Thursday, March 28, 2024
 
Columnist
Martin Hennecke
 
TONGDA GROUP
HKEx Stock Code : 00698 
 
Corporate Profile
Principally engaged in (a) produces accessories for electrical appliance products; (b) supplier of metallic casings and other ironware parts for electrical and electronic appliances; (c) a supply of electronic components and the trading of electrical appliances.

Business Review - For the year ended December 31, 2012

(a) Electrical Fittings Division

The Group devoted efforts to expand its own IML (¡§In-mould Lamination¡¨) and IMD (¡§Inmould Decoration¡¨) technological application and constantly enhanced its scientific research capability to meet consumers' increasing demand for high-tech products. In view of the increasing demand for high value-added electrical fittings products and casing products with functions and decorations on the market, the Group launched more high quality products to further expand customer base. For the Year, casings and parts maintained satisfactory growth, which resulted in a 6.0% growth in revenue of the electrical fittings division to HK$2,813,423,000 (2011:HK$2,653,549,000), representing 83% of the total turnover.

i. Handsets

Turnover of the Group's handset business increased by 9.5% to HK$1,556,058,000 from HK$1,420,412,000 last year, representing 55% of the turnover in the electrical fittings division. For the Year, the global sales of smartphones still maintained a rapid growth, and with the wider recognition and increasing market share of domestic handset brands in the international market, the Group strengthened its cooperation with renowned mobile phone manufacturers such as ZTE and Huawei, which drove up the orders of handset highprecision casings and casings with embedded structures. The Group has discerned the market opportunities and successfully deepened the relationship with customers through strengthening the combination of handset's decorative and the functional components and timely developed and launched more high value-added products. For the Year, our major renowned-brand customers include Huawei, ZTE, Nokia, TCL, Lenovo and other rapidly growing domestic brands. Utilising our high-tech and creative design, the Group selected to complement for the high-end handset models to enhance profit margin.

ii. Notebook Computers

During the Year, the Group's notebook computer business recorded an increase of 23.6% in turnover from HK$449,179,000 last year to HK$555,040,000, representing 20% of the turnover of the electrical fittings division. As one of the preferred component suppliers of notebook computers of Lenovo, a worldwide renowned computer brand, the Group benefited from the further increasing market share of the brand in global computer market, and orders from the brand posted a satisfactory growth. For the Year, the Group also took advantage of its leading technology to launch other products of notebook computer components, such as casings of portable hard disk and mouse, to expand its revenue base. Meanwhile, the Group committed to apply IML and IMD printing technology to research and develop quality metal casings and fittings. The Group continued to maintain close cooperation relationship with other notebook computer customers and partners, including Dell, HP, Toshiba, NEC and Taiwan's top four computer manufacturers, namely, Asus, Acer, Quanta and Compal. In addition to the increasing in Lenovo's market share, the Group also actively supplied high-precision components to enjoy higher average price and gross profit of products. For the Year, the average price of products rose in line with the popularity of metal casings.

iii. Electrical Appliances

In the first half of 2012, the weak performance of domestic real estate market and the absorption of the accumulated stock of electrical products customers substantially dragged the sales of electrical products. Fortunately, the situation improved in the second half, which mitigated the impact on the electrical products business of the Group. The segment turnover for the period decreased by 10.4% to HK$702,325,000 (2011:HK$783,958,000), accounting for 25% of the total turnover of the electrical fittings division. The Group kept long-term cooperation relationship with domestic leading electrical appliances brands, including Midea, Haier and Gree, and produced components for high-end electrical appliances, such as glass for touch screen and casing of appliance composed of plastic, so as to ensure the Group's leading position in the decorative and functional casings business of high end electrical appliances'.

(b) Ironware Parts Division

Through technology innovations and more efficient use of resources, the Group focused on producing aluminum parts with various surfaces effects and high-precision metal components. Due to the increase in product categories and the replacement of plastic casings of some electrical appliances by metal casings, segment turnover increased by 30.5% to HK$491,631,000 (2011:HK$376,865,000) year on year.



The Communication Facilities Division of the Group which focuses on the production of satellite TV receivers and set top boxes, posted a decrease of 11.7% in turnover to HK$103,037,000 (2011: HK$116,705,000) for the Year.

Business Outlook - For the year ended December 31, 2012

Despite that the global economy still faced uncertainties, the growth of China's economy was relatively stable and medium and high-end consumer electronics products had considerable development potential. With the success of its strategic business deployment, the Group will continue to focus on smartphone, notebook computer and tablet computer business and expand its high value-added product portfolio, and become a one-stop service provider of casing products with functional components and decorations. Meanwhile, the Management will follow the principle of fiscal prudence and proactively consolidate operational strength, which will enable the Group to maintain a long-term and stable growth of business performance amid the increasingly complicated operational environment.

For smartphones, the Group will continue to increase investment in research and developing new technology and products and the direction will be on ultra-thin and functional components. In order to seize the market opportunities and complement the development of leading handset brand customers in domestic 4G (the 4th generation wireless communication system) handset business, the Group has initiated the development of Laser Direct Structuring technology applicable to 4G mobile equipment. Related products are expected to be put into trial production at the end of this year and commercial production will commence next year. According to iHS Suppli, it is expected that handset users using 4G LTE in the world will increase to 744 million in 2015 which will create huge demand for handsets. As the shipment of smartphones in the world and China is continuously growing, renowned handset brands all to the prospects of the market, which reflects ample business opportunities in the smartphone market.

For notebook computers, the development trend of the Group will be towards the integration of ultra-thin and functional components while metal coating and other metal effects will be the new key area for research. In addition, the Group will devote particular effort to promote the application of core technology of IML to other computer-related products. As there is an improving sign of electrical appliance market and the central government offers environmental protection and energy saving allowances, we are positive on the prospects of electrical appliance business. In view that the casings of electrical appliances (such as rice cookers, air-conditioners and washing machines) will follow the development trend of handset and notebook computer casings and heading towards the use of components with advanced functions and equipped with high-end ironware casing, therefore, the Group will take full advantage of the synergy of each business division to raise further the overall efficiency of the production line.

The Group remains optimistic about its business performance for the coming year. The Management will continue to adopt the formulated business strategy, keep abreast of the market requirements and actively seize opportunities related to potential high-end consumer electronics products. We will maintain our advantages in advanced technology and craftmanship, diversified high value-added product portfolio and flexible and effective integration of production lines, and reward the Group with greater profit. In addition, we will be committed to maintaining a healthy financial position and continue to strengthen good relationship with banks for more favorable financing terms to support our future expansion plan. The Group will always maintain a stable dividend policy and bring longterm and greater returns for shareholders.

Source: Tongda Group (00698) Annual Results Announcement
Chairman Wang Ya Nan Issued Capital (shares) 4,859M
Par Value HKD 0.01 Market Capitalisation (HKD) 2,308M
 
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