Sing Lun

Against a challenging global climate and a demanding retail environment, a supplier base can survive the intense competition only if it manages to set itself apart from the others. Sing Lun’s continuous transformation into a one-stop apparel provider has allowed us to maintain and expand our market share.

Leveraging on our core competencies in areas of operational excellence, expansion of product ranges, maintaining a strong focus on design and development, as well as implementing relevant skills-set and nurturing our global workforce, our competitive edge has continuously gained traction, leading to a compounded annual growth rate of 30% in turnover and profitability over the last 5 years. Even as we enter into a challenging environment in 2008, we remain optimistic that Sing Lun can ride through with our strong positioning within the marketplace.

It is with great pleasure that I announce an 84.0% increase in Group revenue, for the financial year ended 31 December 2007 (“FY2007”) from US$73.80 to US$135.76 million. This strong growth was achieved through robust order placement from our key customers, testifying to our strengths in our manufacturing and sourcing networks of delivering quality products to them.

Underscoring the success of our positioning as a one-stop provider, group profit before tax increased by 114.1% to US$7.94 million and group profit attributable to shareholders increased by 103.3% to US$6.34 million.

On the whole, the strategies which we have consistently implemented throughout the year, have enabled us to achieve a set of respectable financial results.

Our apparel manufacturing operations continue in their upward momentum, recording a 40.0% increase in revenue to US$77.23 million while our agency, trading and distribution segment experienced exceptional growth of 222.5%, with total revenue recorded at US$61.09 million.

These encouraging results from FY2007 is a testament of our ability in deepening the supply chain relationship with key customers within three growing industry segments, namely, performance sportswear, fashion wear and specialised children apparel.

They recognise Sing Lun’s differentiated position as a unique supplier of apparel with manufacturing expertise, rigorous quality controls, remarkable designs and exceptional value as well as an operator of a wide network of facilities in various countries that offer wide product capabilities.

We are greatly heartened by our performance in FY2007 and believe that our balanced portfolio of different industry segments will allow the Group to weather through any challenging retail environment better than our peers.

Our four-pronged strategy that we have been emphasizing on is gaining momentum and manifesting results along the way. We have achieved more market share and our financial performance and standing have strengthened over the years. The key developments of each area are highlighted below:-

We stressed on differentiating and value-adding to our customers as a global one-stop apparel supplier through wider product coverage and design capabilities, thereby offering convenience and cost-savings to our customers,. We continuously invest in our design and development team so as to allow our customers to tap on our expertise in designing affordable clothing that offers stylish trends at great quality and at the right prices.

We aim to maintain cost competitiveness by investing in cost competitive locations. The Group announced on 19 April 2007 the setting up of two wholly owned subsidiaries in Hanoi, Starlight Sportswear Company Limited and Star Fashion Company Limited, to manufacture apparels for export. These new facilities will have integrated capabilities in printing, embroidery, laundry services and design development, enhancing the Group’s focus on becoming a preferred one-stop apparel supplier. Production is expected to commence by the end of 2008, and another factory will be constructed on the same premises in 2009.

Our pursuit for retail industry “stars” goes on even while we continue serving our existing clients. Also, as our existing customers continue to consolidate their supply matrix, Sing Lun is well positioned to benefit from this shake-out. We will continue our efforts to provide quality service to our loyal clientele such as Under Armour, Macys, Ralph Lauren, Baby Gap and Banana Republic, while value-adding to new customers like Esprit as well as Mark’s and Spencers. These retailers have invested their long-term trust in us, confident that we understand their brand names and are able to deliver according to their demanding needs.

Our strategic joint venture of SL Ponie has borne fruits. This joint venture is a major contributor to our full year performance. SL Ponie has enabled the Group to gain access to more manufacturing networks, expanding our product range and production capabilities.

Sing Lun’s strategies have proven to work, and we will continue riding the momentum which our initiatives have started us on. With a focused management and a loyal and growing clientele base, we are well placed to weather the current challenging global economic environment.

We are proud to have received the Macy’s Five Star Award once again in FY2007, having enjoyed the sustained confidence of our customer by delivering quality and value, year after year.

It is also our honour to add Under Armour’s 2007 Supplier of the Year award to our accolades. We are delighted that Under Armour, one of the industry’s highest benchmark of quality requirements, has recognised Sing Lun as an important partner. We are the only supplier in Asia to have been singled out for excellence in quality, reliability and service.

Amid rising competition, Sing Lun will continue to innovate through new manufacturing capabilities, adding more product range within the Group, and offering new design and development ideas while driving cost effective solutions to bring more value to our clientele.

The Group will also focus on costs management. Our presence in Vietnam will be key to this initiative as we expand our capacity in the lowercost country.

Sing Lun performed well in the North American market in FY2007. In FY2008, the Group is looking into its sales in the European, Canadian and Asian markets.

Our heritage as a quality and preferred supplier has earned us more customers along the way. This will continue to serve as a strong platform of growth for us globally.

Sing Lun will not forget to inculcate a culture of collaboration within the Company, reinforcing a customercentric mindset. Our valued staff is integral to the Company’s success and they have demonstrated a great understanding of this culture. We will continue to nurture this culture, motivating them to work as a team and developing a can-do attitude within our employees.

Even as our team embarks onto a challenging year, our strong financial position will allow us to seek out M&A opportunities so as to create more value for our shareholders.

As a reward and appreciation of shareholder loyalty, the Board is pleased to recommend a special dividend of S$0.008 (0.8 cents) per share, with a final dividend of S$0.012 (1.2 cents) per share, for the financial year ended 31 December 2007. In addition to an interim dividend of S$0.006 (0.6 cents), the total tax exempt 1-tier dividend for the year is 2.60 cents per share, as opposed to 1.40 cents per share in FY2006.

Our good results in FY2007 would not have been attained without the concerted efforts of our staff and Board members. Our staff has demonstrated deep commitment and belief in the Company, while the wise counsel from my fellow Board members have been invaluable for our growth. Above all, there was unwavering support from everyone, and I would like to thank our colleagues, customers, business associates and shareholders for having faith in us throughout the year.

We will continue to uphold our heritage as a quality one-stop supplier through the culture of collaboration and customer-centric mindset that Sing Lun has always stressed. We believe that our colleagues and business associates will move together as one to propel growth for Sing Lun in 2008.

I look forward to another rewarding and productive year ahead.

Patrick Lee
Executive Chairman