Ten Pao Group Announces 2016 Annual Results
Revenue and Net Profit Set New Record Highs
Soar by 14.5% and 52.1% Respectively
Final Dividend of HK 3.5Cents
(Hong Kong, 8 March 2017) – Ten Pao Group Holdings Limited (“Ten Pao” or “the Group;” stock code: 1979), an industry-leading one-stop provider of smart power supply solutions, has announced its annual results for the year ended 31 December 2016 (“the Year”). The Group’s relentless efforts in product innovation, technology upgrade and customer expansion contributed to strong business results. Both its revenue and profit attributable to the owners of the Company set new historical highs.
During the year, benefitting from substantial increases in sales orders of smart chargers and controllers used for electric power tools and switching power supply units used for telecommunications equipment, as well as revenue derived from switching power supply units for lighting equipment, the Group’s revenue rose by 14.5% to HK$2,583 million (2015: HK$2,256 million) as compared to the preceding year. Gross profit and gross profit margin increasedsubstantiallyto HK$529 million (2015: HK$390 million) and 20.5% (2015: 17.3%) respectively. Profit attributable to owners of the Company soared by 52.1% to a record high of HK$194 million (2015: HK$128 million). Basic earnings per share were HK 19.4 cents (2015: HK16.7 cents).
As at 31 December 2016, the Group’s net current assets was HK$226 million and the current ratio was 1.23 times, reflecting that the Group has a sound financial position. The Board has recommended the payment of a final dividend of HK 3.5cents per share (2015: HK 2.0cents per share). Together with the interim dividend of HK 2.0cents per share paid, total dividends for the year were HK5.5cents per share, with a dividend payout of 28.3%.
Mr. Hung Kwong Yee, Chairman, Executive Director and Chief Executive Officer of Ten Pao, said, “As an industry-leading one-stop provider of smart power supply solutions in the PRC, we have strong R&D capabilities, complemented by a vertically integrated production model and enhanced by extensive experience accumulated over nearly four decades. We are able to seize opportunities presented by the major technology upgrade trend in electric power tools and telecommunications equipment. Consequently, the revenue of the two businesses grew significantly and profit attributable to owners of the Company surged by 52.1%, leading the Group’s business results to reach a new record high.”
Switching power supply units for consumer products – significant increase in orders of telecommunications equipment and lighting equipment
Ten Pao’s switching power supply units are applied to consumer products across various industry sectors, including telecommunications equipment, media and entertainment equipment, electronic cigarettes, electrical home appliances, lighting equipment and other products such as healthcare products. Most of its products are incorporated into and / or applied to its customers’ end products under their own brands.
Revenue from switching power supply units for telecommunication equipment, in particular smartphones, was outstanding. The strong demand for ultra-fast chargers and the continuous increase in smartphone shipments in the PRC have led to the substantial growth in orders from a famous smartphone brand in the PRC. Coupled with significant growth in the sales of switching power supply units for lighting equipment, overall revenue from switching power supply units for consumer products rose by 10.1% to HK$1,966 million, accounting for 76.1% of total revenue. Gross profit jumped by 31.4% year-on-year to HK$382 million while gross profit margin climbed by 3.1 percentage points to 19.4%.
Smart chargers and controllers for power tools for industrial use – gross profit margin growth of this segment exceeds overall growth of the Group
The Group’s strategy of broadening its customer portfolio began to bear fruit. Ithas secured new projects from existing customers and received large sales orders from certain recently developed customers. As a result, revenue from this segment jumped by 31.4% to HK$617 million. Gross profit soared by 47.4% to HK$147 million. Gross profit margin increased by 2.6 percentage points to 23.9%, better than the Group’s overall performance.
Launch of several new green energy-saving projects to create business opportunities
With the increasing awareness of environmental protectionof thesociety, Ten Pao launched several green energy-saving projects during the year, including switching power supply units for lighting equipment and charging piles for two-wheeled electric vehicles. During the year, the business of switching power supply units for lighting equipment began to deliver results. The products received favorable responses from the market and were widely used in the PRC and Africa. The first batch of charging piles for two-wheel electric vehicles was shipped in January 2017.
Enhance production efficiency to fully prepare for inclusion of the power supply industry in national strategic initiatives
Upgrading and transformation has been regarded as a key corporate development focus by the Group. During the year, the Group has forged a strategic partnership with the Hong Kong Productivity Council on “Smart Production.” The core of this reform project is based on automatic diagnostics, smart system design and production, with the aim to achieve digitalisation of the production process and build a highly automated and efficient factory, thereby saving production time and enhancing production efficiency. Investment in the project is expected to amount to RMB200 million over several phases. Final configuration of the technology upgrade for 20 to 40 production lines will depend on market conditions and demand. Consequently, production efficiency will be significantly enhanced and can reduce the Group’s reliance on manpower while enabling swift response to changes in market demand.
Furthermore, Ten Pao has devised a strategic plan for overseas expansion. Its first overseas factory is to be established in Hungary with the investment made in phases. As the factory is in proximity to the locations of its international customers, it is expected to help the Group greatly shorten production and delivery cycles and enhance operational efficiency.
Looking forward, the steady demand for switching power supply units will continue to spur the growth of the industry as this product is indispensable to a majority of electrical products.
Regarding R&D of the products, with the rapid development of high-tech, smartphone shipments will gradually increase. The Group will leverage its leading technological advantage, outstanding product quality to provide suitable solutions and competitive pricing strategies for its customers to facilitate their product upgradeso as tosustain growth momentum in the second half of 2017. As strong demand for wireless power tools has driven demand for cordless built-in batteries, the Group expects its smart power supply units will continue to serve as a growth driver. To further expand its product mix, the Group will keep abreast of the latest market development and increase its investment in research on green energy. While meeting the orders of charging piles for two-wheeled electric vehicles, the Group actively developed a variety of charging pile products for electric vehicles, including those for four-wheeled electric vehicles and golf carts.This project is expected to transform into a new growth driver for the Group’s business in the future.
Regarding capacity expansion, the construction of its first overseas factory in Hungary is proceeding smoothly, and production is set to commence in the second half of 2017. The factory will serve as a model for the Group when expanding its overseas markets. In the mean time, Ten Pao has been actively following the “Industrie 4.0” and “Made in China 2025” national strategic initiatives. While the “Smart Production” automation technological reform project by Hong Kong Productivity Council has begun in 2016, production and cost efficiency will rise notably and paving the way for sustainable business growth.
Chairman Hung concluded, “With Ten Pao’s innovative R&D and efficient production capabilities and seasoned management team, we will adhere to our established business development strategy and leverage our first mover advantage in the industry in order to respond to market trends and deliver product with higher value to our customers as well as maintain our leadership in the switching power supply industry and bring promising returns to our shareholders.”
About Ten Pao Group Holdings Limited (Stock Code:1979)
Ten Pao Group Holdings Limited is an industry-leading one-stop provider of smart power supply solutions and it becomes a constituent stock in the MSCI Hong Kong Small Cap Index since end of 2016.With almost 40 years of experience in the power supply industry, its clienteles include many leading and fast growing international brands. Ten Pao is equipped with strong R&D capabilities and is one of the few manufacturers that have its own CNAS-accredited testing laboratory, which enables it to transform with the change of the technology market while it develops and produces diversified products catering to the specifications of clients’ new products.Company website: www.tenpao.com
Ten Pao Group Holdings Limited
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