– Turnover Grows 28.8% to HK$7,825.1 Million;
– Net Profit up by 42.8% to HK$1,004.0 Million
HONG KONG — Tongda Group Holdings Limited (“Tongda Group” or the “Group”) (stock code: 698) today announced its annual results for the year ended 31 December 2016.
During the Year, as a world’s leading solutions provider of high-precision components for smart mobile communications and consumer electronic products, the Group benefited from its major customers increasing their market shares, and its ability to stay abreast of metal casing trends, allowing it to achieve a 28.8% growth in total turnover of the Group to HK$7,825.1 million. Gross profit increased by 24.7% to HK$1,885.4 million and net profit attributable to shareholders amounted to HK$1,004.0 million, representing a year-on-year growth of 42.8%. Gross profit margin and net profit margin were 24.1% and 12.8% respectively. Basic earnings per share rose by 38.9% to HK17.50 cents.
The Board declared a final dividend of HK3.2 cents (2015: HK2.1 cents) per share, representing a dividend payout ratio of 30%.
The Group has a solid financial position. As at 31 December 2016, it had cash and cash equivalents and pledged deposits balance of HK$1,131.2 million (31 December 2015: HK$936.0 million).
Mr. Wang Ya Nan, Chairman and CEO of Tongda Group, said, “The year 2016 was an encouraging year, during which major customers of the Group archived excellent performance in the handsets market. Partnered with these customers, the Group consistently shown its ability in the design of precise molds, quality metal treatment technologies and craftsmanship in diverse surface decoration. During the Year, the Group enhanced the production capacity for metal casings and gave its best effort in delivering exterior parts of handsets to customers.”
Business Review
The Group’s electrical fittings division consists of three business segments, namely handsets, electrical appliances and notebook computers. During the Year, overall revenue of the division increased by 34.7% to approximately HK$6,439.3 million (2015: HK$4,780.3 million), accounting for 82.3% of the Group’s total turnover. The other operations of the Group are the ironware parts division, communication facilities and other businesses.
Handsets
During the Year, at the rapid growth of major customers’ shipments and the speed up of market penetration of metal casings, revenue of the segment increase by 44.7% from HK$3,712.4 million in the same period of 2015 to approximately HK$5,371.4 million, making up 68.6% of the Group’s total turnover.
The Group joint forced with its major customers to offer metal handset casings for various flagship handsets and mid-range-to-high-end handsets. It has also extended its customer base to a leading international brand for whom the Group manufactures Liquid Silicone Rubber (“LSR”) and precision rubber molding parts. In addition, the Group expects that mid-range-to-high-end handsets are likely to adopt the solutions which apply back covers made of 2D/2.5D/3D glass, ceramics or other materials with metal middle frames, so as to solve the problem of signal shielding. The Group has developed the technology of 3D glass surface processing, coupled with advanced technologies in areas such as vertically integrated metal forging technology, Nano Molding Technology (“NMT”) and CNC processing, and the techniques necessary for casing processing. Techniques also include anodic oxidation, painting and polishing, so as to pave a path for future growth.
Electrical Appliances
Turnover of the electrical appliances business for the Year amounted to HK$599.0 million, representing 7.7% of the Group’s total turnover. The Group mainly focuses on offering casings and panels with trendy designs for high-end household appliances such as air-conditioners, refrigerators, washing machines and rice-cookers, as well as manufacturing sensors for the panels. Its major customers included Haier, Gree, Midea, Panasonic, Zojirushi, Electrolux, General Electric and Whirlpool.
Notebook Computers
Turnover from notebook computers for the Year amounted to HK$468.9 million, representing 6.0% of the Group’s total turnover. This business mainly involves the production of ultrabook and tablet casings made of precision metal and plastics. During the Year, the Group proposed to spin-off the notebook computer and tablet casing segment so as to focus its resources on developing its handset-related core business.
Ironware Parts, Communication Facilities and Other Business
Turnover of ironware parts for the Year was HK$524.3 million, representing 6.7% of the Group’s total turnover. Turnover of communication facilities and other business increased to HK$861.4 million, representing 11.0% of the total turnover.
The communication facilities and other business offers a wide variety of products, mainly including auto motors, digital satellite TV receivers, plastic set top boxes casings, durable household goods and sports equipment. The Group’s automotive business maintained substantial growth last year. In addition to BYD and Ford, new customers secured during the Year included Geely Auto, Mazda, General Motors and Wuling Motors etc. The Group hopes the segment will become a growth driver of its business in the future.
Percentage of total revenue by product types for the year ended 31 December 2016 and comparison with the corresponding period of 2015 are as follows:
2016 2015 Electrical Fittings Division 82% 79% i. Handsets 68% 61% ii. Electrical Appliances 8% 10% iii. Notebook Computers 6% 8% Ironware Parts Division 7% 8% Communication Facilities 11% 13% and Other Business
Prospects
Looking forward, the penetration rate of metal handset casings will keep rising, more low-to-mid-range handsets are going to pick casings with simple and clean designs, more mid-range-to-high-end handsets will switch to choosing solutions that entail the use of casings made of 2D / 2.5D / 3D glass, ceramics or other materials, and with metal middle frames. And, in the advent of new transmission modes such as wireless charging and 5G communications, the signal shielding characteristic of metal casings presents major challenges to antenna design. Thus, the Group has high hope that glass back casings will become a new trend.
As more and more domestic and international handset brands intend to introduce the waterproof feature to their products, the demand for metal parts and waterproofing components is expected to rise. The Group thus expanded its production capacity for metal casings during the Year, and will set up more plants in the coming year mainly for manufacturing metal parts. At the same time, it will also build a new plant dedicated to serving the leading international brand producing waterproofing components for it and also to meet potential new orders in the future.
With stable development of automotive market in PRC and increasing use of decorative parts, the automotive business is expected to be another growth driver of the Group. The Group will actively approach domestic and joint-venture automotive brands and strive to secure more customers and orders, so as to increase its market share. At the same time, it will continue to apply the advantages of its core technologies, In-Mold Lamination (“IML”) technology and surface treatment craftsmanship, to explore other potential businesses, aiming to optimize the synergy effect.
Mr. Wang concluded, “The Group will continue to focus on developing handset casing business and explore more new businesses with great potential to broaden its customer base and promote business diversification. On top of furthering development of existing businesses with competitive edges, we will also strive to consolidate customer relationships as well as enhancing the level of corporate governance. The Group has been awarded and recognized by customers, industry institutions as well as the capital market which demonstrate the recognition and encouragement in relation to the products’ quality and management level from the market and customers.”