Tongda Group Achieves Remarkable Results in 2015

Mar 17, 2016 00:35 JST

Source: Tongda Group

Turnover Rises by 26.8% to HK$6,074.1 Million;
Net Profit Increases by 40% to HK$702.8 Million

HONG KONG, Mar 16, 2016 - (ACN Newswire) - Tongda Group Holdings Limited ("Tongda Group" or the "Group") (stock code: 698) announced its annual results for the year ended 31 December 2015.

As a world-leading one-stop solution provider of high-precision components for smart mobile communication products, during the year, the Group benefitted from the brand effect of the smartphone market in China, resulting in a substantial growth in income of major handset customers. Revenue grew by 26.8% to HK$6,074.1 million, gross profit increased by 32.2% to HK$1,512.0 million, while profit attributable to owners of the Company rose by 40% to HK$702.8 million. Overall gross profit margin and net profit margin increased from 23.9% and 10.5% to 24.9% and 11.6%, respectively. Earnings per share grew by 33.5% to HK12.60 cents.

For the Year, the Board recommends the payment of a final dividend of HK2.1 cents per share (2014: HK2.0 cents). Together with the paid interim dividend of HK1.6 cents per share, the total dividend for the Year will amount to HK3.7cents per share (2014: HK3.0 cents).

The Group has maintained its sound financial position. On 31 December 2015, the balance of pledged deposits and cash and cash equivalents was HK$936.0 million (31 December 2014: HK$477.6 million).

Mr. Wang Ya Nan, Chairman and CEO of Tongda Group, said, "As metal handsets casings rapidly gained penetration from high-end markets to mid-range markets, the Group's handset casing products continued to be transformed and upgraded during the year, successfully seizing market opportunities in the metal components segment. The Group also implemented technical advancements and enhanced the automated production process, which boosted the Group's revenue and profit to achieve remarkable results. As the market demands products with stringent requirement and technical barriers are constantly enhanced, leveraging the Group's innovative and advanced technologies and its potent integration capabilities, we will devote more resources to technical advancement and R&D. This will allow the Group to increase its market share in order to propel the Group to the next level."

Business Review
The Group's Electrical Fitting Division consists of three business segments, namely handsets, electrical appliances and notebook computers. During the year under review, overall revenue increased by 31.4% to HK$4,780.3 million (2014: HK$3,637.0 million), accounting for 79% of total revenue. In addition, the Group also possesses an ironware parts division, communication facilities and other businesses.

Handsets
The Group seized market opportunities in respect of metal components during the year, driving turnover to surge by 53.7% from HK$2,415.0 million in 2014 to HK$3,712.5 million, representing 61% of total turnover.

The Group's major handset clients includes various domestic and international brands, namely Huawei, Xiaomi, OPPO, Asus, Coolpad, Vivo etc.. These companies have mainly focused on metal handsets and peripheral fittings during the year. With increasingly stringent requirements of metal handset casings, the Group's diversed metal treatment solutions can be applied to metal handsets in different price ranges. Of which, Nano Molding Technology ("NMT") has already been widely applied by clients to manufacture metal casings. This technology has generally been used in mid-end handsets with high price-performance ratio. With strong foresight, the Group has also developed capacity of Computer Numerical Control ("CNC") machines and, at the same time, conducted R&D of metal stamping/ forging technology in order to shorten CNC processing time. Composite die-casting technology is used in the processing of metal middle frames, and technologies including Metal Injection Molding ("MIM") are applied in the production of metal precision components.

Furthermore, the Group also developed its precision rubber parts business during the year. This product has excellent sealing, waterproof and insulating properties, providing well protection to electronic components in the handsets. With this product, the Group expects to extend its reach to the supply chains of reputable international customers, or provide one-stop supply of a wide variety of components incorporating this product, which will enhance its overall competitiveness.

Electrical Appliances
Revenue of the electrical appliances business accounted for 10% of total turnover, amounting to HK$587.5 million. The Group's major customers include China's well-known household electrical appliance brands, namely Haier, Gree and Midea, and the products include panels for high-end air-conditioners, refrigerators, washing machines and rice-cookers. During the year, there was slight decline in our overall performance, which was attributable to the weak demand for domestic household electrical appliances. In view of this, the Group actively expanded into overseas markets during the year. Other than existing customers, such as Panasonic, Zojirushi, Electrolux and DYSON, the Group has also become a qualified supplier of General Electric and Whirlpool, taking an important step towards the US market.

Notebook Computers
Due to the divestment of a customer from international market in the second half of 2014, revenue from notebook computers division decreased to HK$480.3 million, which accounted for 8% of turnover. During the year, the Group secured orders for high-end products from major clients like Lenovo, and orders from other international brands such as Fujitsu, Toshiba and NEC had become stable. In addition, the Group proposed the spin-off of the notebook computer and tablet segment so as to concentrate its resources in the development of handset-related core business.

Ironware Parts, Communication Facilities and Other Businesses
Revenue of the ironware parts division for the year was HK$471.9 million, which represented 8% of turnover. Revenue of the communication facilities business was HK$821.9 million, up 76.1% from HK$466.6 million last year.

The Group had already commenced the development of the automotive interior decoration business three years ago. After two years of customers' recognition and trial production, the Group has officially become a supplier of a substantial amount of automotive interior decorations to Ford and BYD last year and secured numbers of new orders from various automotive brands, such as General Motors, Mazda and Geely Auto.

Percentage of total revenue by types of product for the year ended 31 December 2015 and a comparison with 2014 are as follows:

                                               2015	2014
Electrical Fittings Division                    79%     76%
i. Handsets                                     61%     51%
ii. Electrical Appliances                       10%     12%
iii. Notebook Computers                          8%     13%
Ironware Parts Division                          8%     14%
Communication Facilities and Other Business     13%     10%

Business Prospects
During the year, with global economy clouded by uncertainties, the growth of global handset shipments slowed down. Leveraging their advantage of outstanding cost-performance ratio, the performance of renowned handset brands from Mainland China outpaced competitors within the industry. The Group anticipates a continuous increase in the penetration rate of the domestic handsets in the global market. As a supplier possessing advanced and innovative technologies, strong integration capability, and products with high cost-performance ratio, the Group has been benefited from new opportunities arising from the popularity of the 4G market. It will strive to gain a larger market share amid intensive industrial integration.

The Group will devote its efforts to improving the quality and production efficiency of metal casings for handsets and will maximize its penetration of existing clients by delivering high quality, stable and reliable products. Keeping abreast of the market dynamics through application and research of new technologies, new materials and new craftsmanship, as well as strengthening the compatibility of components, the Group will be able to rise above fierce industry competition. Besides, the Group will proactively explore the household appliance market in the United States and seek for new impetus for further development.

The automotive market in China is the key target of the Group in mid-to-long term. In view of the high development potential of new energy-driven automobiles, internet of vehicles and connected mobility, the Group will endeavor to develop interior decorative components for automobiles so as to further expand client base in the automobile industry. The Group expects to explore all-around cooperation amid localization of joint venture brands and the anticipated increase in domestic revenue of automobiles.

Mr. Wang concluded, "Looking ahead, the Group will maintain its focus on the development of handset casings. We will also develop new businesses with potential, such as the precision rubber parts and automotive interior decoration business to promote the diversified development of the Group. We will continue to optimize quality control, production and operation, research and development, and will strive to enhance our overall competitive advantages through more automatic, intelligent, standardized and optimized production and quality, enabling us to meet the challenges and opportunities in the future."

Contact:

Strategic Financial Relations Limited
Vicky Lee   Tel: 2864 4834  Email: vicky.lee@sprg.com.hk
Angela Ng   Tel: 2864 4855  Email: angela.ng@sprg.com.hk
Angel Li    Tel: 2864 4859  Email: angelok.li@sprg.com.hk
Fax: 2527 1196

Source: Tongda Group
Sectors: Daily Finance, Daily News