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Public company info - SIM Technology Group Ltd. , 02000.HK

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SIM Technology Group Ltd., 02000.HK - Company Profile
Chairman Yeung Man Ying
Share Issued (share) 2,248,000,000
Par Currency Hong Kong Dollar
Par Value 0.1
Industry Telecomm. & Networking Equipment
Corporate Profile Business Summary: The principal activities of The Group are the manufacturing, design and development and sale of handsets and internet of things (“IOT”) terminals business, electronics manufacturing services (“EMS”) business, carrying out IOT system and online-to-offline (“O2O”) business, intelligent manufacturing business and property development in the People’s Republic of China (“PRC”). Performance for the year: The total revenue of the Group for the Year amounted to HK$938.3 million (2019: HK$1,155.0 million). the Group recorded a loss attributable to owners of the Company from continuing operations of HK$36.5 million (2019: HK$58.5 million) for the Year. The basic loss per share from continuing operations for the Year was HK1.53 cents (2019: HK2.37 cents). Business Review: In 2020, the spread of COVID-19 around the world has wreaked havoc on global economies. Production was unable to resume in the first quarter due to the pandemic, thereby causing stagnation of the Group’s business operation. However, business gradually improved in the second quarter and it managed to deliver the backlog of orders. Due to the inability of many countries to bring the pandemic under effective control, this has inflicted a huge adverse impact on the Group’s overseas business, with some projects delayed or even cancelled. With the tight supply of core components, such as upstream chips and displays, and with the delays in the delivery schedule in the second half of the year, some orders encountered extended cycles of material preparation and were not delivered during the year, thereby affecting sales revenue for the year. In 2020, the Group posted revenue of HK$938.3 million from continuing operations and net loss attributable to the owners of the Company from continuing operations of HK$36.5 million. Except for the Group’s electronics manufacturing services (EMS) business and property management business which recorded a profit, the Group’s remaining businesses suffered a loss. Centralizing resources for business development expansion of the handsets and IOT terminals business has become the Group’s medium and long-term goal. During the year ended 31 December 2020, the Group completed the disposal of its 51% equity interest in Shanghai Jizhi Automation Technology Co., Limited (“Shanghai Jizhi”), which was a core company within the intelligent manufacturing business. Subsequent to the reporting period, the Group also entered into an agreement to dispose of its 98.7% equity interest in Shanghai Yunhao Trading Limited, a core company within the IOT system and O2O business segment, thus withdrawing entirely from the offline segment of the IOT system and O2O business after completion of the disposal. Handsets and IOT terminals business In 2020, revenue of this business segment amounted to HK$586.1 million, representing a 21.8% decline from the level during the same period last year. Gross profit was HK$61.6 million, representing a yearon-year growth of 8.7%. Gross profit margin was 10.5%, representing a year-on-year increase of 2.9 percent point. As the Group’s total inventory level significantly reduced this year, the related inventory provision has been reversed, resulting in an increase in gross profit margin this year. Revenue was lower than expected as the conclusion of new projects became impossible due to cessation of international travel to China for project negotiations amid the severe COVID-19 pandemic across the world. Another major factor was the non-delivery of a significant portion of customers’ orders by the end of the year due to rising components prices as the upstream supply chain was adversely affected by the pandemic and the supply and demand status With the new management team and a change in operating philosophy, centralizing resources for the development of the handsets and IOT terminals business in scale and strength has become the Group’s medium to long-term goal. As for the IOT industry application market, the Group has further developed various intelligent terminal markets, including barcode recognition device, mobile point-of-sale (POS) information system, industrial-grade augmented reality (AR) glasses, intercom network terminals, tablets and intelligent wearable devices and other intelligent terminal markets. In addition to capturing huge business opportunities in the 5G handset market, the Group has also enhanced its capabilities in research and development (R&D) technology and supply chain delivery via its handset original design manufacturer (ODM) business. Looking ahead, the Group will pay close attention to market opportunities in data communication products, such as Wi-Fi 6 and customer premise equipment (CPE). In 2021, the Group will allocate more resources to the handsets and IOT terminals business and enrich its product portfolio so as to provide more diversified products and services to existing customers as well as secure more quality handset and IOT industry customers. The Group also plans to realize its goal of moving the supply chain operation center to Southern China within the year. Such move will enhance the Group’s supply chain capability, helping it lower material costs and ensure timely and complete material delivery. Electronics manufacturing services business The EMS business segment achieved sales revenue of HK$74.9 million in 2020, representing a yearon-year decrease of 19.4%. Gross profit also declined by 37.8% year-on-year to HK$2.7 million. As a result of intense market competition and requests for price reduction by customers, gross profit margin of the EMS business continued to decline to 3.6%. The notable decrease in sales revenue was due to the pandemic which hindered timely production and work resumption of plants, and weaker demand from key customers which led to a substantial reduction in orders during the reporting period. The Group’s overall strategy for the EMS business remains unchanged. In addition to maintaining good relations with its existing EMS clients, it will also explore new clients and new processing product categories, as well as step up its investment in the deployment of automation and intelligence in its production operation so as to lower labor costs and improve product quality control. Internet of things system and online-to-offline business This business segment generated sales revenue of HK$228.0 million in 2020, a 12.5% decrease compared with the last corresponding period. Gross profit also declined by 62.0% year-on-year to HK$6.6 million. During the reporting period, the Group continued to streamline the offline business of its O2O automated vending machine platform and subsequent to the reporting period, it entered into an agreement to dispose of 98.7% equity interest in Shanghai Yunhao Trading Limited, making the complete exit of all of its offline business from this segment after completion of the disposal. The Group plans to integrate the Internet of things system business with the IOT terminals business in order to provide “cloud + terminal” one-stop solutions to customers. Intelligent manufacturing business After years of development, the Group has built considerable scale for its intelligent manufacturing business, as well as a leading advantage in the automated testing of robots for industrial use. However, the pace of development remains unsatisfactory as market demand has become saturated. To invigorate the potential of the management team of the intelligent manufacturing segment, the Group has invested new resources in the expansion of other markets. Therefore, during the reporting period, the Group disposed of its 51% equity interest in Shanghai Jizhi. After the disposal, the Group no longer has control of the company but it continues to maintain a 49% equity interest in the company to generate investment returns. The Group believes such arrangement will help create greater value. Property development For the year ended 31 December 2020, only an insignificant amount of properties remaining was sold and delivered. Therefore, pursuant to a reorganization of the Group’s internal reporting structure which resulted in changes to the composition of its reportable segments, the Group’s property development segment is no longer a reportable segment. Property management For the year ended 31 December 2020, the revenue of property management was mainly derived from the leasing of SIM Technology Building Block A and Block B in Shanghai, factory units in Shanghai and Shenyang and commercial properties in Shenyang. A total area of approximately 72,000 square meters was leased out. To utilize the Group’s resources more effectively, the Group is developing the property management business by leasing out the spare space at factories and other buildings. The revenue of property management for the year 2020 amounted to HK$49.3 million (2019: HK$43.1 million) with a gross profit margin of 95.5% (2019: 97.4%). Prospects: During the reporting period, the management formulated medium to long-term development strategies by adhering to the operating philosophies of its core businesses. The Group divested its non-core business which performed below expectation, and it focused on developing its core businesses, namely its handset and IOT terminals businesses. In addition to securing more terminal customers in China, the Group has strived to develop other major markets, including Europe, the US and Japan. On the development of overseas markets at this stage, the Group is exploring business opportunities through its own sales team and distributor network. While developing the IOT terminal business, it also seized opportunities in the ODM business of 5G smartphones so as to retain economies of scale and strengthen the competitiveness of its supply chain. As disclosed in the Company’s announcement date 26 January 2021, the Group is planning on the constriction of production facilities in Dongguan. The plan has proceeded smoothly, and the technological and industrial park will become the Group’s supply chain and manufacturing center in the Greater Bay Area after its completion, and it will help the Group to achieve its strategic goals. Faced with an extremely challenging external environment, the management and staff at all levels share a common and clear goal and the ambition to start a new chapter of business. The Group believe the Group is set to replicate its success and emerge as the leading IOT products and service provider.

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