RAY Raytech Holding Ltd

Exhibit 99.2

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with Raytech Holding’s unaudited interim condensed consolidated financial statements and related notes included elsewhere in this filing. This discussion and analysis and other parts of this filing contain forward-looking statements based upon current beliefs, plans and expectations that involve risks, uncertainties, and assumptions. Raytech Holding’s actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth under “Risk Factors” and elsewhere in the annual report on Form 20-F filed by the Company with the SEC on July 30, 2024 (the “2024 20-F”). You should carefully read the “Risk Factors” section of the 2024 20-F to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements.

 

Overview

 

Leveraging our expertise in the personal care electrical appliance industry, we aim to promote consumer lifestyles and drive the awareness of personal grooming. Through Raytech Holding’s wholly-owned subsidiary in Hong Kong, Pure Beauty, we principally engage in the sourcing and wholesaling of personal care electrical appliances for international brand owners. We also provide product design and development collaboration as a value-added service for our customers. Our customers are brand owners of personal care electrical appliances who market and sell their personal care electrical appliances products to end consumers. Commencing our operation in 2013, we have accumulated over 10 years of experience in the industry.

 

Over years of operation, we have sourced and wholesaled a wide range of personal care electrical appliances, which can be broadly classified into five major categories: (i) hair styling series, including hair dryer, hair straightener and curling iron; (ii) trimmer series, including facial shaver, nose trimmer and eyebrow trimmers; (iii) eyelash curler; (iv) nail care series; and (v) other personal care appliances, including reset brushes, facial brushes, electric cosmetic brush cleaners, and callus removers. In particular, we are specialized in sourcing and wholesaling hair dryers within our hair styling series which primarily include salon-type hair protection and styling functions or compact design for travel.

 

Our customers are brand owners of personal care electrical appliances including, Koizumi Corporation Inc, one of the top 10 sellers in terms of retail volume in the personal care electrical appliance market in Japan as stated in “Personal Care Appliances in Japan” by Euromonitor International in December 2023. We maintain long term business relationship with our customers.  Leveraging our substantial experience and expertise in the personal care electrical appliances industry, we believe we are well positioned to maintain our relationship with our current customers, and we have engaged with new customer to expand our market share in the U.S., UK, Europe, Australia and other Asian markets in the near future. 

 

Since our inception, our business has continued to generate revenues and positive profits. Our revenue increased significantly from HKD33,017,199 for the six months ended September 30, 2023 to HKD43,248,906 (US$5,566,641) for the six months ended September 30, 2024, representing an increase of 31.0%. Our net income decreased from HKD6,418,069 for the six months ended September 30, 2023 to HKD4,652,035 (US$598,771) for the six months ended September 30, 2024, representing a decrease of 27.5%, mainly due to an increase in IPO relating professional expenses.

 

Key Factors that Affect Results of Operations

 

Our results of operations have been and will continue to be affected by a number of factors, including those set out below:

 

 

Competition from other sellers in the market

 

The personal care electric appliances sourcing market is relatively fragmented and competitive. We primarily compete with other sourcing offices in the industry and indirectly compete with manufacturers based in South Asia. We compete based on our product quality, research and development capabilities, established customer relationships and our experienced management team. Our current and future competitors may have longer operating histories, larger and more established customer bases, better manufacturer relationships, better supply chain capabilities, or greater financial, technical, or marketing resources than we do. Competitors may leverage their experience and resources to compete with us in a variety of ways, including investing more heavily in sales and marketing, adopting more aggressive pricing strategies, and making acquisitions for the expansion of their products. There can be no assurance that we will be able to compete successfully against current or future competitors, and such competition may have a material adverse impact on our business, financial condition, and results of operation.

 

Our ability to retain existing customers and attract new customers

 

Our success depends on our ability to maintain good relationships with our existing customers and increase sales to them over time, as a significant amount of current net revenue is generated from sales to a limited number of existing customers. If we are unable to satisfy our existing customer needs in terms of product quality or service level, our business transactions with our customers may decline, and our operating results and financial conditions would be adversely impacted in a material manner.

 

In addition, our future success depends in part on our ability to attract new customers and continue to expand our customer base. In order to attract new customers, we must increase our investment in sales and marketing function across markets and recruit the right talent to drive the expansion efforts. Such investment and recruitment activities may not necessarily yield an increase in revenue, and even if they do, the expenses we will incur may more than offset any increase in revenue, which would harm our business, financial condition, and growth prospects.

 

Our ability to manage costs of raw materials or transportation

 

Changes in the costs of raw materials or transportation indirectly affect our cost structure. Any increase in production costs may be passed on to us, but we might not be able to pass on all or any part of the subsequent increase in costs to our customers, which may have a material adverse effect on our financial performance. We do not have long-term contracts with third-party contract manufacturers and raw material vendors. We usually enter into fixed-price contracts with vendors and agree on raw materials pricing concurrently with our acceptance of each customer order, but in some cases a short time gap may be inevitable. Where market forces drive up raw material costs, we may from time to time fail to negotiate price terms that are advantageous to us and hence put pressure on our profit margin.

 

A downturn in general economic conditions

 

Majority of our revenue was derived from sales to Japan consumer market, with future expansion strategies into the U.S., Europe and Asia market. In recent years, the global economic indicators have shown mixed signs, and the future growth of the economies are subject to many factors beyond our control. A downturn in the economy could adversely impact consumer purchases of discretionary items such as personal care electric appliances. Factors that could affect consumers’ willingness to make such discretionary purchase include general business conditions, levels of employment, interest rates and tax rates, the availability of consumer credit, and consumer confidence in future economic conditions. In the event of an economic downturn, we could experience lower than expected net sales, which could force us to delay or slow our growth strategy and have a material adverse effect on our business, financial condition, profitability, and cash flow. 

 

 

Economic, political and social conditions in mainland China and Hong Kong, as well as its government policies, laws and regulations

 

Our key operations are in Hong Kong. However, due to the long arm provisions under the current laws and regulations of mainland China, the PRC government may exercise significant oversight and discretion over the conduct of our business and may intervene in or influence our operations at any time, which could result in a material change in our operations and/or the value of Raytech Holding’s ordinary shares. Accordingly, our business, prospects, financial condition, and results of operations may be influenced to a significant degree by the political, economic, and social conditions in the PRC generally and by the continued economic growth in mainland China as a whole. Accordingly, our results of operations and prospects are, to a significant degree, subject to economic, political, and legal developments in the PRC.

 

Hong Kong is a special administrative region of the PRC and the basic policies of the PRC regarding Hong Kong are reflected in the Basic Law, namely, Hong Kong’s constitutional document, which provides Hong Kong with a high degree of autonomy and executive, legislative and independent judicial powers, including that of final adjudication under the principle of “one country, two systems”. However, there is no assurance that there will not be any changes in the economic, political, and legal environment in Hong Kong in the future. Since our operation is based in Hong Kong, any change of such political arrangements may pose immediate threat to the stability of the economy in Hong Kong, thereby directly and adversely affecting our results of operations and financial positions.

 

Results of Operations

 

For the Six Months ended September 30, 2024, compared to Six Months Ended September 30, 2023

 

The following table sets forth a summary of the consolidated results of operations of us for the periods indicated, both in absolute amount and as a percentage of its total revenues.

 

		(Unaudited) For the six months ended September 30,
		2023								2024
		HKD				% of revenue				HKD				US$				% of revenue
Revenue
Sales of products			26,011,185				78.8	%			42,101,829				5,418,999				97.3	%
Sales of tooling			7,006,014				21.2	%			1,147,077				147,642				2.7	%
			33,017,199				100.0	%			43,248,906				5,566,641				100.0	%
Operating Expenses
Merchandise costs			(24,305,564	)			(73.6	)%			(34,100,724	)			(4,389,163	)			(78.8	)%
Selling, general and administrative expenses			(1,751,531	)			(5.3	)%			(5,229,459	)			(673,093	)			(12.1	)%
Total operating expenses			(26,057,095	)			(78.9	)%			(39,330,183	)			(5,062,256	)			(90.9	)%
Income from operations			6,960,104				21.1	%			3,918,723				504,385				9.1	%
Other income (expenses)
Interest income			615,405				1.9	%			1,431,474				184,248				3.3	%
Interest expenses			(1,657	)			*				-				-				*
Loss from foreign currency exchange			(16,334	)			*				(407,242	)			(52,417	)			(0.9	)%
Total other income, net			597,414				1.8	%			1,024,232				131,831				2.4	%
Income before income taxes			7,557,518				22.9	%			4,942,955				636,216				11.4	%
Income tax expense			(1,139,449	)			(3.5	)%			(290,920	)			(37,445	)			(0.7	)%
Net income			6,418,069				19.4	%			4,652,035				598,771				10.8	%

 

*

Less than 0.1%

 

 

Revenue

 

		(Unaudited) For the Six Months ended September 30,
		2023				2024				2024
		HKD				HKD				US$
Sales of products
Hair styling series			20,112,210				19,096,339				2,457,923
Trimmer series			4,507,626				20,856,897				2,684,527
Eyelash curler			165,148				210,330				27,072
Nail care series			525,825				898,966				115,707
Other personal care appliances			700,376				1,039,297				133,770
			26,011,185				42,101,829				5,418,999
Sales of tooling			7,006,014				1,147,077				147,642
Total			33,017,199				43,248,906				5,566,641

 

For the six months ended September 30, 2023, and 2024, we generated our revenue primarily through sales of personal care products.

 

Our revenue increased by 31.0% to HKD43,248,906 (US$5,566,641) for the six months ended September 30, 2024 from HKD33,017,199 for the six months ended September 30, 2023. The increase was principally driven by an increase in sales in our trimmer series within our personal care products, which are mostly driven by engaging new customer.

 

For the six months ended September 30, 2023, and 2024, we generated significant sales to our two key customers. These customers are a Japanese corporation and a multi-national corporation, respectively, both with established global brands across a myriad of sectors, including but not limited to, beauty, audio and electric cooking and home appliances.

 

Merchandise costs

 

The following table shows segregated merchandise costs by major cost items for the six months ended September 30, 2023 and 2024, respectively:

 

		(Unaudited) For the six months ended September 30,
		2023				2024				2024
		HKD				HKD				US$
Purchases			18,468,714				32,178,642				4,141,769
Tooling costs			4,907,700				705,890				90,856
Commissions			869,796				1,149,916				148,008
Freight, transport, and testing and inspection			59,354				66,276				8,530
Total			24,305,564				34,100,724				4,389,163

 

Our merchandise costs increased by 40.3% to HKD34,100,724 (US$4,389,163) for the six months ended September 30, 2024 from HKD24,305,564 for the six months ended September 30, 2023. The increase was in line with our increase in sales of products.

 

 

Selling, general and administrative expenses

 

For the six months ended September 30, 2023 and 2024, our selling, general and administrative expenses consisted of staff costs, rental expenses, transport and travelling, selling and marketing, depreciation, legal and professional fees and auditor’s remuneration. The following table sets forth a breakdown of our selling, general and administrative expenses for the six months ended September 30, 2023 and 2024:

 

		(Unaudited) For the six months ended September 30,
		2023				2024				2024
		HKD				HKD				US$
Staff costs			135,684				1,659,978				213,659
Rental expenses			150,000				150,000				19,307
Transport and travelling			206,606				421,656				54,272
Selling and marketing			46,167				12,206				1,571
Depreciation			54,214				-				-
Legal and professional fees			5,305				1,187,649				152,864
Auditor’s remuneration			1,084,767				1,724,497				221,963
Others			68,788				73,473				9,457
Total			1,751,531				5,229,459				673,093

 

Staff costs

 

Our staff costs increased by 1123.4% to HKD1,659,978 (US$213,659) for the six months ended September 30, 2024 from HKD135,684 for the six months ended September 30, 2024 mainly due to an increase in salaries and addition of compensation fee for audit committee.

 

Rental expenses

 

Our rental expenses mainly represented rental expenses for Hong Kong office. Our rental and office expenses were HKD150,000 and HKD150,000 (US$19,307) for the six months ended September 30, 2023 and 2024, respectively.

 

Transport and travelling

 

For the six months ended September 30, 2023, and 2024, our transport and travelling consisted of motor vehicle running cost, travel and communication expenses and other travel related expenses. Our transport and travelling expenses increased by 104.1%, primarily due to an increase in business travel for professional parties relating the IPO.

 

Selling and marketing

 

For the six months ended September 30, 2023 and 2024, our selling and marketing expenses decreased by 73.6% from HKD46,167 for the six months ended September 30, 2023 to HKD12,206 (US$1,571) for the six months ended September 30, 2024. The decrease was principally driven by lower marketing expenses.

 

Depreciation

 

Our depreciation mainly represented depreciation for our property and equipment. Our depreciation for our property and equipment decreased from HKD54,214 for the six months ended September 30, 2023 to nil for the six months ended September 30, 2024 due to our property and equipment has fully depreciated.

 

 

Legal and professional fees

 

Our legal and professional fee increased by 22287.4% to HKD1,187,649 (US$152,864) for the six months ended September 30, 2024 from HKD5,305 for the six months ended September 30, 2023, primarily due to an increase in IPO relating expenses, such as service fees for legal counsel and investor relations service provider.

 

Others

 

Our other general and administrative expenses mainly consisted of bank charges, cleaning charges, courier and postage, insurance, printing and stationery and other miscellaneous expenses. Our other general and administrative expenses increased to HKD73,473 (US$9,457) for the six months ended September 30, 2024 from HKD68,788 for the six months ended September 30, 2023 due primarily to an increase in bank charges.

  

Income from operations and margin

 

Our overall income from operations decreased by 43.7% to HKD3,918,723 (US$504,385) for the six months ended September 30, 2024 from HKD6,960,104 for the six months ended September 30, 2023, primarily due to the increase in IPO relating expenses. Our overall gross profit margin decreased by 5.2% to 21.2% for the six months ended September 30, 2024 from 26.4% for the six months ended September 30, 2023, primarily due to the lower margin profiles to new customer and less sales of tooling.

 

Provision for income tax expense

 

Our income tax expenses amounted to HKD290,920 (US$37,445) for the six months ended September 30, 2024 and amounted to HKD1,139,449 for the six months ended September 30, 2023. We are subject only to the Hong Kong corporate tax regime. Starting from the financial year commencing on April 1, 2018, the two-tiered profits tax regime in Hong Kong took effect, under which the tax rate is 8.25% for assessable profits on the first HKD2,000,000 profit generated by the Company in a financial year and 16.5% for any assessable portion of our profits exceeding HKD2,000,000 in a financial year.

 

Net income

 

Our net income decreased by 27.5% to HKD4,652,035 (US$598,771) for the six months ended September 30, 2024 as compared to HKD6,418,069 for the six months ended September 30, 2023. The decrease in net income was predominantly due to an increase in selling, general and administrative expenses.

  

LIQUIDITY AND CAPITAL RESOURCES

 

The following table sets forth a breakdown of our current assets and liabilities as of the dates indicated.

 

		As of March 31,				(Unaudited) As of September 30,
		2024				2024				2024
		HKD				HKD				US$
CURRENT ASSETS
Cash and cash equivalents			35,885,666				81,047,102				10,431,712
Accounts receivable, net			14,557,523				13,476,241				1,734,550
Merchandise inventories, net			1,855,686				1,135,068				146,096
Amount due from a director			145,166				-				-
Taxes receivables			395,005				104,085				13,397
Prepayments			5,000				5,000				644
TOTAL CURRENT ASSETS			52,844,046				95,767,496				12,326,399
CURRENT LIABILITIES
Accounts payable			732,340				1,098,929				141,445
Accounts payable - related party			24,278,340				20,418,181				2,628,059
Accruals			1,018,618				920,901				118,531
Contract liabilities			1,008,415				-				-
TOTAL CURRENT LIABILITIES			27,037,713				22,438,011				2,888,035
NET CURRENT ASSETS			25,806,333				73,329,485				9,438,364

 

 

Accounts receivable, net

 

Accounts receivable represented receivables from our customers arising from our sales. We generally grant our customers a credit period ranging from 30 to 120 days, depending on their reputation, transaction history and the products purchased. Our accounts receivable decreased by 7.4% to HKD13,476,241 (US$1,734,550) as of September 30, 2024 from HKD14,557,523 as of March 31, 2024, which was primarily driven by less number of orders near September.

  

During the period from April 1, 2024 to September 30, 2024, we have not recorded any provision for doubtful accounts as our customers have always settled full payments within the credit periods or short extended credit periods.

 

Our management regularly reviews outstanding accounts and provides an allowance for doubtful accounts. When collection of the original invoice amounts is no longer probable, we will either partially or fully write-off the balance against the allowance for doubtful accounts. In establishing the required allowance for doubtful accounts, management considers historical collection experience, aging of the receivables, the economic environment, industry trend analysis, and the credit history and financial conditions of the customers. Our management reviews its receivables on a regular basis to determine if the bad debt allowance is adequate and adjusts the allowance when necessary. Delinquent account balances are written-off against allowance for doubtful accounts after all means of collection have been exhausted and that the likelihood of collection is not probable.

 

Merchandise inventories, net

 

Our inventories represented products that we sourced and sell to our customers. Our inventories increased to HKD1,135,068 (US$146,096) as of September 30, 2024 from HKD1,855,686 as of March 31, 2024. We record goods in transit based on freight on board destination.

 

Taxes receivables

 

Our taxes receivables were HKD104,085 (US$13,397) as of September 30, 2024, compared to our taxes receivables of HKD395,005 as of March 31, 2024. 

 

Amount due from a director

 

The amounts are due from a shareholder, Mr. Ching Tim Hoi. The amounts due from a shareholder decreased to nil as of September 30, 2024 from HKD145,166 as of March 31, 2024 due to shareholder has fully repaid the amount.

 

The receivable represented payments made on behalf of the director and shareholder by Pure Beauty. The loan agreement provides that borrowings are interest free and are payable on demand.

 

Prepayments

 

Our prepayments remained HKD5,000 (US$644) as of September 30, 2024 from HKD5,000 as of March 31, 2024.

 

Accounts payable and account payable – related party

 

Our total accounts payable are mainly related to the purchase of apparel products from our collaborating manufacturers and a related party. Our collaborating manufacturers usually granted us a credit period of 120 days.

 

Our total accounts payable decreased by 14.0% to HKD21,517,110 (US$2,769,504) as of September 30, 2024 from HKD25,010,680 as of March 31, 2024 due to fasten payment to related party during the six months ended September 30, 2024 for cost of tooling.

 

 

Accruals

 

Our accruals decreased to HKD920,901 (US$118,531) as of September 30, 2024 from HKD1,018,618 as of March 31, 2024, principally due to a decrease in provision for commissions.

 

Contract liabilities

 

Contract liabilities are recognized if the Company receives consideration in advance of performance, which is mainly in relation to emerging and other services. As of March 31, 2024 and September 30, 2024, the contract liabilities of the Company were HKD1,008,415 and nil.

 

Cash Flows

 

Our use of cash is primarily related to operating activities and payment of dividends. We have historically financed our operations primarily through the cash flow generated from our operations.

 

The following table sets forth a summary of our cash flows information for the years indicated:

 

		(Unaudited) Six months ended September 30,
		2023				2024				2024
		HKD				HKD				US$
Cash at the beginning of the period			21,362,580				35,885,666				4,618,906
Net cash generated from operating activities			16,412,961				2,621,059				337,361
Net cash generated from investing activities			210,702				145,166				18,684
Net cash (used in) generated from financing activities			(257,702	)			42,772,241				5,505,289
Effect of foreign exchange on cash			35,039				(377,030	)			(48,528	)
Cash at the end of the period			37,763,580				81,047,102				10,431,712

 

Cash generated from operating activities

 

Our cash inflow from operating activities was principally from receipt of sales. Our cash outflow used in operating activities was principally for payment of purchases of manufactured goods, staff costs and other operating expenses.

 

For the six months ended September 30, 2023, net cash generated from operating activities of HKD16,412,961 was primarily resulted from our net income of HKD6,418,069, as adjusted for non-cash items and change in operating activities. Adjustments for non-cash items consisted of depreciation of property and equipment of HKD2,928, amortization of right-of-use asset of HKD51,286 and loss from unrealized foreign currency translation of HKD17,918. Changes in operating assets and liabilities mainly included: (i) a decrease in prepayments of HKD54,000; (ii) an increase in accounts payable to a related party of HKD12,178,316; and (iii) an increase in taxes payables of HKD1,139,449; and partially offset by (i) an increase in accounts receivable of HKD654,485; (ii) an increase in merchandise inventories of HKD681,683; (iii) a decrease in accounts payable of HKD150,807; (iv) a decrease in accruals of HKD203,832; (v) a decrease in contract liabilities of HKD1,705,854; and (vi) a decrease in operating lease obligation of HKD52,344. 

 

For the six months ended September 30, 2024, net cash generated from operating activities of HKD2,621,059 (US$337,361) was primarily resulted from our net income of HKD4,652,035 (US$598,771), as adjusted for non-cash items and change in operating activities. Adjustments for loss from unrealized foreign currency translation accounted for HKD406,530 (US$52,325). Changes in operating assets and liabilities mainly included: (i) a decrease in accounts receivable of HKD978,597 (US$125,957); (ii) a decrease in merchandise inventories of HKD720,618 (US$92,752); (iii) an increase in accounts payable of HKD372,876 (US$47,994) and (iv) a decrease in taxes receivables of HKD290,920 (US$37,445); and partially offset by (i) a decrease in accounts payable to a related party of HKD3,694,385 (US$475,511), (ii) a decrease in contract liabilities of HKD1,008,415 (US$129,795) and(ii) decrease in accruals of HKD97,717 (US$12,577). 

 

 

Cash generated from investing activities

 

For the six months ended September 30, 2023, net cash generated from investing activities was HKD210,702, which is driven by a repayment of shareholder.

 

For the six months ended September 30, 2024, net cash generated from investing activities was HKD145,166 (US$18,684), which is driven by a repayment of shareholder.

 

Net cash (used in) generated from financing activities

 

For the six months ended September 30, 2023, net cash used in financing activities was HKD257,702, which was primarily related to the deferred IPO costs.

 

For the six months ended September 30, 2024, net cash generated from financing activities was HKD42,772,241 (US$5,505,289), which was primarily related to the proceed from Initial Public Offering of shares.

 

Capital Expenditures

 

We did not incur any capital expenditures for the six months ended September 30, 2023 and 2024.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements, including arrangements that would affect its liquidity, capital resources, market risk support, and credit risk support or other benefits.

 

Quantitative and Qualitative Disclosure About Market Risk

 

Credit risk

 

Our assets that potentially subject to a significant concentration of credit risk primarily consist of cash and accounts receivable.

 

We believe that there is no significant credit risk associated with cash in Hong Kong, which were held by reputable financial institutions. As of September 30, 2024, cash balance of HKD81,047,102 (approximately US$10,431,712) was maintained at financial institutions in Hong Kong across 3 major reputable banks.

 

We have designed credit policies with an objective to minimize their exposure to credit risk. Our accounts receivable are short term in nature and the associated risk is minimal. We conduct credit evaluations on our customers and generally do not require collateral or other security from such customers. We periodically evaluate the creditworthiness of the existing customers in determining an allowance for doubtful accounts primarily based upon the age of the receivables and factors surrounding the credit risk of specific customers.

 

We are also exposed to risk from accounts receivables. These assets are subjected to credit evaluations. An allowance, where applicable, would make for estimated unrecoverable amounts which have been determined by reference to past default experience and the current economic environment.

 

Customers concentration risk

 

As of March 31, 2024, two customers, who are distributors representing and selling brands of well-known manufactures from Japan, the U.S., UK, Europe and Australia accounted for 72.1 % and 27.9% of the Company’s total accounts receivable.

 

As of September 30, 2024, two customers, who are distributors representing and selling brands of well-known manufactures from Japan, the U.S., UK, Europe and Australia accounted for 70.6% and 29.4% of the Company’s total accounts receivable respectively.

  

 

For the six months ended September 30, 2023, one major customer, who is a distributor representing and selling brands of well-known manufactures from Japan and abroad, accounted for 81.1% of the Company’s total revenues, while another customer, who is a global distributor of various consumer products, accounted for 17.1% of the Company’s total revenues.

 

For the six months ended September 30, 2024, two major customers, who are distributors representing and selling brands of well-known manufactures from Japan, the U.S., UK, Europe and Australia accounted for 57.8% and 33.7% of the Company’s total revenues respectively.

   

Manufacturers concentration risk 

 

As of March 31, 2024, one manufacturer accounted for 97.1% of the total balance of accounts payable. The manufacturer is a related party. As of September 30, 2024, one manufacturer accounted for 94.9% of the total balance of accounts payable. The manufacturer is a related party.

 

For the six months ended September 30, 2023, one manufacturer accounted for 92.7% of our total purchases. The manufacturer is a related party. For the six months ended September 30, 2024, one manufacturer accounted for 91.5% of our total purchases. The manufacturer is a related party.

 

Interest rate risk

 

Our exposure on cash flow interest rate risk mainly arises from our deposits with banks.

 

In respect of the exposure to cash flow interest rate risk arising from floating rate non-derivative financial instruments held by us, such as cash deposits and bank borrowings, at the end of the reporting period, we are not exposed to significant interest rate risk, as the interest rates are not expected to change significantly.

 

Foreign currency risk

 

We are exposed to foreign currency risk primarily through sales that are denominated in a currency other than the functional currency of the operations to which they relate. The currencies giving rise to this risk are primarily US$. As HKD is currently pegged to US$, our exposure to foreign exchange fluctuations is minimal.

 

 

10

Exhibit 99.3

 

Raytech Holding Reports Financial Results for Six Months Ended September 30, 2024

 

Hong Kong, January 10, 2025 (GLOBE NEWSWIRE) -- Raytech Holding Limited (the “Company” or “RAY”), a Hong Kong-headquartered company specializing in design, sourcing and wholesale of personal care electrical appliances for international brand owners, today announced its financial results for the six months ended September 30, 2024.

 

CHING Tim Hoi, CEO and Chairman of the Company, commented, “The Company achieved a notable 31.0% increase in revenue for the six months ended September 30, 2024, reaching HKD 43.2 million (US$ 5.6 million), up from HKD 33.0 million in the prior year. This growth was driven primarily by strong sales in our trimmer series within the personal care products segment, reflecting our success in attracting new customers.”

 

“However, operating expenses rose sharply, with merchandise costs increasing by 40.3% to HKD 34.1 million (US$ 4.4 million) and selling, general, and administrative expenses climbing to HKD 5.2 million (US$ 0.7 million). Consequently, income from operations decreased by 43.7% to HKD 3.9 million (US$ 0.5 million), and net income fell by 27.5% to HKD 4.7 million (US$ 0.6 million).”

 

“Looking ahead, we remain committed to optimize our cost structure while continuing to drive sales growth. We are focused on enhancing our product offerings and expanding our customer base to improve profitability and strengthen our market position in the coming periods.”

 

Selected 2024 Interim Financial Metrics

 

		Six Months Ended September 30,								Changes in
(HKD in millions, except per share data, differences due to rounding.)		2024				2023				Percentage
Revenue			43.2				33.0				31.0	%
Total operating expenses			39.3				26.1				50.9	%
Income from operations			3.9				7.0				(43.7	)%
Income from operations %			9.1	%			21.1	%
Total other income, net			1.0				0.6				71.4	%
Income before income taxes			4.9				7.6				(34.6	)%
Net income			4.7				6.4				(27.5	)%

 

·

Revenue increased by 31.0% to HKD43.2 million for the six months ended September 30, 2024, compared with HKD33.0 million during the same period in 2023.

 

·

Total operating expenses were HKD39.3 million for the six months ended September 30, 2024, increasing from HKD26.1 million during the same period in 2023.

 

·

Net income decreased to HKD4.7 million for the six months ended September 30, 2024, from HKD6.4 million during the same period in 2023.

 

Revenue

 

Revenue increased by 31.0% to HKD43.2 million (US$5.6 million) for the six months ended September 30, 2024 from HKD33.0 million for the six months ended September 30, 2023. The increase was principally driven by an increase in sales in our trimmer series within our personal care products, which are mostly driven by engaging new customers.

 

 

The following table shows segregated revenue by sales of major products and sales of tooling for the six months ended September 30, 2024 and 2023.

 

HKD in millions, differences due to rounding.)		Six Months Ended September 30,
Sales of products		2024				2023
Hair styling series			19.1				20.1
Trimmer series			20.9				4.5
Eyelash curler			0.2				0.2
Nail care series			0.9				0.5
Other personal care appliances			1.0				0.7
Sales of tooling			1.1				7.0
Total			43.2				33.0

 

Operating expenses

 

Merchandise costs increased by 40.3% to HKD34.1 million (US$4.4 million) for the six months ended September 30, 2024 from HKD24.3 million for the six months ended September 30, 2023. The increase was in line with our increase in sales of products.

 

Selling, general and administrative expenses were HKD5.2 million (US$0.7 million) for the six months ended September 30, 2024, as compared to HKD1.8 million for the six months ended September 30, 2023. The increase is mainly due to rise in salaries and additional compensation for the audit committee and rise in transport and travelling expenses as well as in legal and professional fee relating to the Company’s initial public offering (the “IPO”).

 

Income from operations and margin

 

Overall income from operations decreased by 43.7% to HKD3.9 million (US$0.5 million) for the six months ended September 30, 2024 from HKD7.0 million for the six months ended September 30, 2023, primarily due to the increase in IPO relating expenses. Our overall gross profit margin decreased by 5.2% to 21.2% for the six months ended September 30, 2024 from 26.4% for the six months ended September 30, 2023, primarily due to the lower margin profiles of our new customers and less sales of tooling.

 

Net income

 

Net income decreased by 27.5% to HKD4.7 million (US$0.6 million) for the six months ended September 30, 2024 as compared to HKD6.4 million for the six months ended September 30, 2023. The decrease in net income was predominantly due to an increase in selling, general and administrative expenses.

 

 

About Raytech Holding Limited

 

Raytech Holding Limited is a Hong Kong-headquartered company with over 10 years of experience in the personal care electrical appliance industry. Through its operating subsidiary in Hong Kong, it sources and wholesales a diverse range of personal care electrical appliances ranging from hair styling, tooling, trimmer, eyelash curler, neck care, to nail care and other body and facial care appliances for international brand owners, providing integrated product design, production processing, and manufacturing solutions. For more information please visit: https://ir.raytech.com.hk/.

 

Forward-Looking Statement

 

This press release contains forward-looking statements. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. When the Company uses words such as "may, "will, "intend," "should," "believe," "expect," "anticipate," "project," "estimate" or similar expressions that do not relate solely to historical matters, it is making forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may cause actual results to differ materially from the Company's expectations discussed in the forward-looking statements. These forward-looking statements are subject to uncertainties and risks including, but not limited to, the uncertainties related to market conditions, and other factors discussed in the “Risk Factors” section of the Company’s annual report on From 20-F filed with the SEC on July 30, 2024 and the Interim Report on Form 6-K for the six months ended September 30, 2024, filed with the U.S. Securities and Exchange Commission (the “SEC”). For these reasons, among others, investors are cautioned not to place undue reliance upon any forward-looking statements in this press release. Additional factors are discussed in the Company's filings with the SEC, which are available for review at www.sec.gov. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.

 

For more information, please contact:

 

Investor Relations

 

WFS Investor Relations Inc.

Janice Wang, Managing Partner

Email: services@wealthfsllc.com

Phone: +86 13811768599

+1 628 283 9214

 

 

RAYTECH HOLDING LIMITED

UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS

 

		As of March 31,				(Unaudited) As of September 30,
		2024				2024				2024
		HKD				HKD				US$
ASSETS
CURRENT ASSETS
Cash and cash equivalents			35,885,666				81,047,102				10,431,712
Accounts receivable, net			14,557,523				13,476,241				1,734,550
Amount due from a director			145,166				–				–
Merchandise inventories, net			1,855,686				1,135,068				146,096
Taxes receivables			395,005				104,085				13,397
Prepayments			5,000				5,000				644
TOTAL CURRENT ASSETS			52,844,046				95,767,496				12,326,399
NON-CURRENT ASSETS
Property and equipment, net			–				–				–
Deferred initial public offering costs			5,252,768				–				–
Long-term deposits			16,200				16,200				2,085
TOTAL NON-CURRENT ASSETS			5,268,968				16,200				2,085
TOTAL ASSETS			58,113,014				95,783,696				12,328,484
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable			732,340				1,098,929				141,445
Accounts payable - related party			24,278,340				20,418,181				2,628,059
Accruals			1,018,618				920,901				118,531
Contract liabilities			1,008,415				-				-
TOTAL CURRENT LIABILITIES			27,037,713				22,438,011				2,888,035
TOTAL LIABILITIES			27,037,713				22,438,011				2,888,035
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY
Ordinary Shares, US$0.00000625 par value, 8,000,000,000 Ordinary Shares authorized, 16,000,000 shares and 17,613,083 shares issued and outstanding as of March 31, 2024 and September 30, 2024, respectively(1)			783				862				110
Additional paid-in capital			99,217				37,717,487				4,854,683
Retained earnings			30,975,301				35,627,336				4,585,656
TOTAL SHAREHOLDERS’ EQUITY			31,075,301				73,345,685				9,440,449
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY			58,113,014				95,783,696				12,328,484

 

 

RAYTECH HOLDING LIMITED

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME

 

		(Unaudited) For the Six Months ended September 30,
		2023				2024				2024
		HKD				HKD				US$
REVENUE
Sales of products			26,011,185				42,101,829				5,418,999
Sales of tooling			7,006,014				1,147,077				147,642
			33,017,199				43,248,906				5,566,641
OPERATING EXPENSES
Merchandise costs			(24,305,564	)			(34,100,724	)			(4,389,163	)
Selling, general and administrative expenses			(1,751,531	)			(5,229,459	)			(673,093	)
Total operating expenses			(26,057,095	)			(39,330,183	)			(5,062,256	)
INCOME FROM OPERATIONS			6,960,104				3,918,723				504,385
OTHER INCOME (EXPENSE)
Interest income			615,405				1,431,474				184,248
Interest expense			(1,657	)			–				–
Loss from foreign currency exchange			(16,334	)			(407,242	)			(52,417	)
Total other income, net			597,414				1,024,232				131,831
INCOME BEFORE INCOME TAX PROVISION			7,557,518				4,942,955				636,216
PROVISION FOR INCOME TAXES			(1,139,449	)			(290,920	)			(37,445	)
NET INCOME			6,418,069				4,652,035				598,771
WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES
Basic and diluted(1)			16,000,000				17,613,083				17,613,083
EARNINGS PER SHARE
Basic and diluted			0.40				0.26				0.03

 

 

RAYTECH HOLDING LIMITED

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

		(Unaudited) For the Six Months ended September 30,
		2023				2024				2024
		HKD				HKD				US$
Cash flows from operating activities
Net income			6,418,069				4,652,035				598,771
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation of property and equipment			2,928				-				-
Amortization of right-of-use asset			51,286				-				-
Loss from unrealized foreign currency translation			17,918				406,530				52,325
Changes in operating assets and liabilities
Accounts receivable, net			(654,485	)			978,597				125,957
Merchandise inventories, net			(681,683	)			720,618				92,752
Prepayments			54,000				-				-
Accounts payable			(150,807	)			372,876				47,994
Accounts payable - related party			12,178,316				(3,694,385	)			(475,511	)
Accruals			(203,832	)			(97,717	)			(12,577	)
Contract liabilities			(1,705,854	)			(1,008,415	)			(129,795	)
Operating lease obligation			(52,344	)			-				-
Taxes receivables			-				290,920				37,445
Taxes payables			1,139,449				-				-
Net cash provided by operating activities			16,412,961				2,621,059				337,361
Cash flows from investing activities
Repayment of amount due from a director			210,702				145,166				18,684
Net cash provided by investing activities			210,702				145,166				18,684
Cash flows from financing activities
Proceed from Initial Public Offering of shares			-				42,772,241				5,505,289
Deferred initial public offering cost			(257,702	)			-				-
Net cash (used in)/from financing activities			(257,702	)			42,772,241				5,505,289
Change in cash			16,365,961				45,538,466				5,861,334
Effect of foreign exchange on cash			35,039				(377,030	)			(48,528	)
Cash at the beginning of the period			21,362,580				35,885,666				4,618,906
Cash at the end of the period			37,763,580				81,047,102				10,431,712
Supplementary cash flow information
Cash paid for income tax			–				–				–
Cash paid for interest expense			–				–				–

 

 

v3.24.4

Document And Entity Information	6 Months Ended
	Sep. 30, 2024
Document Information Line Items
Entity Registrant Name	RAYTECH HOLDING LIMITED
Document Type	6-K
Current Fiscal Year End Date	--03-31
Amendment Flag	false
Entity Central Index Key	0001948443
Document Period End Date	Sep. 30, 2024
Document Fiscal Year Focus	2025
Document Fiscal Period Focus	Q2
Entity File Number	001-42100

v3.24.4

Unaudited Interim Condensed Consolidated Balance Sheets		Sep. 30, 2024 HKD ($)	Sep. 30, 2024 USD ($)	Mar. 31, 2024 HKD ($)
CURRENT ASSETS
Cash and cash equivalents		$ 81,047,102	$ 10,431,712	$ 35,885,666
Accounts receivable, net		13,476,241	1,734,550	14,557,523
Amount due from a director				145,166
Merchandise inventories, net		1,135,068	146,096	1,855,686
Taxes receivables		104,085	13,397	395,005
Prepayments		5,000	644	5,000
TOTAL CURRENT ASSETS		95,767,496	12,326,399	52,844,046
NON-CURRENT ASSETS
Property and equipment, net
Deferred initial public offering costs				5,252,768
Long-term deposits		16,200	2,085	16,200
TOTAL NON-CURRENT ASSETS		16,200	2,085	5,268,968
TOTAL ASSETS		95,783,696	12,328,484	58,113,014
CURRENT LIABILITIES
Accounts payable		1,098,929	141,445	732,340
Accruals		920,901	118,531	1,018,618
Contract liabilities				1,008,415
TOTAL CURRENT LIABILITIES		22,438,011	2,888,035	27,037,713
TOTAL LIABILITIES		22,438,011	2,888,035	27,037,713
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY
Ordinary Shares, US$0.00000625 par value, 8,000,000,000 Ordinary Shares authorized, 16,000,000 shares and 17,613,083 shares issued and outstanding as of March 31, 2024 and September 30, 2024, respectively(1)	[1]	862	110	783
Additional paid-in capital		37,717,487	4,854,683	99,217
Retained earnings		35,627,336	4,585,656	30,975,301
TOTAL SHAREHOLDERS’ EQUITY		73,345,685	9,440,449	31,075,301
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		95,783,696	12,328,484	58,113,014
Related Party
CURRENT LIABILITIES
Accounts payable - related party		$ 20,418,181	$ 2,628,059	$ 24,278,340
[1] 1,500,000 ordinary shares were issued on May 15, 2024, and 113,083 ordinary shares were issued on July 5, 2024.

v3.24.4

Unaudited Interim Condensed Consolidated Balance Sheets (Parentheticals) - $ / shares		Sep. 30, 2024	Mar. 31, 2024
Statement of Financial Position [Abstract]
Ordinary Shares, par value (in Dollars per share)		$ 0.00000625
Ordinary Shares, Authorized	[1]	8,000,000,000	8,000,000,000
Ordinary Shares, shares issued	[1]	17,613,083	16,000,000
Ordinary Shares, shares outstanding	[1]	17,613,083	16,000,000
[1] 1,500,000 ordinary shares were issued on May 15, 2024, and 113,083 ordinary shares were issued on July 5, 2024.

v3.24.4

Unaudited Interim Condensed Consolidated Statements of Income		6 Months Ended
		Sep. 30, 2024 HKD ($) $ / shares shares	Sep. 30, 2024 USD ($) $ / shares shares	Sep. 30, 2023 HKD ($) $ / shares shares
REVENUE
Total revenue		$ 43,248,906	$ 5,566,641	$ 33,017,199
OPERATING EXPENSES
Merchandise costs		(34,100,724)	(4,389,163)	(24,305,564)
Selling, general and administrative expenses		(5,229,459)	(673,093)	(1,751,531)
Total operating expenses		(39,330,183)	(5,062,256)	(26,057,095)
INCOME FROM OPERATIONS		3,918,723	504,385	6,960,104
OTHER INCOME (EXPENSE)
Interest income		1,431,474	184,248	615,405
Interest expense				(1,657)
Loss from foreign currency exchange		(407,242)	(52,417)	(16,334)
Total other income, net		1,024,232	131,831	597,414
INCOME BEFORE INCOME TAX PROVISION		4,942,955	636,216	7,557,518
PROVISION FOR INCOME TAXES		(290,920)	(37,445)	(1,139,449)
NET INCOME		$ 4,652,035	$ 598,771	$ 6,418,069
WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES
Basic (in Shares)	[1]	17,184,908	17,184,908	16,000,000
Diluted (in Shares)	[1]	17,184,908	17,184,908	16,000,000
EARNINGS PER SHARE
Basic (in Dollars per share and Dollars per share) | (per share)		$ 0.27	$ 0.03	$ 0.4
Diluted (in Dollars per share and Dollars per share) | (per share)		$ 0.27	$ 0.03	$ 0.4
Sales of Products
REVENUE
Sales		$ 42,101,829	$ 5,418,999	$ 26,011,185
Sales of Tooling
REVENUE
Sales		$ 1,147,077	$ 147,642	$ 7,006,014
[1] 1,500,000 ordinary shares were issued on May 15, 2024, and 113,083 ordinary shares were issued on July 5, 2024.

v3.24.4

Unaudited Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity		Ordinary shares HKD ($) shares		Ordinary shares USD ($) shares		Additional Paid-in Capital HKD ($)	Additional Paid-in Capital USD ($)	Retained Earnings HKD ($)	Retained Earnings USD ($)	HKD ($) shares		USD ($) shares
Balance (in Dollars)		$ 783				$ 99,217		$ 21,038,507		$ 21,138,507
Balance at Mar. 31, 2023		$ 783				99,217		21,038,507		21,138,507
Balance (in Shares) at Mar. 31, 2023 | shares	[1]	16,000,000		16,000,000
Net income								6,418,069		6,418,069
Balance at Sep. 30, 2023		$ 783				99,217		27,456,576		27,556,576
Balance (in Shares) at Sep. 30, 2023 | shares	[1]	16,000,000		16,000,000
Balance (in Dollars)		$ 783				99,217		27,456,576		27,556,576
Balance (in Dollars)		783				99,217		30,975,301		31,075,301
Balance at Mar. 31, 2024		$ 783				99,217		30,975,301		$ 31,075,301
Balance (in Shares) at Mar. 31, 2024 | shares		16,000,000	[1]	16,000,000	[1]					16,000,000	[2]	16,000,000	[2]
Initial Public Offering of shares		$ 79				37,618,270				$ 37,618,349
Initial Public Offering of shares (in Shares) | shares	[1]	1,613,083		1,613,083
Net income								4,652,035		4,652,035		$ 598,771
Balance at Sep. 30, 2024		$ 862		$ 110		37,717,487	$ 4,854,683	35,627,336	$ 4,585,656	$ 73,345,685		$ 9,440,449
Balance (in Shares) at Sep. 30, 2024 | shares		17,613,083	[1]	17,613,083	[1]					17,613,083	[2]	17,613,083	[2]
Balance (in Dollars)		$ 862		$ 110		$ 37,717,487	$ 4,854,683	$ 35,627,336	$ 4,585,656	$ 73,345,685		$ 9,440,449
[1] 1,500,000 ordinary shares were issued on May 15, 2024, and 113,083 ordinary shares were issued on July 5, 2024. [2] 1,500,000 ordinary shares were issued on May 15, 2024, and 113,083 ordinary shares were issued on July 5, 2024.

v3.24.4

Unaudited Interim Condensed Consolidated Statements of Cash Flows	6 Months Ended
	Sep. 30, 2024 HKD ($)	Sep. 30, 2024 USD ($)	Sep. 30, 2023 HKD ($)
Cash flows from operating activities
Net income	$ 4,652,035	$ 598,771	$ 6,418,069
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation of property and equipment			2,928
Amortization of right-of-use asset			51,286
Loss from unrealized foreign currency translation	406,530	52,325	17,918
Changes in operating assets and liabilities
Accounts receivable, net	978,597	125,957	(654,485)
Merchandise inventories, net	720,618	92,752	(681,683)
Prepayments			54,000
Accounts payable	372,876	47,994	(150,807)
Accounts payable - related party	(3,694,385)	(475,511)	12,178,316
Accruals	(97,717)	(12,577)	(203,832)
Contract liabilities	(1,008,415)	(129,795)	(1,705,854)
Operating lease obligation			(52,344)
Taxes receivables	290,920	37,445
Taxes payables			1,139,449
Net cash provided by operating activities	2,621,059	337,361	16,412,961
Cash flows from investing activities
Repayment of amount due from a director	145,166	18,684	210,702
Net cash provided by investing activities	145,166	18,684	210,702
Cash flows from financing activities
Proceed from Initial Public Offering of shares	42,772,241	5,505,289
Deferred initial public offering cost			(257,702)
Net cash (used in)/from financing activities	42,772,241	5,505,289	(257,702)
Change in cash	45,538,466	5,861,334	16,365,961
Effect of foreign exchange on cash	(377,030)	(48,528)	35,039
Cash at the beginning of the period	35,885,666	4,618,906	21,362,580
Cash at the end of the period	81,047,102	10,431,712	37,763,580
Supplementary cash flow information
Cash paid for income tax
Cash paid for interest expense

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