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Public company info - Wai Chi Holdings Co. Ltd. , 01305.HK
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Wai Chi Holdings Co. Ltd., 01305.HK - Company Profile
Chairman Chen Chung Po
Share Issued (share) 217,000,000
Par Currency Hong Kong Dollar
Par Value 0.01
Industry IT Hardware
Corporate Profile Business Summary: The principal activities of the group are manufacturing and trading of Light-Emitting Diode (“LED”) backlight and LED lighting products and provision of high-tech electronic components and products sourcing business. Performance for the year: The total revenue for the year ended 31 December 2020 was approximately HK$1,395,888,000, representing a decrease of 37.0% as compared to approximately HK$2,214,974,000 for the year ended 31 December 2019. For the year ended 31 December 2020, the Group’s overall gross profit was approximately HK$198,417,000, representing a decrease of 13.3% from approximately HK$228,967,000 in 2019. Overall gross profit margin was 14.2% in 2020, representing an increase of 3.9 percentage points from 10.3% in 2019. Business Review For the year 2020, the Group’s resilience has been strongly tested in times of the COVID-19 pandemic and many other heightened uncertainties. Although the Group’s production was forced to halt at the beginning of the year due to the imposition of lockdown restrictions in the PRC, the Group’s operation soon resumed with the implementation of health and safety precautionary measures, and its core business sectors have gradually recovered from the impacts of COVID-19 pandemic by the end of 2020. The enterprise resource planning (“ERP”) system implemented by the Group was especially effective in cost control through timely monitoring of its operation process to promote information exchange between functions, storing and managing operational data. It has enhanced financial and work efficiency with a higher level of process automation during the manufacturing process. The total revenue for the year ended 31 December 2020 was approximately HK$1,395,888,000, representing a decrease of 37.0% as compared to approximately HK$2,214,974,000 for the year ended 31 December 2019. Disregarding the high-tech electronic components and product sourcing business, which was intended to fund the Group’s transitional period temporarily, revenue from the core business sectors was approximately HK$1,062,451,000, representing an increase of 1.7% as compared to approximately HK$1,044,883,000 of the year ended 31 December 2019. Revenue from the sales of LED backlight products was approximately HK$988,091,000 (2019: approximately HK$950,106,000), representing an increase of 4.0%. Such increase was mainly contributed by the steady increase in sales of the automobile onboard displays and the other industrial equipment displays, which grew 10.5% and 8.1% respectively. Revenue from the sales of LED lighting products was approximately HK$74,360,000 (2019: approximately HK$94,777,000), representing a decrease of 21.5%, which was on account of an 83.8% decrease in revenue from the public lighting segment. LED Backlight Business The three types of the Group’s LED backlight products are: 1) automobile onboard displays; 2) television displays; and 3) other industrial equipment displays. For the year ended 31 December 2020, revenue derived from LED backlight products in automobile onboard displays, television displays and industrial equipment displays were approximately HK$706,600,000, HK$60,911,000 and HK$220,580,000, respectively. Automobile onboard displays recorded a 10.5% increase in sales for the year ended 31 December 2020. It continued to be the largest contribution to the Group’s LED backlight business during the year ended 31 December 2020, representing approximately 71.5% of total LED backlight products sales (2019: approximately 67.3%). Considering the declining price of OLED displays in the domestic television market, fewer consumers opt for the lower-end LCD TVs. The Group, therefore, was not surprised by a drastic revenue drop of 43.0% in LED backlight products for television displays for the year ended 31 December 2020. Equipment displays backlight products recorded an increase of 8.1% in revenue for the year ended 31 December 2020, which was attributable to the increased production for medical devices and other industrial equipment. LED Lighting Service Business The Group’s LED lighting business is classified into two categories, namely public lighting and commercial lighting. The Group provides various services including products, lighting solutions design, installation, and maintenance etc. During the year ended 31 December 2020, revenues from public lighting and commercial lighting were approximately HK$2,559,000 and HK$71,801,000 respectively, observing decreases in the former of 83.8% and in the latter of 9.1% (2019: approximately HK$15,770,000 and HK$79,007,000). The decrease in the Group’s public lighting business was mainly due to the halt in production at the production plant in Yichang in the Hubei province since the COVID-19 outbreak in the PRC and decreasing public lighting projects available in the PRC market. For the year ended 31 December 2020, the Group continued its enterprising efforts on commercial lighting business through searching for more project opportunities in Europe, Australia, and New Zealand. The Group has attained stable revenue from the commercial lighting segment as projects were resumed in the fourth quarter of 2020 when the COVID-19 pandemic was under control. Sourcing Business As a temporary source of income to fund the transitional period, the Group has been engaged in sourcing high-tech electronic components and products. Starting from the year ended 31 December 2019, the Group added a new collection of products to this segment, namely, memory chips related products, aiming for higher profit margin and more value added product mix. During the year ended 31 December 2020, there was a shift of focus, and this segment currently mainly involves the trading of memory chips related products, which is in line with the Group’s future business expansion into the semiconductor memory field. For the year ended 31 December 2020, revenue from the sourcing segment was approximately HK$333,437,000 (2019: approximately HK$1,170,091,000), representing a significant decrease of approximately 71.5%, being a result of resource allocation to focus on the Group’s future expansion into the small-storage memory chips business sector. During the year ended 31 December 2020, revenue from sourcing memory chips related products reached approximately HK$244,450,000 (2019: approximately HK$19,224,000), attaining a growth of approximately 1,171.6%. Segment gross profit was approximately HK$17,582,000 (2019: approximately HK$19,033,000), which was more or less similar to last year, due to the significant increase in segment gross profit margin from 1.6% to 5.3%, on account of the strategic shifting of focus onto the higher-margin products. Prospects: Following the devastating global public health and economic crisis unleashed by COVID-19, 2021 begins with a subdued economic recovery from the gravest recession in 2020. If the COVID-19 situation in the PRC remains under control, China’s economy is likely to thrive in 2021, but it still takes time to get back to the level prior to the COVID-19 outbreak. Despite the COVID-19 pandemic is still unsettled in many countries, markets are adjusted to a ‘new normal’ after the year-long co-existence with the pandemic. The IMF forecaster expects that the global economic performance will be stronger in the second half of 2021. The Group is moving towards such dynamism and resilience, and continues to maintain close relationships with overseas clients for possible opportunities. In times of the digital revolution, it is believed that LCD displays will be installed in many more daily applications, even in devices that used not to have screen displays. The Group believes its backlight products will possibly remain stable in the coming year, especially for the automotive onboard displays and equipment displays. According to the Ministry of Industry and Information Technology of the PRC, the PRC government plans to accelerate 5G roll-out to over 1,200,000 base stations nationwide for the 5G telecommunication network in 2021, further promoting 5G network infrastructure construction and application across the country. With government support, China is leading the way in its scale and coverage of 5G network. The adoption of 5G is expected to power the semi-conductor industry as all new chips, wafers, memory chips components are necessary in national 5G deployment. Owing to the emerging IoT trend and the 5G deployment ahead, the Group is also aware that the SLC and MLC NAND Flash industry, among the semi-conductor industry, might enjoy a surge in demand in the future. NAND Flash memory chip is adopted to support the embedded systems in controlling the operation of machines or fulfilling designated tasks. Since many IoT products will require small-storage memory units, the rising consumption for IoT products could bring a higher demand for SLC and MLC NAND flash memory chips in the long term. Due to limited supply in the market, the rise in the price of NAND Flash is expected to continue in 2021. Considering the potentials of this niche market, the Group, therefore, has assured the access to the reliable supply of high-quality wafers and secured deals for acquiring memory chips packaging and testing equipment and facilities. The Group believes that its memory chips business will commence after the transaction is completed in the first quarter of 2021.

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