Mr Rowell Yang Long-san, Chairman and Chief Executive Officer, PROVIEW International noted: "The Group's revenue growth was underpinned by the continuous global economic growth, digitization of TV specifications, as well as the rapid drop in prices of large-size TFT-LCD panels. These environmental parameters have contributed to significant surge in consumer demand for TFT-LCD TVs."
The rapid slide in TFT-LCD panel prices has closed the gap between CRT and TFT-LCD monitor unit prices, resulting in further diminution in global demand for CRT monitors. During the period under review, the Group shipped 4.25 million units of TFT-LCD monitors, representing a volume growth of 12.7% year on year. On the other hand, shipment of CRT monitors during the first half decreased by 59.2%to 1.28 million units of the reporting period. The Group sold around 434,000 units of full-set and semi-knocked down (SKD) TFT-LCD TVs during the period, a 267.8% increase year on year.
To capitalize on the full potential of business opportunities brought by the rise in demand for TFT-LCD monitors and TVs, the Group has strategically altered CRT monitor production lines into TFT-LCD monitor and TV production in line with customer-specific shipment needs.
Breaking down by product, the gross profit margin on TFT-LCD monitor sales slightly increased to 7.36% from 7.26% of the previous year, as a result of greater vertical integration for LCD modules undertaken by the Group in-house, as well as stronger economies of scale. The decline in demand for CRT monitors, coupled with the increase in the costs of CRT tubes, resulted in a reduced gross profit margin on CRT monitor sales to about 6.13% from 7.11% last year. The gross profit margin for TFT-LCD TVs decreased from 11.5% last year to 8.1% due to fierce price competition.
Sales to North America, Western Europe and Asia made respective contributions of 28%, 18% and 45% to the Group's consolidated turnover. Sales to Asia recorded a higher contribution to total turnover on the back of strong economic growth in China, as well as the shift of procurement modes of European customers from direct purchase via their European headquarters to through procurement centers in Asia. Businesses in other regions continued to grow steadily.
According to DisplaySearch, the 2007 market scales of TFT-LCD monitors and TFT-LCD TVs will amount to 150 million units and 73 million units respectively, representing growth of 15.4% and 87.2% respectively. Industry researchers expect TFT-LCD TVs to become the display industry's next major growth driver after LCD monitors in the coming year.
The Group is well positioned to take advantage of the continuous trend to outsource the design, manufacture and servicing of display products. It expects TFT-LCD TV products to be a key revenue growth driver in the future. From the initial rollout in 2004, the Group has aggressively expanded its production, design and cost-effective innovation capabilities to capture the strong potential of TFT-LCD TVs.
The Group also aims to further diversify its geographic coverage and increase sales to emerging markets. While the demand for CRT monitors is declining in developed markets, this product segment continues to have significant momentum for cost-conscious customers in such emerging markets as Africa, India, Eastern Europe and Latin America. By building up customer and channel strengths in the emerging markets, the Group is well prepared for the expected future migration of these markets to TFT-LCD monitor and TFT-LCD TVs. Furthermore, as many competitors have ceased the production of CRT monitors, the Group is able to capture existing market share with minimal capital and R&D input.
Mr Yang continued: "As part of our strategy to expand production capacity to achieve greater economies of scales and cost savings through purchases of raw materials and components, we are expanding our Ningbo manufacturing facility to 8 million units of TFT-LCD monitors and 2 million units of TFT-LCD TVs annually by the end of 2007."
The Group works with multiple panel manufacturers to ensure efficient access to TFT-LCD panels to fulfill requirements of TFT-LCD product manufacturing. It intends to work even more closely with world-leading TFT-LCD panel manufacturers including CMO, AUO, Samsung and SVA. In 2006, the Group established manufacturing facilities in Ningbo, which are expected to fulfilll requirements of CMO, and to enable the Group to secure new orders through vertical integration and strategic alliance with CMO.
As at December 31, 2006, the Group's cash and bank balances stood at approximately HK$1,514 million (June 30, 2006: HK$1,883 million). Inventories increased to around HK$1,963 million (June 30, 2006: HK$1,928 million), with inventory turnover days reducing to 45 days (June 30, 2006: 47 days). The inventories were slightly higher because of the higher material costs of TFT-LCD TVs as compared to monitors.
Financial Highlights
| Six months ended December 31, | ||
| 2006 | 2005 | |
| HK$ '000 | HK$ '000 | |
| Turnover | 8,510,914 | 8,406,595 |
 LCD monitors |
||
| Units sold |
4.25 million units | 3.77 million units |
| Turnover |
5,536,000 | 5,748,000 |
| CRT monitors |
||
| Units sold |
1.28 million units | 3.14 million units |
| Turnover |
976,000 | 1,794,000 |
| TFT-LCD televisions |
||
| Units sold |
434,000 units | 118,000 units |
| Turnover |
1,843,000 | 588,000 |
| Profit from operations | 197,829 | 189,498 |
| Net profit attributable to shareholders | 102,815 | 107,231 |
| Basic earnings per share | HK15.9 cents | HK16.61 cents |
| Interim dividend per share | HK2.5 cents | HK2.5 cents |
About PROVIEW International
PROVIEW International Holdings Limited (HKEx: 334) is a world top-five display devices producer owning globally recognized house brands including PROVIEW and EMC. The Group commands a global retail-sales and distribution network covering 50 countries with strong leverage of its world-class manufacturing facilities in China, Brazil, Mexico, Germany and Russia. For more information, please visit www.proview.com.