Wahsun Handbags International Holdings Ltd (ASX: 02683) has announced that it expects the group to achieve a net profit attributable to the company's owners of not less than HK$84 million for the year ending March 31, 2026. This compares to a net profit attributable to owners of approximately HK$64 million for the corresponding period in 2025.

The company stated that the increase in net profit is primarily attributable to several key factors. Revenue is expected to rise by approximately HK$126 million, or about 17%, from around HK$724 million in the previous year to approximately HK$850 million in the reporting year. This growth is mainly due to sustained orders from new clients secured during the reporting year and increased sales in Europe, particularly the Netherlands.

Additionally, the increase in the volume of goods sold by the group contributed to the revenue growth. The successful implementation of several stringent cost-control measures also led to a reduction in the group's fundamental production and operational costs, thereby boosting gross profit and the gross profit margin.

Consequently, the gross profit for the reporting year is higher than that of the previous year. However, this increase was partially offset by several factors. These include a rise in administrative expenses, primarily due to increased employee benefits costs, which aligns with the higher level of sales activity.

Other mitigating factors are a decrease in foreign exchange gains for the reporting year, an increase in impairment provisions for trade receivables under the expected credit loss model—consistent with the overall increase in trade receivables—compared to a reversal of such provisions in the prior year due to the recovery of some previously provided-for receivables. Lastly, the increase in taxable profit for the reporting year led to higher income tax expenses.