Add preferred source
Ching Feng Home Fashions (9935.TW) held its earnings call on September 18, where Vice President Chang Chun-ming revealed a qualitative shift in the company’s first-half operating structure. Consolidated revenue for H1 2026 reached NT$2.358 billion (approximately $74.2 million), with gross margin climbing from 26% in 2025 to nearly 28%. Q2 gross margin hit 29% with an operating margin of 12%, and net profit swung from a loss of NT$38 million (approximately $1.2 million) a year earlier to a profit of NT$108 million (approximately $3.4 million). The most fundamental change came from channel mix: retail’s share fell to 44.7% in Q2 2026 — the first time below 50% — while e-commerce rose to 33.7% and professional market share doubled to 21.6%. Chang emphasized that the company has transformed from a traditional OEM into an omni-channel ODM, leveraging a B2B2C model to directly capture end-consumer data. E-commerce order-to-shipment time has been cut to 33 hours, with a target of under 24 hours. On the production front, Vietnam accounts for 60% of curtain capacity, Taiwan 30%, and the Zhenjiang plant in China has been converted into an IKEA-dedicated facility. A second U.S. customization warehouse was delayed by regulatory hurdles until May and is expected to contribute only after year-end. Financially, due to a syndicated loan reclassification, the current ratio fell to 125% and quick ratio to 85% in H1, but a new NT$4.4 billion (approximately $138.4 million) syndicated loan was signed on September 10 with significantly lower interest rates, which should improve financial metrics starting Q3. Management remains conservative on the outlook, noting that North American retail momentum has not shown signs of strengthening in the near term, and will continue deepening e-commerce and professional market penetration.
Key Elements
Ching Feng Home Fashions’ Channel Mix Flips — Retail Share Falls Below 50% for the First Time
“We have gradually lifted our profitability to a whole new tier.” Ching Feng Home Fashions Vice President Chang Chun-ming used this statement at the earnings call to sum up the first-half operating results. This curtain manufacturer, founded in 1974, is undergoing a transformation more fundamental than revenue figures alone can capture: in Q2 2026, the retail channel share dropped to 44.7% — the first time in company history it fell below 50% — while e-commerce and professional market combined share surpassed 55%.
The flip in channel structure has directly rewritten the profit equation. Chang explicitly noted during the call that the quarter-over-quarter improvement in gross margin is “largely attributable to the change in our sales mix.”
First-Half Financial Performance: Structural Improvement in Profitability
Data disclosed at the earnings call shows Ching Feng Home Fashions posted consolidated revenue of NT$2.358 billion (approximately $74.2 million) for H1 2026, with gross margin improving from 26% in FY2025 to nearly 28%, and earnings per share of NT$1.12. The quarterly trend is even more noteworthy:
| Metric | Q2 2026 | Q2 2025 | Change |
|---|---|---|---|
| Quarterly Gross Margin | 29% | 26% | +3 ppts |
| Quarterly Operating Margin | 12% | 11% | +1 ppt |
| Quarterly Net Profit | NT$108M (approximately $3.4M) | -NT$38M (~-$1.2M) | Turned profitable |
Chang acknowledged that with the increase in B2B2C opportunities, overall operating expenses “unavoidably have an upward trend,” but stressed that “from the perspective of operating profit and net margin, we should still deliver relatively good results — the increase in overall expenses will not prevent net margin from moving up in tandem.”
According to publicly disclosed monthly revenue data, August 2026 single-month revenue was NT$430 million (approximately $13.5 million), down 4.7% year-over-year, marking two consecutive months of decline following the June peak of 17.0% YoY growth. Cumulative revenue through August reached NT$3.465 billion (approximately $109.0 million). Chang revealed that under the traditional retail model, the peak season typically occurred in Q3, but this year, due to the earlier timing of e-commerce sales, May already saw an “all-time e-commerce high,” and “Q3 may not necessarily be the highest quarter of the year.”
Channel Structure: A Quiet Business Model Revolution
Ching Feng Home Fashions’ channel landscape has shifted dramatically over the past five quarters. Q2 2025 marked a clear inflection point:
| Channel | Q2 2025 Share | Q2 2026 Share | Change |
|---|---|---|---|
| Retail | 57.5% | 44.7% | -12.8 ppts |
| E-commerce | 30.5% | 33.7% | +3.2 ppts |
| Professional Market | 12.0% | 21.6% | +9.6 ppts |
Chang noted that before Q1 2025, “e-commerce share never exceeded 30%,” after which it climbed steadily for five consecutive quarters. Customer concentration has also diversified: Lowe’s remains at 35% to 37% of revenue, while Amazon, Home Depot, and professional market client PHH have seen their shares “gradually expand and remain relatively stable.”
This is not merely a numbers game. Chang revealed the competitive logic behind the transformation: “Customers no longer proactively tell Ching Feng what their next product development direction is — instead, they prefer Ching Feng to tell them what we have observed from the e-commerce market.”
In the OEM era, Ching Feng’s product development rhythm was: listen to retail customer instructions, spend six months getting products on shelves, then spend another three to six months validating sales. Now, by directly facing end consumers through e-commerce channels, new products “can be listed within two to three weeks, and after another two to three weeks of observation, we can collect data on product performance.” Chang even mentioned that the company can “infer gender from the recipient’s name,” enabling cross-analysis of product sales across different regions.
Supply Chain Layout: A Dual-Track China and Non-China Strategy
Ching Feng Home Fashions’ production footprint has taken clear shape in 2026. Chang summarized curtain capacity allocation as “six-three-one”:
The Zhenjiang plant in China has been converted into an IKEA-dedicated facility, targeting the European and Chinese domestic markets. Chang did not mince words: “China’s domestic market is currently quite cutthroat and under significant pressure,” but emphasized that the transformation “has actually generated meaningful benefits for us with IKEA.” The Taiwan facilities have shifted from high-volume manufacturing toward “higher value-added products, or strengthening full-customization supply capabilities,” with the next phase of high-volume manufacturing focused on Vietnam.
U.S. sales account for approximately 85% of revenue, with Europe at roughly 11% to 12%. To shorten local supply lead times, Ching Feng added a second customization warehouse and facility in the U.S., but progress has lagged expectations. Chang admitted during the call: “We are indeed somewhat behind schedule. Due to local government regulations and administrative efficiency, we didn’t complete the full handover of the new facility from the landlord until May.” He estimated that “meaningful contributions should only begin to materialize after year-end.”
Financial Health: The Truth Behind the Deteriorating Current Ratio
At the earnings call, Chang spent considerable time explaining the striking figures on the balance sheet. As of June 30, 2026, Ching Feng’s debt ratio stood at 70%, current ratio at 125%, and quick ratio at 85% — a notable deterioration from historical levels.
“The primary reason is that we have a syndicated loan maturing in January next year, so starting from January this year, it was reclassified into current liabilities as long-term debt due within one year.” Chang stressed that this is an accounting classification issue, not operational deterioration.
The more critical turning point came on September 10: Ching Feng completed a new syndicated loan agreement, expanding the facility from NT$3 billion (approximately $94.4 million) to NT$4.4 billion (approximately $138.4 million), with interest rates and fees “significantly reduced.” Chang stated: “For those of you who have been observing changes in the capital markets recently, we completed this at a relatively opportune time.” He explicitly expects that “starting next quarter, i.e., Q3, the current ratio and quick ratio should return to a relatively healthy state.”
Strategic Retreat in the Blanket Business
Compared with the aggressive expansion in the curtain business, the handling of the blanket business reveals management’s pragmatism and discipline. Chang disclosed that blankets encountered “relatively significant turbulence” after last year’s tariffs, with notable sales volatility over the past few years. Looking at 2025 figures in original currency terms, “curtain sales in original currency actually grew,” and one of the main reasons for the decline in NT-dollar revenue was the drop in blanket sales.
Faced with this situation, Ching Feng made a structural decision: rather than building out a complete blanket supply chain on its own, the company will strengthen its Vietnam-based local supply through strategic alliances. Chang explained: “We are not aggressively pursuing so-called low-price orders. Instead, we are thinking more about how to optimize — or even transfer — the business model we have built in curtains to the home textile market.”
The 24-Hour Shipping Arms Race
One number that recurred throughout the earnings call was “33 hours” — Ching Feng’s current e-commerce order-to-shipment time, with a target of under 24 hours. Chang’s logic is straightforward: “Consumers on e-commerce platforms expect shorter waiting periods. The shorter the wait, the faster the demand is fulfilled, reducing the likelihood of them changing their minds.”
Supporting this goal is a shift in U.S. warehousing and cutting strategy. Currently, over 95% of Ching Feng’s North American orders require cutting. The company plans to maintain inventory of best-selling sizes, supplied directly by high-volume production from Taiwan and Vietnam, “trading warehousing costs for local labor costs” while simultaneously accelerating shipping speed.
Housing Market, Tariffs, and Management’s Conservative Stance
Facing external concerns about the U.S. housing market and interest rates, Chang maintained his characteristic caution. His view: the retail and e-commerce markets Ching Feng targets are “mostly DIY customers and renovation customers,” whose correlation with new housing starts is “not absolute.” However, inflation has indeed caused a crowding-out effect on consumer spending, with customers “almost certainly benefiting from down-specification, and possibly reconsidering price-point management.”
Regarding the knock-on effects if new housing starts are disrupted, he acknowledged that the professional market would also be affected, but emphasized that current professional market clients are MRO (maintenance, repair, and operations) in nature — “not just new construction, but also maintenance and renovation work.” “From Ching Feng’s perspective, we view this matter with equanimity.”
Overall, management deliberately tempered expectations for the outlook. Chang stated at the outset: “Since the company is still in a build-out phase, the focus of this earnings call will be to report on the results of the past two quarters. Regarding the outlook, we will be relatively conservative.” He explicitly noted that “retail sales momentum does not appear to be strengthening in the near term,” and the company’s expectation is to take the information and products observed in the e-commerce market and push for listings in retail channels.
Analyst Focus: Competitive Moat of the ODM Transformation
During the Q&A session, analysts’ attention centered on the competitive barriers of Ching Feng’s shift from OEM to omni-channel ODM. Chang’s response revealed the company’s information asymmetry advantage: “We have gone from e-commerce to brick-and-mortar, and now increasingly we are bringing e-commerce insights to customers for their consideration on whether to introduce such products. At the same time, through the information we collect, we are beginning to influence the professional market.”
He used Lowe’s as an example to illustrate supply depth: the customer has expanded from retail into e-commerce in recent years and is now building a professional market team, allowing Ching Feng to “supply one product across three channels.” If retail channels push fixed-size products, they are sourced through Lowe’s warehouse scheduling; rapid customization orders go to the U.S. subsidiary; and full-customization solutions are supplied from Taiwan.
“The influence of services plus manufacturing is growing.” Chang used this to contrast with “peers that supply retail channels through high-volume manufacturing,” arguing that Ching Feng “has a relative first-mover advantage.” The company has begun building a “dedicated information-sharing platform” with professional market clients, aimed at helping customers understand that “Ching Feng has the capability to provide more market intelligence for their reference — whereas in the past, they may have made independent judgments.”
Ching Feng Home Fashions’ transformation is accelerating. While management deliberately maintains a low profile, judging by the speed of the channel mix shift, this curtain manufacturer with over five decades of history has placed its bets for the future on information mastery and supply chain flexibility — not merely on manufacturing scale.
Once added, BigGo Finance appears first in Google Search Top Stories, so you get the broadest, most up-to-the-minute, and most comprehensive global financial news first.
