omniture

Heng Xin China Announces 2009 Annual Results

Heng Xin China Holdings Limited
2009-09-16 17:04 1459

New Business Model Gains Approval As Turnover Grew by 10 Folds

Digital TV Contracts Accounted for 66% of Revenue as Key Driver

HONG KONG, Sept. 16 /PRNewswire-Asia/ --

Year Ended June 30 2008 2009 Change

(HK$ '000) (Restated)

Turnover 32,821 339,365 9.34 Times

Gross Profit 509 163,348 31.9 Times

Profit /(Loss) from

Operation (5,488) 127,833 N/A

Profit /(Loss) before

Taxation (15,838) 123,435 N/A

Profit /(Loss) for the Year (15,838) 118,006 N/A

Profit /(Loss) Attributable

to Equity Holders (15,838) 110,698 N/A

Earnings /(Loss) Per Share (2.86) 11.28 2.9 Times

Heng Xin China Holdings Limited ("Heng Xin China," or the "Group", HKEx: 8046), the biggest wireless digital TV equipment integrator and integrated circuits ("IC") designer in China, announced its annual results for the year ended 30 June 2009.

For the year ended 30 June 2009, the Group recorded a total turnover of approximately HK$339.4 million, representing an increase of approximately 10 times as compared to HK$32.8 million in the last financial year. Profit attributable to shareholders of the Company was approximately HK$110.7 million, compared to loss of approximately HK$15.8 million in 2008. Basic earnings per share was approximately HK11.28 cents, compared to basic loss per share of approximately HK2.86 cents.

In light of the Group's focus on higher margin business after the introduction of the new businesses, gross profit margin of the Group improved significantly to 48.1% for the financial year ended 30 June 2009 from approximately 1.6% for the last financial year.

Operating expenses amount to HK$44.9 million relative to HK$16.1 million in the previous year. Finance costs amounted to approximately HK$2.0 million, of which approximately HK$1.7 million represents effective interest expenses on convertible notes issued by the Company before their full conversions.

The Board of the Company does not recommend the payment of a final dividend for the year ended 30 June 2009 (2008: Nil).

Turnover of core businesses for the year ended 30 June 2009:

(i) Ground wireless digital television equipment integrated business:

HK$223.9 million or approximately 66% of the total turnover.

(ii) Encrypted integrated circuits and the derived integrated business:

HK$45.1 million or approximately 13% of the total turnover.

(iii) Wireless digital audio products business: HK$54.0 million or

approximately 16% of the total turnover.

BUSINESS REVIEW

(i) Ground wireless digital television network equipment integrated business

With the Group's key technology in 32-bits security integrated circuits, and a vast resource of experienced professional for network design, planning and construction under various geographical conditions. During the year, the Group has developed and implemented a new principal business in the provision of technology and network equipment integration for digital TV. The Group entered into an agreement with Hunan Mobile TV Co., Ltd. ("Hunan MTV") to exclusively undertaking the provision of systems and related hardwares for wireless ground digital TV project in Hunan Province. The construction of the frontend of the wireless digital TV platform in the province and has commenced bulk sales of the terminal/set-up boxes, which will be a large profit contributor over the next few years.

At present, the Group is the most famous wireless TV operating networks and equipments integrator at a provincial level. Based on the established model in Hunan, the Group has also ready secured a contract with Hubei province where the total contracted amount entered into with Hunan and Hubei provinces reached RMB 4,500 million, and the proposed contracted amount from MOUs reached RMB 5,500 million.

(ii) Encrypted integrated circuits and the derived integrated business

In addition to the advanced encrypted CPU chips dedicated for government enterprises the Group's business also includes information safety software design and systems; wireless multimedia transmission baseband integrated circuits and product design services, and state standards ground wireless digital TV network equipment integration systems and services. Each of the Group's R&D research achievements have obtained proprietary intellectual property rights in China. These R&D achievements are now being commercialized and starting to generate revenues for the Group.

The Group is putting resources in the development of new Conditional Access ("CA") encrypted chips. Two products will be launched in the near future: a low cost CA encrypted chip for the existing market and compatible with DVB, and a high-end convertible CA encrypted chip of high performance available to the high-end market which is scheduled to be put on the market next year.

(iii) Wireless digital audio products business

Growth in this segment is mainly driven by the development of three types of wireless peripheral products, home wireless multimedia products, products for games and PC markets, and wireless communication products. In addition to foreign markets, the Group has been actively developing domestic market. Benefiting from the positive stimulation of favourable government policies and increase in domestic demand for its products this year, this business segment is growing rapidly despite the severe global financial crisis. The number of its new customers in the overseas markets has also experienced a substantial increase in recent months responding to the early signs of economic recovery.

To compliment the Group's strategy for new markets for its existing product lines, the Group intends to enter the 3G communication market, and has made a good start by partnering with China's biggest mobile phone operator to become its sole provider of wireless solution for terminals for mobile home multimedia systems in China.

FUTURE PLANS & PROSPECTS

Commenting on the Group's future plans, Mr. Xiao Yan, Chief Executive Officer of the Group commented, "The prospects of PRC's digital TV market is very promising and is still at its infant stage. As planned by State Administration of Radio, Film and Television ("SARFT"), completion of switch from analog to digital TV will take place by 2015, creating over 400 million TV viewers. We have allocated our resources to focus on technology development and equipment integration for ground wireless digital TV with stable revenue and higher profit margin.

Mr. Xiao continued, "We expect that the integral packaging integration of wireless digital TV, satellite digital TV and cable digital TV two-way upgrade to be completed in five more provinces or municipals in one or two years with demographic coverage of 100 million subscribers. Based on our success in Hunan Province, we plan to further engage in two or three provinces in the PRC in the coming year. By 2015, the Group hopes to have completed the construction of wireless digital TV networks in 8 to 10 provinces with a total business that could reach RMB20 billion., becoming the largest provider of overall design, technology and equipment integration and total solutions for digital TV sector in the PRC."

On the Group's satisfactory performance during the year, Mr. Xiao said, "I would like to take this opportunity to extend the sincere gratitude to our customers, business partners and shareholders for their continuous and valuable support to the Group. I would also like to express my heartfelt appreciation to all our dedicated staff for their hard work and efforts over the year."

About the Company

Heng Xin China Holdings Limited is the largest ground wireless digital TV equipment integrator and integrated circuits ("IC") designer in China. The Group is principally engaged in the research, design, development on and manufacturing of electronic message security products, integrated circuits and related devices and systems, and the integrated circuit solutions and related services.

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Source: Heng Xin China Holdings Limited
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