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KIN YAT HOLDINGS LIMITED
Announces strong 2007/08 interim performance
on four-pillar business streams
Hong Kong, December 14, 2007 - Leading industrial group Kin Yat Holdings Limited (HKEx: 638) today announces that after achieving record-breaking turnover last year, its strong performance has extended well into the first half of fiscal 2007/08. Turnover for the six months ended September 30, 2007 increased 70% year on year to HK$800,687,000 (2006: HK$471,928,000), setting another half-year record for the Group, with profit attributable to equity holders of the Company also rising substantially by 81% year on year to HK$60,865,000 (2006: HK$33,536,000). The Group declared an interim dividend of HK4.5 cents (2006: HK2 cents).
The core operations of toys, electrical appliances and motors, each contributed 51% (2006: 61%), 27% (2006: 5%) and 21% (2006: 31%), respectively, in turnover to the Group during the half year, indicative of a healthy Group business portfolio and earnings base.
Mr Raymond Cheng Chor-kit, Chairman of Kin Yat Holdings, said: “We firmly believe that our four-pillar business structure, with a balanced portfolio of steady revenue contributors, returns-generating operations, growth drivers and a pipeline of future development projects, is the right direction for the Group. The four business streams are also complementary in terms of revenue generating patterns. And to translate our improved revenue-generating capabilities into bottom-line increases, we devote considerable management attention to cost elements.”
The Group's growth aspirations have spurred the development of its third production base in Mainland China. Located in Shaoguan, Guangdong Province, this new base, commissioned in the fourth quarter of 2007, will accommodate planned expansion in toy manufacturing, as well as lower the overall cost structure of the toys operation, while allocating the higher-cost Shenzhen base to the development of the higher-margin artificial-intelligent (AI) appliances business.
During the period under review, safety issues have aroused some concern over the standard of some Chinese-made toys, resulting in overall industry uncertainties. As a reputable manufacturer with over 30 years of experience, Kin Yat imposes the most stringent quality standards on materials sourcing and production processes.
Despite a challenging market and operating environment, the Group reported solid growth in toys segment turnover to HK$407,455,000 (2006: HK$285,755,000), up 43% over the comparative period. Major contributors to this growth included re-orders for Star Wars products and new orders for Spider-Man 3 and Transformers products. Due to strong market response, orders for the Transformers line in particular far exceeded forecasts.
Looking ahead, confirmed orders for movie-themed toy products will contribute high utilization of Group facilities until the last quarter of 2007, with some orders extending into the first quarter of 2008. Development of new TV-series relate toy products is also underway.
The Group is encouraged to report steady segment turnover and profit growth for the motors division, which has continued with its strategic shift to higher-margin products, as well as the diversification to a much broader end-user market base. With the successful completion of product testing and trials, the division has obtained increasing orders from customers in the automotive, household and personal care products, office automation and audio-visual equipment sectors.
The division generated external sales of HK$171,617,000 (2006: HK$145,609,000) during the reporting period, which was up 18% year on year.
Meeting its business target of being one of the Group's major growth drivers, the electrical appliances segment recorded a nine-time leap in turnover to HK$218,913,000 (2006: HK$22,295,000). The division has developed a specialization in AI appliances, highlighted by iRobot Roomba, a series of vacuum cleaning robots. With first shipment in July 2007, the division booked only three months' sales of iRobot Roomba into first-half segment turnover, but this new line has already contributed turnover of HK$186 million to the appliances division.
Production was maintained at peak levels during the last quarter of 2007. Looking at current sales figures and the order book, management forecasts an even stronger sales performance for iRobot Roomba in the second half. The AI appliances line is expected to continue to fuel significant sales growth for the Group.
On the other hand, intensive research-and-development work at the resources development division has led to the establishment of a more sophisticated business platform for the future roll-out of upper-end Indium Tin Oxide (ITO) target products. ITO target is applied in the production of thin transparent electrically conductive film for liquid crystal display (LCD) devices.
In addition to the development of downstream products, the Group is also making active pursuits to tap business opportunities in the upstream mining arena. On September 24, 2007, the Group acquired a 70% equity interest in Xian Jinshi Mining Company Limited to participate in the exploration of a polymetallic ore mine in Xian city, Shaanxi Province. Management maintains a positive outlook for the ongoing development of this new business initiative.
The Group maintains a strong financial position in support of its continued initiatives to solicit new investment opportunities. It had cash in hand of HK$71 million (2006: HK$113 million) and a healthy gearing ratio of 2.3% (2006: 2.1%) as at September 30, 2007.
About Kin Yat Holdings Issued by : Through :
Six months ended September 30,
2007
2006
HK$ '000
HK$ '000
Turnover
800,687
471,928
Toys and related products407,455
285,755
Motors(including sales to Kin Yat Group)175,608
149,050
Sales to Kin Yat Group(3,991)
(3,441)
Electrical appliances218,913
22,295
Resources development2,702
18,269
Net profit attributable to shareholders
60,865
33,536
Segment Results from operating activities
Toys and related products29,075
14,310
Motors (including sales to Kin Yat Group)34,810
31,035
Electrical household appliances17,200
(386)
Resources development(6,691)
(599)
Interim dividend per share
HK4.5 cents
HK2 cents
Earnings per Share
- Basic
HK14.91 cents
HK8.28 cents
- Diluted
HK14.88 cents
HK8.26 cents
Kin Yat Holdings Limited (HKEx: 638) is an industrial group with a niche in electronic and mechanical productions. It has a stretch of toys, motors, electrical appliances and resources development businesses, based on its strong cost-effective engineering and production platform in Shenzhen and Shaoguan, China.
Kin Yat Holdings Limited
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