regard, the Company is taking a positive view on the contributions of the CP&J Project.”
About Man Sang Holdings, Inc.
Man Sang Holdings, Inc. and its subsidiaries (together the “Man Sang Group”) are one of the world’s largest purchasers and processors of Chinese cultured and freshwater pearls. The Group had two main business segments during the year.
One business segment is engaged in the purchase, processing, assembling, merchandising and wholesale distribution of pearls and jewelry products (“Pearl Operations”) and the other is engaged in real estate development and real estate leasing (“Real Estate Operations”).
The Pearl Operations include jewelry purchasing, processing, assembling, design, export, merchandising and wholesale distribution of pearls and jewelry products, including Chinese cultured pearls, Chinese freshwater pearls, Japanese cultured pearls, Tahitian and South Sea pearls, as well as pearls and jewellery products. The Group operates its own pearl processing facilities in Shenzhen, China.
The Real Estate Operations include the development and management of the China Pearls and Jewelry City (“CP&J City”) in Zhuji of Zhejiang Province, China. It is the single largest shareholder of the project. CP&J City will be the pearl and jewelry trading platform covering processing, manufacturing, research and development and trading of jewelry products and also provision of related services including logistics, electronic commerce, exhibition and convention, accommodation, catering, and entertainment.