凯发网站·(中国)集团_公司4980 凯发网站·(中国)集团_公司401
Overcome the challenge of COVID-19 with revenue of HK$2.03 billion and profit of HK$210 million


2020annual performance telephone conference

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Overcome the challenge of COVID-19 with revenue of HK$2.03 billion and profit of HK$210 million
The year-end dividend payout rate is 8.0 HK cents, the annual dividend payout rate reaches 39.7%
Orders in hand reach HK$930 million, with continuous growth in the second half year


[March29, 2021-Hong Kong] TK Group (Holdings) Limited ("TK Group"or"the Group",stock code:2283), one of the world's leading one-stop injection molding solutions suppliers, announced its annual performance up to December 31, 2020 in an investor conference today. Due to the epidemic situation,this conference was held in the form of telephone conference, which still attracted many fund managers and analysts to participate and ask questions online. The atmosphere was enthusiastic.



In the first half of 2020, under the impact of the COVID-19epidemic (“COVID-19”),the major customers of the Group delayed most orders,which affected the interim performance of the Group. In contrast, in the second half of the year, the anti-epidemic measures of Chinese government were effective,and the recovery of economic activities was accelerated. Despite of therepeated overseas epidemic situation, the market had gradually adapted to the new normality under the outbreak, which made several downstream customers recover new product development and launch market plan, and the revenue of theGroup in the second half year had recovered the level equal to that in the sameperiod of last year. The annual revenue of the Group in 2020 reached HK$2033.4million (2019: HK$2310.8million), with the year-on-year decrease of 12.0%.


 

In the year, affected by the epidemic, many countries implemented isolation and social restrictions, which affected daily operation. The customers of the Group delayed the delivery date and new orders, and the machine idle rate of the Group was increased in the first half year. With more severe trade war between China and U.S. since 2019 and intense competition in the industry, the price of molds delivered in the year was low, which affected the overall gross interest. The gross interest rate was reduced by 2.7%to 26.2% (2019: 28.9%). Profit attributable to the owners of the Company was HK$209.7 million (2019: HK$301.8 million), with the year-on-year decrease of 30.5%. Net profit margin was 10.3% (2019:13.1%), with the year-on-year decrease of 2.8 percentage points. The basic earnings per share was HK$0.25 (2019: HK$0.36), with the year-on-year decrease of 30.6%. The Board of Directors has resolved to recommend a year-end dividend of HK$8.0 per share up to December 31, 2020. Together with an interim dividend of HK$2.0 per share already paid, the payout rate is 39.7%.


Prospect

Looking forward to 2021, as a number of new coronavirus vaccines start to be vaccinated in many countries, it is expected that global consumer confidence and desire will gradually stabilize, and consumer demand will drive the recovery of demand on the products of the customers of the Group, thus driving the growth of the order volume of the Group. In the past two years, the Group has successfully expanded into the electronic atomization component sector and has received orders from several well-known international and Chinese customers by virtue of its superior product quality. With the rise of global demand for electronic atomizers, TK Group believes that the sector has broad growth prospects. In 2021, TK Group will continue to adopt a diversified strategy to continuously improve the level of intelligent automation and technology research and development of its existing production lines to maintain its competition advantages and profitability, continue to stand firm in the ever-changing market, seek opportunities and achieve sustainable growth.


Mr. Alan P. L. Li, Chairman of TK Group, said: “the Group has restarted the establishment of injection molding production base in Vietnam at the end of 2020. It is expected to complete installation of production line in Q3 of 2021, put into production in Q4, and cooperate with the move of supply chain to expand regional coverage, reduce geopolitical risk for a long time. In addition, the Group will also expand production of three production bases in Shenzhen Guangming District Headquarters, Huizhou and Suzhou. It is expected cooperate with the increase of orders since 2021, gradually put in use, and make preparation for the long-term order growth.” He added: “In the face of numerous uncontrollable macro factors such as the possible recurrence of the epidemic and geopolitics, the Group will continue to maintain prudent attitude and maintain rigorous credit and trade receivable turnover policy, stabilize cash flow and financial condition, and lay a more solid foundation for long-term business development.”


Mr.Michael Yung, ExecutiveDirector and Chief Executive Officer of TK Group, added: “The Group hasabundant orders in hand. On December 31, 2020, the value of orders in hand hasreached HK$925.2 million. The orders and production plan of the Group in thefirst quarter of 2021 can continue the momentum in the second half of 2020, andI believe that the production line load will be significantly improved in thefirst half of 2021. In addition, the Group is continuing to develop morecustomers in Chinese consumer goods market, so as to expand domestic marketshare, including continuing to actively seek cooperation with more high-techconsumer electronics and medical supplies, insisting on the strategy directionof developing diversified customers, so as to balance the risks of different sectors and market fluctuations.”


凯发网站·(中国)集团_image3892

Mr.Alan P. L. Li, Chairman of TK Group (left) and Mr. Michael Yung, ChiefExecutive Officer (right)



Annual business review in 2020

As the world’s leading one-stop comprehensive injection molding solutions supplier, TK Group provides customized, cost-effective and high-precision injection molding products and services to many internationally renowned companies. Looking back over the year, downstream customer sectors such as healthcare and personal care, automotive and mobile phones and wearable devices are still recorded with growth.


Injection molding component manufacturing business (accounting for about 65.6% of total revenue)

In 2020, the revenue of the medical and personal care sector increased by 7.0% year on year. The Group had several new customers with large scale during the year, including an overseas brand customer engaged in the medical consumables industry and a domestic listed company. Several sets of molds have been successfully tailored during the year, and it is expected to mass produce related injection molding components in 2021. The revenue of the mobile phone and wearable device sector increased by 3.7% year on year, mainly due to the significant increase in orders of the Group as the new products launched by the brand customers who provide protection cases for smart phones with the new smart phones were well received by the market. In addition, products of wireless headphone brand customers were also well received by the public despite the epidemic, and orders also increased during the year. In addition, due to the excellent production quality and reputation of the Group in the industry, we successfully added a new North American smart home brand customer within the year, and now we serve three industry giants. The Group has great confidence in the long-term development of this sector.


The overall revenue of the Injection Molding Component Manufacturing Business Department was approximately HK$1,333.2 million (2019: HK$1,720.0 million), with the year-on-year decrease of 22.5%. The gross margin of injection molding business declined slightly to 25.6% (2019: 26.7%), due to the serious impact of epidemic in the first half year, production of several projects was delayed, which increased the machine idle rate. With relevant projects and projects of new customers are carried out in succession, the machine use rate has recovered stable mass production in the second half year, and the overall annual gross margin of the Group has recovered to a healthy level.


Mold making business (accounting for about 34.4% of total revenue)

The ultra-large standard mold products of the Group are mainly auto parts, and customers are mainly primary parts suppliers who produce auto parts for European auto brands such as Mercedes Benz, BMW, Volkswagen. Precision mold production line mainly produces multi-cavity and high-efficiency precision molds. The market covers high-end consumer electronics and commercial communication equipment such as smart home, mobile phones and wearable devices, medical and personal care, etc. The Group cooperates with downstream injection molding component manufacturing business, and provides customers with one-stop service of better quality.


In 2020, the revenue of the Mold Manufacturing Business Department was about HK$700.2 million, with the increase of 18.5% compared to HK$590.8 million of last year. With the increasingly fierce competition in the mold manufacturing industry and the instability caused by the trade war between China and the United States, the Group was inevitably subjected to bargaining pressure from customers and fierce competition from overseas counterparts, so the prices were relatively low. The year-on-year gross margin was reduced by 7.8% to 27.4% (2019: 35.2%). However, in the past few years, the Group has been vigorously developing new customers and new products. During the year, the increase in mold delivery in the medical and personal care sector resulted in an increase of 165.5% (about HK$108.6 million) in the revenue of this sector, driving the growth of the mold business. In the face of industry competition, the Group will continue to improve its process technology and production efficiency, while expanding the scope of other high value-added mold, provides customers with high quality molds and design solutions, so as to improve the gross profit margin and maintain the absolute quality and technical advantages of the Group in the industry.





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