Millennium Group International Holdings Ltd

Millennium Group International Holdings Limited operates in the paper-based packaging industry, providing packaging products and supply chain management solutions to brand owners and OEM customers. The business is primarily conducted in Hong Kong and the PRC, with production bases at the MP Production Site and the Yee Woo Production Site in Shenzhen, and additional operations in Vietnam and Indonesia. The industry is characterized by competitive pricing pressure, with certain of the company's largest customers historically exerting significant pressure on their outside suppliers to keep prices low because of their market share and their ability to leverage such market share in the highly competitive environment. The economic downturn has resulted in increased pricing pressures from customers. Raw materials are generally obtainable from various sources and in sufficient quantities, though supply interruptions could arise from shortages of raw materials, labor disputes or weather conditions affecting raw materials or shipments, transportation disruptions or other factors beyond the company's control.

The company faces competition from other packaging suppliers, and its competitive position depends on its ability to offer high-quality products and services that meet user preferences and demands, maintain close and satisfactory relationships with customers, and attract potential customers. The company's ability to maintain the high and consistent quality and integrity of its packaging and continue to enhance its value-added services to customers is critical to avoiding a decline in profit margin and business. The company had one significant customer which accounted for 18.6% ¹, 20.4% ² and 18.8% ³ of total revenues for the years ended June 30, 2026, 2025 and 2024, respectively. The company does not enter into long-term agreements with its customers, but supply is based upon purchase orders placed by customers from time to time.

The company generates revenue primarily from the sale of packaging products, corrugated products, and packaging products supply chain management solutions. Revenue is recognized upon transfer of control of products to customers. The company's customer base includes brand owners and OEM customers, with sales concentrated in the PRC, Hong Kong, Vietnam, the United States, Australia, and other countries. The company operates through a network of subsidiaries in the Cayman Islands, British Virgin Islands, Hong Kong, the PRC, Vietnam, Indonesia, and Singapore. The business is capital intensive, with significant investments in property, plant and equipment, including buildings, leasehold improvements, machinery, office equipment, and vehicles.

The company's product lines include packaging products, which are printed paper products that can be corrugated and are mainly used for inner packaging purposes, and corrugated products, which are paper products that have undergone corrugation and can be printed and are mainly used for outer packaging purposes. The company also provides packaging products supply chain management solutions. For the year ended June 30, 2026, revenues from packaging products were $20,339,679 ⁴, with corrugated products and supply chain management solutions contributing to the overall revenue mix. The company's gross profit for the year ended June 30, 2026 was $1,639,416 ⁵, compared to $4,685,118 ⁶ for the year ended June 30, 2025. The company's gross margin declined due to lower revenues and higher fixed costs as a percentage of sales.

During the year ended June 30, 2026, the company continued to invest in its production facilities, with purchases of property, plant and equipment of $1,494,369 ⁷. The company also disposed of property, plant and equipment with proceeds of $428,161 ⁸. The company repaid bank borrowings of $8,370,715 ⁹ and obtained proceeds from bank borrowings of $6,248,462 ¹⁰. The company received proceeds from related-party loans of $2,091,551 ¹¹. On August 27, 2026, the company agreed to sell Millennium Printing International Limited to Yee Cheong (1926) Enterprise Company Limited, and the sale was completed August 28, 2026. The company also entered into a financing arrangement with YC Financing, with a loan facility of up to $1,000,000 ¹² maturing on March 31, 2027.

The company's financial performance for the year ended June 30, 2026 reflected a challenging operating environment. Total revenues were $20,339,679 ¹³, compared to $25,334,149 ¹⁴ for the year ended June 30, 2025 and $38,530,773 ¹⁵ for the year ended June 30, 2024. The company reported a net loss of $7,090,366 ¹⁶ for the year ended June 30, 2026, compared to a net loss of $6,315,385 ¹⁷ for the year ended June 30, 2025 and a net loss of $8,770,044 ¹⁸ for the year ended June 30, 2024. The net loss per share was $0.63 ¹⁹ for the year ended June 30, 2026, compared to $0.56 ²⁰ for the year ended June 30, 2025 and $0.78 ²¹ for the year ended June 30, 2024. The company's cash and cash equivalents decreased to $5,612,562 ²² as of June 30, 2026 from $10,689,219 ²³ as of June 30, 2025. Total shareholders' equity decreased to $18,865,212 ²⁴ as of June 30, 2026 from $24,909,948 ²⁵ as of June 30, 2025.

The company has set goals to achieve profitability and if achieved, to progressively improve profitability over time by growing sales, increasing gross margin and reducing expenses as a percentage of sales. There can be no assurance that the company will achieve these enhanced profitability goals. Factors that could significantly adversely affect efforts to achieve these goals include the failure to grow revenue through organic growth or through acquisitions, improve revenue mix by investing in businesses that provide higher margins, achieve improvements in purchasing or maintain or increase rebates from vendors, improve gross margins through improved pricing practices and technology and sourcing savings, maintain or reduce overhead and support expenses as the company grows, effectively evaluate future inventory reserves, collect monies owed from customers, maintain relationships with significant customers and suppliers, and integrate any businesses acquired.

The company may pursue growth through acquisitions of complementary businesses. Complying with the requirements of PRC regulations and other relevant rules to complete such transactions could be time-consuming, and any required approval processes, including obtaining approval from the Ministry of Commerce or its local counterparts, may delay or inhibit the ability to complete such transactions, which could affect the ability to expand the business or maintain market share. The company currently has no plans to pursue any acquisitions in China or elsewhere in the world, but may pursue acquisitions in the future that may involve complex corporate structures.

The company's growth strategy includes expanding into new clients and further developing existing clients. If the company is unable to expand into new clients or further develop existing clients, the business may be adversely affected. The company relies on its experience from past and current operations to offer, manage, and refine its high-quality product and service, which may not be effective as customer preferences and market trends change. The company's ability to offer a wide variety of products to customers is dependent upon the ability to obtain adequate raw materials supply from manufacturers or other suppliers.

The company's margin trajectory is subject to competitive pricing pressure from customers. Certain of the largest customers historically have exerted significant pressure on their outside suppliers to keep prices low because of their market share and their ability to leverage such market share in the highly competitive environment. The economic downturn has resulted in increased pricing pressures from customers. If the company is unable to generate sufficient cost savings to offset any price reductions, the financial condition, operating results and cash flows may be adversely affected. Short-term changes in the cost of materials, some of which are subject to significant fluctuations, are sometimes, but not always passed on to customers. The inability to pass on material price increases to customers could adversely impact financial condition, operating results and cash flows.

The company's operational outlook includes managing supply chain disruptions and raw material availability. Supply interruptions could arise from shortages of raw materials, labor disputes or weather conditions affecting raw materials or shipments, transportation disruptions or other factors beyond the company's control. A disruption in the timely availability of raw materials by key suppliers would result in a decrease in revenues and profitability, especially in business units with supplier concentration. Although in many instances the company has agreements with suppliers, these agreements are generally terminable by either party on limited notice. Failure by suppliers to continue to supply raw materials on commercially reasonable terms, or at all, would put pressure on operating margins and have a material adverse effect on financial condition, operating results and cash flows.

The company's capital allocation priorities include investments in property, plant and equipment. For the year ended June 30, 2026, purchases of property, plant and equipment were $1,494,369 ²⁶. The company also invested in intangible assets, with purchases of $25,512 ²⁷ for the year ended June 30, 2026. The company's financing activities included repayment of bank borrowings of $8,370,715 ²⁸ and proceeds from bank borrowings of $6,248,462 ²⁹. The company received proceeds from related-party loans of $2,091,551 ³⁰. The company has a loan facility with YC Financing of up to $1,000,000 ³¹ maturing on March 31, 2027.

The company faces headwinds from the highly competitive environment and pricing pressures from customers. The loss of any major customers, or a significant reduction in sales to any such customers, would adversely affect profitability. The company had one significant customer which accounted for 18.6% ³², 20.4% ³³ and 18.8% ³⁴ of total revenues for the years ended June 30, 2026, 2025 and 2024, respectively. The company does not enter into long-term agreements with customers, but supply is based upon purchase orders placed by customers from time to time. The company cannot be certain that sales to customers, including major customers, will continue.

The company is subject to risks related to doing business in China, including uncertainties regarding the interpretation and enforcement of Chinese laws and regulations, potential changes in political and economic policies, and government control over currency conversion. The PRC government may impose restrictions on the ability to transfer cash out of China and to U.S. investors. The PRC government imposes controls on the convertibility of Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. To the extent that income is received in Renminbi, shortages in foreign currencies may restrict the ability to pay dividends or other payments, or otherwise satisfy foreign currency denominated obligations.

The company faces significant risks related to its dependence on a few major customers with whom it does not enter into long-term contracts. One significant customer accounted for 18.6% ³⁵, 20.4% ³⁶ and 18.8% ³⁷ of total revenues for the years ended June 30, 2026, 2025 and 2024, respectively. The loss of any major customer, or a significant reduction in sales to any such customer, would adversely affect profitability. The company is subject to competitive pricing pressure from customers, with certain of its largest customers historically exerting significant pressure on their outside suppliers to keep prices low because of their market share and their ability to leverage such market share in the highly competitive environment. Raw materials shortages may impair operating results, as supply interruptions could arise from shortages of raw materials, labor disputes or weather conditions affecting raw materials or shipments, transportation disruptions or other factors beyond the company's control. The company has a history of net losses, with a net loss of $7,090,366 ³⁸ for the year ended June 30, 2026, and may be unable to achieve or maintain profitability. The company is subject to risks related to doing business in China, including uncertainties regarding the interpretation and enforcement of Chinese laws and regulations, potential changes in political and economic policies, and government control over currency conversion, which may limit the ability to transfer cash out of China and to U.S. investors.

Management's message to shareholders emphasizes the company's goals to achieve profitability and if achieved, to progressively improve profitability over time by growing sales, increasing gross margin and reducing expenses as a percentage of sales. There can be no assurance that the company will achieve these enhanced profitability goals. The company's strategic priorities include growing revenue through organic growth or through acquisitions, improving revenue mix by investing in businesses that provide higher margins, achieving improvements in purchasing or maintaining or increasing rebates from vendors, improving gross margins through improved pricing practices and technology and sourcing savings, maintaining or reducing overhead and support expenses as the company grows, effectively evaluating future inventory reserves, collecting monies owed from customers, maintaining relationships with significant customers and suppliers, and integrating any businesses acquired. Management's forward-looking statements reflect views and assumptions only as of the date the report is signed, and the company assumes no responsibility for updating any forward-looking statements except as required by law.