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Valuetronics Holdings Ltd, a premier design and manufacturing partner for the world’s leading brands in the consumer electronics (CE) and industrial and commercial electronics (ICE) sectors, has announced that its net profit for the three months ended 30 June 2016 (first quarter of fiscal year 2017) reached HK$29.6 million, on the back of a revenue of HK$477.5 million.
Both revenue and net profit saw a decrease when compared to corresponding quarter ended 30 June 2015 as the company phased out and exited the mass market LED light bulb business in the third quarter of the last financial year.
Ricky Tse Chong Hing, chairman and managing director of Valuetronics, commented: "We are recovering after exiting the mass market LED light bulb business, supported by the strong growth of our ICE segment. Our gross profit margins have also improved as a result but the ICE segment does not naturally have the volumes of the CE segment so it will take a while to bring up our total revenue back to previous levels. I am pleased that the ICE segment continues to grow steadily and we will continue our efforts to pursue opportunities in this segment leveraging our design and development capabilities."
Q1FY2017 Financial Highlights
The Group's revenue for 1Q FY2017 decreased by 13.2% or HK$72.5 million from HK$550 million in 1Q FY2016 to HK$477.5 million in 1Q FY2017.
In 1Q FY2017, ICE segmental revenue increased by 15.8% to HK$312.5 million from HK$269.8 million in 1Q FY2016. The increase was mainly contributed by the increase in demand from some ICE customers.
The CE segmental revenue on the other hand, decreased by 41.1% to HK$165.0 million from HK$280.2 million in 1Q FY2016, which was mainly due to the decline in demand of LED lighting products, as the group phased out and exited from the mass market LED light bulb business in the third quarter of last financial year.
The group’s gross profit for 1Q FY2017 decreased slightly by 2.4% to HK$76.6 million from HK$78.5 million in Q1FY2016, however its gross profit margin increased to 16.0% from 14.3% in 1Q FY2016. The improved gross profit margin was mainly due to a change in product sales mix during the period.
Selling and distribution costs decreased by 5% to HK$8.1 million for 1Q FY2017 in line with the decrease in revenue, whereas administrative expenses increased slightly by 2.4% to HK$36.1 million in line with the inflation.
As a result of the above, the group's net profit for 1Q FY2017 decreased by 11.6% to HK$29.6 million from HK$33.5 million in 1Q FY2016.
Healthy Financial Position
As at 30 June 2016, the group had a net asset value per share of HK234.2 cents (31 March 2016: HK226.1 cents), total assets of HK$1,634.4 million (31 March 2016: HK$1,506 million) and shareholders’ funds of HK$888.3 million (31 March 2016: HK$857.3 million). The group had cash and cash equivalents of HK$744.9 million (31 March 2016: HK$689.3 million) due to the strong free cash flow generated for the period and continues to have zero debt as at 30 June 2016.
The group continued to benefit from its widened customer base in the ICE segment and the growth of the ICE segment during 1Q FY2017, mitigated the decline in CE revenue. With the increased weightage in the ICE segment, overall gross profit margin has improved.
With the exit from the mass market LED light bulb business since the third quarter of FY2016, the revenue contribution from the CE segment has stabilized between HK$140 million and HK$165 million per quarter from the second half of FY2016.
The ICE segment continued to achieve a sustainable double digit growth in 1Q FY2017, riding on the new revenue stream from the automotive industry, which further extended the breadth of the ICE segment. Serving the automotive industry has also placed the group in a new era of customer requirements characterized by visibility, flexibility, scalability and stringent quality deliverables, and the group will continue to pursue opportunities in the segment.
Although Valuetronics is well positioned to take advantage of a wider product portfolio and opportunities in the pipeline, it continues to operate in an uncertain macro-economic environment like most manufacturers. It will remain mindful of potential impacts on its business that may result from a stronger US dollar or slowdown in China's economy. However, barring unforeseen circumstances, the management expects the Group to remain profitable for the financial year ended 31 March 2017.
Valuetronics is a premier design and manufacturing partner for the world’s leading brands. The Group’s customer base covers the industrial and commercial electronics, medical equipment and consumer electronics industries, which span across a wide geographical region that covers America, Europe and the Asia Pacific. The Group’s customers include OEMs and ODMs as well as international brand owners. Headquartered in Hong Kong, the Group’s main manufacturing facility is located in Long Shan 2nd Road, Western District of Science and Technology Park, Dayawan Economy and Technology Development District, Huizhou City, Guangdong Province, PRC. For more information, click here.