Sunwah International Reports Third Quarter Fiscal 2021 Results

TORONTO, May 13, 2021 /CNW/ - Sunwah International Limited, TSX: SWH ("Sunwah International" or the "Company"), a Hong Kong based investment firm and member of major Asian conglomerate, Sunwah Group, today announced its financial results for the third quarter ended March 31, 2021, reporting a net profit of US$0.31 million.  All figures quoted are in U.S. dollars.

Q3 FY2021 Highlights:

• A profit before tax of $0.31 million for the quarter and a loss of $0.08 million for the year-to-date (Q3 FY2020: a loss of $1.62 million; a loss of $3.18 million for the nine months of FY2020);
• A profit attributable to shareholders of the Company of $0.31 million (Q3 FY2020: a loss of $1.50 million);
• A share of profit of an associate of $0.53 million for the quarter and $0.67 million for the year-to-date, representing results from the Company's primary investment in financial services through Sunwah Kingsway Capital Holdings Limited ("Sunwah Kingsway Capital") (Q3 FY2020: a share of loss of an associate of $1.10 million; a share of loss of $1.48 million for the nine months of FY2020);
• Revenues from the Company's Restaurant Operations investment (through HFL Limited) of $0.65 million
  for Q3 FY2021 (Q3 FY2020: $0.67 million) and $1.91 million for the year-to-date ($2.37 million for the nine months of FY2020);
• Cost of sales for Sunwah International's Restaurant Operations investment, HFL Limited, of $0.20 million for the quarter and $0.60 million for the nine months of FY2021 (Q3 FY2020: $0.21 million; $0.70 million for the nine months of FY2020);
• Selling, general and administrative expenses of $0.63 million with HFL Limited accounting for approximately $0.48 million for the quarter (Q3 FY2020: $0.84 million total with $0.70 million from the operation of HFL Limited) and $2.22 million for the year-to-date with $1.73 million from the operation of HFL Limited (the nine months of FY2020: $2.83 million with $2.24 million from the operation of HFL Limited).

"We are cautiously satisfied with this quarter's improved results, attributable to prudent management policy and recovering investor sentiment in Hong Kong during the quarter, which resulted in minor gains from our primary investment in the financial services sector through Sunwah Kingsway Capital," said Michael Choi, CEO of Sunwah International.  "Our hope for the remainder of Fiscal 2021 is that capital markets continue on this positive trajectory and that the consumer and hospitality sectors follow suit as COVID-19 restrictions lift, which we expect to benefit our restaurant investment operations considerably.  HFL's performance was sustained throughout the quarter thanks in no small part to government subsidies with service revenues continuing to be down significantly relative to pre-pandemic levels."

Hong Kong capital markets rebounded during the third quarter of Sunwah International's 2021 fiscal year, particularly due to aggressive fiscal and monetary policy at the hands of governments worldwide.  The new U.S. Presidential Administration (considering previously strained U.S.-China relations) and the launch and availability of COVID-19 vaccines further added to a positive investment climate as did stimulated market activity led by various new economy stocks, including Tencent, Alibaba and Meituan. Amid improved financial markets, the Company's flagship investment in Sunwah Kingsway Capital (SWK) performed well owing largely to solid results from its proprietary trading portfolio.  SWK is a highly respected domestic financial services provider in Hong Kong, operating one of the region's leading local brokerage houses. 

Throughout the remainder of Fiscal 2021 and beyond, Sunwah International will continue to steer the current economic climate prudently with circumspect investment policy and low gearing as well as targeted efforts to diversify its income base.  This includes recognizing that while the Company's interest in the restaurant and hospitality sector has produced satisfactory results to date, Sunwah International must remain prepared, if necessary, to alter course by lessening or withdrawing its focus on this industry given the higher degree of uncertainty than usual in Hong Kong's consumer marketplace at present.  In Sunwah International's newfound status as an investment company, it is in the normal course of business to invest and divest in various businesses, and the Company is well prepared to efficiently execute on any change in direction should Management determine this to be the best course of action.

Sunwah International Privatization: 

As announced in press releases dated February 27, 2021 and April 30, 2021 (available on SEDAR and the Company's website), Sunwah International has entered into an agreement to privatize.  As part of the Going Private Transaction, the Company will apply to have its shares voluntarily de-listed from the Toronto Stock Exchange (the "TSX") following the completion of the Consolidation and the compulsory purchase by the Company of all issued and outstanding shares held by Shareholders, other than Sun Wah Capital, at a price of CAN$0.30 per share (the "Purchase").  With the Purchase constituting a near term liquidity event for Shareholders, the TSX does not require shareholder approval for the voluntary de-listing.  If the Pre-Consolidation Amendment Resolution and the Consolidation Resolution are passed, it is expected that the Going Private Transaction will be completed in the first two weeks of June 2021 and the de-listing date would be expected in mid-June 2021.  The Company also intends to apply to the applicable Canadian securities regulatory authorities to cease to be a reporting issuer in each province in which it is currently a reporting issuer after the completion of the Going Private Transaction.

Q3 FY2021 Financial Overview:

In accordance with the Company's refocused investments, Sunwah International now presents its results according to the following main segments:

• Share of profit totaling $0.53 million for the quarter and $0.67 million for the year-to-date, up from a share of loss of $1.22 million in last year's comparable quarter and a share of loss of $2.04 million for the nine months of FY2020.
• A loss on the deemed partial disposal of an associate was recorded for $80,000 and $119,000 for the year-to-date, representing the result of the dilution of the Group's equity interests in SWK from 26.05% to 25.81% and from 26.47% to 26.05% due to the scrip dividend arrangements of SWK in the Q3 of FY2021 and FY2020 respectively.
• The quarter's gain is mainly attributable to ample capital market liquidity and the positive performance of SWK's proprietary investment portfolio alongside most world governments' loose monetary policy and increased fiscal spending designed to ease the negative impact of Covid-19.

• A loss of $4,000 for the quarter (Q3 FY2020: a loss of $0.25 million) and a loss for the nine months of FY2021 of $0.20 million (nine months of FY2020: a loss of $0.60 million);
• Revenues of $0.65 million for the quarter (Q3 FY2020: $0.67 million) and $1.91 million for the year-to-date (nine months of FY2020: $2.37 million);
• Other Income mainly in the form of subsidies under the Hong Kong government's Employment Support Scheme and Catering Business Subsidy Scheme (in support of Covid-19 economic recovery efforts) of $26,000 for the current period and $0.25 million for the year-to-date;
• Cost of sales of $0.20 million, representing the cost of food and beverages used in restaurant operations (Q3 FY2020: $0.21 million) and $0.60 million for the nine months of FY2021 (nine months of FY2020: $0.70 million);
• General, selling and administration expenses of $0.37 million (Q3 FY2020: $0.50 million) and $1.40 million for the year-to-date (nine months of FY2020: $1.65 million). This includes staff costs (wages and allowances, pension costs, employee benefits etc.) of approximately $0.21 million for the quarter (Q3 FY2020: $0.34 million) and $0.91 million for the nine months of FY2021 (nine months of FY2020: $1.14 million).
• Depreciation and amortization amounting to $0.11 million for the quarter (Q3 FY2020: $0.20 million) and $0.33 million for the year-to-date (nine months of FY2020: $0.59 million).

• A net loss of $0.14 million for the quarter (Q3 FY2021: loss of $0.15 million) and a loss of $0.48 million for the year-to-date (nine months of FY2020: a loss of $0.55 million)
• A net fair value loss on financial assets at fair value through profit or loss of $1,000 (Q3 FY2020: a net fair value loss of $21,000), mainly due to the loss on disposal and fair value change in investments in listed securities in Hong Kong. A loss of $28,000 was recorded for the year-to-date (nine months of FY2020: a loss of $20,000);
• Selling, general and administrative expenses for the quarter of $0.15 million (Q3 FY2020: $0.14 million) and $0.49 million for the year-to-date (nine months of FY2020: $0.60 million).

For more information on Sunwah International's Q3 FY2021 operating results, please see the Management's Discussion and Analysis (MD&A) and the unaudited interim consolidated financial statements, which are filed on SEDAR and also available on the Company's website at www.sunwahinternational.com.

About Sunwah International Limited

Sunwah International Limited is an investment firm and a member of Sunwah Group, one of Hong Kong's most prominent multi-national conglomerates. The Company's current primary investment interest, Hong Kong based Sunwah Kingsway Capital Holdings Limited, is listed on the Stock Exchange of Hong Kong under the stock code 00188. Sunwah Kingsway is licensed to provide a range of financial solutions in Hong Kong and abroad that include award-winning brokerage services and innovative corporate finance offerings.

Leveraging the expansive relationship network and strategic strengths of Sunwah Group, the company is now also focused on the food and beverage industry following the recent acquisition of HFL Limited, which operates a premium Chinese seafood restaurant in Hong Kong.

Forward-Looking Statements

This press release announcing the financial results for Sunwah International's third quarter ended March 31, 2021 should be read in conjunction with the unaudited interim consolidated financial statements and management's discussion and analysis of Sunwah International Limited (the "Company") and its subsidiaries.

This press release contains certain statements that reflect management's expectations and objectives for the Company's future performance, opportunities and growth, which statements constitute "forward–looking information" and "forward-looking statements" (collectively "forward-looking information") under applicable securities laws. Such statements, other than statements of historical fact, are predictive in nature or depend on future events or conditions. Forward-looking information involves estimates, assumptions, judgments and uncertainties.  These statements may be identified by the use of forward–looking terminology such as "may", "will", "should", "anticipate", "expect", "believe", "predict", "estimate", "continue", "intend", "plan" and variations of these words or other similar expressions. Specifically, this press release includes forward-looking information in respect of Sunwah International's 2021 objectives, including its focus on a variety of industries as an investment holding company and its initiative to expand and diversify, and its strategies to achieve those objectives. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management. Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, investors should not place undue reliance on forward-looking information. Forward-looking information is provided as of the date of this press release, and the Company assumes no obligation to update or revise them to reflect new events or circumstances.

Except as required by applicable law, management and the board of directors of the Company (the "Board of Directors") undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

SOURCE Sunwah International Limited