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Wednesday, 21 August 2013, 09:40 HKT/SGT
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Source: Tongda Group
Tongda Group Announces 2013 Interim Results
Focuses on High Margin Products
Seizes Opportunities of Rapid Take-up of Smartphones Market
Turnover Increases by 20.9% to Approximately HK$1,690 Million
Net Profit Rises by 15.0% to Approximately HK$130 Million

HONG KONG, Aug 21, 2013 - (ACN Newswire) - Tongda Group Holdings Limited ("Tongda Group" or the "Group") (Stock Code: 698) announced its unaudited interim results for the six months ended 30 June 2013.

Despite the ongoing weakness in the global economy, the Group seized the opportunity presented by the rapid take-up of smartphones market to generate growth through close partnerships with leading domestic and international brands, hence reported growth in sales, gross profit and net profit. During the period, overall turnover increased by 20.9% year-on-year to approximately HK$1,689,700,000.Leveraging its core technology of In-Mould Lamination ("IML") to develop high margin products, it reported a rise in gross profit of15.1% to HK$355,600,000compared with HK$308,900,000for the same period last year. The overall gross profit margin remained high at 21.0%. Through automated production, stringent cost control measures, as well as optimization of resources and product mix, profit attributable to owners of the Company climbed by 15.0% to HK$130,300,000as compared with the corresponding period last year and overall net profit margin reached approximately7.7%. Basic earnings per share rose to 2.72HK cents. The Board declared payment of an interim dividend of 0.9HK cent per share.

The Group has maintained a healthy financial position. Its pledged deposit balances and cash and cash equivalents as at 30 June 2013 were approximately HK$263,500,000(31 December 2012: HK$313,900,000).

Mr Wang Ya Nan, Chairman and CEO of Tongda Group, said, "The Group has strategically diversified its businesses over the years in order to broaden income sources while balancing risks. Thus, the Group has managed to achieve a satisfactory business performance despite encountering a difficult environment created by a weak global economy, intense industry competition and rising labour costs. During the period under review, the market demand for smartphones has rapidly grown, with the Group's outstanding research and development (R&D)team and product innovation gaining wide recognition from customers, we are able to capture market share both domestically and internationally while maintaining a high gross profit margin."

Business Review
The Group's electrical fittings division comprises three business segments, namely handsets, notebook computers and electrical appliances. During the period under review, total turnover of the division rose 18.2% to approximately HK$1,355,900,000(30 June2012: approximately HK$1,146,900,000).

Handsets
The sales contribution of the handsets business increased from 44% to 49% driven by the fast-growing demand for smartphones. Turnover of the segment reached approximately HK$823,100,000, up 35.2%compared to the corresponding period last year. With its investment in smartphone design technology, the Group has enhanced the diversity and flexibility of its customers' products, while shortening the production lead-time, enabling it to collaborate closely with a number of leading fast-growing domestic and international handset brands, such as Huawei, ZTE, Lenovo, Coolpad, TCL and Nokia.

To strengthen partnership with its core customers, the Group will continue to follow a two-pronged strategy of designing attractive quality handset casings while developing ultra slim and functional components, providing products at reasonable prices with reliable quality. The Group has introduced the laser direct structuring ("LDS") technology last year, to design a new generation of antenna systems, enabling it to become the only supplier providing a vertically integrated supply chain of these systems in China. Small scale production is expected to begin in the second half of this year with mass production beginning next year.

Electrical Appliances
Greater domestic demand has spurred a rebound in the sales of the Group's electrical appliances of 6.3% to HK$309,100,000million from the same period of last year. The Group has maintained its solid partnership with leading domestic appliances brands including Midea, Haier and Gree forged over the years. The Group's IML large plastic appliance casings for high-end electrical appliances accessories are in line with the increasing demand for upmarket electrical appliances, enabling it to maintain a market-leading position in the industry. During the year, the Group has successfully applied the IML one-piece shaping process and technology to floor-standing air conditioners and become the sole domestic supplier of casings of such products.

Notebook Computers
Global shipment of notebooks declined in the first half of the year, consequently sales income for the period dropped 9.5% to HK$223,700,000. However, the Group is actively developing the tablet market and maintains close partnerships with world-renowned computer brands, such as Lenovo, Toshiba, Sony, NEC and Taiwan's top four computer manufacturers, namely Quanta, Compal, Asus and Acer, most of which are Chinese and Japanese customers, so the adverse industry environment only minimally affected the Group. Currently, the Group is developing high quality metal and ultra-thin computer casings. The newly developed Laminated Metal Film ("LMF") casing effectively maintains the hardness of metals while preserving the attractiveness of IML technology decoration, thus it has been widely accepted by a number of brands during the period.

Ironware parts and communication divisions
Benefited from the increasing trend of using metallic parts and casings on appliance casings, sales of the ironware parts division increased by 63.8% to HK$224,300,000million.Communication facilities division focuses on the production of digital satellite TV receivers and set top boxes and its major customers are from the Middle-East, Europe and the United States. Sales maintained stable atHK$109,500,000million during the period under review.

Prospects
The Group is committed to developing the consumer electronics products market with a goal of maintaining high gross profit margins and providing a one-stop solution for casings and components through utilising state-of-the-art and diversified technologies. As the only supplier providing a vertically integrated supply chain of LDS in China, the Group offers a one-stop service from antenna design to production and installation. The technology can be widely applied to smartphones, notebook computers and tablets. At the same time, the Group plans to set up a new handset production base in Xiamen to satisfy the strong customer demand for precision handset casings of the Group.

Mr.Wang concluded, "Looking ahead, we will continue to increase our investment in the handsets business while at the same time focus on the notebook computers and electrical appliances businesses. To complement these efforts, we will devote greater resources to the research and application in new technology, materials and processes, so as to provide superior high-end casing and precision structural components. By leveraging our one-stop competitive edge, we will further broaden our customer base, and hence increase the utilisation rate of our production facilities and enhance profitability, so as to respond to the rapidly-changing and challenging markets. The rollout of 4G networks will spark the next smartphone craze. The LDS antenna business is set to provide an unrivalled competitive advantage for the Group to maximise this opportunity. We will continue to uphold the principle of prudent financial management, carefully analyze the market and actively strengthen operational capabilities to promote sustainable development."

Topic: Press release summary
Source: Tongda Group

Sectors: Daily Finance, Daily News
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