REGINA MIRACLE (02199) has received its first "Buy" rating from Minyin International, which highlights the company's position as a global leader in intimate apparel manufacturing. The firm operates under an IDM (Innovation, Design, and Manufacturing) model, supported by three core proprietary technologies. In recent years, REGINA MIRACLE has successfully expanded its technological edge into high-growth segments like activewear, which has become its second-largest business.

With optimized client diversification, mature Vietnam production capacity, and near-completion of domestic factory relocation, the company is poised for sustained profitability and efficiency improvements amid controlled capital expenditures and debt reduction. Key insights from Minyin International include:

**Company Overview** REGINA MIRACLE ranks among the top-tier global manufacturers of intimate apparel, leveraging its IDM model and three core technologies to serve segments including intimate wear, activewear, consumer electronics accessories, and bra components. In FY25, the company reported revenue/adjusted net profit of HKD 7.84 billion/HKD 400 million, respectively.

**Technology-Driven Expansion into Activewear** The company’s proprietary technologies—computer-aided molding, 3D seamless molding, and bonding—have enabled it to diversify from traditional intimate apparel into sports bras, leggings, functional activewear, and electronics accessories. Activewear now contributes 37% of total revenue (FY25), trailing only intimate wear (54%). Notably, bonding-based activewear revenue surged 50% YoY in FY25 and 40% YoY in 1H FY26, accounting for over 40% of activewear sales.

**Client Diversification** REGINA MIRACLE has reduced reliance on single clients (e.g., Victoria’s Secret, which contributed 35% of FY2014 revenue) by partnering with Uniqlo and global sportswear giants like Nike, Adidas, Lululemon, and On.

**Vietnam Footprint and Domestic Relocation** - **Production**: Vietnam (85%) and China (15%) form the backbone of its manufacturing, with six Vietnam-based factories strategically segmented by product lines to mitigate tariff risks for U.S. exports. The relocation from Shenzhen to Zhaoqing in China is nearing completion, expected to further enhance operational efficiency. - **Financials**: FY25 restructuring costs (HKD 220 million) and interest expenses (HKD 340 million) weighed on margins, but capital expenditures are projected to stabilize at HKD 250 million in FY26 and below HKD 150 million annually thereafter—a sharp decline from the FY19 peak of HKD 1.21 billion. - **Debt Reduction**: With FY25 EBITDA of HKD 1.06 billion, REGINA MIRACLE aims to cut debt by at least HKD 1 billion over 3–4 years. Lower interest expenses, aided by debt repayment and potential rate cuts, should further improve margins.