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Net profit perks up at Peak Sport
Sep '11
The Board of Directors of Peak Sport Products Co., Limited announce the interim results of the Company and its subsidiaries for the six months ended 30 June 2011.

- Turnover grew by 24.7% to RMB2,255.9 million
- Gross profit grew by 32.0% to RMB899.3 million with gross profit margin rising to 39.9%
- Profit for the period attributable to equity shareholders grew by 22.1% to RMB423.1 million with net profit margin at 18.8%
- Basic and diluted earnings per share amounted to RMB20.17 cents and RMB20.16 cents respectively
- Interim dividend of HK3 cents (equivalent to approximately RMB2.47 cents) per ordinary share was declared
- Number of authorized Peak retail outlets reached 7,619, representing a net increase of 395 outlets from the end of 2010.

Market Overview Global economic conditions
During the first half of 2011, China's GDP grew by 9.6% when compared to the same period in 2010 and China also experienced high inflation with the customer price index reaching a high level of 6.4% in June 2011. To curb further increase in inflation, the Chinese authorities adopted a series of monetary policies during the first half of 2011. These measures include increasing the deposit-reserve ratio and the interest rate. As a result, the economic growth of China has slowed down in the second quarter.

The economic conditions in western countries were no better than those in China. The US market has started to lose its momentum since the announcement of the end of the second round of quantitative easing monetary policy (i.e. QE2) at the end of June 2011. The unemployment rate in the US reversed its downward trend achieved in the early months of 2011 and the property market remained sluggish. European countries were still struggling with debt crisis of certain countries while economic conditions in Asia and Africa were less rosy than those in 2010 partly because of high inflation and political disturbances in several countries in the Middle East and Africa during the first half of 2011.

Sports products industry in China
The sports products industry continued to achieve steady growth during the first half of 2011 although the growth rate was lower than before due to the weakening economic conditions mentioned above. The performance of different sports brands in China during the first half of 2011 varies, with those brands focusing on the lower-tier cities having better performance. Being one of such brands focusing on the lower-tier cities in China, Peak achieved satisfactory growth during the first half of 2011 through its clear positioning and effective marketing strategy.

We note that some peers did not perform well during the first half of 2011, which created negative sentiment for the whole industry. We consider that the poor performance of these peers was caused by their own problems and was not a reflection of the sports products industry as a whole.

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Peak Sport Products Co Limited

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