While the novel coronavirus disease 2019 (“COVID-19” or the
“pandemic”) remained widespread around the world in 2021,
its economic impact gradually became relatively less severe.
With increasing vaccination rates and the gradual resumption
of economic activities, the world began to adjust to a “new
normal”, and market sentiment showed signs of recovery.
Leveraging its strong fundamentals, established reputation
and effective business strategies, Dream International Limited
(the “Company” or “Dream International”, together with its
subsidiaries the “Group”) remained a preferred manufacturing
partner in the toy industry and was able to maintain business
growth during this continued period of uncertainties.

Under the lingering pandemic, the operations of many
manufacturers continued to be affected. To meet the
recovering market demand, major toy companies
demonstrated a strong preference for working with
manufacturing partners that are known to have a high
production capacity, consistently high product quality and
punctual delivery, such as Dream International. Therefore,
during the year under review, we received an increasing
number of orders from our extensive top-tier clientele, thus
boosting our income and fortifying our leading position within
the industry amid the adverse environment. Having such a solid foundation built over many years is clearly an advantage
that cannot be underestimated.

Our successful two-pronged business strategy, supported
by our dual production bases, has proven its effectiveness,
particularly under the pandemic. Regarding the former, in
addition to our well-established plush stuffed toy business,
we have committed efforts to the expansion of our product
portfolio in the past few years, to cover new segments and
create new growth drivers such as plastic figures and diecasting products. We also acquired the tarpaulin business in
2021 to help fuel the Group’s development with strong and
stable income. In terms of product categories, we enhanced
the proportion of non-seasonal products to increase sales and
improve the utilisation rate of production facilities during the
low season. These combined efforts provided the Group with
more diversified income sources with potential for value growth
going forward.

Moreover, our dual production bases located in China
and Vietnam allowed us to enjoy high flexibility during the
pandemic. In the third quarter of 2021, the epidemic took
a turn for the worse in Vietnam, causing local authorities
to impose lockdowns, including in Ho Chi Min City and
surrounding areas. For the Group, its production activities were
halted due to associated anti-pandemic measures. Thanks
to our two production bases with plants that spread across
various cities, we were able to swiftly reallocate the production
activities to China and several other cities in Vietnam, thus
minimising the negative impact and meeting our customers’
product delivery schedules. In addition to facilitating revenue
growth, such flexibility also differentiated Dream International
from other industry players.

 Looking ahead, new uncertainties in the global economy have
arisen due to geopolitical tensions and the potential interest
rate hike. In particular, conflict in eastern Europe has provoked
an upsurge in oil prices, which in turn led to a surge in raw
material prices, posing new challenges to the manufacturing
sector. With the toy industry being less sensitive to market
conditions, as well as the strong demand driven by the gradual
reopening of theme parks around the world, we remain
prudently optimistic about our prospects, and are committed
to strengthening our advantages to sustain revenue growth
while launching a number of measures to maintain profitability.

To enhance our flexibility under the “new normal”, we are
planning to establish three more plants in China, in addition
to a new plant in Vietnam which will commence operation in
June 2022, to increase production capacity and capture the
market demand, especially in our expanding PRC market.
With regards to the supply chain, we are currently striving to
strengthen our partnerships with suppliers to ensure a stable
source of raw materials, while minimising the costs through
bulk purchasing. In terms of production, we will continue to
review our production flow and restructure the production
lines, where appropriate, to enhance cost efficiency.

 The world is constantly changing, and new opportunities
and challenges emerge at every moment. Over the past
few decades, we have accumulated a wealth of experience
in tackling ups and downs in the market and have grown
stronger than ever. Embracing our competitive advantages
and effective strategies, we are well-positioned to counter
any headwinds while also setting new bars for our peers. As
always, we will revisit and adjust our business model on a
regular basis to exploit potential opportunities and mitigate
any risks that surface in the market, with the ultimate goal of
creating sustainable returns for our shareholders.