Web Sales Business Revenue Surges 37.1% to HK$93.2 million

HONG KONG SAR - Media OutReach - 27 August 2021 - Q P Group Holdings Limited ("Q P Group" or the "Group"; Stock code: 01412), one of the leading manufacturers of paper-based tabletop games and paper-based greeting cards in the PRC, today announced its unaudited interim results for the six months ended 30 June 2021 ("6M2021" or "the Period").

During the Period, the Group recorded total revenue of approximately HK$589.6 million, representing an increase of around 16.6% from approximately HK$505.6 million for the six months ended 30 June 2020 ("6M2020"), which was mainly attributable to the increase in original equipment manufacturer ("OEM") sales. Net profit decreased by approximately 17.2% to approximately HK$32.5 million for 6M2021. Without taking into account the non-recurring listing expenses for 6M2020, the net profit would be decreased by approximately 19.6% for 6M2021 as compared with that of 6M2020.

The Board has resolved to declare an interim dividend of HK2.0 cents per ordinary share for 6M2021 (6M2020: HK2.0 cents).

Business Review

COVID-19 continued to pose extensive adverse effects to businesses across the globe during 6M2021. However, global economy has shown signs of recovery and retail activities have been resumed thanks to the effective disease control measures and growing vaccination rates. Still, the global supply chain faced extensive disruption due to the shortage of containers and port congestion problems partially caused by the blockage of the Suez Canal earlier this year as well as the restricted operations of ports in South China due to the implementation of more stringent COVID-19 control measures. As the U.S. and European markets are the Group's primary delivery destinations, such disruption has affected its order fulfilment and the realisation of its sales revenue and financial performance.

Despite the challenges and uncertainties in the macro environment, the revenue from the Group's OEM sales increased by 13.4% to approximately HK$496.4 million for 6M2021. The increase was primarily due to the recovery of the global retail market following the gradual easing of the COVID-19 pandemic and the increase in orders from the Group's major customers who principally purchase greeting cards, tabletop games and puzzles.

Web sales also increased, with revenue rising from approximately HK$68.0 million in 6M2020 to approximately HK$93.2 million in 6M2021, representing an increase of approximately 37.1%. The increase was primarily due to the surging demand for playing cards during the pandemic-driven e-commerce boom.

For 6M2021, the Group's gross profit was approximately HK$178.6 million, representing an increase of around 10.7% as compared with gross profit of approximately HK$161.4 million for 6M2020. The gross profit margin decreased from approximately 31.9% for 6M2020 to approximately 30.3% for 6M2021, primarily due to the appreciation of the renminbi against the Hong Kong dollar and the absence of reductions and exemptions of several corporate social insurance premiums for enterprises in the PRC during the Period.

Prospects

The web sales business remains the Group's long-term strategic focus and growth driver. With its well-established foundation and broad customer base, the Group has been expanding its IT and digital marketing teams to support its goal of achieving greater market penetration and diversification. In alignment with its strategy of developing professional websites for high-potential product categories, the Group kicked off the development of another e-commerce website during the Period — the MakeToteBags ("MTB"). This web platform for personalised bags products is targeted to be officially launched in the third quarter of 2021.

Moreover, the Group is working on the development of a new business-to-business-to-consumer platform, the Q P Market Network ("QPMN"). Targeting global online markets, QPMN will make it possible for worldwide online shops and designers to offer print-on-demand services for personalised products to their end customers, powered by plugin programmes that connect with the Group's backend systems and production facilities. The orders will be fulfilled by the Group to the end customers directly. The Group intends to launch QPMN's first plugin programme in the third quarter of 2021 which will enable online shops to offer customised puzzles to their customers.

To achieve the long-term strategy of developing a new production base in Vietnam, the Group entered into a memorandum of understanding ("MOU") with a lessor in June 2021 in respect of the sublease of land in an industrial park in Ha Nam Province, Vietnam. With an area of approximately 40,000 m², the land will be used to establish the Group's first self-owned production plant outside the PRC. The plant will be equipped with comprehensive end-to-end production machinery and production lines. It will serve as the Group's manufacturing hub in Vietnam and is expected to maximise the synergy of its supply chain in the region. Construction of the factory is expected to commence in the first quarter of 2022 and the production plant is expected to commence operations in the middle of 2023.

Mr. Cheng Wan Wai, Founder, Chairman and CEO of Q P Group concluded: "The COVID-19 pandemic situation is expected to remain volatile and affect various economic activities, stunting global economic growth. We will stay highly alert to the challenges and uncertainties that arise in the economic and political environments, while remaining focused on internal operational improvement and steady business expansion. We will strive to consolidate our capacity, efficiency and cost-optimisation with enhancement of workflows and production planning as well as extended use of smart operations, with the ultimate aim of achieving better business performance and creating greater value for our shareholders."

About Q P Group Holdings Limited (雋思集團控股有限公司; Stock code: 01412)

Established in Hong Kong in 1985, Q P Group is one of the leading paper-based tabletop games and paper-based greeting cards manufacturers in the PRC. 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.

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