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Public company info - Transtech Optelecom Science Holdings Limited , 08465.HK
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Transtech Optelecom Science Holdings Limited, 08465.HK - Company Profile
Chairman Hu Guoqiang
Share Issued (share) 260,000,000
Par Currency Hong Kong Dollar
Par Value 0.01
Industry Industrial Goods
Corporate Profile Business Summary: The group manufacture and sell optical fibre cables with various standard specifications that are widely used in the telecommunications industry. Performance for the year: For the year ended 31 December 2019, the Group reported its revenue of approximately HK$370.8 million (year ended 31 December 2018: approximately HK$510.1 million), representing a decrease of approximately 27.3% as compared to that of the same period in 2018. The gross profit margin of the Group decreased by approximately 2.6% to approximately 22.8% for the year ended 31 December 2019 as compared to a gross profit margin of 25.4% for the year ended 31 December 2018. During the year ended 31 December 2019, the Group recorded a profit attributable to the owners of the Company of approximately HK$35.8 million (year ended 31 December 2018: approximately HK$79.6 million). Business Review: The growth of the market demand of optical fibre and optical cable in 2019 slowed down compared with that in 2018. The change of the supply and demand relationship resulted in a declined average price. Although the Group continued to strengthen its competitive advantages in optical fibre, optical cable cores and optical fibre cables segments and maintained its leading position in the local telecommunication market, the Group reported both decrease of sales revenue and net profit in 2019 compared with last year 2018. Due to the fierce competition, the published average selling price for 2019 decreased significantly compared that in 2018. With the overall economic development and breakthroughs in mobile communication technology in recent years, mobile network has become a necessity in daily life. Following years of development, the mobile communication networks technology in PRC is currently at a stage where the 4G mobile communication technology has reached the end of the product life cycle and enjoyed a fast growth of research and development of the 5G mobile communication technology. During the year 2019, the 5G base stations and the core network equipment has reached the precommercial level, marking a new milestone for 5G scale commercialization. As the 5G construction continues to flourish infrastructure construction will become an important force of the Group. Basic earnings per share was HK$0.14 per share (2018: HK$0.31 per share) which was calculated based on the weighted average number of shares issued, further details of which are set out in note 12 to the audited consolidated financial statement as set out in the annual report. On the other hand, the Company maintained an ongoing sales and manufacturing of optical products with both old and new customers to explore the new sources of revenue. As a result, the Group have managed to generate positive cash flows from operating activities, further details of which are explained in the “Consolidated Statement of Cash Flows” of the Independent Auditor’s Report. Prospects: In 2020, severe competition and the outbreak of pneumonia illness by new coronavirus will enable the market becoming more complicated. The growth rate of the demand from the customers would slow down before the mass construction of 5G infrastructure. However, attracted by the high profitability of the potential 5G related demand in the future, the suppliers are expected to expand their capacity resulting in a change of supply and demand relationship. Nevertheless, the outbreak of pneumonia illness by new coronavirus will bring a huge negative effect to the communication infrastructure industry in PRC. The impact of this illness is still not certain in term of its timeliness and scope at the date of this report. The PRC government plans to commercialize the 5G network in 2020. 5G technology can greatly improve network functions and transmission efficiency in comparison with 4G and bring a new era for internet and new market demand. The new development in 5G technology will definitely drive new demands for networking construction. The fact that the government attaches great importance on 5G development and implements policy on information consumption upgrade will provide a good environment for the 5G industry. In addition, due to the increase in rate and frequency, the transmission distance of the 5G signals is much shorter than that of the 4G signal. Therefore, communication operators need to deploy 5G stations more densely. In light of the characteristics of large bandwidth and multi-connection of the future 5G network, the bandwidth and power of the massive multi-input and multi-output antenna will fold increase as compared with that of 4G, and the unit price of the Group’s corresponding products relating to 5G base station will fold increase accordingly. The increasing demand for communication network infrastructure and manufacture of system equipment in the market has laid a solid foundation for the sales growth. The demand for fibre-optic cables is expected to increase in 2020 since optical fibre cable is required to be used as a basic transmission media for the broadband speed upgrade and traffic burst in both fibre-optic broadband and mobile communication networks. New 5G pre-transmission and mid-transmission network will promote new demand for optical fibre cable from significant increase in construction of in urban network and back bone network driven by the future 5G construction. As a result of the favorable and adverse effect, the sales of the Group’s cables and related products will only change within a narrow range. By the way, the Group would explore the markets in the ASEAN countries other than Thailand to overseas to promote more sales revenue with more new and potential customers. In 2020, the Group would utilize its advantages in technologies and capacity structure to gain more customers. On one hand, the Group would focus on both domestic and overseas markets, take market opportunities, differentiate itself with its leading technologies branding and quality, and realize synergies within the Group to aim leading positions in the industry segment. On the other hand, the Group would continue to optimize its capacity structure of optical fibre, increase production efficiency and lower costs. The Group would gradually develop end to end comprehensive solutions based on customers’ demand and application scenarios. Through customer replication, products extension and business extension, the Group would strengthen its business such optical fibre, optical fibre core and optical fibre cable. Meanwhile under the existing planning of constructing the Group's new factory in Futong Thailand, the Group wish to strengthen the Group's production capacity to meet the future development and competition.

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