Blue Moon Group, the Chinese detergent maker backed by Asian private equity manager Hillhouse Capital, saw a 30 per cent rise in sales in the first two months year-on-year, helped by China’s gradual economic recovery.
The brighter outlook came as the Guangzhou-headquartered company, which listed in Hong Kong in 2020, on Tuesday reported a 39.5 per cent fall in net profit to HK$611 million (US$77.84 million), or 10.92 HK cents per share, for the year ended December 31 2022, below the HK$828 million consensus estimate of analysts polled by Bloomberg.
Despite last year’s poor performance, Blue Moon is optimistic about recovery in 2023, with plans to expand sales channels and tap into a growing exercise trend among Chinese consumers - meaning there will be more garments to wash.
“We have lots to look forward to in 2023,” said CEO Jason Poon Kwok-leung. “We saw a 30 per cent increase in sales in the first two months of 2023... raw material costs have dropped back down by 20 per cent, and we now have economic recovery post-Covid and less volatile foreign exchange rates.”
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Poon said profits last year were also hit by “historic highs” in palm oil prices - up 24 per cent in 2022 - and the impact of pandemic controls on logistics and operating costs.
The company expanded its operations in 2022 by over 300 to 1,700 retailers across the country, and hopes to grow the number to 2,000 by the end of this year.
“In recent years, Chinese consumers have moved towards higher quality of life issues and they are becoming increasingly particular about health and hygiene, especially after a new government policy to promote exercise,” said Joann Law, Blue Moon’s head of investor relations.
Kenny Ng, a strategist at Everbright Securities International in Hong Kong, said the market sees more room for improvement at Blue Moon in 2023.
“Group revenue from offline channels recorded a significant increase of nearly 20 per cent,” said Ng, saying that this could further improve now that China has emerged from pandemic control measures.
Blue Moon reported a 4.6 per cent increase in sales to HK$7.947 billion in 2022, while its gross profit margin dropped 0.6 percentage points to 57.8 per cent, according to the company.
The company recorded a net foreign exchange loss of about HK$156 million in 2022, against a gain of HK$64.5 million in 2021, saying this was mainly due to fluctuations in the value of offshore RMB-denominated bank deposits held by the group against the US dollar and Hong Kong dollar during 2021 and 2022.
Shares in Blue Moon closed 2.1 per cent higher at HK$4.86 on Wednesday.
