Tsit Wing Recorded Revenue of HK$1,071.2 Million for FY2018 Profit Attributable to Owners of the Parent for the Year Increased by 64.4%

Strengthen leading position in the B2B coffee and tea products market; Seeks deepen market penetration of the Mainland China market

Highlights

• Revenue reached HK$1,071.2 million, representing an increase of 12.2% as compared with last year
•  Gross profit amounted to HK$333.1 million, representing an increase of 15.0% as compared with last year
• Profit attributable to owners of the parent for the year reached HK$75.8 million, representing an increase of 64.4% as compared with last year
• Adjusted profit attributable to owners of the parent* increased by 17.4% to HK$90.0 million
• Continues to capture the growth in the B2B coffee and tea products market in Hong Kong and Mainland China
• Plans to strengthen frozen meat and frozen processed food products business and expand product offerings
• Seeks deepen market penetration of the Mainland China market

Financial Highlights

*Excluding a number of nonrecurring income, costs and charges and certain of other non-cash charges

HONG KONG, CHINA - Media OutReach - 5 March 2019 - Tsit Wing International Holdings Limited ("Tsit Wing", together with its subsidiaries, the "Group"; stock code: 2119), an integrated B2B coffee and black tea solutions provider, announced its annual result. For the year ended 31 December 2018 (the "Reporting Period"), Tsit Wing recorded a total revenue of HK$1,071.2 million (2017: HK$954.6 million), representing an increase of 12.2% which was primarily due to the increase in revenue derived from the beverage solutions business, and to a lesser extent, the growth in revenue derived from the food products business. Gross profit increased to HK$333.1 million (2017: HK$289.6 million), representing an increase of 15.0%.

If a number of nonrecurring income, costs and charges and certain of other non-cash charges was excluded, adjusted profit attributable to owners of the parent reached HK$90.0 million (2017: HK$76.7 million), representing an increase of 17.4%.

The Board has proposed the payment of a final dividend of HK5.78 cents per ordinary share in respect of the year ended 31 December 2018 (2017: HK1.62 cents per ordinary share).

Business Review

The Group is a leading integrated B2B coffee and black tea solutions provider in Hong Kong, Macau and Mainland China providing one-stop coffee and tea solutions to commercial customers. The Group also expanded the business scope and commenced frozen meat and frozen processed food business in Hong Kong and Mainland China.

Beverage solutions

During the Reporting Period, revenue from the beverage solutions segment increased to HK$808.7 million (2017: HK$711.3 million), representing an increase of 13.7%. The revenue growth in beverage solutions segment was primarily because of the increase in revenue derived from tea and instant beverage mix products in Mainland China. Gross profit increased by 16.6% to HK$308.1 million (2017: 264.3 million), mainly in line with the increment in revenue. Gross profit margin increased to 38.1% (2017: 37.2%), primarily because of the relatively higher gross profit margin generated from tea and instant beverage mix products.

Food products

During the Reporting Period, revenue from the food products segment increased to HK$262.5 million (2017: HK$243.3 million), representing an increase of 7.9%. The revenue growth in food products segment was primarily because of the increase in (i) the sales of frozen meat products as a result of pricing strategy of the Group; and (ii) the sales of frozen processed food products as a result of the expansion of such business in Hong Kong.

Revenue by geographic locations

During the Reporting Period, revenue generated in Hong Kong increased by 6.0% to HK$739.2 million (2017: HK$697.4 million), primarily because of increase in sales of coffee, tea and milk product as a result of growth in customers' demand. Revenue generated in Mainland China increased by 31.4% to HK$314.0 million (2017: HK$238.9 million), mainly because of the increase in revenue derived from instant beverage mix products in Mainland China. Revenue generated in Macau increased by 6.7% to HK$11.9 million (2017: HK$11.2 million), primarily because of increase in sales to a new customer.

Business Prospect

As a leading integrated B2B coffee and black tea solutions provider in Hong Kong, Macau and Mainland China, the Group will endeavour to take more marketing initiatives to capture the growth in the B2B coffee and tea products market in Hong Kong and Mainland China, in order to strengthen its leading position in the market. Also, the Group seeks deepen its market penetration, particularly focusing on the Mainland China market which is expected to experience considerable growth, to maintain a high growth rate.

The Group will further strengthen its ability to provide food and beverage products solutions to its customers by exploring potential businesses of other strategic arrangements with entities which have the product portfolios demanded by customers and distribution network to expand the Group's distribution network.

The Group also strengthen its frozen meat and frozen processed food products business and expand its product offerings by entering into a strategic cooperation agreement with NH Foods for the sale of frozen, fresh, precooked processed meat and seafood products and a memorandum of understanding with F&N to explore business and product development opportunities for the supply, distribution, cobranded promotion and co-development of beverage products and/or beverage solutions in July 2017 and April 2018, respectively.

Leveraging on the Group's experience in providing frozen meat and frozen processed food, the Group aims to provide tailor-made frozen meat and processed food products to satisfy the needs of its well-established and diverse customer base in Hong Kong, Macau and Mainland China and enhance its product portfolio. Furthermore, the Group will continue to take on more strategic alliance initiatives and explore business development opportunities with various business partners for the supply, distribution, co-branded promotion and co-development of beverage products and/or beverage solutions. It is believed that building on the Group's leading market position and well-established distribution network could fully utilize the distribution channels and optimize efficiency.

About Tsit Wing International Holdings Limited

Tsit Wing is a leading integrated B2B coffee and black tea solutions provider in Hong Kong, Macau and the PRC with 86-year heritage. In 2017, coffee sold by the Group can be made into most 337.7 million cups of coffee per year; tea sold can be made into most 403.2 million cups of milk tea per year. Tsit Wing commenced its frozen meat business in Hong Kong and the PRC from 2013.

According to the Frost & Sullivan Report, Tsit Wing is the largest B2B coffee and black tea solutions provider in Hong Kong in 2016 with 24.5% of the market share in terms of B2B revenue.