Combine Will International Holdings Limited: 1H 2025 Financial Results Analysis

Combine Will International Holdings Limited, a manufacturer of toys and premium products, has released its unaudited condensed interim financial statements for the six months ended 30 June 2025. The results reflect a period of significant growth in revenues, alongside rising costs and major ongoing investments in production expansion and sustainability initiatives.

Key Financial Metrics and Performance Table

*HoH = Half-on-Half. Some comparative quarters are not disclosed; only available periods shown.
*NAV per share for 1H 2024 inferred from annualized growth.

Historical Performance Trends

• Revenue: Strong YoY growth of 31.8% driven by higher demand from key customers, especially for eco-friendly and sustainable toy products.
• Gross Profit: Up 17.9% YoY, but margin declined from 11.3% to 10.1% due to increased use of more costly eco-friendly materials at customer request.
• Net Profit: Decreased by 24.7% YoY, as higher administrative and operating costs outpaced gross profit growth.
• Expenses: Administrative expenses rose sharply (+49.5% YoY) mainly due to expansion in Indonesia and operational investments. Finance costs also increased moderately despite higher borrowings, thanks to lower interest rates and bank terms.

Balance Sheet and Cash Flow Analysis

• Non-current Assets: Increased by 5.5% to HK\$643.0 million, mainly due to acquisition of property, plant, and equipment, and expansion in Indonesia.
• Current Assets: Rose 11.5% to HK\$1,116.9 million, reflecting growth in contract assets, receivables, and financial assets at fair value.
• Current Liabilities: Up 16.1% to HK\$977.5 million, mainly due to higher short-term borrowings to finance working capital, and increased accruals and payables.
• Cash and Cash Equivalents: Ended the period at HK\$99.7 million. Net cash outflow from operations and investing was more than offset by net cash inflow from financing activities, reflecting increased borrowings.

Dividends

• No interim dividend declared for 1H 2025, consistent with the same period last year.
• A final dividend of HK\$9.93 million was paid for FY2024.
• The Board stated its policy is to consider dividends after full-year performance and cash requirements are clear.

Exceptional Items and Notable Events

• Exceptional Expenses: Substantial investments in Indonesia (plant and land acquisition), increased operational expenses from new subsidiaries, and costs related to expansion and sustainability initiatives.
• Asset Revaluation: None disclosed, but significant capital expenditure on new factory construction and land acquisition in Indonesia.
• Share Buybacks/Placements: No share buybacks, placements, or share issuance during the period.
• Related Party Transactions: Only a management fee of HK\$3.3 million paid to a shareholder of a subsidiary; otherwise, no material related-party transactions.
• Macroeconomic and Industry Environment: The company faces ongoing global challenges from interest rates, inflation, and supply chain realignments, but has positioned itself to capitalize on production diversification and sustainability trends.

Chairman’s Statement and Management Commentary

“Looking ahead, we are well positioned to capture growth opportunities in the evolving toy and premium goods market. Our strategic execution is supported by disciplined capital management and diversification of customers and capabilities, and provides a strong foundation to navigate macroeconomic uncertainties and deliver sustainable long-term value to our stakeholders.”

“As we progressed through 2H 2025, the global operating environment remains challenging, shaped by elevated interest rates, persistent inflationary pressures, and evolving trade dynamics, including ongoing tariff realignments. These factors are reshaping global supply chains and prompting manufacturers in the toy and premium goods industries to reassess and optimize their production footprints to balance cost efficiency and enhanced market access.”

“In this context, the Group has taken decisive steps to reinforce our long-term competitive positioning. Our strategic diversification into Indonesia enables us to benefit from favorable tariff structures and a cost-efficient manufacturing base while bolstering supply chain resilience. This expansion is complemented by our intensified focus on green manufacturing practices, with eco-friendly materials now contributing 71% of 1H 2025 revenue, reflecting both strong customer alignment and our industry leadership in sustainability.”

“To support growth, we are investing significantly in quality management systems, IT infrastructure, and automation to drive operational excellence and production stability. The commencement of Plush Phase 2 in Indonesia in 1H 2025 has substantially increased capacity, with annual plush output expected to double year-on-year. The construction of our die-casting facility remains on track for launch in Q4 2025.”

Tone: The Chairman’s statement is clearly positive, highlighting resilience, sustainability, and strategic readiness for both near-term challenges and long-term growth.

Outlook and Risks

• The company is focused on expanding in Indonesia to diversify production and benefit from favorable tariffs and cost structures.
• Large investments in automation and sustainability are expected to support future growth and margins.
• Management acknowledges macroeconomic headwinds (interest rates, inflation, supply chain volatility) but is confident in the company’s strategic positioning.
• No interim dividend was declared, as the Board prefers to retain flexibility amid ongoing expansion.

Conclusion and Investment Recommendations

Overall, Combine Will International Holdings Limited’s 1H 2025 performance appears fundamentally strong in terms of top-line growth, customer alignment, and strategic investments, but profitability is under near-term pressure due to rising costs and heavy capital expenditure. The company is executing a clear long-term strategy centered on sustainability, diversification, and operational excellence, but investors should note the risk from margin compression and ongoing expansion costs.

Investor Recommendations

• If you currently hold the stock:
  Given the strong revenue growth, long-term strategy, and management’s positive outlook, it is reasonable to hold the stock, especially if you are a long-term investor. However, monitor future earnings for margin recovery and assess the company’s ability to translate investments into sustained profit growth.
• If you do not currently hold the stock:
  Consider a wait-and-see approach. The stock is attractive for those seeking growth exposure to the toy and premium goods sector, particularly in sustainability and Southeast Asia expansion. However, entry may be more favorable after evidence of margin stabilization and clearer returns on the company’s current investments.

Disclaimer: This analysis is based solely on information disclosed in the 1H 2025 interim financial report of Combine Will International Holdings Limited. It does not constitute investment advice or a recommendation to buy or sell any securities. Investors should conduct their own research and consider their individual financial circumstances before making any investment decisions.

View Combine Will Historical chart here