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Nanfang Communication 2016 Total Revenues Hit Record High with 31.5% Growth
Profit Increased Rapidly by 38.6% driven by demand in Optical Fibre Cable Market
HONG KONG, Mar 27, 2017 - (ACN Newswire) - Nanfang Communication Holdings Limited, ("Nanfang Communication" or the "Company", stock code: 1617), a well-established optical fibre cable supplier in the PRC, is pleased to announce the annual results of the Company for the year ended 31 December 2016 (the "year").
In 2016, the Company's total revenue hit a record high by achieving approximately RMB805.9 million (2015: approximately RMB612.6 million), representing an increase of approximately 31.5% over that of last year. In 2016, the Company accomplished profit and total comprehensive income for the year of approximately RMB100.0 million (2015: approximately RMB72.2 million), representing a notable increase of approximately 38.6%. During the year, the Company's revenue, profit margin and profit attributable to equity shareholders for the year have both recorded a rapid growth. For the year ended 31 December 2016, the major PRC telecommunications network operators have commenced their large-scale construction on telecommunication infrastructure, which resulted in a booming demand in the optical fibre cable market in the PRC. Consequently, the Company has been awarded more orders from the major PRC telecommunications network operators, benefited from the long-established relationship and strategic cooperation with them, which led to a significant increase in the Company's revenue.
During the year, the gross profit has achieved double-digit growth, mainly contributed by the commencement of Jiangsu Yingke Communication Technology Company Limited ("Yingke")'s production in late 2015, the Company has increased its production capacity and thus has reduced engaging subcontractors for the production of optical fibre cables. The subcontracting fees have thus decreased significantly. In addition, the achievement of economies of scale has lowered the production cost and enhancing the Company's overall production efficiency. On the other hand, the Company has increased sourcing optical fibres, which is the major raw material for production of optical fibre cables, from Jiangsu Nanfang Optic Electric Technology Company Limited ("Nanfang Optic"), a company in which the Company currently holds 49% shares. The close relationship between the Company and Nanfang Optic enable the Company to better manage the quality and cost of the optical fibres, which in return has led to a competitive cost structure of the Company's optical fibre cable products.
In 2016, the "Broadband China" Strategic Implementation Plan and the Twelfth Five-Year Plan of the communication industry were major drivers that generated investments in network construction and upgrades of the broadband telecommunications networks and infrastructure, all of which drove demand for optical fibre cables. In 2017, the "Broadband China" Strategic Implementation Plan and "Internet Plus" initiative are still continuing. Together with the launch of Thirteenth Five-Year Plan of the Communication Industry, these government policies and plans will accelerate the integration of information and communication technologies and industry, as well as promote industrial upgrade, therefore will stimulate high-speed broadband network infrastructure construction because optical fibre cables would be used for the construction of the broadband network. As a result, we expect that the demand for optical fibre cables in 2017 in the PRC will remain promising as to promote the development of the optical broadband and wireless broadband mobile communications.
Mr. Shi Ming, the CEO and Executive Director of Nanfang Communication Holdings Limited, said "2016 was the first financial year the Company listed on the Stock Exchange and marked a milestone for the Company in improving its capital strength and corporate governance as well as enhancing its competitive edge, which laid a solid foundation for the Company's future development. With experienced and dedicated management team, the Company's operating expenses have been well managed and have increased moderately in line with the growth in the production capacity and revenue. This resulted in a significant improvement of profit attributable to equity shareholders of the Company for the year ended 31 December 2016. In 2017, we will focus on land acquisition and relevant government approvals and/or permits application to execute and implement our production capacity expansion plan and to make sure that our expansion plan can be completed on schedule so as to further expand in the PRC market and enhance our market penetration in the PRC to capture the potential growth and market opportunities. Our strategic goal remains unchanged, and through the following strategies: (i) increase market share and penetration in the PRC, promote our brand and brand awareness in the PRC and continue to increase our production capacity; (ii) strengthen our product research and development capabilities and optimise our product offerings to capture emerging industry growth potentials; (iii) further vertically integrate our optical fibre cable production value chain with the upstream production of key raw materials; and (iv) establish integrated business management information system, to enhance our competitive leading position in the optical fibre cable market in the PRC, enhance our market share and provide fruitful returns to our shareholders."
About Nanfang Communication Holdings Limited
Nanfang Communication Holdings Limited is a well-established optical fibre cable supplier with a wide range of optical fibre cables. The Company was No. 10 optical fibre cable supplier to the communication type optical fibre cable market in the PRC in 2015 in terms of sales volume, whose market share was 3.2%. The Company's customers are mainly telecommunications network operators and telecommunications supporting service providers in the PRC. Nanfang Communication has maintained business relationships of between nine and 11 years with the Major PRC Telecommunications Network Operators. Nanfang Communication was awarded ISO 9001:2008, ISO 14001:2004 and TL9000 certificates in relation to manufacturing of optical fibre cable products and was recognised by the Science and Technology Department of Jiangsu Province in the PRC as a high and new technology enterprise in 2016. The research and development department was recognised as one of the provincial recognised enterprise technical centres. The Company has obtained 54 domestic patents, including 11 invention patents and 43 utility model patents. The two main production sites, Wu Jin Factory and Jin Tan Factory, have reached an aggregate annual production capacity of 10.3 million fibre kilometres.
Source: Nanfang Communication Holdings Limited
Sectors: Telecoms, 5G, Daily Finance, Daily News
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