Announces 2020 Interim Results Profit for the period increased by 17.3% to HK$ 95.1million Maintain
TEN PAO GROUP HOLDINGS LIMITED
Announces 2020 Interim Results
Profit for the period increased by 17.3% to HK$ 95.1million
Maintaining profitable growth in tough times
( 21 August 2020 – Hong Kong ) Ten Pao Group Holdings Limited (“Ten Pao”, and together with its subsidiaries, the “Group;” stock code: 1979) is pleased to announce the unaudited consolidated results for the six months ended 30 June 2020 ( the “Period”).
For the Period, Group revenue decreased slightly by 3.9% to HK$1,763.7 million when compared to the same period of last year. This was mainly attributable to the adverse impact of the temporary suspension of the Group’s manufacturing facility in Huizhou, the PRC in the first quarter as a result of the PRC government’s order in preventing and combating the coronavirus. Despite the decrease in revenue, gross profit for the Period amounted to HK$306.1 million which approximated to that of the same period of last year, and gross profit margin increased by 0.7 percentage point to 17.4%, which are attributable to measures including tightened cost control policies and increased rate of automated production. Net profit before tax was HK$115.9 million, and net profit attributable to owners of the Company increased by 17.3% to HK$95.1 million when compared to the same period of last year. Earnings per share amounted to HK10 cents (2019: HK8 cents).
The Board proposed to declare the payment of an interim dividend of HK3 cents per ordinary share for the six months ended 30 June 2020.
During the Period, the coronavirus pandemic brought pressure on the manufacturing industry in different ways. At the production level, as a means to keep the pandemic at bay, the PRC government issued a notice to extend the Lunar New Year Holidays of 2020. The Group’s manufacturing plants in the PRC temporarily suspended operations in February this year, and gradually resumed some operations in March. However, the spread of the pandemic globally since March led to international logistics delays which affected the transportation of finished products and raw materials. The Group, as a supply chain partner of various consumer goods brands, was inevitably affected by the above factors. During the Period, the Group was in active communication with its customers and redeployed resources, and hence, successfully recovered most of the production progress in the second quarter and maintained its business stability.
Smart chargers and controllers for power tools – 40.3% of total revenue
Revenue from the Group’s business segment of smart chargers and controllers for power tools was approximately HK$710.0 million, decreased by 5.2% when compared to the same period of last year. Gross profit margin for the sector increased by 1.8 percentage point to 20.1%. Segment revenue remained relatively stable, which is primarily attributable to the Group’s efforts not only in maintaining a good cooperative relationship with existing customers, but also in actively deepening the level of cooperation, and at the same time adopting flexible marketing strategies to continue to expand a customer base that has growth potential. Customers of this segment are mainly international corporations with excellent foundations, high risk-bearing capabilities, as well as diversified distribution channels, these factors along with the increased automation rate in production, has improved the gross profit margin.
Switching power supply units for consumer products – 59.7% of total revenue
Segment revenue of switching power supply units for consumer products was approximately HK$1,053.6 million, a decreased by 3.0% when compared to the same period of last year. This was mainly attributable to the sales decrease recorded in the lighting equipment segment, whilst the decrease was mitigated by the sales increment in the telecommunication segment and media and entertainment segment. Gross profit margin for the sector increased by 0.3 percentage point to 15.5%.
During the Period, thanks to the Group’s forward-looking strategic plan of setting up a manufacturing plant in Dazhou City, Sichuan in 2019, in close proximity to the main production centres of a number of telecommunications equipment customers, the Group was able to capture this opportunity to successfully obtain additional orders. Furthermore, one of of the top five well-known mobile phone manufacturers in the PRC has entered into a further trusting relationship with the Group and began to place a larger volume of orders with the Group for its flagship products and new products, casting a vote of trust in the product quality of Ten Pao.
Continuous overseas expansion
To support the sustainable development of the Group’s business, Ten Pao has, in the past few years, gradually expanded its domestic and overseas production layout. During the Period, phase three expansion of the plant in Hungary was successfully completed and the set-up of production lines is currently in progress. The plant in Hungary is expected to contribute additional production capacity starting from the third quarter of this year. In the PRC, the production base in Dazhou, Sichuan Province has commenced operation. Its proximity to the production centres of various manufacturers of consumer electronics brands will give Ten Pao a competitive edge to bring in more new customers and orders. The production capacity of the Dazhou plant is gradually being released, with its phase 2 expected to enter production in the second half of 2020. The Vietnam production base has also begun to contribute production capacity during the Period and the Group will continue to explore the opportunity to expand the manufacturing capacity there.
The coronavirus pandemic and global geopolitical instability are expected to place further downward pressure on economic growth in the second half of 2020. To sustain the Group’s competitive strength, resilience and profitability, we have been attentively monitoring changes in the external environment, adopting flexible response measures, maintaining cost efficiency and diversifying our global production capacity. At the same time, the Group is also actively exploring market opportunities and potential. Apart from continuing to launch new products in line with environmental protection policies related to 5G telecommunication technology research and development and green mobility development, the Group has invested resources to explore business opportunities in other industries, in preparation for the steady development of Ten Pao in the long term.
Mr. Hung Kwong Yee, Chairman and CEO of Ten Pao said “We are very pleased that Ten Pao was able to maintain a stable and healthy business operation, and furthermore, achieving profit growth during such tough market conditions. It could not be achieved without the concerted effort invested by all parties within the Company. Looking forward, Ten Pao will continue to remain prudent when the macro environment is shadowed by uncertainties, and to expand its overseas and domestic businesses while sustaining a healthy financial position.”
Mr. Hung added, “Ten Pao has been devoting resources to technological innovation and product R&D in the 5G smartphone power supply market to capitalise on market opportunities. The growing market demand for its respective higher power, fast-charging, flash-charging and wireless-charging products, will continue to fuel the technological upgrading and sales of such products. Apart from smartphones, 5G technology advancement also encourages technological innovation and application in many other commercial areas, including the Internet of Things (IoT). Ten Pao will commit additional resources to the R&D of technology in these areas, especially in higher power, fast-charging, flash-charging and wireless-charging products, to further expand its product offerings and increase its market share. In addition, green mobility remains an objective that is being proactively promoted by the PRC government. The Group will continue to expand our research capability in green mobility and related products, such as smart charging products for electric vehicles (EVs) and portable power supply/charging products, and to actively develop this blue ocean market. In the Period, the Group had entered into an agreement with a renowned energy company for the grant of license to use its logo in certain kinds of consumer electronic products and merchandising rights in the market. These products are scheduled to launch to the market in the first half of 2021. Looking ahead, Ten Pao will uphold its pragmatic business philosophy, and continue to capture every market opportunity and potential to strengthen the Group’s profitability and consolidate its leading position in the switching power supply industry.”
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About Ten Pao Group Holdings Limited
Ten Pao Group was established in 1979 and listed in 2015 in Hong Kong(Stock Code: 1979). With 40 years of experience in power supply industry, Ten Pao designs and manufactures safe and reliable power supplies and smart chargers, and provides with competitive “one-stop smart power supply solutions”. By cooperating with different famous brands for years, it has become trustworthy supplier for various international brands.
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