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KIN YAT HOLDINGS LIMITED
Earnings up 45% in half-year to September 2009 on back of multi-pillar business portfolio
Hong Kong, December 3, 2009 - Electrical and electronic toys, appliances and motor manufacturer Kin Yat Holdings Limited (HKEx: 638) concluded the first half of fiscal 2009/10 with a 45% year-on-year growth in profit attributable to equity holders of HK$90,430,000 (2008: HK$62,189,000). The Group’s continuous efforts to control costs, automate production, enhance efficiency and optimize raw material procurement also produced admirable improvements in both the gross and net profit margins. As active business developments were offset by some order decreases amid the recession, there was a moderate 15% decline in turnover to HK$789,853,000 (2008: HK$927,851,000). The Group declared an interim dividend of HK5 cents (2008: HK4.5 cents).
During the six months to 30 September 2009, the electrical and electronic product line contributed 70% (2008: 67%) of the Group’s turnover, while the motor division accounted for 25% (2008: 22%) of total turnover. The feature plush and wooden toys segment brought sales contribution amounting to 4% (2008: 11%) of the Group’s total.
Mr Raymond Cheng Chor-kit, Chairman of Kin Yat Holdings, remarked: “We will continue to work on furthering segmental sales performance while exploring new growth opportunities. We also envisage that expanding our presence in new geographical markets, in particular in mainland China, will be an important component of our growth strategy into the future.”
The Group currently operates three major development and manufacturing centers, in Shenzhen and Shaoguan, customized to the production of toys, appliances and motors, of varying technical and manpower requirements.
The financial performance of the electrical and electronic toys stream continued to be fueled by a healthy order book supported by the success of several blockbuster movies, albeit to some extent offset by the adverse impact of the financial tsunami. The segment succeeded in scoring strong advances in profit margins which drove the Group’s overall improvement in margins and net earnings.
The toys line’s strategic focus on the movie-and-entertainment sector has helped fill the Group’s order book for the remainder of the year, with momentum continuing to be underpinned by the scheduled release of certain action-hero movies in 2010 and 2011.
The electrical appliances line also delivered stable performance in the first half. While sales contribution of the vacuum-cleaning robot series was still healthy, the Group is actively growing its product range by developing relevant new products.
Preliminary new product development efforts centered on accessories in relation to television games and healthcare appliances. The division is also taking measured actions to tap further into the mainland’s domestic demand with house-designed appliances and plush toys scheduled to be on shop shelves by the first half of 2010.
The micro-motor segment registered stable results reflecting the successful penetration into non-toy customer sectors. During the half-year period, the segment achieved notable success in growing sales in the office automation arena.
The acquisition of the productive assets of Sun Motor Group in the previous fiscal year also outlined a distinct path to developing new competences in AC and other types of motors to complement the segment’s existing DC product line. Despite the charging of restructuring-related costs to, and the impact of commodity price hikes on, the bottom line, the segment recorded improvements in gross and net profit margins. One major contributing factor to the improvement is the segment’s successful foray into high-margin products.
With an expanded and enhanced operating platform, the motor segment is in a sound financial and competitive position to exploit further business opportunities as they arise.
The resources-development division continues to facilitate the Group’s strategy to pursue long-term growth and returns, and represents a key component of the management’s long-standing commitment to business diversification.
In 2007, the Group embarked on geological exploration works on an ore mine of an area of approximately 39.23 square kilometers located in Lantian County, Xian City, Shaanxi Province, China（陜西省西安市藍田縣）.
The exploration works outlined the variations in geologic features, formation background, shape and size of strata, and ore deposit thickness within an area of 1.4 square kilometers. There is also a fundamental understanding of the structure and formation of ore deposits in this polymetallic ore mine. From the results of chemical analysis of the ores, the mine contains lead, zinc, copper, gold and silver deposits. Such initial findings point to the long-term potential of developing the mine area into a mid-sized project. Under industry classification, a mining project of medium scale has long-term metallic reserve estimates of 100,000 million tonnes. This encouraging discovery is of significant and guiding value for the ongoing development of the project.
Based on the positive results of the exploration work, the Group is expanding and expediting the exploration of other veins within the mine area. Documents to apply for an exploitation license have already been submitted with approval expected by mid-2010. The Group is currently moving forward plans to build a beneficiation plant for the processing of ore excavated from the mine. The site for the plant has been identified and related land acquisition work is now under way.
Mr Cheng continued: “The outlook for the medium term remains promising as we continue to benefit from our strong fundamentals. The diverse income-base spread as a result of timely investments, and as directed by the strong vision of our management, has also formed a solid platform to support the Group’s new business pursuits. Kin Yat has always fulfilled its promise of delivering return to shareholders while remaining a disciplined enterprise resilient to economic cycles. This pledge to shareholders remains unchanged.”
The Group maintains a strong financial position with aggregate cash in hand of HK$288 million (March 31, 2009: HK$179 million) and a net asset value of HK$884 million (March 31, 2009: HK$829 million) as at September 30, 2009. Gearing ratio remained healthy at 9.1% (March 31, 2009: 10.5%).
About Kin Yat Holdings Issued by : Through :
Six months ended September 30,
2009
2008
HK$ '000
HK$ '000
Turnover
789,853
927,851
Electrical and electronic products555,648
622,907
Motors (sales to external customers only)201,399
204,939
Feature plush and wooden toys30,961
97,613
Resources development1,845
2,392
Net profit attributable to equity holders of the Company
90,430
62,189
Segment Results from operating activities
Electrical and electronic products101,458
63,671
Motor14,501
14,914
Feature plush and wooden toys2,740
6,885
Resources development(10,826)
(4,986)
Interim dividend per share
HK5 cents
HK4.5 cents
Earnings per Share
- Basic
HK22.12 cents
HK15.21 cents
- Diluted
HK21.11 cents
HK15.20 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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