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

The global economy witnessed a gradual recovery during 2017. The steady economic growth in China along with the strengthened consumer confidence in the US market has had a positive effect on the overall market sentiment. Against this favourable backdrop, the Group has achieved encouraging results with a record high net profit amounting to HK$402,211,000, representing an exceptional year on year increase of 36.8%. This performance resulted from our effective implementation of the two pronged strategy specifically for developing the plush stuffed toys and plastic figures businesses, backed by our effective production capacity expansion plans and cost control measures.

The Group’s encouraging financial results achieved over the last few years ago have been attributed to our business strategies set forth almost a decade ago. In recent years, the toy industry has been undergoing consolidation with decreasing total industry production capacity, which creates conditions for dynamic companies with a solid foundation and a large capacity which can enjoy increasing orders when the market recovers. As a leading toy manufacturer in the industry, we have an outstanding reputation and a strong track record in the market, enabling us to stand out among industry peers and capture the emerging business opportunities. Having production bases in both China and Vietnam has served as another competitive edge for Dream International. With factories set up in Vietnam very early on, we have benefitted from lower labour costs and have expanded production capacity in a timely fashion to accommodate increasing orders. Capacity expansion has also helped to boost economies of scale and bring synergies, and, in turn, lower our overall costs.

In terms of business development strategies, we leverage our core business, plush stuffed toys, to provide stable revenue as a strong foundation. By offering timely delivery of quality products through a strong production capacity, we have won support from internationally renowned brand customers and gained new customers. In addition, the plastic figures segment acts as a major growth driver of the Group and has driven its rapid development in the past few years since its establishment. The sales performance of this segment has been impressive during the year with a year on year growth of approximately 112.2%. In particular, we were able to gain an increasing volume of orders from the US market underscoring the encouraging expansion of sales seen there during the review year. Meanwhile, with respect to the plastic figures segment, we have captured cross selling opportunities, leading to continuously accelerating growth.

Looking ahead, the interest rate hikes in the United States can lead to the increased costs for corporations and Trump’s “America First” strategy with protectionist aspects may introduce uncertainties to the global economy. Nevertheless, benefiting from the relatively lower production costs of the Vietnam production facilities, reinforced by our reputation for quality products in the industry, we are in position to secure a greater volume of customer orders. We resolve to maintain a stable relationship with our existing customers while also continuing to explore new top tier customers in order to broaden our customer base, thereby generating long term stable income while enabling us to seize development opportunities. The management thus remains prudently optimistic about the Group’s business development prospects.

As for further expansion of production, in view of the growing market demand, we are planning to further ramp up our capacity dedicated to manufacturing plastic figures in Hanoi. We will be able to use our enhanced production capability and realise synergies to secure a greater volume of orders from existing and new customers. At the same time, we have been closely examining opportunities and taking initiatives to boosting our development further by product diversification. With the plastic figures segment set up a few years ago as a good example, to maximise the value of our resources, we currently utilize our existing manufacturing facilities to expand to “Doll Products” market to unearth more growth opportunities in the future.

Going forward, the Group continues to monitor market conditions and actively seize market opportunities. Last but not least, the Group is strengthening its production and operational efficiency, as well as implementing stringent cost control measures, as it aims to enhance overall profit performance and deliver better returns to its shareholders in the long term.

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 steadfast commitment and constant contributions.

Kyoo Yoon Choi
Chairman
23 March 2018

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