Sunwah International Announces Q2 FY2020 Results

TORONTO, Feb. 14, 2020 /CNW/ - Sunwah International Limited, TSX: SWH ("Sunwah International" or the "Company"), a Hong Kong based investment firm and member of major Asian conglomerate, Sunwah Group, today announced its financial results for the second quarter ended December 31, 2019, reporting a net loss of US$1.59 million for the period. All figures quoted are in U.S. dollars.

Q2 FY2020 Highlights:

• Total revenues, mainly from the Company's new Restaurant Operations, of $0.89 million for the quarter, totaling $1.73 million for the first half of FY2020
• A loss attributable to shareholders of the Company from continuing operations amounting to $0.73 million, a notable improvement over last year's loss of $1.54 million in Q2 FY2019. The year-to-date loss for FY2020 was $1.42 million against a loss of $2.03 million for the six months of last year.
• A loss before tax from continuing operations of $0.81 million for the quarter and $1.59 million for the year-to-date (Q2 FY2019: loss of $1.54 million; a loss of $2.03 million for the six months of FY2019)
• A share of losses of $0.02 million for the quarter and $0.37 million for the year-to-date, which represents results from the Company's primary investment in financial services
• A loss on partial disposal of interest in Sunwah Kingsway Capital Limited of $0.47 million for the quarter
• Cost of sales for Sunwah International's new Restaurant Operations of $0.26 million in Q2 FY2020 and $0.49 million for the first half of FY2020
• An increase in selling, general and administrative expenses to $0.96 million for the quarter and $2.00 million for the six-month period up from $0.44 million in Q2 FY2019 and $0.63 million for the first half of FY2019. The increase was the result of expenses related to its new restaurant business.

"Sunwah International's efforts over the past year to create a more stable income base are proving successful as evidenced by the improvement in our results year-over-year in spite of widespread market uncertainty in Asia and Hong Kong," said Michael Choi, CEO of Sunwah International.  "With our recently revised and enhanced income diversification strategy, we are generating respectable revenues through our new restaurant operations while continuing to participate in financial services — a lucrative space in which we offer significant expertise — in a meaningful way with reduced risk."

Hong Kong stock markets were down and volatile during the current financial year in connection with adverse investor sentiment stemming from the region's social unrest and U.S.-China trade wars, which had a negative impact on the Company's results although to a lesser extent than would have been the case prior to Sunwah International's adjusted focus on financial services.  Primary market activity in the region was substantially higher, however, and the Company looks forward to opportunities to benefit from this in future periods with Hong Kong cementing its position as the world's top IPO destination. 

Sunwah International recently decreased its equity interest in Hong Kong based Sunwah Kingsway Capital Limited ("SWK"), one of the region's leading domestic corporate finance and brokerage firms and the financial services division of major Asian conglomerate, Sunwah Group, to expand and diversify its investment base across different industry sectors.  This change in focus was designed to open up investment opportunities in other sectors in line with Sunwah Group's core strengths, while continuing to allow the Company to participate in the financial services sector and SWK's success.    

Financial Overview:

In accordance with the Company's refocused operations, Sunwah International now presents its results according to the following main segments:

• A share of losses of $0.02 million for the quarter and $0.37 million for the year-to-date, which stands for a share of results of 26.47% (27.90% prior to the December 2019 disposal of shares). This corresponds with a share of losses of $1.05 million and $1.42 million in the second quarter and six months of FY2019 respectively (representing a 28.36% equity interest in SWK at the time).
• SWK's second quarter and year-to-date losses in FY2020 are mainly the result of a decrease in commission and fee income amid dampened financial markets in Hong Kong and Asia and an increase in impairment loss from financial assets.
  
  

• A loss of $0.16 million for the quarter and $0.35 million for the first half of Fiscal 2020
• Revenues for the quarter of $0.87 million and $1.70 million for the first half of Fiscal 2020
• Cost of sales of $0.26 million and $0.49 million for the quarter and year-to-date respectively, representing the cost of inventories sold
• General, selling and administration expenses of $0.57 million for the quarter and $1.15 million for the six months of Fiscal 2020, which includes staff costs of approximately $0.40 million for the quarter and $0.80 million for the year-to-date (wages and allowances, pension costs, employee benefits etc.)
• Depreciation and amortization amounted to $0.20 million for the quarter and $0.39 million for the first half of Fiscal 2020 while property related management expenses total $41,000 and $82,000 for the quarter and the first half of Fiscal 2020 respectively
  
  

• A substantially improved year-over-year performance with a net loss of $0.16 million in Q2 FY2020 (Q2 FY2019: loss of $0.50 million) and $0.40 million for the half-year (six months of FY2019: loss of $0.69 million)
• A fair value gain on the financial assets at fair value through profit or loss of $40,000 for the quarter
• Selling, general and administrative expenses of $0.20 million in Q2 and $0.46 million for the year-to-date against $0.20 million and $0.40 million for the corresponding periods of FY2019
  
  

• A small loss of $19,000 was recorded in last year's second quarter (Q2 FY2020: N/A), resulting in a small loss of $6,000 for the first half of Fiscal 2019 (six months of FY2020: N/A).

Future Prospects

Sunwah International's Restaurant Operations have produced decent results since the division's inception following the acquisition of HFL Limited towards the end of last year's second quarter.  Despite this success,  given the high degree of uncertainty in Hong Kong's consumer marketplace at present as a result of the recent social unrest and concerns related to the spread of the novel coronavirus (COVID-19), the Company is prepared, if necessary, to alter course by lessening or withdrawing its focus on the food and beverage industry.  As an investment company, it is in the normal course of business to invest and divest in various businesses, and the Company is well prepared to execute on any change in direction should Management determine this to be the best course of action.

For more information on Sunwah International's Q2 FY2020 operating results, please see the Management's Discussion and Analysis (MD&A) and the unaudited interim consolidated financial statements, which are filed on SEDAR and also available on the Company's website at www.sunwahinternational.com.

About Sunwah International Limited

Sunwah International Limited is an investment firm and a member of Sunwah Group, one of Hong Kong's most prominent multi-national conglomerates. The Company's current primary investment interest, Hong Kong based Sunwah Kingsway Capital Holdings Limited, is listed on the Stock Exchange of Hong Kong under the stock code 00188. Sunwah Kingsway is licensed to provide a range of financial solutions in Hong Kong and abroad that include award-winning brokerage services and innovative corporate finance offerings.

Leveraging the expansive relationship network and strategic strengths of Sunwah Group, the company is now also focused on the food and beverage industry following the recent acquisition of HFL Limited, which operates a premium Chinese seafood restaurant in Hong Kong.

Forward-Looking Statements

This press release announcing the financial results for Sunwah International's quarter ended December 31, 2019 should be read in conjunction with the unaudited interim consolidated financial statements and management's discussion and analysis of Sunwah International Limited (the "Company") and its subsidiaries.

This press release contains certain statements that reflect management's expectations and objectives for the Company's future performance, opportunities and growth, which statements constitute "forward‑looking information" and "forward-looking statements" (collectively "forward-looking information") under applicable securities laws. Such statements, other than statements of historical fact, are predictive in nature or depend on future events or conditions. Forward-looking information involves estimates, assumptions, judgments and uncertainties.  These statements may be identified by the use of forward‑looking terminology such as "may", "will", "should", "anticipate", "expect", "believe", "predict", "estimate", "continue", "intend", "plan" and variations of these words or other similar expressions. Specifically, this press release includes forward-looking information in respect of Sunwah International's 2020 objectives, including its focus on a variety of industries as an investment holding company and its initiative to expand and diversify, and its strategies to achieve those objectives. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management. Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, investors should not place undue reliance on forward-looking information. Forward-looking information is provided as of the date of this press release, and the Company assumes no obligation to update or revise them to reflect new events or circumstances.

Except as required by applicable law, management and the board of directors of the Company (the "Board of Directors") undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

SOURCE Sunwah International Limited