Friday, March 29, 2024
 
Columnist
Martin Hennecke
 
CAPXON INT'L
HKEx Stock Code : 00469 
 
Corporate Profile
Principally engaged in the production and sales of aluminum electrolytic capacitors and aluminum foil, the major raw materials for the manufacturing of electrolytic capacitors.

Business Review - For the year ended December 31, 2012

Manufacture and sale of aluminum foils

During the Year, after satisfying internal production demand, external sales of aluminum foils amounted to approximately RMB190,553,000, representing a decrease of approximately 31.58% as compared to that of RMB278,518,000 in the same period last year. The share of aluminum foils in the Group's total external sales decreased from approximately 24.88% in the same period last year to approximately 19.62% this Year.

During the Year, the global structural recession, sluggish demand from Japan, European and US markets, weak consumption power and consumer sentiment had dragged down the market demand for endproducts, which in turn caused a decrease in the market demand for upstream raw materials. Since there was a drop in the production volume of aluminium foils, a rise in unit cost and a reduction in the selling price of products, gross profit was affected by the higher cost but lower selling price. Coupled with the fact that the benefits of factory relocation have yet to be realised and the loss in foreign exchange, the Group incurred loss for the Year. Only by leveraging on its ever refining production and processing technology and relatively low electricity tariffs can the Group control its production cost and mitigate the decrease in gross profit.

Aluminum foils are the major raw materials of capacitors, thus a high quality of which is required. The Group has positioned the high quality formed foils as a major product in its sales strategy to, firstly, provide adequate high quality raw materials for the Group's own production of capacitors so as to lower the production costs and control product quality; and secondly, sell to both domestic and overseas manufacturers of capacitors. Not only can the Group develop customized aluminum foils in accordance with customers'' requests, it also understands the market demand and is able to enhance its own research and development capacity through mutual cooperation.

The Group has excellent production processing technologies for formed foils and stable production capacity. Currently, the ultra-high voltage formed foils have been fully put into mass production, and the research and development for capacitance improvement in medium-high voltage etched foils have also achieved its goal. The production line of formed foils in Qinghai Xining Plant operated in full swing this year as scheduled. The key technical research and development of high capacitance formed foils has also achieved the expected goal. The production capacity of formed foils would not merely satisfy the Group''s internal demand but would also be sufficient to persistently meet the needs of other capacitor manufacturers. As far as production costs control is concerned, the Group has, on the one hand, entered into agreements with its main suppliers to lower its raw material acquisition price and, on the other hand, developed innovative technology, enhanced production techniques and implemented energy-saving and consumption reduction measures to reduce production costs.

Manufacture and sale of capacitors

External sales of aluminum electrolytic capacitors during the Year were approximately RMB780,422,000, representing approximately 80.38% of the Group's total external sales and an increase of approximately 5.26% from the same period last year, as the external sales of aluminum electrolytic capacitors for the same period last year accounted for approximately 75.12% of the Group's total external sales.

In light of the multi-tasking requirements for electronic products, the Group strives to advance its capacitor production technology. The Group's aluminum electrolytic capacitors offer a comprehensive range of size and specifications, and are characterized by features such as long life, high capacitance, low impedance, energy-saving, high temperature resistance and high voltage tolerance. For example, we offer small-sized high voltage capacitors and conductive polymers to satisfy the demand arising from the use of small chargers in the smart phone market; we shorten the trial production process for the custom-made SMD electrolytic capacitors and conductive polymers, the required components of the relevant adapter of LED television sets and monitors, in order to enhance our competitiveness; we advocate the use of mass production equipment for the industrial PSU large-sized SMD capacitors and client server as an alternative to the traditional liquid capacitance, application of network products in cloud system, and high voltage slim type capacitors and conductive polymers which are required by the relevant wireless router clients etc, and we have already completed the equipment test and will concurrently undergo trial runs on new machine types; as for other industries like voltage-inverter, mobile power supply and charger, we directly contact clients from the relevant brands and the system vendors and actively promote the sales of the relevant capacitors; we have also completed setup of highly reliable testing equipment for capacitors for use in automobiles. It is believed that the enhanced basic specifications of general products in the future can help to improve application conditions and service life reliability.

Green production mechanism

Restriction of Hazardous Substances Directive 2002/95/EC (¡§RoHS¡¨) is an environmental protection directive enacted by the European Union in 2003 which came into effect in July 2006. It principally regulates the standards of the raw materials and production process used in electronic products. As far as the examination of the composition of raw materials and the overall production process are concerned, the Group has installed the relevant equipment and apparatuses to support quality control management so as to ensure compliance with the requirements of the RoHS. In addition, in full compliance with the SVHC (Substances of Very High Concern) and halogen-free regulations, the Group has shouldered environmental protection responsibilities, thereby winning the trustworthiness of its clients and creating new opportunities for green business.

Business Outlook - For the year ended December 31, 2012

Pursuing sustainable operations and sharing profit with shareholders of the Company (¡§Shareholders¡¨) have always been the goals of the Group. In the future, the Group will persistently focus on the existing industry and seek vertical integration on the manufacturing and marketing of aluminum foil and capacitor products. We strive for excellence and focus on innovative research and development. Leveraging on our edges of vertical integration, we will effectively control costs and enhance manufacturing efficiency, in order to maintain our competitiveness in the industry. With the technological advancement and product innovation, we will serve and maintain a stable relationship with existing customers. The Group will proactively explore new markets and meet mass production planning, and develop towards the target of economies of scale.

The Group will adhere to its mission of sustainable operations, enhance the efficiency of industry vertical integration, overcome the challenges of economies of scale as well as stabilize the value and revenue from the industry, in order to use profit to reward Shareholders for their support.

Source: Capxon Int'l (00469) Annual Results Announcement
Chairman Lin Chin Tsun Issued Capital (shares) 845M
Par Value HKD 0.1 Market Capitalisation (HKD) 149M
 
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