Transcript:
Man Sang Holdings, Inc. (MHJ)
Earnings Conference Call
February 13, 2009
Transcript of
Man Sang Holdings, Inc. (MHJ)
Earnings Conference Call
February 13, 2009
Participants
Executives
Martin Pak Wai Keung – Chief Financial Officer of Man Sang Holdings, Inc.
Flavia Hung Yuen Yee – Executive Director of Man Sang International Ltd
Jessica Chan Hei Yee – Compliance Officer of Man Sang International Ltd
Presentation
Operator
Greetings and welcome to the Man Sang Holdings, Inc. third quarter earnings conference call. At this time all participants are in a listen-only mode. Questions may be submitted at anytime by sending an e-mail to Martin Pak (e-mail address:) or Flavia Hung (e-mail address: ). If anyone should require operator assistance during the conference, please press “*0” on your telephone keypad. As a reminder, this conference call is recorded. It is now my pleasure to introduce your host, Ms.Jessica Chan. Ms. Chan, you may begin. Thank you.
Jessica Chan Hei Yee – Man Sang International Ltd. – Compliance Officer
Thank you. Good morning everyone. Thank you for participating in our conference call today. Here joining me isMr. Martin Pak, the Chief Financial Officer of Man Sang Holdings, Inc. and Ms. Flavia Hung, the Director of Man Sang International Limited.
Before we get started, please be aware that today’s presentation may involve certain forward-looking statements which are, by their nature, subject to risks and uncertainties. For more information on forward looking statements, please refer to our latest filings in the Securities and Exchange Commission.
I’ll start by giving a brief background of the Company and then Martin will highlight the results of our Group, then Flavia will share her thoughts on the future’s outlook.
Man Sang has a long history with over 25 years in pearl business. It is one of the world’s largest purchasers and processors of salt water pearls.It engaged in different business activities including purchasing, assembling, merchandising and wholesale distribution of pearls and pearl jewelry products. In addition, we developed another business segment – the real estate development and real estate leasing. One of the major projects was the China Pearls and Jewelry City Project which commenced on April 18, 2008. This is an integration project including real estate development, trading, exhibition, manufacturing, processing and business supporting facilities.
In addition, wehave a subsidiary called Man Sang International Limited. It is the first company which engaged in the pearl business and is listed on the Main Board of the Hong Kong Stock Exchange with the Stock Code 0938. Processing, manufacturing and assembling of pearls and jewelry products are conducted at our Group’s self-owned facilities in the ManSangIndustrialCity in Shenzhen of Mainland China. The industrial city consists of 27 buildings covering a total gross floor area of approximately 813,000 square feet.
Now I willpass the time to Mr. Martin Pak who will give the financial highlights. Mr. Pak, please.
Martin Pak Wai Keung- Man Sang Holdings, Inc – Chief Financial Officer
Thank you, Jessica. I’d like to summarize our financial performance for the ninemonths ended December 31, 2008 and all amounts are expressed in US dollar. Now, let’s take a look at slide no. 3, Financial Highlights. For the ninemonths ended December 31, 2008, our revenue decreased by 12.8% to US$35.6 million. Our gross profit decreased by 2.9% to US$13.3 million. Our net income after minority interestdropped by 65.6% to US$0.7 million, basic earnings per share were US$0.11, as compared to US$0.33 for corresponding period in last year. And finally, Net assets per share was US$8.4 which is almost the same as corresponding period in last year.
Now let’s turn to slide no. 4, our net sales for the ninemonths ended December 31, 2008 has decreased by US$5.3 million dropping from US$40.9 million to US$35.6 million which is primarily due to the slow down in demand of our core markets including the United States and Asian countries, particularlyin the field of our saltwater pearls and freshwater pearls.
You can see on slide no. 5, saltwater pearls accounted for 29.2% of total sales for the ninemonths ended December 31, 2008, which decreased by 9.0% as compared to 38.2% for corresponding period in last year. Freshwater pearls accounted for 3.0% of total sales for the ninemonths ended December 31, 2008, which decreased by 2.3% as compared to 5.3% for corresponding period in last year.
Now, we will move to slide no. 6, several regions including Hong Kong, North America and other Asian countries recorded a decrease in net sales by over 20% each. With an increase in net salesfrom Europe and other regions,total net sales attributable to Pearl operations decreased by 16.4% from US$40.9 million to US$34.2 million.
In regards to the revenue of real estate, which we can see on slide no. 7, revenue attributable to real estate for the nine months ended December 31, 2008 was US$3.8 million, consisting of US$1.4 million from sales of properties and US$2.4 million from rental income. We had not commenced real estate sales and leasing of CP&J Project during the corresponding period in last year, therefore, we had only rental income of US$0.5 million for the corresponding period in last year.
Now we shall go to slide no. 8, our gross profit margin increased gradually from 27.3% in 2005 to 37.4% in 2008. The increase in gross profit margin was primarily due to our continued implementation of effective cost controls and enhancement of production efficiency, in additions, we shifted in our sales focus to sales of higher value jewelry products.
Moving on now to slide no.9,we will go through our profitability performance. The operation income slightly decreased by US$0.4 million from US$2.5 million for the ninemonths ended December 31, 2007 to US$2.1 million for the ninemonths ended December 31, 2008. Then, on slide no. 10, our net income after minority interest decreased by US$1.5 million from US$2.2 million to US$0.7 million. As for our earnings per shares on slide no. 11, our basic earnings per share decreased by US$0.22 from US$0.33to US$0.11.
Next on slide no. 12 is our balance sheet analysis. Shareholders’ equity increased by 1.0% from US$53.3 million as of March 31, 2008 to US$53.9 million as of December 31, 2008 and the total debts reduced by 3.9% from US$25.6 million as of March 31, 2008 to US$24.6 million as of December 31, 2008. It resulted in the gearing ratio dropped from 0.48 to 0.46.
Now, moving on to slide no. 13, our net assets per share as of December 31, 2008were consistent at US$8.4which was the same as March 31, 2008.
Finally, we move to slide no. 14. You can see the latest development progress of CP&J project. The schedule of construction work on manufacturing and processing areas is in line with the expected timetable, we have completed an interior renovation now. Regarding to the residential areas, we completed 11-story constructions. For the multi-complex buildings, interior renovation works have been commenced. After the completion of the ancillary facilities, the CP&J Project becomes more sophisticated and comprehensive for our pearls and jewelry trading platform for our existing and potential customers.
With respect to our outlook, I would like to introduce Ms. Flavia Hung.
Flavia Hung Yuen Yee– Man Sang International Ltd. – Executive Director
Thank you Martin. Good morning ladies and gentlemen. Regarding the future prospect, as you may well know the outlook of theglobal economy remains uncertain as the ripple effects of the global financial turmoil continues. Under the continuous deteriorationof economic conditions in many countries and regions, we believe that our business will inevitably be affected during the next quarter.We will closely monitor our major market sectors and adopt stringent business and financial management policies to maintain our existing share in core markets and explore more business opportunities.
As for the real estate segment, the conditions in the PRC real estate market deteriorated significantly under macroeconomic policies and austerity measures implemented by thePRC Government as well as a material downturn in the global financial market. However the PRC Government since late 2008 has launched and announced various economic and financial stimulus plans to revive the domestic economy and the demand. We believe that the real estate industry in PRC including our CP&J Project as a whole will gradually benefit from such plans.
Thank you again for joining us on our web casting conference for the third quarter results. We shall look forward to talking to you soon in Junefor our final year results.
Operator
Thank you for ladies and gentlemenfor joining thisweb casting conference today. So, if you have any comments or questions, please either send us the e-mail to Martin Pak (e-mail address: ) or Flavia Hung (e-mail address: )or contact the Altman Group’s Miss Patricia, via her e-mail address . Thank you very much and have a nice day.
Ladies and gentlemen, this concludes today’s teleconference. Thank you for your participation.
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