Camkids (CAMK), the maker of outdoor apparel and accessories for children in China, has announced a maiden dividend payment on the back of strong profit growth at the half-year stage, although management warns that challenges could lie ahead.
Revenue growth was driven by 75 net new store openings and a fifth production line that went live in May. But while gross margins hit an all-time high of 38.2 per cent, the operating margin fell from 29.5 per cent to 28.1 per cent as the company spent more on advertising, store renovation, research and development and staff. Still, operating profit jumped 15 per cent to RMB122m (£12.5m) and a new focus on faster-growing tier three cities should give a boost to sales and profit. Camkids has also signed an agreement with Taobao, China's largest e-commerce website, to sell its products online.
That said, management warns that pricing is under pressure as competitors slash costs to clear excess stock to cope with falling sales. As a result, its distributors are becoming more cautious. So are analysts: Allenby Capital is maintaining full-year EPS estimates at 31.5p (26.9p in 2012) and is pencilling in a 5.4p a share dividend, but has cut its 2014 EPS forecast by 11 per cent to 32.9p.
| CAMKIDS (CAMK) | ||||
|---|---|---|---|---|
| ORD PRICE: | 108p | MARKET VALUE: | £81m | |
| TOUCH: | 107p-108p | 12-MONTH HIGH: | 139p | LOW: 82p |
| DIVIDEND YIELD: | 2.1% | PE RATIO: | 3 | |
| NET ASSET VALUE: | RMB7.9 | NET CASH: | RMB288m | |
| Half-year to 30 Jun | Turnover (RMBm) | Pre-tax profit (RMBm) | Earnings per share (RMB) | Dividend per share (p) |
|---|---|---|---|---|
| 2012* | 359 | 106 | 1.24 | nil |
| 2013 | 434 | 122 | 1.20 | 2.30 |
| % change | +21 | +15 | -3 | - |
Ex-div: 23 Oct Payment: 22 Nov *Pro-forma figures £1=RMB9.73 | ||||
