1999/2000 Third Quarterly Report
BUSINESS REVIEW
Third Quarter
For the three months ended 31st January 2000, the Group’s unaudited turnover and profit attributable to shareholders were approximately HK$63,660,000 and HK$8,032,000 respectively, representing a substantial increase of 58.6% and 208.2% respectively as compared to the corresponding period in 1999. The gross profit margin and net profit margin were approximately 34.0% (1999: 25.9%) and 12.6% (1999: 6.5%) respectively.
The following highlights the Group’s major accomplishments during the three months ended 31st January 2000:
- The Company was successfully listed on the Stock Exchange on 15th November 1999, with net proceeds of approximately HK$45,000,000 raised from the issue of new shares. Such accomplishment positions the Group to a new financial frontier that widens the horizon for growth and expansion.
- To cater for the vibrant growth of the telecommunication and IT industries, the Group has purchased two more production lines for manufacturing various models of chip inductors in Singapore. The facilities are scheduled to be operational in March 2000 and expected to raise the production capacity of our Singapore factory by two folds. The whole manufacturing facilities in Singapore are to be relocated to accommodate the expansion.
- In January 2000, the Group acquired a land lot of approximately 16 acres, with a cost of approximately HK$2,800,000, in the vicinity of its Zhongshan facilities for the manufacture of ferrite cores-manganese zinc series.
- The recovery from Asian Financial Crisis marked the good harvest in the period. New production facilities have been installed to cater for further expansion. The Group’s new production facilities for radio frequency coils, intermediate frequency coils, toroidal transformers and high quality fixed inductors in Zhongshan commenced pilot run production. The total cost of investment of the above machinery was approximately HK$21,000,000.
- The production facilities for ceramic saggers, which are used for manufacturing ferrite cores, were in pilot run, and are expected to be operational in March 2000.
All the above marked the Group’s commitment to persistent improvement which lays the foundation for further business development.
First Three Quarters
For the nine months ended 31st January 2000, the Group’s unaudited turnover and profit attributable to shareholders were approximately HK$196,942,000 and HK$31,910,000 respectively, representing an increase of 27.8% and 58.3% respectively as compared to the corresponding period in 1999. The gross profit margin and net profit margin were approximately 34.5% (1999: 29.5%) and 16.2% (1999: 13.1%) respectively.
The nine months ended 31st January 2000 represented a period of good harvest marked with aggressive growth in business and higher profitability due to the Group’s continual dedication to strategic business development. The Group was able not only to further reduce its overall production cost as a result of improvement in production technology, but also to market its products more effectively and efficiently during the period.
In view of the rapid convergence of the telecommunication sector and the Group’s strategic promotion in the field, over 100% growth in turnover to the telecommunication sector has been achieved during the nine months ended 31st January 2000 as compared to the corresponding period in 1999. Following the great business opportunities emerging in the telecommunication industry, further rooms for expansion are expected in the near future.
FUTURE PLANS AND PROSPECTS
Looking forward to the coming year, the Group will adhere to its principles and strive to materialise its existing plans.
Research and Development
Focusing on the world’s rapidly growing technologies: Local Area Networking (LAN), wireless broadband communications, and interactive voice, data and video applications, the Group’s research and development centre in Tokyo, Japan, planned to work more closely with its customers to capture opportunities arising from the fields and develop “design-in” components of information technology products such as LAN hubs, routers and switches, high-speed personal computer data interfaces, cable modems and power converters.
New Products Development
The new millenium is expected to be an age of explosive growth in information technology. In order to meet the new challenges and simultaneously capture the new sphere for development, the Group has planned to invest into new production facilities for the manufacture of ferrite cores-manganese zinc series to manufacture line filters, EMI filters and switching mode power supply (SMPS), which are indispensable components in computers, telecommunication equipment and household electrical appliances.
E-commerce
Entering into the Internet Era, the Group is developing e-commerce functionality for its “on-line sales” system and product specification simulation system. System testing is underway and positive responses from sample customers have been received. Upon its completion, customers will be able to place orders, request for samples, and set their product specification through Internet, which enables the Group to provide more tailor-made and value-added services to its customers. The Group further planned to extend the system to provide platforms for its over 6,000 business partners, customers and suppliers for business to business solutions in the electronic component field.
Further Vertical Integration
The Group is cooperating with the local authority in Shaoguan, Guangdong Province, to develop the technology in refining ferrite powder. The project is now at the stage of development and experiment, the result of which is expected to come out in the coming three months. An abundant supply of high-quality and low-cost ferrite powder to the Group is expected for the manufacture of ferrite cores, which will save considerable production cost and further improve the quality of the Group’s products.
Overseas Markets
To better serve the Group’s prestigious multinational customers who envisioned the booming industries of India and set up production facilities in the country, a new representative office in Bangalore, India, was set up in January 2000. Besides, the Group is also actively considering the feasibility of setting up new representative offices and manufacturing facilities around the world, in a bid to exploit the unique competitive edges, such as technology and human resources in different countries. Meanwhile, the Group will continue to explore more overseas markets and establish a much wider customer base.