Fenbo (FEBO) - 2023 Q4 - Annual Report

IPO and Financial Overview - Fenbo Holdings Limited completed its IPO on December 1, 2023, raising total gross proceeds of $5,000,000 by offering 1,000,000 Ordinary Shares at a price of$5.00 per share[217]. - For the financial year ended December 31, 2023, the company's revenue was approximately HK$119.1 million, a decrease of 0.5$119.7 million in 2022[340]. - The company's net income for the financial year ended December 31, 2023, was a net loss of approximately HK$1.5 million, compared to a net income of HK$8.7 million in 2022[342]. - The gross profit margin for 2023 was 18.6%, an increase from 15.7% in 2022, despite a decline in revenue[340]. - Selling and marketing expenses decreased to HK$1.96 million in 2023, representing 1.7$20.54 million in 2023, accounting for 17.2% of revenue, up from 16.1% in 2022[340]. - The company reported other income of HK$767,000 in 2023, a significant decrease from HK$13 million in 2022[340]. - The income tax expense for 2023 was HK$131,000, compared to HK$312,000 in 2022, reflecting a lower tax burden due to the net loss[340]. - The loss from operations decreased to HK$0.4 million for the fiscal year ended December 31, 2023, from a loss of HK$2.5 million in 2022, driven by increased gross profit and reduced administrative expenses[364]. - The company anticipates enhancing gross margins in 2024 by optimizing product mix and increasing raw material inventories within capital constraints[359]. Market Trends and Demand - The global market size for personal care beauty appliances increased from approximately $26.9 billion in 2016 to$32.4 billion in 2021, representing a CAGR of 3.8%[222]. - The personal care beauty appliance OEM market in the PRC grew from $2,010.1 million in 2016 to$3,310.3 million in 2021, reflecting a CAGR of approximately 10.5%[235]. - The global hair styling tool market is projected to reach $39.0 billion by 2026, with a CAGR of 3.7% over the next five years[224]. - The demand for hair styling tools is driven by evolving fashion trends and increased self-grooming consciousness, particularly among millennials and men[225]. - The rise of e-commerce has significantly boosted sales of personal care beauty appliances, particularly during the COVID-19 pandemic[230]. - The PRC government has implemented favorable policies to support the domestic manufacturing industry, enhancing the demand for hair styling tool OEM services[239]. Production and Operational Capacity - The Group's manufacturing facilities can produce approximately three million pieces of electrical hair styling products per annum[258]. - The Group plans to expand its production capacity by upgrading existing facilities and purchasing new equipment in the SZ Factory to enhance overall production capacity[273]. - The Group aims to strengthen its engineering, research, and development capabilities by recruiting more engineers to expand the range of product models for potential ODM and OBM customers[275]. - The Group intends to penetrate new geographical markets, particularly the United States, by recruiting new sales and marketing staff and establishing a subsidiary or representative office[276]. Financial Risks and Challenges - The profitability of enterprises in the electronics industry in China declined from 9.1% in 2018 to 5.9% in 2021 due to rising labor and raw material costs[241]. - The average monthly wage of professional technicians in the manufacturing industry increased from RMB 6,212.4 to RMB 9,800.9 from 2016 to 2021, representing a CAGR of approximately 9.5%[245]. - The average lead delivery time of chips increased from 12.7 weeks in January 2020 to 26.2 weeks in January 2022 due to global component shortages exacerbated by COVID-19[244]. - The Group's export sales volume was adversely affected due to severe supply chain shortages and manpower constraints[305]. - The Group's response to the ongoing geopolitical tensions includes stockpiling inventories to mitigate potential shortages[309]. - The company expects fluctuations in the cost of key materials to continue affecting margins, as raw material prices are influenced by market forces and supply-demand dynamics[345]. Governance and Management - The Board of Directors consists of five members, including two Executive Directors and three independent non-executive Directors[398]. - Mr. Li Siu Lun Allan has been the Chairman, Executive Director, and CEO since September 30, 2022[399]. - Mr. Fu Wai Yip has served as the Chief Financial Officer since December 6, 2022[400]. - The audit committee is chaired by Wong Siu Keung and includes independent non-executive Directors[408]. - The audit committee has been designated as having "audit committee financial experts" to oversee financial reporting[410]. - The compensation committee is chaired by Lai King Yan and includes independent non-executive Directors[413]. - The company has established various committees to ensure compliance with applicable regulations and enhance governance[407].