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KIN YAT HOLDINGS LIMITED
Reports stable performance for year to March 2009 against economic headwinds
Hong Kong, July 22, 2009 - Toys, electrical appliances and motors manufacturer Kin Yat Holdings Limited (HKEx: 638) announced that the Group was able to sustain relatively stable results, with turnover decreasing only marginally by 4% year-on-year to HK$1,574,220,000 after a 78% record growth in 2007/08 to HK$1,637,242,000. Profit attributable to equity holders of the Group was down 24% to HK$89,238,000 (2008: HK$117,268,000), mainly due to a one-off item under other expenses of HK$29,247,000 from the acquisition of the productive assets of Sun Motor Group, a motor manufacturing group (now in liquidation). Excluding this item, both the gross and net margins improved. The Group declared a final dividend of HK4 cents (2008: HK5.5 cents), which together with the interim dividend of HK4.5 cents, represents a payout ratio of 39% (2008: 35%).
During the year, the electrical and electronic product line contributed 73% (2008: 78%) of turnover, while the micro-motor division accounted for 20% (2008: 17%). Efforts to develop the feature plush and wooden toys segment have resulted in sales contribution of 7% (2008: 5%).
Kin Yat Holdings Deputy Chairman Mr Vincent Fung Wah-cheong noted: “The set of stable results for fiscal 2008/09 attests to our solid foundation based on a strategic spread of research-and-development-focused industrial disciplines. Our multi-pillar business structure helps build management and marketing resilience within the Group.”
The electrical and electronic products segment, which develops electronic toys and electrical appliances, reported a 10% decrease in turnover to HK$1,145,893,000 (2008: HK$1,271,597,000), following last year’s unprecedented peak in sales.
The performance of the toys line continued to be underpinned by its strategic focus on the movie-and-entertainment sector with tie-ins with the release of major action-hero and other films. The success of these blockbuster movies helped fill the Group’s order book during the year.
The electrical-appliances line continued to perform well, driven mainly by the AI appliances, highlighted by the line of vacuum-cleaning robots developed with NASDAQ-listed iRobot Corporation. Sales momentum of the vacuum cleaning robot series remains robust, but the division is prepared for a leveling-off in demand as the product moves to a more mature long-term development phase.
The micro-motors segment continued to perform its key role of providing a steady income base for the Group, delivering external sales of HK$315,677,000 (2008: HK$275,074,000), up 15% as the segment diversifies further into non-toy customer sectors.
Business diversification of the motors segment was also helped by the division’s acquisition of the productive assets of Sun Motor Group. The acquisition will provide a new avenue for the Group to tap into new customer bases complementing its existing clientele, as well as to expand production capabilities. The acquisition has resulted in a one-off cost of HK$29,247,000. These initial investments will inevitably have an impact on the segment’s short-term results.
The resources-development division is the Group’s strategic vehicle for seeking long-term growth and returns.
The segment’s upstream development followed the acquisition of a 70% equity interest in Xian Jinshi Mining Company Limited (西安金石礦業有限公司) in September 2007. The Group was awarded an exploration licence for a polymetallic ore mine, conferring the right to explore within a mining area of approximately 39.23 square kilometers, containing primarily lead, zinc and gold deposits, in Lantian County, Xian City, Shaanxi Province (陜西省西安市藍田縣). The mine is located on the western end of Xiao Qin Ling (小秦嶺) Mineral Belt and to the northwest of Jindui Cheng (金堆城) Fault Zone.
General geological exploration works on the ore mine have led to the discovery of 21 mine veins. Based on the geological investigation of three of the veins up to mid-2009, total inferred and indicated mineral resources, in accordance with the classification for resources/reserves of solid fuels and mineral commodities in the PRC (Standards 333 and 332), amounted to a minimum of 360,000 tonnes.
Based on the positive results of the exploration work, the Group is preparing the necessary documents to apply for an exploitation license. The Group expects to submit the application to the Land and Resources Bureau of Shaanxi Province (陜西省國土資源廳) in September 2009, with approval expected by 2010.
Studies have been undertaken by the Sixth Geological Team of the Shaanxi Provincial Bureau of Geological Minerals Exploration (陜西省地質礦產勘查開發局第六地質隊), the Group’s PRC partner, which holds 30% of Xian Jinshi.
The feature plush and wooden toys segment is a spin-off from the core electronic toys operation. Built on Kin Yat’s premise of innovation and quality, the plush toy line has quickly established itself to make inroads into both the conventional toy and movie-and-entertainment sectors. The non-electronic toys segment reported a 28% increase in turnover to HK$109,314,000 (2008: HK$85,255,000) during the year.
As at March 31, 2009, the Company had aggregate cash in hand of HK$179 million (September 30, 2008: HK$150 million) and a net asset value of HK$829 million (September 30, 2008: HK$805 million). Gearing ratio remained healthy at 10.5% (September 30, 2008: 13.6%).
About Kin Yat Holdings Issued by : Through :
Year ended March 31,
2009
2008
HK$ '000
HK$ '000
Turnover
1,574,220
1,637,242
Electrical and electronic products1,145,893
1,271,597
Motors (sales to external customers only)315,677
275,074
Feature plush and wooden toys109,314
85,255
Resources development3,336
5,316
Net profit attributable to equity holders of the Company
89,238
117,268
Segment Results from operating activities
Electrical and electronic products143,425
123,030
Motor515
24,092
Feature plush and wooden toys7,299
5,621
Resources development(11,050)
(13,117)
Final dividend per share
HK4.0 cents
HK5.5 cents
Interim dividend per share
HK4.5 cents
HK4.5 cents
Earnings per Share
- Basic
HK21.83 cents
HK28.71 cents
- Diluted
HK21.82 cents
HK28.66 cents
Kin Yat Holdings Limited (HKEx: 638) is an industrial group with a niche in electronic and mechanical productions. It has a stretch of toy, electrical appliances and motor manufacturing businesses, all based on its strong cost-effective engineering and production platform in Shenzhen and Shaoguan, China.
Kin Yat Holdings Limited
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Angus Ho or Jenny Lee
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