Tonly Electronics's Profit Attributable to Owners of the Parent Reached HK$62.1 Million for the First Half of 2013

Increased by 28.4% Year-on-Year

Successfully Listed on the Main Board of the Stock Exchange

HONG KONG, Aug. 16, 2013 /PRNewswire/ --

Results Highlights:

• For the six months ended 30 June 2013, the Group recorded turnover of approximately HK$1,921.3 million, up by 16.5% year-on-year. Gross profit amounted to approximately HK$243.4 million, up by 50.0% year-on-year. Operating profit reached approximately HK$98.6 million, up by 73.7% year-on-year. Profit attributable to owners of the parent reached approximately HK$62.1 million, representing an increase of 28.4% year-on-year.
• With vertical integration of production, economies of scale, production cost control and optimization of product mix, the Group significantly improved the gross profit and gross profit margin and consistently maintained them at healthy levels.
• Revenue from the Group's video product decreased by 18.7% year-on-year to HK$938.4 million. Revenue from the audio product grew by 95.1% year-on-year to HK$548.1 million. Revenue from other products (mainly ABS-s products) increased by 103.4% year-on-year to HK$434.8 million.
• According to a market research report by Euromonitor, the Group was the largest video product manufacturer and the third largest HTS and soundbars manufacturer in the PRC in terms of production volume in 2012.
• Shares of the Group were successfully listed on the Main Board of the Stock Exchange on 15 August 2013.

Tonly Electronics Holdings Limited ("Tonly Electronics" or "the Group"; SEHK stock code: 01249) today announced its unaudited consolidated interim results for the six months ended 30 June 2013.

During the six months ended 30 June, 2013, the Group recorded a turnover of approximately HK$1,921.3 million, up 16.5% year-on-year. Gross profit amounted to approximately HK$243.4 million, up 50.0% year-on-year. Gross profit margin was maintained at a healthy level of approximately 12.7%, up by 2.9 percentage point year-on-year. Operating profit rose by 73.7% year-on-year to approximately HK$98.6 million. Profit attributable to owners of the parent was approximately HK$62.1 million, up 28.4% year-on-year. Net profit margin was 4.0%. Basic earnings per share were HK46.57 cents for the first half of 2013 (first half of 2012: HK36.27 cents).

For the first half of 2013, the Group proactively accommodates to changes in development of the industry and caters to needs for market development by shifting its focus from traditional video disc players to a diversified product portfolio which comprises internet-based video products, audio products and Advanced Broadcasting System-Satellite receivers ("ABS-s"). With vertical integration of production, economies of scale, production cost control and optimization of product mix, the Group significantly improved the gross profit and gross profit margin and consistently maintained them at healthy levels.

During the period under review, revenue from the Group's video product decreased by 18.7% year-on-year to HK$938.4 million; revenue from the audio product business grew by 95.1% year-on-year to HK$548.1 million; revenue from the business of other products increased by 103.4% year-on-year to HK$434.8 million. Revenues from video products, audio products and other products accounted for 48.9%, 28.5% and 22.6% respectively of the Group's turnover.

For video products business, the Group mitigated the impact by adapting proactively to changes in the industry. It expands market shares of its products by accommodating to the important clients' market approach and products strategies, and leverages on our advantages in costs and supply chain. It is envisaged that the BD player market will be growing consistently, so the Group adapts proactively to the market trend in order to strengthen its leading position in the industry, and it will continue to improve product designs and enhance supply chain management in order to achieve economies of scale and reduce production costs. In addition, the Group proactively developed internet-based video products with higher market potential and profitability.

For audio products business, sales of traditional audio products, which include HTS and Micro & Mini continued to grow fast. Meanwhile, breakthroughs were achieved in product development and sales of new audio products, tremendous market potential, including wireless speakers, soundbars and dockings. Sales of audio products increased by 95.1% year-on-year to HK$548.1 million for the first half of this year, compared with the HK$281.0 million for the first half of last year. In particular, sales of new audio products rose by 928.2% year-on-year to HK$174.3 million. The development of internet-enabled and wireless technologies, smart TVs and intelligent mobile devices (smart phones and tablets etc) has stimulated the development audio products thus generated tremendous market potential. During the period under review, the Group developed more than 14 new audio product series which comprised 77 new products.

For other business, during the period under review, ABS-s products generated HK$373.0 million in turnover, up by 87.5% year-on-year. According to "The Outline of Cultural Reform and Development during the 12th Five-year Plan" in China, the signal coverage of those satellite-used receivers will extend to some 200 million families in remote or rural areas that have yet to be covered by cable television network in the country. The Group believes that ABS-s products have tremendous potential for development and will become one of its key growth engines in the future.

In order to meet its needs in future business development and to further improve its production efficiency, the Group had begun constructing the new factory since 2011. The new factory officially commenced production in July 2013. Its designed annual production capacity is expected to reach approximately 17 million. The Group envisages that as the new plant commences commercial operation, it will be able to meet the growing demand for audio products with its enhanced production capacity and production efficiency.

Looking forward, the Group has been shifting its business focus from traditional video disc players to the internet-based video products and audio products, especially the new audio products for smart TVs and smartphones. The Group will further enhance its technology and capabilities of designing intelligent ancillary products. Meanwhile, the Group will put more efforts in strengthening its capacity for developing drivers and speakers and research in electro-acoustic technologies, a view to enriching its product portfolio and enhance its product competitive.

Mr. Yu Guang Hui , Chief Executive Officer of Tonly Electronics, said, "We will continue to solidify our strategic co-operations with international brands and major clients in an attempt to enhancing the Group's leading position in the global audio-visual product market, and meanwhile, leverage on vertically-integrated operations, aiming at maximizing value for all the customers and shareholders."

The sales of the Group by products are set forth as follows:

(1) Mainly DVD players and BD players
(2) Mainly HTS and Micro & Mini
(3) Mainly wireless speakers, soundbars and dockings

About Tonly Electronics

Tonly Electronics Holdings Limited (stock code: 01249.HK) , the largest video products manufacturer and the third largest HTS & Soundbars manufacturer in the PRC, is principally engaged in the research and development, manufacturing and sales of AV Products (excluding TV sets) for international brands on an ODM basis. Tonly Electronics is also one of the ABS-s manufacturers under "Hu Hu Tong" program and "Cun Cun Tong" program initiated by SARFT and has supplied more than 0.6 million units. Its ultimate shareholder is TCL Corporation. For more information, please visit its website at www.tonlyele.com