Hung Fook Tong Demonstrates Resilience, Prepaid Receipts Increase by 3.5%

Hung Fuk Tong (01446), amid a challenging economic environment and a surge in Mainland travel consumers, released its annual results for the year ended last December. Pre-sale coupon and points sales continued to grow, driving contract liabilities to increase by 3.5% year-on-year to HK$168 million, equivalent to more than four months of Hong Kong retail revenue. The company said the figures reflect that consumers’ trust and loyalty toward it remain high.

Ending cash of over $100 million, strong liquidity

The group’s cash and cash equivalents at period end increased to HK$119 million, up 7.9% year-on-year. This was mainly driven by an increase in customers’ purchases of pre-paid coupons, together with HK$90.2 million in unused bank credit, showing ample liquidity. Meanwhile, earnings before interest, tax, depreciation and amortization (EBITDA) was HK$111 million. Even with a net loss recorded for the full year, the data still indicates that the group has operating profitability and continues to generate steady cash flows.

Cost control delivers results, gross margin edges up

Total revenue for the period recorded HK$600 million, down 3.3% year-on-year. Gross margin, however, inched up slightly from 59.4% to 59.5%. Even in a tough economic environment, it still maintained gross margin by optimizing production efficiency and effective cost management. However, the group recorded a shareholder-attributable loss of HK$16.7 million for the full year. The increase in the loss was mainly due to additional one-off expenses of about HK$2.1 million arising from incremental discharge fees. Loss per share was HK$2.55 cents, and no final dividend was declared. Hong Kong’s retail business remained the largest source of revenue, with revenue of about HK$460 million, accounting for more than 76% of total revenue. During the year, the group operated 108 self-operated stores in Hong Kong, similar to the number of stores it had last year, and it continued to rank as the largest Chinese herbal products retailer in Hong Kong.

Entering its 40th anniversary, strengthen brand health positioning

Looking ahead to 2026, when the brand celebrates its 40th anniversary, the group said that next year’s retail efforts will focus on expanding Hong Kong-style street snacks, strengthening the “Hung Siu Rice House” positioning, and launching a Diamond membership tier, to further enhance customer loyalty and reinforce its unique position as a “Chinese herbal wellness brand.” As for the wholesale market, it will also launch products tailored to the market’s demand for lower-sugar items, further strengthening the brand image oriented toward health, and continue to expand overseas markets such as the United Kingdom and Indonesia.