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Public company info - Ten Pao Group Holdings Limited , 01979.HK
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Ten Pao Group Holdings Limited, 01979.HK - Company Profile
Chairman Hung Kwong Yee
Share Issued (share) 1,000,000,000
Par Currency Hong Kong Dollar
Par Value 0.01
Industry Electronic Component
Corporate Profile Business Summary: The Group is principally engaged in the developing, manufacturing and sales of electric charging products in the People’s Republic of China (the “PRC” or “China”). Performance for the year: Revenue for the year ended 31 December 2020 increased by 23.4% to HK$4,488.6 million. Gross profit for the year ended 31 December 2020 increased by 30.7% to HK$827.3 million. Gross profit margin increased by 1.0 percentage point to 18.4%. Profit before income tax for the year ended 31 December 2020 increased by 72.3% to HK$373.8 million. Profit attributable to owners of the Company for the year ended 31 December 2020 was HK$289.1 million, representing an increase of 63.5%. Business Review Looking back the start of 2020, the manufacturing industry in the PRC had been brought to a halt by the outbreak of the COVID-19 pandemic, sending shockwaves to the international logistics industry and putting economic pressure on various industry sectors. Nevertheless, the domestic manufacturing industry, with its solid foundation, demonstrated strong resilience under the pandemic. According to the National Bureau of Statistics of PRC, the PRC was the only major world economy to have achieved positive economic growth in 2020, with the gross domestic product (GDP), for the first time, outreached one trillion Renminbi (RMB). Favorable factors in the domestic market, coupled with the global production coverage and diversified business and client portfolio in both the domestic and overseas markets, have enabled the Group to outperform the market during the year under review. In recent years, Ten Pao has placed more emphasis on enhancing its core competitiveness, and strengthening the flexibility and adaptability of its operations and production. These have helped the Group quickly adapting to any uncertainties and the ever-changing operating environment and maintaining sustainable growth in the long run. With the Group’s persistent efforts in internal improvements over the past few years, Ten Pao has reached the stage of harvest, and has successfully seized market opportunities during the year and achieved exceptional results. For the year under review, the Group had continued to expand the business segment of switching power supply units for consumer products, which acted as a major driver to the Group’s business growth. Revenue of this segment increased from approximately HK$2,277.7 million in 2019 to HK$2,767.0 million, rising by 21.5% year-on-year and occupying 61.6% of the Group’s total revenue for the year ended 31 December 2020. Gross profit of this segment amounted to approximately HK$450.9 million, representing an increase of 21.5% over year 2019. Gross profit margin remained steady at 16.3% (2019: 16.3%). In 2020, the “dual circulation” economic strategy actively promoted by the PRC government had helped stimulating consumption. This, together with the consistent launch of new 5G smartphones, had stimulated rapid development for the Group's clients in the telecommunications sector, including two of the top five leading mobile phone manufacturers in the PRC. Ten Pao’s earlier forward-looking strategic plan played a crucial role in capturing opportunities. The Group’s production facility located in Dazhou City, Sichuan has geographical and logistical advantages, since it is in close proximity to the main production centers of a number of telecommunications equipment clients. The Group was able to capture this opportunity, brought by increasing demand for client products, to successfully obtain a substantial amount of additional orders, particularly for high-end smart fast charging and flash-charging products. Thanks to the Group’s efforts in resources reallocation, active expansion of sales contribution from domestic customers and further client portfolio diversification during the year under review, the negative revenue impact of overseas markets was significantly mitigated. For the year ended 31 December 2020, the business segment of smart chargers and controllers also achieved remarkable growth with revenue increased by 26.7% over year 2019 to HK$1,721.6 million, contributing 38.4% of the total revenue. Gross profit from this segment amounted to HK$376.5 million, indicating a 43.6% increase from HK$262.1 million in 2019, and gross profit margin was 21.9%, as compared with 19.3% in 2019. The increase of segment revenue was primarily attributable to the Group’s efforts in maintaining a good and long-term cooperative relationship with existing customers who are mainly international enterprises with solid foundations, high risk-bearing capabilities, as well as diversified distribution channels and they have full confidence in the quality of the Group’s products. Leveraging the Group's close business relationship over the years with these core customers, the Group maintained active communication with them and strengthened cooperation over the year, resulting in a steady increase in the number of orders. Ten Pao is committed to the continuous improvement on production efficiency and cost management. As the pandemic gradually came under control in the PRC, the Group swiftly caught up with delayed development plans and orders in the second quarter of 2020. During the year, prices of major raw materials had remained relatively stable; but as the economy gradually recovered, the supply of raw materials became unstable and prices fluctuated in the fourth quarter of 2020. Nevertheless, the Group’s well-established and effective supplier tendering system, strategic localisation and standardisation of raw materials, as well as ongoing diversification of suppliers have helped the Group to maintain a steady supply of raw materials and control of their price levels. The Group has also strengthened communication with suppliers, solidified strategic partnerships with suppliers, and strategically established sufficient inventories of key raw materials in order to ensure a stable source of raw material supply and to reduce the impact of raw material price fluctuation on the Group’s product pricing and thus, gross profit. The market expects an upward trajectory on the price of raw materials in 2021, and the possibility of a product price hike will largely depend on the future market supply and demand. At the same time, the Group has continued to increase the proportion of automated production lines during the year, which not only reduced the impact of rising labour costs and employee turnover, but also offered a more efficient channel to monitor product quality and production efficiency. Notably, the sudden emergence of the pandemic has underlined the importance of an automated production system and smart operational model. Moving forward, the Group will accelerate the integration of the automation and digitalisation model into its production and operation systems as a whole, to strengthen the Group’s ability in providing customers with its premium one-stop solutions, and enhance the Group’s operational flexibility and control in the long run. The PRC economy displayed strong resilience amidst market headwinds in 2020, and thus, the market anticipated rapid recovery for the PRC economy. This optimistic market outlook has led to a continuous appreciation in the exchange rate of Renminbi since end of May 2020, putting mild economic pressure on the Group’s export business. However, the Group’s diverse and balanced production layout in domestic and overseas regions played a role in the year, enabling the Group to optimise the use of resources, increase investment in and development of resources for domestic sales, seize the opportunities brought about by domestic economic recovery, and mitigate the impact of exchange rate changes. The Group will also closely monitor exchange rate volatility and continue to regulate the allocation of resources in domestic and overseas markets, in order to minimise the impact caused by exchange rate fluctuations. During the year under review, the Group actively refined its overseas and domestic production layout to strengthen its global production network, in order to alleviate risks from changes in geopolitics and align with long-term business development plans of its customers. In terms of overseas production capacity, phase three expansion of the Hungary plant was successfully completed, installment of production lines went smoothly and the plant commenced operation in the third quarter of 2020. In addition, the production base in Vietnam also began to contribute to the Group’s production capacity during the year. The Group has also been planning for capacity expansion in the Vietnam base. Domestically, the production capacity of the plant in Dazhou City, Sichuan has gathered momentum, as phase two expansion of the facility commenced production in the second half of 2020. Meanwhile, the Group has begun the construction of a new plant on an additional piece of land in Huizhou purchased by the Group during the second half of 2020, as scheduled. It is estimated that construction will complete in 2022. This plant in the Huizhou Industrial Park will serve as Ten Pao’s pilot project in realising a digital and intelligent manufacturing base. Prospects: The COVID-19 pandemic, international trade disputes and other market uncertainties have created a new normality. These have accelerated the establishment of new industries, operation methods and production mode upgrade and acted as catalysts to fundamentally challenge the production methods of today and the business models of tomorrow. As an industry leading one-stop smart power supply solutions provider, Ten Pao has always actively contributed to the evolvement of the industry. On top of the current expansion in production capacity for staying in line with the growth of existing customers’ orders and enlargement of the customer network, the Group will also invest its key resources in the development of the new energy industry and smart production, so as to lay a solid foundation for the long-term development of the Group. Looking ahead, the new energy industry will continue to draw global attention. Many countries from around the world including the PRC have actively promoted government subsidy schemes and has sped up the development of infrastructural charging facilities. Numerous automotive manufacturers, real estate developers and internet industry giants have also entered the new energy arena, indicating the determination and confidence from the government, market and corporations towards developing the industry. This has also opened up opportunities for Ten Pao to venture into various promising industries, including automotive electronics, green mobility and others. During the year, the Group has established a new energy business division, and plans to invest resources in product research and development and production, with the goal of building a one-stop new energy product and service support center in the western region of the PRC, one of the major production hubs for new energy vehicles. The Group is also in active discussion with potential customers on collaboration opportunities, and will direct more resources to developing more new energy charging facilities, portable power supply/charging products, and other complimentary automotive electronic products, establishing a new key development area for the Group. Apart from domestic investment of resources, in the year, the Group has also entered into an agreement with an internationally renowned energy company — Shell Oil Company, and has been granted a license for the use of its trademark on portable power supply/charging products and portable charging station for new energy vehicles and merchandising rights in the market. Plans have been made to launch these products on both online and offline platforms in North America in the second half of 2021, which will broaden the international sales network and platform of automotive electronics for Ten Pao. In addition, Ten Pao will continue to cultivate existing innovations, including high-end smart fast chargers, portable power supply/charging products, and other charging products with higher power, flashcharging and wireless charging products. With the advancement of 5G technology driving technological innovation and various commercialisation, including the Internet of Things, Ten Pao shall continue to research and develop broader applications in the 5G field and explore market opportunities. The Group has actively developed its global production network to better align with Ten Pao’s goals of long-term sales growth and avoid risks brought by trade disputes. In terms of overseas production, despite the delayed development schedule due to the pandemic in the first half of 2020, the Group has made every effort to catch up on affected projects. Among these, Ten Pao made plans in the second half of 2020 to expand its production base in Vietnam and considered the establishment of a self-owned plant. Although the plan was delayed due to the impact of the pandemic, it is now back on the track. The plant is expected to contribute additional production capacity by the second quarter of 2021, which will further expand Ten Pao’s customer network and business areas. The Group will also continue to look for more opportunities to expand its global production capacity in Southeast Asia, South Asia and North America to mitigate the impact of geopolitical tension. On the domestic front, the Group is committed to promoting the expansion of the third phase of the plant in Sichuan, aiming at securing more new customers and developing more business areas by leveraging its geographical advantage. Furthermore, it is estimated that construction of the new plant at the headquarters of the Huizhou Industrial Park will be completed and put into operation by 2022 as scheduled. Aside from expanding its production capacity, Ten Pao is also actively promoting smart production management and digitalisation upgrade plans to enhance the Group’s production efficiency, risk resistance and flexibility to respond to future uncertainties. The Group has set up a smart manufacturing department to digitalise production lines and production management platforms, in order to facilitate the accumulation of big data for a more accurate management and the upgrade of the production chain, and hence, ensuring product quality and multi-faceted enhancement of long-term production efficiency. The new plant in Huizhou will be the first pilot project of the Group’s upgrade plan towards smart and digital production. Going forward, Ten Pao will expand its digital reform to other production bases to unify all production models and build a centralised global smart production network for Ten Pao, leading Ten Pao to a new era of smart production. The accomplishments of Ten Pao were built upon years of hardwork, which have laid the foundation for its long-term development. Going forward in 2021, the Group will stay ever-prepared and competitive for sustainable development by improving the proportion and technology of smart and automated production lines, constructing a global production capacity network, upholding a prudent management plan on cost and quality, while focusing on research and development, and making continuous effort to identify new business opportunities. Furthermore, the Group will effectively enhance its risk-weathering capabilities to navigate the unpredictable macro market. Ten Pao will continue to consolidate its leading position in the switching power supply industry and strive to bring long-term and sustainable returns to the Group's shareholders.

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