10 Questions for Combine Will International Holdings

1.    What is Combine Will’s business about and what are some key business segments?

• Headquartered in Hong Kong, with offices in Shenzhen, Dongguan, and Singapore, Combine Will is a leading Original Design Manufacturer/Original Equipment Manufacturer specialising in corporate premiums, toys, and consumer products. We serve a diverse international clientele portfolio across Asia, Europe and North America, including prominent multinational companies from diverse sectors like consumer products, toys, and global fast-food chains.

2.    What are the new product lines that Combine Will has diversified into, and why these product lines specifically?

• In 2023, the Group launched its first plush toy production line in Sragen, Indonesia, with initial shipments in 1Q24. This strategic diversification into plush toy manufacturing was driven by rising global demand and the Group’s commitment to expand our product range. In 1H FY2024, our revenue grew by 30.0%, driven by the launch of our new plush toy operation. Our gross profit margin also improved to 11.3%, up from 10.9% in 1H FY2023. Consequently, operating profit increased by 9.6% to HK$40.1 million.
• Besides plush toy production, the Group has established paper production lines, reflecting our dedication to sustainability by utilising green materials, including green polyethylene, recycled PET, aluminium, and Forest Stewardship Council certified paper. These materials are integrated into our paper and hybrid toy products. Presently, the Group owns five paper production lines across Sragen, Indonesia and Heyuan, China. 

3.    How does Combine Will remain competitive against other Original Design Manufacturers (ODM) and Original Equipment Manufacturers (OEM)?

• Our competitive advantage is rooted in our customer-driven philosophy, which emphasises quality management through the use of sustainable materials. This strategy allows us to satisfy customer expectations for both product quality and environmental stewardship.
• To stay competitive and ensure sustainability, we will keep investing in production automation and digitalising our factories. Using advanced technologies, we aim to boost efficiency, reduce costs, and improve product quality.
• These efforts will enable us to stay competitive in a changing industry landscape and underscore our dedication to sustainable growth by optimising resource utilisation and minimising environmental impact.

4.    What are Combine Will’s focused markets? Are there plans to expand beyond these markets?

• We serve a diverse international clientele portfolio across Asia and Europe, with our products distributed globally. In China, we have broadened our customer base by partnering with one of the largest premium goods solution providers, focusing on both Chinese and international intellectual property (IP) related products. Additionally, we are in active discussions with globally renowned brands in the toy and theme park sectors, which will further support our market expansion efforts. 
• Our efforts to fortify supply chain resilience have led to the identification of potential material suppliers across Indonesia, Taiwan, South Korea and Vietnam. To uphold our quality control measures, these suppliers are required to undergo relevant compliance and qualification assessments mandated by customers.

5.    What are some risks in this business and how is Combine Will mitigating them?

• Our business faces risks such as supply chain disruptions and meeting the needs of our international clients. Expanding production has complicated our supply chain, influenced by geopolitical tensions.
• With growing production, securing raw materials is tougher. Our supply chain team is working to find new sources that meet our clients' high standards, collaborating with universities and renowned enterprises for diverse sourcing options.
• To meet the unique demands of our global clientele, we are hiring top talent, automating and digitalising production processes, and continuously improving department cooperation. These steps aim to enhance production efficiency and better serve our clients.
• We prioritise product safety by maintaining strict quality control during manufacturing. We are committed to a customer safety-first mission by delivering safe, high-quality products through an effective quality management system. We also foster integrity and transparency by providing ethics training, ensuring adherence to our ethical standards.

6.    Does the group have any expansion or acquisition plans and what are the strategies for it?

• Expanding our plastic and paper production, the Group started manufacturing plush toys in Indonesia in 2023 through a partnership with an experienced manufacturer. The new facility has around 2,000 employees and will positively impact revenue from FY2024. This aligns with our strategic vision for diversification and growth, expanding product offerings and our customer base. To support this, we acquired 200,000 more square meters in Indonesia, doubling our capacity soon.
• In Q3 2024, we converted a warehouse into spraying workshops and installed over 450 automated decoration machines. Two additional warehouses, covering over 15,000 square meters, will be operational by Q4 2024. Ongoing construction projects include new plush, die-casting, and plastic production facilities totaling about 70,000 square meters, set to complete by Q2 2025.

7.    Can you share how Combine Will is planning to achieve its carbon neutrality goals, the timeline, and what actions your company will take?

• The Group aims for carbon neutrality through a comprehensive strategy, including the establishment of a Sustainable Operations Committee to continuously manage growth sustainably. We target a minimum 15% reduction in carbon emissions by 2026, 35% by 2035, and full carbon neutrality by 2050. Our focus on sustainability, especially in materials application and green investments, continues to yield positive results.
• We have implemented a carbon footprint tracking and reporting system that monitors all subsidiary emissions and obtained third-party verification for our GHG emissions. To support cleaner production, we use green electricity from renewable sources, currently accounting for 16.46% of our total usage. In 2023, we purchased 5,542 MWh of green electricity, cutting approximately 3,161 tonnes of greenhouse gas emissions.

8.    Sustainability and ESG have increasingly been a key focus, how is your company committed towards sustainability?

• Integration of ESG and DE&I: We have embedded Diversity, Equity, and Inclusion (DE&I) into our core business practices, focusing on three critical drivers to deliver sustainable value to our stakeholders.
  • Compliance and Risk Management: Strong compliance with customer and regulatory standards, effectively managing risks and supports ethical and sustainable operations.
  • Employer of Choice: Inclusive work culture to attract and retain top talent, valuing diverse perspectives to boost employee satisfaction and business growth.
  • Innovation and Competitive Advantage: Foster innovation, enhance industry competitiveness and create sustainable solutions for our customers' and society's needs.
• Recognition and Awards: Our efforts in sustainability and excellence have been acknowledged through several awards, including the HR Asia Best Company to Work For and DE&I Awards 2023 in Hong Kong, the ESG Exemplary Enterprise Award 2023 at the International Green Zero Carbon Festival in China, and the ESG Business Award 2023 in Singapore.
• Ongoing Commitment: We are dedicated to advancing our ESG agenda by enhancing innovation with over USD$1 million dedicated to research & development, promoting resource efficiency and reducing our environmental footprint, and improving governance standards.

9.    What are the most significant ESG risks or opportunities your company is facing? How are you meeting these needs?

• The Group, much like its industry counterparts, encounters notable ESG risks such as climate change and evolving regulations. Natural disasters threaten to cause operational delays, heightened operating costs, and disruptions in supply chains. To mitigate these issues, we have strengthened our Business Continuity Planning (BCP) and evaluate our suppliers' BCP strategies.
• In terms of regulatory compliance, we might face increased expenses tied to greenhouse gas emissions and energy consumption. However, we are continually seeking out innovative approaches to reduce waste and support circularity across our value chain. Overall, to address risks and seize new opportunities, we have developed a sustainability strategy aligned with the United Nations Sustainable Development Goals. This plan integrates ESG principles into our business practices, ensuring adherence to best practices and encouraging responsible corporate citizenship.

10.    Why should investors take a closer look at Combine Will?

• Sustainability is central to our strategy. We set ourselves apart by committing to sustainable manufacturing through our customer-driven philosophy that prioritises quality management, utilises sustainable materials, and strengthens relationships with existing customers to ensure a stable flow of orders.
• As proof of this commitment, the Group increased its use of sustainable green raw materials from 22% in 2021 to 35% in 2022 and aims to raise the production output of green products to over 40% by the end of 2024.
• Supported by a robust balance sheet and cash balance of HK$112.1 million alongside a strong focus on diversification, strategic leadership, and accelerated transformative initiatives, Combine Will is well-positioned to significantly boost both revenue streams and profit margins.
• By implementing our strategic expansion plans—in particular, new customer acquisition and land development—we remain dedicated to consistently providing innovative value to our investors.

10 in 10 – 10 Questions in 10 Minutes with SGX-listed companies

Designed to be a short read, 10 in 10 provides insights into SGX-listed companies through a series of 10 Q&As with management. Through these Q&As, management will discuss current business objectives, key revenue drivers as well as the industry landscape. Expect to find wide-ranging topics that go beyond usual company financials.

This report contains factual commentary from the company’s management and is based on publicly announced information from the company.

For more, visit sgx.com/research.

For more company information, visit http://www.combinewill.com/

Click here for Combine Will’s 1H2024 Financial Results, and here for their FY2023 Annual report.