Innovation Driven, Go Smart
Boosts R&D Investment for the Development of Smart Home Business
Results Highlights:
For the three months ended 31 March 2016, the Group's turnover reduced by 35.9% year-on-year ("yoy") to approximately HK$741.4 million, mainly due to business restructuring of one of its major customers, the change in cooperation model between the Group and one of its customers and the decline of sales in traditional products.
Sales revenue of audio products reached approximately HK$ 363.2 million, dropped by 15.1% yoy;
Sales revenue of video disc player reached approximately HK$332.6 million, decreased by 50.3% yoy;
Sales revenue of smart home products reached approximately HK$5.3 million; and
Sales revenue of other products (mainly components and R&D) reached approximately HK$40.4 million, representing a reduction of 31.7% yoy.
Gross profit was approximately HK$106.3 million, decreased by 30.0% yoy, while gross profit margin widened to 14.3% from 13.1% in Q1 2015. Operating profit fell by 24.9% yoy to approximately HK$37.3 million. Profit attributable to owners of the parent reached approximately HK$27.1 million, representing a decline of 26.4% yoy. Net profit margin was 3.7%.
Innovative Business Team has been set up with the introduction of industry professionals.
Intelligent security products have started commercial shipments and more intelligent products will be shipped in Q2 2016.
The overseas set top box ("STB") business has started commercial shipments and made major breakthroughs in India market.
Advanced Broadcasting System-Satellite ("ABS-s") products recorded substantial growth.
(19 April 2016, Hong Kong) Tonly Electronics Holdings Limited ("Tonly Electronics" or "the Group"; SEHK stock code: 01249) today announced its unaudited first quarter results for three months ended 31 March 2016.
For the three months ended 31 March 2016, the Group's turnover amounted to approximately HK$741.1 million, dropped by 35.9% yoy. Gross profit decreased by 30.0% yoy to approximately HK$106.3 million, while gross profit margin widened from 13.1% in the same period last year to 14.3%. Operating profit fell by 24.9% yoy to approximately HK$37.3 million. Profit attributable to owners of the parent declined by 26.4% yoy to approximately HK$27.1 million.
With the rapid development of the Internet and wireless technology, the market demand for smartphones, smart TVs and other new audio corresponding peripheral products is becoming huge. In response to the prevalent market trend, the Group has actively strengthened its R&D investments in new audio products to further develop single speaker and wireless speaker products to enhance the overall product competitiveness. During the period, one of the Group's major customers underwent business restructuring which caused a significant drop in order amount of audio products, resulting in decline in segment revenue to HK$363.2 million, a decrease of 15.1% yoy. The turnover of new audio products increased by 1.9% yoy to approximately HK$214.4 million.
With the growing popularity of tablet PCs and smartphones, the traditional DVD player market is under pressure. By strengthening software development capabilities and improving product design, the Group was able to enhance the competitiveness of its media box products. The Group established cooperation with foreign and domestic internet companies to develop communication operator business in order to promote its media box products sale. Sales volume of ABS-s products surged 252.6% yoy to HK$ 91.0 million. During the period, the cooperation model between the Group and one of its customers has changed, pursuant to which the customer provided the major materials for its orders. Although the business volume with this customer increased by a fairly substantial amount, sales volume decreased significantly. Sales revenue of the Group's video disc player decreased by 50.3% yoy to HK$332.6 million in Q1 2016.
In early January 2016, the Group launched three flagship product series: KiWi, KiWi Mini and KiWi Junior at the Global Consumer Electronics Tradeshow - Consumer Electronics Show ("CES"), which held in Las Vegas, the United States, providing solutions for users in three major aspects of security, health and fitness, and energy management. The products provide a wide-ranging package of services encompassing smart sockets, smart lighting and smart switches, with full coverage of convenience management, which allows users to enjoy the ultimate smart life experience everywhere. During the period, sales revenue generated from the Group's smart home business was HK$5.3 million.
In terms of production and supply chain management, the Group is committed to enhance its human resources system, including successful implementation of smart warehouse logistics management and optimization of factory equipment maintenance and management systems, as well as uplifting of actual production capacity of the Huizhou production base. In order to further develop plastic molding business, the Group consolidated the molding and plastic parts manufacturing business of Guangdong Regency Optics-Electron Corp and combined the entire production process with its upstream operations to reduce production costs. Leveraging its global supply chain advantages, the Group has established HTS and DVD production lines in its factory located in Indonesia, which enhanced the operating capabilities of overseas supply chain and successfully acquired new customers, boosting shipment of the region substantially.
Management of Tonly Electronics, stated "With the growing prevalence of internet and wireless technology, we will put great efforts in developing intelligent hardware business and focus on three major businesses, namely, video products, OTT and media boxes, as well as smart home business in the future. We will also strengthen the cooperation with strategic partners and broaden our customer base by optimizing our new product portfolio. Although business transformation will lead to short-term fluctuations or decline in the Group's turnover this year, we will continue to explore new customers and pay more efforts to develop smart home products and other Internet-related products to improve overall profitability."
(1) Mainly include HTS and Micro & Mini, wireless speakers, soundbars, audio docks and headphones
(2) Mainly DVD players and BD player, OTT (over-the-top) Internet services and contents set top box (STB) and ABS-s
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About Tonly Electronics
Tonly Electronics Holdings Limited (stock code: 01249) as a high-tech smart products manufacturer with competitive advantages in the industry, is principally engaged in the research and development, manufacturing and sales of audio-visual products and wireless intelligent interconnectivity products. Tonly Electronics is also one of the ABS-s manufacturers under the programmes of "Hu Hu Tong" and "Cun Cun Tong" initiated by The State Administration of Radio, Film, and Television ("SARFT"). The Company will establish the most competitive new ODM industry platform based on acoustic and wireless internet technology. Its ultimate controlling shareholder is TCL Corporation (a company listed on the Shenzhen Stock Exchange, Stock code 000100.SZ).
For more information, please visit its website at www.tonlyele.com.
For further information, please contact:
Cornerstones Communications Ltd.
Sam Choi/ Sharis Siu / Sara Qian/ Victoria Chiu
T: (852) 2903 9289/ 2903 9292 / 2903 9282/ 2903 9281
E: tonly@cornerstonescom.com
End of Press Release