Dream International Limited World's Leading Plush Toy Manufacturer
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Chairman's Statement

In 2016, the global economy continued to experience challenges. Significant developments including the slowdown of economic growth in Mainland China and policies of the new US administration affected market sentiment. Despite the volatile environment and increasing production costs, the Group nonetheless recorded satisfactory business growth and increase in profits, which were attributed to the long-standing partnerships with its customers, as well as the strategic expansion of its production base in Vietnam.

In response to the changing market environment and increasing competition, the Group timely expanded its production capacity, which enabled it to seize business opportunities. Increased production capacity also facilitated greater economies of scale and synergies, leading to overall cost reductions. Such cost reductions were even more significant for the Group since its production sites are in Vietnam where lower labor costs are enjoyed. The encouraging performance of the Group is owed greatly to its well-executed two-pronged strategy specifically for developing the plush stuffed toys and plastic figures businesses. The plush stuffed toys business remained the core business of the Group, providing sustainable revenue by leveraging our longstanding business relations with globally renowned toy companies. Meanwhile, the Group’s plastic figures business continued to be the major growth driver, with sales increasing sharply by Chairman’s Statement approximate 20% year-on-year. With a third plant dedicated to manufacturing plastic figures in Hanoi, Vietnam commencing operation in the first half of 2016, the Group’s production capacity has been enhanced, enabling it to accept greater orders from customers who value its quality production and design capabilities. Already, the Group’s sales to the US markets in particular have increased substantially. In addition, cross-selling opportunities with respect to the plastic figures segment were well captured by the Group due to its ability capitalize on long-term business ties with existing top-tier customers, leading to continuously accelerating growth.

Looking ahead, socio-political volatility around the world and global economic instability are likely to persist; nonetheless, we expect the toy industry to remain competitive and further production cost that our facilities enjoy, together with our reputation for product quality within the industry, we are well prepared to secure more customer orders to stand out from our peers, thus gain greater recognition from top-tier toy companies. We remain cautiously optimistic about our business development prospects in 2017.

Despite such optimism, we will further strengthen relations with our existing customers, and enhance our competitiveness by further improving production and operational efficiency, thereby become more cost effective and price competitive. For the plastic figures segment, we have initiated construction of a fourth plant to satisfy growing orders from this burgeoning segment. Moreover, having witnessed encouraging revenue contributions from the plastic figures segment, we had begun expanding our business to the “Doll Products” category. With the Group’s strong manufacturing capability and solid market experience, we expect this new category to serve as another growth driver in the future. To better equip ourselves, production plant with a designated line for our “Doll Products” division is under construction, and is expected to commence operation in the second quarter of 2017. We will also continue to closely monitor market conditions and look for new business opportunities that might arise. Leveraging our leading position as one of the largest global plush toy manufacturers in the industry, we are currently in discussions with several new customers that are renowned industry players, which will further strengthen our customer base. At the same time, we are enhancing our design and market research capabilities, as well as starting to develop new designs for our existing customers.

Benefitting from a solid customer base and healthy financial position, Dream International has made encouraging strides in its core business, while gradually expanding to new product categories. The Group will continue to optimize production, with the aim of enhancing its overall competitiveness and better insulating itself from the adverse effects of market volatility.

APPRECIATION

On behalf of the Board, I would like to take this opportunity to sincerely thank our shareholders, business partners and customers for their unwavering support. I would also like to extend my appreciation to the management team and the entire workforce for their commitment and contributions.

Kyoo Yoon Choi
Chairman
27 March 2017

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