Dapai International Holdings Co., the manufacturer of backpacks in China, posted RMB372.9 million ($72.1 million) of revenue for 3Q2010, a 17.7% y-o-y decrease. Net profit fell 45.2% to RMB27.8 million.

The drop was mainly due to the decrease in sales of luggage products because two major suppliers were unable to meet orders due to labour shortage problems; and the special discounts on backpack products given to distributors to compensate them for their loss.

During 3Q, ASP for backpacks decreased 16.0% y-o-y to RMB65.3 per unit although number of sold units increased 101.2% to 5.1 million. ASP for luggage rose 7.6% to RMB203.2 per unit with 187,000 units sold, down 86.2%.

Gross profit decreased 26.6% y-o-y to RMB94.4 million in 3Q2010. The drop was attributable to the decreases in revenue and a lower overall gross profit margin.

In order to ensure a steady luggage supply in the long run, Dapai has entered into an agreement to acquire a piece of land in Bengbu City, Anhui Province, to construct a new luggage manufacturing plant with an estimated designed capacity of four million pieces of luggage per annum. The land was purchased for a of RMB110 million and the group targets to complete the new manufacturing facility by 4Q2011 or 1Q2012.

On the short to medium term measures, the group has engaged other new luggage suppliers and manufacturing a number of their own luggage products in house, to partially reduce the impact of the current luggage supply issue.