omniture

Tonly Electronics' Turnover Up by 9.5% Year-on-Year to Approximately HK$1,156.0 Million for First Quarter of 2015

Audio and media box products continues to drive business growth

HONG KONG, April 22, 2015 /PRNewswire/ --  

Results Highlights:

  • For the three months ended 31 March 2015, the Group's turnover increased by 9.5% year-on-year ("yoy") to approximately HK$1,156.0 million, driven by the growing businesses of audio products and media boxes.
    • The sales revenue of video disc players reached approximately HK$397.3 million, decreased by 11.6% yoy;
    • The sales revenue of audio products reached approximately HK$427.8 million, up 30.3% yoy;
    • The sales revenue of media box products reached approximately HK$245.9 million, up 22.2% yoy; and
    • The sales revenue of other products (mainly Advanced Broadcasting System-Satellite ("ABS-s") products) reached approximately HK$85.0 million, representing an increase of 10.7% yoy.
  • Gross profit was approximately HK$151.9 million, increased 34.6% yoy, gross profit margin widened to 13.1% from 10.7% of Q1 2014. Operating profit rose by 13.5% yoy to approximately HK$49.6 million. Profit attributable to owners of the parent reached approximately HK$36.9 million, representing an increase of 27.9% yoy, which was mainly due to the completion of the Group's acquisition of the remaining 20% equity of the subsidiary, Tonly Electronics Limited, on 15 May 2014, resulting in an increase of profit attributable to owners of the parent for Q1 2015.
  • In preparation for the establishment of venture capital funds by using capital as a linkage to build business alliances, which will serve as an industry and supply chain platform for investors.
  • Purchased a parcel of land with an area of 80,000 sq.m. situating next to the existing plant site in Huizhou, with a consideration of approximately HK$40.0 million and a GFA of 120,000 sq.m.. The Group will divide the construction in phases to cope with its business development, in order to help lessen the problem of shortage in production capacity.

Tonly Electronics Holdings Limited ("Tonly Electronics" or "the Group"; SEHK stock code: 01249) today announced its unaudited quarterly results for the three months ended 31 March 2015.

Through expanding and optimizing customer portfolios as well as enhancing production efficiency, the Group achieved encouraging growth in turnover and operating profit. For the three months ended 31 March 2015, the Group recorded a turnover of approximately HK$1,156.0 million, up by 9.5% yoy. Gross profit grew by 34.6% yoy to approximately HK$151.9 million. Gross profit margin widened to 13.1% from 10.7% of the same period last year. Operating profit rose by 13.5% yoy to approximately HK$49.6 million. Profit attributable to owners of the parent reached approximately HK$36.9 million, representing an increase of 27.9% yoy, which was mainly due to the completion of the Group's acquisition of the remaining 20% equity of the subsidiary, Tonly Electronics Limited, on 15 May 2014, resulting in an increase of profit attributable to owners of the parent for first quarter of 2015. Net profit margin was 3.3%.

With swift developments in Internet technology, the market demand for traditional digital versatile disc ("DVD") players continues to shrink. Although the Group has leverage on its years of accumulated technology R&D, production capability, good supply chain, and strong client relationships to take a leading position in the industry, the shrinking market for this product segment has led to overall decline in the Group's video disc player business. Revenue from the Group's video disc player decreased by 11.6% yoy to HK$397.3 million in the first quarter of 2015.

During the period under review, the sales of audio products continues to grow with revenue of HK$427.8 million from HK$328.4 million in the same period last year, representing an increase of 30.3% compared to the corresponding period last year. The Group continues to actively strengthen its R&D efficiency, as well as developing strategic partnerships with existing customers. Meanwhile, it also continues to enhance the competitiveness of its audio products, and is committed to investing in R&D of electroacoustics technology and independently developed its proprietary speaker transducers and speaker products.

In the first quarter of 2015, revenue from the Group's media box business rose 22.2% yoy to HK$245.9 million. Last year, the Group successfully qualified as an official supplier for a renowned telecommunication equipment firm to produce media box products. The Group also successfully established cooperation relationships with domestic internet companies, contributing to significant growth in the media box business. It has also partnered with domestic and foreign telecommunication players to jointly develop the media box business for more diversified products. There is huge potential in the media box business which will become the Group's focus as well as a major growth driver in the future.

In the first quarter this year, sales of ABS-s products generated revenue of HK$25.8 million, representing a decrease of 20.7% yoy. It is expected that the Central Government's gradual easing of its restrictions on the ABS-s retail market will help drive sales in this business segment.

In terms of production and supply chain management, the Group is committed to enhancing its human resources system. The Group decreased the proportion of temporary staff in the work force, stabilized the turnover of skilled workers, and adopted more automated equipment and automated product testing processes to boost its per capita production efficiency and mitigate the impact of rising labour costs. The Group located in suitable site in Huizhou and acquired the land use right for construction of a new production plant, with an area of 80,000 sq.m. at a consideration of approximately HK$40.0 million and a GFA of 120,000 sq.m.. It will divide the construction in phases to cope with its business development, in order to help lessen the problem of shortage in production capacity.

On top of this, the Group took advantage of its global supply chain and strengthened the operational capability of its overseas supply chain with the aim of providing more competitive products for customers. During the first quarter of 2015, the Group's R&D expenses were approximately HK$40.1 million, accounting for 3.5% of its total revenue, a high ratio according to industry standards.

The Group is in preparation to join hands with Shenzhen Qianhai Haofang Keji Limited* ("Qianhai Haofang") to form a venture capital fund, targeting smart product manufacturers with high brand equity and growth potential, as well as companies engaging in e-commerce ecosystem or related businesses, to provide equity investment, investment advisory and investment management services. The initial investment of the fund will be approximately RMB60 to 100 million. Qianhai Haofang and Tonly will leverage on their own expertise and use the investment capital as a linkage to build business alliances, to promote the industry development of smart products and internet companies.

Mr Yu Guang Hui, Chief Executive Officer of Tonly Electronics, stated "Going forward, we will adhere to focus on product innovation as our future expansion strategy, especially on the development of smart home and Internet related new audio products. We will continue to invest heavily into R&D, strengthen our innovation capabilities in electroacoustics and related technologies, and enhance product quality and design. We will also grow both organically and through acquisitions of new businesses to expand our existing business scale and increase revenue. We will strengthen our integrated production capacities, shifting to the development of high-end products to improve profitability, and thus maximize value for our customers and shareholders."

*For identification purpose only.

The Group's revenue breakdown by product:


2015 Q1

2014 Q1

Change


(HK$'000)

(HK$'000)


Video disc players(1)

397,341

449,592

-11.6%





Audio products




- Traditional audio products(2)

217,385

171,419

+26.8%

- New audio products(3)

210,451

156,951

+34.1%

Subtotal

427,836

328,370

+30.3%





Media boxes(4)

245,872

201,123

+22.2%





Other businesses




-ABS-s products

25,813

32,540

-20.7%

-Components

44,177

21,998

+100.8%

-R&D income

14,973

22,163

-32.4%

Subtotal

84,963

76,701

+10.8%





Total

1,156,012

1,055,786

+9.5%

(1)Mainly include DVD players and BD players

(2)Mainly include HTS and Micro & Mini speakers

(3)Mainly include wireless speakers, soundbars and audio docks

(4)Mainly include OTT (over-the-top) Internet services and content set up box

About Tonly Electronics

Tonly Electronics Holdings Limited (stock code: 01249) is a leading vertically-integrated manufacturing services provider in the audio-visual ("AV") products. It is also is the largest video products manufacturer and the fourth largest HTS manufacturer in the world, and is principally engaged in the research and development, manufacturing and sales of audio-visual products (excluding TV sets) for international brands on an ODM basis. Tonly Electronics is also one of the ABS-s manufacturers under the programmes of "Hu Hu Tong" and "CunCun Tong" initiated by The State Administration of Radio, Film, and Television ("SARFT"). Its ultimate controlling shareholder is TCL Corporation (a company listed on the Shenzhen Stock Exchange, Stock code 000100.SZ).

For more information, please visit its website at www.tonlyele.com.

Source: Tonly Electronics Holdings Limited
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