China Dongxiang sportswear net operating profits nearly doubled with strong growth prospects

Results Highlights

*Together with the total interim and interim special dividend paid on 15 September 2015, the total dividends payout represents 60% of the Group's profit attributable to the equity holders in 2015.

(22 March 2016, Hong Kong) The leading international sportswear brand enterprise in the PRC, China Dongxiang (Group) Co., Ltd. ("China Dongxiang" or "the Group"; HKEx stock code: 3818, together with its subsidiaries, "the Group") is pleased to announce its annual results for the year ended 31 December 2015("reporting period").

Looking back at 2015, Chinese economy sustained steady development despite the downward economic pressure. With the supporting of the government and the introduction of relevant policies, a growing number of investors and cross industry leaders have been tapping into the sporting industry, as its potential for driving the economy growth has become increasingly evident against the backdrop of China’s economic transformation and the ongoing downside of the real economy. It was in this context that our people worked in concerted effort and progressed in a judicious manner to enhance the capacity of management, clarify brand positioning, identify and produce suitable products for the market, and strengthen financial investments management for achieving stable business growth.

The Group resulted in strong growth prospects in the reporting period. Under the continue of consolidating the business models of "brand + product" and "brand + retail", the Group’s revenue for the reporting period grew by 16.4% to RMB1,469 million. For Kappa China, revenue increased by 25.8%, year-on-year, to RMB1,030 million, while gross profit margin grew by 6.5 percentage points to 67.0% thanks to the increased sales of new products, further improvements in the gross profit margin for new products and the percentage share of self-owned retail sales. The Group had an outstanding performance in 2015. The operating profit excluding investment gain increased by 170.8% to RMB260 million. Profit attributable to equity holders for the reporting period was RMB803 million, basic earnings per share year-on-year was RMB14.56 cents. To reward shareholders for their support, the Board of Directors has proposed to distribute 30% and 30% of the net profit attributable to equity holders for the year ended 31 December 2015 as final dividend and special dividend, the total dividends payout represents 60% of the Group's profit attributable to the equity holders in 2015.

Looking back at 2015, the Group continued to adhere to the business models of "brand + product" and "brand + retail". In connection with "brand + product", the Group adopted a dual approach. First of all, all products were designed to meet consumers’ preferences and needs, as target consumer groups were identified through analysis and applications of retail data generated from retail end. In connection with brand publicity, the Group also sponsored a number of offline marketing activities. It is also worth noting that Kappa products featured prominently in the hit movie Detective Chinatown («唐人街探案») and gained considerable exposure as a result of the huge popularity of the movie. Under the new business model of "brand + retail", the Group made dedicated efforts in exploring prefecture-level cities and achieved notable results. As at the end of December 2015, the Group had a total of 1,267 Kappa stores, representing a net increase of 57 stores compared to the end of last year. These included 397 self-owned retail stores run by subsidiaries. Meanwhile, the Group acted swiftly to replace certain underperforming stores, resulting in improved quality and efficiency for its sales channel and effective enhancement of profitability on the retail end. In terms of e-commerce, after years of hard work, the business is now reaping lucrative reward. Revenue from off-season items as a percentage of total sales declined substantially with product mix further fine-tuned. In the November 11th sales initiative in 2015, e-commerce sales doubled as compared to the same period of the previous year.

"A new Dongxiang calls for a new strategic layout." In 2015, the Group gradually formed a brand new business profile featuring a two pronged growth driver comprising the principal sportswear operations and the supplementary investment operations. Mr. Chen Yihong, Chairman, Chief Executive Officer and Executive Director of China Dongxiang (Group) Co., Ltd., commented, "With an open mind and a strong commitment to progress in the pursuit of excellence, the Group will explore and innovate in a composed manner amidst such volatile economic conditions and embrace challenges with diversified approaches and thinking. Looking ahead, it’s true that global economic uncertainties will continue to prevail. But then, success often emerges from difficulties and constraints. Hence we will continue to venture forward with courage and be relentless in our endeavor to build a better future for Dongxiang!"

About China Dongxiang (Group) Co., Ltd.
Chan Dongxiang (Group) Co., Ltd. (HKEx: 3818) is a leading international sportswear brand enterprise in China which has been listed on the Main Board of the Hong Kong Stock Exchange since 10 October 2007. The Group is primarily engaged in the design, development, marketing and wholesale of branded sportswear in China. Currently, China Dongxiang owns all rights to the internationally renowned Kappa brand in China, Macau and Japan. On 1 May 2008, China Dongxiang completed the acquisition of Phenix, a Japanese sportswear enterprise. Phenix is the most popular ski brand in Japan with the largest market share, as well as a well-known brand in the international market.

For enquiries, please contact:
China Dongxiang (Group) Co., Ltd.
Christina Low
Investor Relations Department
(8610) 67836585