Trinity Actively Looking for Deals as Profit Surges 51%
Stock Chart for Trinity Ltd (891)
Trinity Ltd. (891), the high-end menswear retailer that sells Gieves & Hawkes (GIEVES) and Cerruti 1881 in China, is “actively” looking for European brands to buy after 2011 profit increased 51 percent. The stock surged.
Net income jumped to HK$513 million ($66 million) from HK$341 million a year earlier, beating the average estimate of HK$498.3 million from 12 analysts surveyed by Bloomberg News. Sales climbed 30 percent to HK$2.61 billion in 2011.
Trinity, a unit of Hong Kong’s Li & Fung Group, benefited from the rising demand for high-end menswear in China as the urban disposable income in the world’s second-largest economy rose 14 percent to about 21,810 yuan in 2011. With the net cash of HK$410 million it had at the end of 2011, the company is seeking to buy new brands to expand its product lines.
“We are highly selective,” Managing Director Sunny Wong said in an interview today. “Hopefully we can do one or two acquisitions every couple of years.” The Hong Kong-based company is interested in high-end European menswear brands from the U.K., France and Italy, he said.
The stock climbed 7.5 percent to HK$6.92, the most in more than two months. The shares have climbed 24 percent for the year, compared with a 16 percent gain for the benchmark Hang Seng Index.
Trinity’s first-quarter growth will probably be “softer” than a year earlier while there are signs of pickup in March, Wong said. This year will be ‘challenging’’ because of rising labor and rental costs, as well as slowing economic growth, particularly in eastern and southern China that are more export oriented, he said.
The slowdown will be short term and the Greater China markets remain attractive in the long term, the company said in a statement yesterday.
Trinity expects to keep its gross profit margin around 80 percent this year, Wong said. “There are still cost increases we have to pass on to customers,” he said.
Premier Wen Jiabao set a 2012 economic growth target of 7.5 percent on March 5, lower than an 8 percent goal in place since 2005. He pledged to adjust taxes as the nation seeks to end the economy’s reliance on investment and exports in favor of boosting domestic consumption.
Trinity operated 460 stores by the end of last year and increased new outlets by 12 percent, it said in yesterday’s statement. It plans to open 40 new shops in mainland China this year, Wong said at a press conference yesterday.
The retailer that also sells Kent & Curwen and D’URBAN brands (SUUB) said same-store sales, or revenue from outlets open more than a year, grew 19.5 percent last year and it targets a“low teen” growth rate this year, Wong said yesterday.
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