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Public company info - TK Group (Holdings) Ltd. , 02283.HK

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TK Group (Holdings) Ltd., 02283.HK - Company Profile
Chairman Li Pui Leung (formerly named as Li Leung Pui)
Share Issued (share) 833,000,000
Par Currency Hong Kong Dollar
Par Value 0.1
Industry Industrial Goods
Corporate Profile Business Summary: The Group is principally engaged in the manufacturing, sales, subcontracting, fabrication and modification of molds and plastic components in the People’s Republic of China (the ‘‘PRC’’) . Performance for the year: Revenue for the year ended 31 December 2020 was approximately HK$2,033.4 million, representing a decrease of approximately HK$277.4 million or 12.0% when compared with the revenue of approximately HK$2,310.8 million in 2019. Profit for the year attributable to owners of the Company for the year ended 31 December 2020 was approximately HK$209.7 million, representing a decrease of approximately HK$92.1 million or 30.5% from approximately HK$301.8 million in 2019. Business review 2020 was a challenging year. In the first half of the year, most of the Group’s major customers postponed their orders due to the impact of the COVID-19 epidemic, which dragged down the Group’s interim results. In the second half of the year, with the Chinese government’s effective anti-epidemic measures, economic activities’ recovery accelerated and the market gradually coped with the new normal amid the epidemic despite the fluctuant epidemic situation overseas, which led to the resumption of new product development and launch of market plans by a number of downstream customers. Therefore, the Group’s revenue in the second half of the year rebounded to a similar level of the corresponding period of last year. For the year ended 31 December 2020, the Group’s total revenue amounted to HK$2,033.4 million (2019: HK$2,310.8 million), representing a year-on-year decrease of 12.0%. The segments of medical and personal health care, automobiles and mobile phones and wearable devices in the downstream industries still recorded growth during the year. Daily operation was impacted by the implementation of the quarantine and social restrictions by many countries in response to the epidemic. Particularly in the first half of 2020, the customers of the Group postponed delivery dates and new orders, resulting in the higher idle rate of the machines of the Group in this period. The overall gross profit margin was also impacted by the lower price of molds delivered during the year due to the intense competition in the industry and the severe China-United States trade war since 2019. During the year, the gross profit of the Group decreased by 20.2% to HK$532.6 million (2019: HK$667.5 million), while gross profit margin dropped by 2.7 percentage points to 26.2% (2019: 28.9%). In the second half of the year, the Group tried its best endeavor to resume its operational performance to the previous level. However, due to the impact of the epidemic in the first half of the year, profit attributable to owners of the Company for the year recorded HK$209.7 million (2019: HK$301.8 million), representing a decrease of 30.5% as compared to the last year. Net profit margin decreased by 2.8 percentage points to 10.3% (2019: 13.1%). Basic earnings per share was HK$0.25 (2019: HK$0.36), representing a decrease of 30.6% as compared to the last year. Under the influence of the epidemic, the Group’s trade receivable turnover days increased slightly to 54 days as compared with the same period of last year, but decreased by 10 days as compared with 64 days in the interim period. In addition, under the epidemic, the Group adopted a prudent attitude towards wealth management to minimize the capital expense, which enabled the Group to maintain net cash of HK$786.9 million (2019: HK$493.2 million). The sound financial position enables the Group to flexibly respond to the uncertainties of the macro environment, while preparing for the recovery of the global epidemic, and adopting other measures to promote the growth of the Group in due course. The Group has a considerable amount of sales orders on hand, as at 31 December 2020, amounting to HK$925.2 million, which represented an increase of 4.8% as compared with HK$883.2 million as at 31 December 2019. Prospects: It is expected that worldwide consumer confidence and spending appetite will gradually stabilise as a number of new coronavirus vaccines become available in various countries around the world. Growing consumer demand will lead to a recovery in demand for the Group’s products from customers, which will in turn drive the Group’s order growth. In fact, the Group’s order and production plans for the first quarter of 2021 sustains the momentum of the second half of 2020 and the management believes that production line utilization will be improved significantly in the first half of 2021. In addition, the Group is committed to continuing to expand its customer base in the Chinese consumer goods market in order to increase its domestic market share, such as continuing to actively seek partnerships with more key brands of high-tech consumer electronics and medical products, adhering to the strategic direction of developing diversified customers to balance the risks arising from different segments and market fluctuations. Over the past two years, the Group has successfully developed the electronic atomisation component segment and with the excellent quality of its products, the Group has secured orders from several well-known international and Chinese customers. As the global demand for electronic atomisers rises, the Group believes that its growth prospects in this segment are promising. In terms of the layout of overseas production, the Group has restarted its plan to set up an injection moulding production base in Vietnam by the end of 2020. The installation of the production line is expected to be completed in the third quarter of 2021 and production will commence in the fourth quarter of 2021. This will extend the Group’s regional coverage in line with the relocation of the supply chain and reducing geopolitical risks in the long run. In addition, the Group will also expand the capacity of its three production bases in the headquarter in Guangming District in Shenzhen, Huizhou and Suzhou, which are expected to be put into operation gradually from 2021 to support the increase in order volume and prepare for the long-term order growth demand. In order to further broaden the product mix and the market size of plastic injection, the Group signed an asset acquisition agreement with Techco Silicone & Technology Co., Ltd. in February 2021 for a consideration of RMB12,000,000 (equivalent to approximately HK$14,370,000) to acquire all of its assets, including its design and production technology, intellectual property, technology team, production facilities and customer resources, so as to expand the technology and production capacity of the Group in silicone mold and product solutions and thus strengthen its leading position in the plastic injection market. Silicone products are widely used in optics, medical, infant products, automobile, electrical & electronics, household essentials etc., and possess great potential in the enormous global market. The Group believes that the epidemic will stabilize with the introduction of vaccines. However, given a number of uncontrollable macro factors such as the possible evolution of epidemic and geopolitical situation, the Group will remain cautious and maintain a strict credit and trade receivables turnover policy to stabilize cash flow and financial position, and prepare for long-term business development. In 2021, the Group will adhere to the diversity policy, continue to improve the intelligent automation level and technological research and development of the existing production lines in order to maintain its competitiveness and profitability. The Group will continue to gain a foothold in the ever-changing market to seek for opportunities and realize a sustainable growth.

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