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Revenue Increases by 21.0% to HK$1.14 Billion;
Net Profit Rises by 26.5% to HK$75.8 Million;
Adjusted Net Profit1 Surges by 86.8% to HK$70.4 Million
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HONG KONG, Aug 23, 2016 - (ACN Newswire) - Ten Pao Group Holdings Limited ("Ten Pao" or "the Group" ; stock code: 1979), a leading one-stop manufacturer of switching power supply units in China, has announced its unaudited interim results for the six months ended 30 June 2016 ("the Period"). The Group's revenue and net profit have both recorded significant increases in the first half of 2016.
During the Period, driven by the substantial rise in orders for switching power supply units for consumer and industrial products, the Group's revenue increased by 21.0% to HK$1,142.0 million (first half of 2015: HK$943.7 million) when compared with the same period last year. As a result, gross profit and gross profit margin increased to HK$221.6 million (first half of 2015: HK$148.5 million) and 19.4% respectively. Profit before tax also increased by 45.6% to HK$109.3 million (first half of 2015: HK$75.1 million) as compared with the same period last year. Profit attributable to owners of the Company has soared by 26.5% to HK$75.8 million. If the effect of derivative financial instruments, net of income tax, is excluded, the adjusted profit attributable to owners of the Company would soar by 86.8% to HK$70.4 million (first half of 2015: HK37.7 million). Basic earnings per share was HK 8 cents.
The Board has recommended the payment of an interim dividend of HK 2 cents per share.
Mr. Hung Kwong Yee, Chairman, Executive Director and Chief Executive Officer of Ten Pao, said, "Although the uncertain macroeconomic environment presented challenges to the market in the first half of 2016, our strong R&D foundation and efficient operations, together with an exceptional knowledge of manufacturing switching power supply units have enabled the Group to launch a number of new projects during the Period. These same attributes, combined with our strong relations with customers further allowed the Group to successfully secure more sales orders during the Period and record profit growth despite the difficult market conditions. With the view towards bolstering our operations, we launched a reform program during the period; consequently forging a strategic partnership with Hong Kong Productivity Council. The "Smart Production" project will enhance the flexibility of automatic production lines and work places; saving production time and enhancing production efficiency."
Business Review
Strong demand for switching power supply units leads to growth
Ten Pao's switching power supply units can be used in a variety of industries, as reflected by its application in such products as telecommunications equipment, media and entertainment equipment, electronic cigarettes, home electrical appliances and other products (LED lighting and health care products). Most of the products that the switching power supply units are incorporated into and/or applied to customers' end products under their own brands.
During the Period, mainly attributable to the increase in sales of switching power supply units to various customers, especially that of mobile phone customers, revenue from switching power supply units for consumer products increased by 15.6% to HK$841.7 million when compared with the corresponding period last year, thus accounting for 73.7% of total revenue. Gross profit of switching power supply units for consumer products increased to HK$151.4 million, while gross profit margin increased by 3.1 percentage points to 18.0%.
Significant growth in smart chargers and controllers mainly applied to power tools for industrial use
The revenue from smart chargers and controllers, which are mainly applied to power tools for industrial use rose by 39.5% to HK$300.4 million when compared with the corresponding period last year, accounting for 26.3% of total revenue. This was mainly driven by the substantial increase in sales order as major customers launched a number of new projects during the Period. Gross profit rose by 74.3% to HK$70.2 million compared with the same period last year, while gross profit margin climbed by 4.7 percentage points to 23.4%.
Enhance production efficiency in order to be fully prepared as the power supply industry enters the "Industrie 4.0"
Upgrading and transformation are vital for corporate development, and has always been the focus of the Group. The Group strives to increase its proportion of automation level and implement cyber-physical system. During the Period, the Group's strategic partnership with Hong Kong Productivity Council on "Smart Production" brought it in line with national strategic initiatives of the "Made in China 2025" and "Industrie 4.0". The reform project is based on automatic diagnosis, smart system design and production as the core. This will be achieved through the development of smart automatic equipment, in order to enhance the flexibility of automatic production lines and work places, achieve digitalisation of the production process and build a highly automated and efficient factory. Thus, it helps save production time and enhances production efficiency. The investment in the project is expected to amount to RMB200 million, which will be made during several phases and final configuration of the technology upgrade of about 20 to 40 production lines, depending on market conditions and market demand. Consequently, the Group will reduce its reliance on manpower and be able to promptly respond to changes in market demand.
Prospects
Looking ahead, the market for switching power supply units is promising as they have diverse applications and represent essential components of all daily electrical products. Spurred on by rapid advances in leading-edge technologies, the demand for ultra-fast chargers supporting different electric power voltages should further increase as well. In respect of electronic cigarettes, they are becoming increasingly popular, attracting more tobacco producers to enter the market and set up points of sale. The demand for electronic cigarettes is therefore expected to increase. Besides the aforementioned products, the Group has been actively engaged in the development of charging piles to capture the enormous opportunities presented by domestic electric vehicles. Currently, the charging stations for two-wheeled electric vehicles and golf carts are under development, and the Group plans to expand the scope of R&D to include four-wheeled vehicles in order to capture the enormous opportunities arising from the increasing popularity of electric cars and subsequently to promote the development of green industry. This project is expected to result in tremendous growth opportunities for the Group in the future.
The Group also aims to seize growth opportunities through the strategic expansion of production capacity. Its first overseas factory in Hungary is expected to commence operation in the second quarter of 2017. Its prime location, which is in close proximity to the Group's international customers, not only can effectively enhance its ability to address their needs, but also facilitate the Group's further exploration of emerging opportunities.
Ten Pao will actively support the national strategic initiatives of "Made in China 2025" together with "Industrie 4.0" as well. With the "Smart Production" reform being rolled out with Hong Kong Productivity Council, the Group envisages its production efficiency, lead-time, and product quality to improve notably. Besides, the Group plans to acquire new machinery and equipment to increase the automation level of production, further optimising product quality and achieving economies of scale.
Mr. Hung concluded, "In addition to consolidating our existing markets in China and other regions, we will leverage Ten Pao's innovative R&D and production capacity, explore potential opportunities for mergers and acquisitions in different markets, and further bolster production capacity with the aim of achieving higher growth and realising more business breakthroughs. We are fully committed to reinforcing Ten Pao's leading position in the switching power supply unit industry."
Contact:
Strategic Financial Relations Limited
Joanne Lam Tel: (852) 2864 4816 Email: joanne.lam@sprg.com.hk
Cecilia Shum Tel: (852) 2864 4890 Email: cecilia.shum@sprg.com.hk
Phoebe Li Tel: (852) 2864 4862 Email: phoebe.li@sprg.com.hk
Website: www.sprg.com.hk
Topic: Press release summary
Source: Ten Pao Group Holdings Limited
Sectors: Daily Finance, Daily News
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