tongda group holdings limited summary by focusing on handsets business, turnover increased by about...
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TONGDA GROUP HOLDINGS LIMITED Stock code: 00698.HK
2015
Annual Results Announcement 17 March 2016
Contents
Financial Summary 2
Business Segment Analysis 3
Executive Summary 1 P.03
P.05
P.15
4 Appendix P.36
P. 2
Executive Summary
Executive Summary
By focusing on handsets business, turnover increased by about 26.8% to HK$6.07 billion, gross profit
increased by about 32.2% to HK$1.51 billion
Thanks to the increase in the adoption rate of metal handset casing, optimization of the product mix and
enhancement of the automated workflow, profit attributable to owners of the Company reached HK$702.8
million, rising 40% against HK$501.7 million in the corresponding year. Basic earnings per share increased
33.5% to HK$12.6 cents
Thanks to the strong demand of highly value-added products such as metal casings, gross profit margin and
net profit margin increased from 23.9% and 10.5%, to 24.9% and 11.6% respectively
The Group maintained a stable dividend payout track record , final dividend is proposed to be HK 2.1 cents
per share. Together with the interim dividend of HK 1.6 cents, total dividend will be HK 3.7 cents
Maintaining close partnerships with domestic handset leading brands, including strategic customers
Huawei, Xiaomi and OPPO
In China, the adoption rate of metal casing from mid to high end handsets increased drastically, especially
those produced with Nano Molding Technology (NMT) which are gaining a larger market share
Proposed spin-off of the notebook and tablet casing manufacturing business to focus on handset-related
businesses P. 4
Financial Summary
For the year ended 31 December
2015 2014
(HK$’000) (HK$’000)
Revenue 6,074,061 4,791,346
Cost of sales (4,562,032) (3,647,711)
Gross profit 1,512,029 1,143,635
Other income and gains, net 25,930 26,507
Selling and distribution expenses (148,535) (111,992)
Administrative expenses (445,207) (330,262)
Other operating expenses, net (16,011) (26,756)
Finance costs (55,660) (56,883)
Share of losses of associates (286) (1,852)
Profit before tax 872,260 642,397
Income tax expense (134,285) (94,187)
Profit for the period 737,975 548,210
Profit for the
Owners of the Company 702,839 501,701
Non-controlling interests 35,136 46,509
737,975 548,210
Earnings per share
- Basic HK12.60 cents HK9.44 cents
- Diluted HK11.97 cents HK9.30 cents
Consolidated Income Statement
P. 6
The Group’s total turnover
increased to HK$6.07 billion:
Continuous revenue growth in
high-profit metal components
Continuous increase in the
proportion of handset business
focusing on the improvements in
technology, production capacity,
client relationship and quality
management
Turnover
3,147 3,408
3,627
4,791
6,074
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2011 2012 2013 2014 2015
(HK$ million)
For the year ended 31 December
P. 7
Handsets
Electrical Appliances
Notebook Computers
Turnover by Product
For the year ended 31 December
Total
Communication Facilities
and Others
Ironware Parts
Turnover (HK$ million)
2015 2014 Change
Amount %
3,712.5 2,415.0 1,297.5 53.7
587.5 588.4 0.9 0.2
480.3 633.6 153.3 24.2
471.9 687.7 215.8 31.4
821.9 466.6 355.3 76.1
6,074.1 4,791.3 1,282.8 26.8
P. 8
2,500
3,000
3,500
4,000
4,500
5,000
5,500
6,000
6,500
7,000
7,500
2013 2014 2015
51%
13%
14%
15%
7%
Turnover by Product
(HK$ million)
For the year ended 31 December
Total Turnover
Handsets Electrical Appliances
Notebook Computers
Ironware Parts
Communication Facilities and Others
51%
12%
13%
14%
10%
3,627.1
4,791.3
6,074.1
61%
10%
8%
8%
13%
P. 9
For the year ended 31 December
The Group’s gross profit and net
profit rose 32.2% and 40% YoY
respectively to HK$1.54 billion
and HK$702.8 million:
Focused on mid-to-high end
products such as metal casings
of handsets
Enhanced production quality
and efficiency through more
automatic, intelligent, and
standardized production
The Group’s net profit CAGR
recorded 29.5% from 2011 to
2015
Profit & Margin
Net Profit Net Profit Margin
For the year ended 31 December
Gross Profit Gross Profit Margin
(HK$ million)
(HK$ million)
605 731 798
1,144
1,512
19.2%
21.4% 22.0% 23.9%
24.9%
0%
5%
10%
15%
20%
25%
30%
0
400
800
1200
1600
2011 2012 2013 2014 2015
250 300 360 502
703
8.0% 8.8%
9.9% 10.5%
11.6%
0%
2%
4%
6%
8%
10%
12%
14%
0
200
400
600
800
2011 2012 2013 2014 2015
P. 10
0.70 0.80 0.90 1.00
1.60
1.00 1.20
1.60
2.00
2.10
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
2011 2012 2013 2014 2015
Maintains a stable dividend
payout history
Final dividend for 2015 is
proposed to be HK 2.1 cents
per share (2014: HK 2.0 cents)
Together with the interim
dividend of HK 1.6 cents, total
dividend will be HK 3.7 cents
for 2015 (2014: HK 3.0 cents)
Dividend History
For the year ended 31 December
(HK$ cent)
Interim
Dividend
Final
Dividend
P. 11
3.7
3.0
2.5
2.0
1.7
Key Financial Figures
(HK$’000) As at 31 Dec 2015 As at 31 Dec 2014
CAPEX 1,133,201 625,753
Net Assets 4,039,318 3,636,469
Net Assets per Share (HK$) 0.71 0.66
Current Assets Ratio (Times) 1.81 1.83
Cash and Bank Balances
(Includes Pledged Deposits) 935,973 477,624
Interest-bearing Bank Borrowings 1,495,677 979,978
Gearing Ratio* 35.5% 13.8%
* Consolidated Net Debt/ Total Equity
P. 12
Key Financial Figures (Cont’d)
As at 31 Dec 2015 As at 31 Dec 2014
Working Capital Turnover Days 150 157
Inventory Turnover Days1
120 125
Trade and Bills Receivables Turnover Days2
146 143
Trade and Bills Payable Turnover Days3
116 111
1. (Opening + Ending inventory) / 2 x 365 days / COGS
2. (Opening + Ending AR & BR) / 2 x 365 days / Sales
3. (Opening + Ending AP & BP) / 2 x 365 days / COGS
P. 13
Trade and Bills Receivables (HK$’000) As at 31 Dec 2015 As at 31 Dec 2014
Within 3 Months 2,363,751 1,907,767
4 to 6 Months
(Inclusive of the First and the Last Month) 274,776 216,833
7 to 9 Months
(Inclusive of the First and the Last Month) 25,976 35,902
10 to 12 Months
(Inclusive of the First and the Last Month) 10,068 8,762
More than 1 year 57,203 36,935
Impairment Allowances (48,835) (40,013)
Total 2,682,939 2,166,186
Key Financial Figures (Cont’d)
Inventories (HK$’000) As at 31 Dec 2015 As at 31 Dec 2014
Raw Materials 412,742 482,131
Work in Progress 421,146 360,711
Finished Goods (Molds excluded) 548,264 383,047
Molds 223,785 175,012
Total 1,605,937 1,400,901
P. 14
Business Segment Analysis
Extensive Customer Base
Handsets Electrical Appliances
New customers in FY2015
Ironware Parts Communication Facilities,
Automotives and Others
*
Notebook Computers/Tablets
* *
*
*
* * * * *
*
*
* *
* *
P. 16
* *
Handsets
Battery Cover
- Metal
- Uni-body (CNC)
- Nano Molding Technology
(NMT)
- Metal Stamping/ Forging
Technology
- In-Mold Lamination (IML)
- In-Mold Transfer (IMT)
- High Precision and
Advanced Decorative Plastic
- Laser Direct Structuring
(LDS)Technology
- Glass
- Composite Material
Cover Lens
- Glass
- PMMA Display Lens
- In-Mold Lamination
(IML)
- In-Mold Decoration
(IMD)
One-stop Solution Provider of Mechanical and
Decorative Components for Smart Mobile Communication
Picture Source: Cdn.ihs.com
Wordings in Red: Newly developed technology
Internal Parts
- Precision O Ring
Middle Frame
- Metal
- CNC Machining
- Nano Molding
Technology (NMT)
- Composite Die-
Casting
- Insert Molding
- Laser Direct
Structuring (LDS)
Technology
- Glass Fiber
Reinforced Plastics
Display Frame
- Metal stamping
- Insert Molding
P. 18
Major
Customers Major Handsets Models
Huawei
Xiaomi
OPPO
Others
R7 N3 A31 3007 A53
Coolpad
Qiku Youth
Coolpad
FengShang Max
P8 Max Media Pad M2 Mate 7 Huawei G8 Honor 4C
Redmi Note 3 Mi 4 Redmi 3
Asus Zenfone 2 Meizu -meilan2 LeTV - Le1
Major Customers and Handsets Models
Handsets
P. 19
355,563
49,421 63,560
492,973
208,070 135,440
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
China Mobile China Unicom China Telecom
4G Others
User Distribution Among Telecom Providers in China in Jan 2016
The domestic 4G network in China is expected to expand from cities into towns and
administrative villages. Also, the 4G base stations will account for more than 50% of all
base stations in 2016, according to the China Academy of Telecommunication Research.
(’000 users)
828,536
199,000 257,491
Sources: MIIT, China Mobile, China Unicom, China Telecom websites
Handsets
P. 20
108
72 70
52 49
188
130
81 85
56 55
214 20.0%
13.3%
13.0%
9.6% 9.1%
34.9%
20.9%
13.0%
13.7%
9.0% 8.9%
34.5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
0
50
100
150
200
250
Huawei Xiaomi Lenovo TCL OPPO Others
2015 Shipment 2016 Shipment
2015 Market Share 2016 Market Share
2015 Annual Shipment and 2016 Estimated
Shipment of Major Domestic Brands
Source: Trendforce, Jan 2016
(Million Units)
0%
12%
19%
29%
37%
0%
5%
10%
15%
20%
25%
30%
35%
40%
2013 2014 2015E 2016E 2017E
Adoption Rate of Metal Casing Among
Smartphones in China is Further Rising
Source: Credit Suisse estimate, Jan 2016
Global:
2015 -1.293 billion units
2016 – 1.397 billion units
China:
2015 - 539 million units
2016 – 621 million units
Handsets
P. 21
Applications
Smartphones
Notebooks
Tablets
Wearable Gadgets
Diversified Production and Decoration Methods
Unibody (CNC) Machining
Nano Molding Technology (NMT)
Composite Die-casting Technology *
Metal Stamping/ Forging technology*
7 Series Aluminum Anodizing*
Metal Injection Molding Technology (MIM)
Sand Blasting
Laser Etching
Polishing
Metallic Brushed Surface
The increasing popularity of metal casings in Mainland China resulted in notable growth in the Group’s
metal casings order volume:
Metal Casing
Handsets
*Latest technology
P. 22
Applications
Smartphones
Notebooks
Tablets
Wearable Gargets
Home Appliances
Diversified Production and Decoration Methods
In-Mold Transfer (IMT) Technology
In-Mold Lamination (IML) Technology
HTVM + Diamond Coating
Baby Skin Coating
UV Painting
Soft Touch
Automatic Mirror-effect Coating
Vacuum Metallization (NCVM)
Laser Etching
Metal Embedded Components
2K Molding
Thin Wall Molding
High Precision Clear Lens Molding
Sub-assembly
The Group has hydraulic/electric injection machines ranging from 40 tons to 2500 tons:
High Texture Vacuum Metallization
(HTVM) + Diamond Coating
Brushed Coating Baby Skin Coating Mirror-effect Coating
High Precision and Advanced Decorative Plastic Components
Handsets
P. 23
Rubber Compression Molding
Applications
Smartphones
Wearable Gadgets
Electrical Appliances
Automotives
Diversified Production and Decoration Methods
Cost effective tooling manufacturing process
Maximized cavitation
Economical manufacturing process for silicone functional parts
Rubber Compression Molding is a process that involves taking a rubber compound mixing with raw
material, applying heat and pressure to form a finished product, mainly for waterproof application:
Precision O Ring Precision O-ring cross section:
Able to produce 120 O-rings with 0.02mm discrepancy
and 0.02-0.04mm flash in one session with our moulds.
Handsets
P. 24
Spray and Polish Automated Assembly Injection Molding
2012 Manual
polishing
Fixture
assembly
line
2013
Automated
coiler type
polishing
machine
First
generation
ring-shaped
lamination
line
Manual assembly line
2014
Single-station
6-axis robotic
polishing
machine
Flexible
automated
lamination
line
Robotic arm+
automatic steel coil feeding
2015
Automated
polishing and
shaping line
All-in-one
polishing,
shaping,
surface
inspection
machine
Smart
assembly
line
Automatic steel coil
feeding +
all-in-one machine
One robot serving two
injection machines for
common embedded
components, achieving
24-hour fully automated
production
2016 Automated
assembly
workshop
Group’s Automated Production Milestones
P. 25
2015 Awards & Achievements
Awards Received From Market And Suppliers In 2015
2015 DHL/SCMP
Hong Kong Business Awards-
Enterprise Award
Selected as a constituent stock in
Hang Seng Composite SmallCap Index,
Hang Seng Broad Consumption Index
Excellent Supplier Award from Huawei
(Mechanical parts)
Supplier Quality Excellence Award
from Coolpad
Core Supplier of Coolpad
Excellent Technology Award from Xiaomi
P. 26
Electrical Appliances
Applications
Touch control for smart
home appliances
Panels of electrical
appliances
Advantages
Wide range of artwork selection
Internet Connection
Cost-effective solution
Electrical Appliances
Internet of Things (IoT) Related Casings
IML front panel
Printing sensor
IML plastic film
Inner structure showing sensor integrated into IML
front panel
P. 28
Notebook Computers/ Tablets
Applications
Notebooks
Tablets
Home Appliances
Black Brushed Finish Notebook Palm-rest Cover
Notebook Computers/ Tablets
Diversified Decorative Technologies
Technical Effects
Laminated Metal Filming (LMF)
Two-color Injection Molding
Anodizing
Magnesium-Aluminum Alloy Plating
Brushed Surface
Spray Painting
In-Mold Lamination (IML) technology
Laser Etching
P. 30
Ironware Parts,
Communication Facilities and Others
Ironware Parts,
Communication Facilities and Others
Applications
Interior decorative
components of automotives
Digital satellite TV receivers
High precision plastic set-top
boxes
Household durables
Sports accessories
Baby trolleys
Advantages
Provide one-stop solution of components to customers and boost
competitiveness
Produce aluminum components and high precision metal mechanical
parts with different surface effects
Advantages
Years of experience in plastic injection and surface decoration, with sizable
capacity
Provide one-stop solution of components to customers and hence enhance
competitiveness
Applications
Handles and bases of
electrical appliances
Metal casings of electrical
appliances
Metal casings of set top boxes
Ironware Parts
Communication Facilities and Others
P. 32
Automotives
Automotives
Production Volume of Automotives in China
from 2012-2015
Sales Volume of Automotives in China
from 2012-2015 (Ten thousand
units)
(Ten thousand
units)
Source: Statistics, China Association of Automobile Manufacturers
Development Trend of the Automotive Industry
1,552
1,809 1,992
2,108
375
403
380 342
0
500
1,000
1,500
2,000
2,500
3,000
2012 2013 2014 2015 Passenger Cars Commercial Cars
1,927
2,212
2,372 2,450
1,550
1,793 1,970
2,115
381
406
379
345
0
500
1,000
1,500
2,000
2,500
3,000
2012 2013 2014 2015
Passenger Cars Commerical Cars
1,931
2,198
2,349
2,460
P. 34
Speed Meter IP Trim Faceplate and Button Light Panel Air Vent
Application
Automotive interior
decorative components
Advantages
Wide range of artwork selection
Full utilization of production machinery and IML technology
Interior Accessories – In-Mold Lamination (IML) Technology
Door Trim
SPK Mesh Shift Knob Shift Cover Trim Door handle Steering Wheel Door Trim
P. 35
Automotives
Appendix
Group’s Development Milestones
1990 2000 2010 2020 1978
Ironware
Components
White Home
Appliances
Handsets
MP3
Players VCD/DVD
Players
Notebooks
Smart-
phones
(2.5/3G)
Smart-phones
(4G/metal casing)
Automotives
Group’s Major Products at Different Development Stages
Smart
Home
Appliances
Smart-
phones
(5G)
P. 37
Scalable R&D Centers and Factories
Kaohsiung, Taiwan
Nan’an City, Fujian
Shanghai
Changshu, Jiangsu
Shishi City, Fujian
Shenzhen, Guangdong
Xiamen, Fujian
Hong Kong
Headquarters
Factories
LDS R&D Centre
P. 38
Forward-Looking Statement
FORWARD LOOKING STATEMENT: This presentation contains “forward-looking statements” which are statements
that refer to expectations and plans for the future and include, without limitation, statements regarding Tongda’s future
results of operations, financial condition or business prospects as well as other statements based on projections,
estimates and assumptions. In some cases, these statements can be identified by terms such as "expect," "intend,"
"plan," "believe," "estimate," "may," "will," "should" and comparable words (including the negative of such words).
The statements in this presentation are based on current expectations, forecasts and assumptions involving risks and
uncertainties that could cause actual outcomes and results to differ materially. Many risks, uncertainties and other
factors, some of which are unpredictable and beyond Tongda Group’s control, could affect the matters discussed in
these forward-looking statements. These risks and uncertainties include, but are not limited to: our determination as we
finalize our financial results of fiscal year 2014 that our financial results and conditions differ from our current
preliminary unaudited numbers set forth herein; fluctuations in our stock’s market price; fluctuations in operating results
and cash flows; unexpected, adverse seasonal impacts on demand; changes in macroeconomic conditions, both in
China and internationally; changes in applicable laws and regulation; the occurrence of, success and expected financial
results from, the expected multiple product trends; our financial performance during and after the current economic
conditions; our ability to maintain and improve costs, risks and costs inherent in litigation; quality and delivery for our
customers; pricing trends and competition; ability to service customers and labor relations; our ability to take advantage
of perceived benefits of offering customers vertically integrated services; whether our realignment of our capacity will
adversely affect our cost structure; changes in technology; competition; anticipated growth for us and our industry that
may not occur; managing rapid growth; managing rapid declines in customer demand and other related customer
challenges that may occur; our ability to successfully consummate acquisitions and divestitures; managing the
integration of businesses we acquire; risks associated with international sales and operations; retaining key personnel;
our dependence on a limited number of large customers; business and competitive factors generally affecting the
casings manufacturing services industry, our customers and our business; other factors that we may not have currently
identified or quantified; and other risks, relevant factors and uncertainties identified in our Annual Report. Tongda Group
disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise. All forward-looking statements in this presentation are qualified by reference to
this paragraph.
P. 39
Disclaimer
The material contained herein is a presentation of general background information about
the Company’s activities at the date of the presentation, and is not an offer of securities
for sales. It is information given in summary form and does not purport to be complete. It
is not intended to be relied upon as advice to potential investors. This presentation may
not be reproduced or redistributed to any other person and you agree to keep the
contents herein confidential. No representation or warranty, express or implied is made
and no reliance should be placed on the accuracy, fairness or completeness of the
information presented herein.
Confidentiality
The documents being given to you are given to you on a confidential basis and must not
be passed to, or their contents disclosed to, any other person.
Disclaimer
P. 40
Thank you!
Tongda Group Holdings Ltd.
Rm1201-1203, 12/F, Shui On Centre,
6-8 Harbour Road, Wanchai, Hong Kong
Ms. Long Li
(852) 2872-2628
(852) 2510-0991
Contact Person:
Tel :
Fax :
E-mail :
Investor Relations Contact