Merchant House International Ltd (MHI:ASX)

Recent Share Price: A$0.12

Accounting: International Financial Reporting Standards

Fiscal Year: Mar. 31st

Market Cap: A$10.8 million ($7.8 million)

Merchant House International Ltd. engages in the design, manufacture, and marketing of home textiles and footwear products.  They are incorporated in Bermuda, listed in Australia, and domiciled in Hong Kong.

It operates through the following segments:

  • The Home Textile segment primarily manufactures kitchen textiles and table linens for import and export.  The Group’s Carsan textile factory in Shunde, China is 100% owned, has been in operation since 2002 employing over 600 workers. In 2017, the company acquired a facility in the U.S. to manufacture textiles, (primarily kitchen and bath towels).
  • The Footwear Trading segment exports work boots and safety shoes. In China, the division operates mainly through 2 Tianjin joint venture factories, (listed on the books at A$11 million).
  • The Footwear Manufacturing segment produces work boots and safety shoes in U.S. and sells directly to domestic customers. Their 2014 Tennessee factory supplies safety boots through direct injection molded soles.

The company was founded by Bic Hing Lee in 1978 and is headquartered in Hong Kong.  Loretta Lee owns 52% of the company.

If the company can right the ship on the footwear manufacturing division, the company would return to profitability.

The Bristol facility is also an unknown.

Sales per Businesses    
 2017 2018 
AUD (in Million) % %
Home Textile40.2355.30%40.2463.30%
Footwear Trading31.6843.50%20.4132.10%
Footwear Manufacturing1.031.40%2.874.50%
Sales per Regions    
 2017 2018 
AUD (in Million) % %
United States71.3398%63.299.50%
China/Hong Kong0.1270.20%0.0370.10%

Recent History


Company guides (for FY2019, ending March 31) at a loss of A$1,000,000 (US$750,000) due to execution issues at Footwear Industries in Tennessee (FIT).


Footwear Trading (Forsan shoe division) was down y/y due to the company’s decision to resign from retailers which are having financial difficulties, (which I assume to be Sears), and “giving up on the low-end margin product lines and moving toward higher value, branded products”. Net profit was A$0.27 million.

Footwear Manufacturing (Footwear Industries of Tennessee) suffered a loss of A$3.3 million reflecting “weak management, and lack of worker training and productivity”.

While the loss was as projected, the plan is for Hong Kong management to take a more active role in overseeing this business. […] For Footwear Industries of Tennessee improving the management will be our top priority in 2018. Numerous American brands continue to be interested in our factory, and we currently have more orders than we can fulfill.

Home Segment recorded profit of A$3.2 million in FY2018.

American Merchant Inc, (Bristol, VA facility) placed orders for the major weaving and finishing equipment which will begin to be delivered in the fourth quarter of this year. Some renovation on the existing building is currently taking place; they anticipate production will begin in the first quarter of 2019. [article]

During the year, the Group spent A$3.4 million (2017: A$1.5 million) on acquisition of property, plant and equipment and A$3.0 million (2017: A$nil million) on other assets under development, mainly for land and building and machineries of US wholly-owned subsidiary, American Merchant Inc.


Acquired plant for $1.9 million in Bristol, VA, for textile manufacturing.  The company expects to invest $19.9 million to get the facility up and running.  The 260,000 sq/ft facility is expected to employ 405 employees.


Discontinued Dividend.


Purchased a 40,000 square foot building in the Jefferson City Industrial Park where it produces men’s leather boots and shoes.   The initial investment, to acquire and equip the plant in Jefferson City,  was $5 million and employs 50 people. [WSJ article]


Blog Posts

Disclosure: We own shares in Merchant House Int’l (MHI:ASX).

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