TONGDA GROUP HOLDINGS LIMITED Summary By focusing on handsets business, turnover increased by about...

TONGDA GROUP HOLDINGS LIMITED Stock code: 00698.HK

2015

Annual Results Announcement 17 March 2016

Contents

Financial Summary 2

Business Segment Analysis 3

Executive Summary 1 P.03

P.05

P.15

4 Appendix P.36

P. 2

Executive Summary

Executive Summary

By focusing on handsets business, turnover increased by about 26.8% to HK$6.07 billion, gross profit

increased by about 32.2% to HK$1.51 billion

Thanks to the increase in the adoption rate of metal handset casing, optimization of the product mix and

enhancement of the automated workflow, profit attributable to owners of the Company reached HK$702.8

million, rising 40% against HK$501.7 million in the corresponding year. Basic earnings per share increased

33.5% to HK$12.6 cents

Thanks to the strong demand of highly value-added products such as metal casings, gross profit margin and

net profit margin increased from 23.9% and 10.5%, to 24.9% and 11.6% respectively

The Group maintained a stable dividend payout track record , final dividend is proposed to be HK 2.1 cents

per share. Together with the interim dividend of HK 1.6 cents, total dividend will be HK 3.7 cents

Maintaining close partnerships with domestic handset leading brands, including strategic customers

Huawei, Xiaomi and OPPO

In China, the adoption rate of metal casing from mid to high end handsets increased drastically, especially

those produced with Nano Molding Technology (NMT) which are gaining a larger market share

Proposed spin-off of the notebook and tablet casing manufacturing business to focus on handset-related

businesses P. 4

Financial Summary

For the year ended 31 December

2015 2014

(HK$’000) (HK$’000)

Revenue 6,074,061 4,791,346

Cost of sales (4,562,032) (3,647,711)

Gross profit 1,512,029 1,143,635

Other income and gains, net 25,930 26,507

Selling and distribution expenses (148,535) (111,992)

Administrative expenses (445,207) (330,262)

Other operating expenses, net (16,011) (26,756)

Finance costs (55,660) (56,883)

Share of losses of associates (286) (1,852)

Profit before tax 872,260 642,397

Income tax expense (134,285) (94,187)

Profit for the period 737,975 548,210

Profit for the

Owners of the Company 702,839 501,701

Non-controlling interests 35,136 46,509

737,975 548,210

Earnings per share

- Basic HK12.60 cents HK9.44 cents

- Diluted HK11.97 cents HK9.30 cents

Consolidated Income Statement

P. 6

The Group’s total turnover

increased to HK$6.07 billion:

Continuous revenue growth in

high-profit metal components

Continuous increase in the

proportion of handset business

focusing on the improvements in

technology, production capacity,

client relationship and quality

management

Turnover

3,147 3,408

3,627

4,791

6,074

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2011 2012 2013 2014 2015

(HK$ million)


P. 7

Handsets

Electrical Appliances

Notebook Computers

Turnover by Product


Total

Communication Facilities

and Others

Ironware Parts

Turnover (HK$ million)

2015 2014 Change

Amount %

3,712.5 2,415.0 1,297.5 53.7

587.5 588.4 0.9 0.2

480.3 633.6 153.3 24.2

471.9 687.7 215.8 31.4

821.9 466.6 355.3 76.1

6,074.1 4,791.3 1,282.8 26.8

P. 8

2,500

3,000

3,500

4,000

4,500

5,000

5,500

6,000

6,500

7,000

7,500

2013 2014 2015

51%

13%

14%

15%

7%

Turnover by Product

(HK$ million)


Total Turnover

Handsets Electrical Appliances

Notebook Computers

Ironware Parts

Communication Facilities and Others

51%

12%

13%

14%

10%

3,627.1

4,791.3

6,074.1

61%

10%

8%

8%

13%

P. 9


The Group’s gross profit and net

profit rose 32.2% and 40% YoY

respectively to HK$1.54 billion

and HK$702.8 million:

Focused on mid-to-high end

products such as metal casings

of handsets

Enhanced production quality

and efficiency through more

automatic, intelligent, and

standardized production

The Group’s net profit CAGR

recorded 29.5% from 2011 to

2015

Profit & Margin

Net Profit Net Profit Margin


Gross Profit Gross Profit Margin

(HK$ million)

(HK$ million)

605 731 798

1,144

1,512

19.2%

21.4% 22.0% 23.9%

24.9%

0%

5%

10%

15%

20%

25%

30%

0

400

800

1200

1600

2011 2012 2013 2014 2015

250 300 360 502

703

8.0% 8.8%

9.9% 10.5%

11.6%

0%

2%

4%

6%

8%

10%

12%

14%

0

200

400

600

800

2011 2012 2013 2014 2015

P. 10

0.70 0.80 0.90 1.00

1.60

1.00 1.20

1.60

2.00

2.10

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

2011 2012 2013 2014 2015

Maintains a stable dividend

payout history

Final dividend for 2015 is

proposed to be HK 2.1 cents

per share (2014: HK 2.0 cents)

Together with the interim

dividend of HK 1.6 cents, total

dividend will be HK 3.7 cents

for 2015 (2014: HK 3.0 cents)

Dividend History


(HK$ cent)

Interim

Dividend

Final

Dividend

P. 11

3.7

3.0

2.5

2.0

1.7

Key Financial Figures

(HK$’000) As at 31 Dec 2015 As at 31 Dec 2014

CAPEX 1,133,201 625,753

Net Assets 4,039,318 3,636,469

Net Assets per Share (HK$) 0.71 0.66

Current Assets Ratio (Times) 1.81 1.83

Cash and Bank Balances

(Includes Pledged Deposits) 935,973 477,624

Interest-bearing Bank Borrowings 1,495,677 979,978

Gearing Ratio* 35.5% 13.8%

* Consolidated Net Debt/ Total Equity

P. 12

Key Financial Figures (Cont’d)

As at 31 Dec 2015 As at 31 Dec 2014

Working Capital Turnover Days 150 157

Inventory Turnover Days1

120 125

Trade and Bills Receivables Turnover Days2

146 143

Trade and Bills Payable Turnover Days3

116 111

1. (Opening + Ending inventory) / 2 x 365 days / COGS

2. (Opening + Ending AR & BR) / 2 x 365 days / Sales

3. (Opening + Ending AP & BP) / 2 x 365 days / COGS

P. 13

Trade and Bills Receivables (HK$’000) As at 31 Dec 2015 As at 31 Dec 2014

Within 3 Months 2,363,751 1,907,767

4 to 6 Months

(Inclusive of the First and the Last Month) 274,776 216,833

7 to 9 Months


10 to 12 Months


More than 1 year 57,203 36,935

Impairment Allowances (48,835) (40,013)

Total 2,682,939 2,166,186

Key Financial Figures (Cont’d)

Inventories (HK$’000) As at 31 Dec 2015 As at 31 Dec 2014

Raw Materials 412,742 482,131

Work in Progress 421,146 360,711

Finished Goods (Molds excluded) 548,264 383,047

Molds 223,785 175,012

Total 1,605,937 1,400,901

P. 14

Business Segment Analysis

Extensive Customer Base

Handsets Electrical Appliances

New customers in FY2015

Ironware Parts Communication Facilities,

Automotives and Others

*

Notebook Computers/Tablets

* *

*

*

* * * * *

*

*

* *

* *

P. 16

* *

Handsets

Battery Cover

- Metal

- Uni-body (CNC)

- Nano Molding Technology

(NMT)

- Metal Stamping/ Forging

Technology

- In-Mold Lamination (IML)

- In-Mold Transfer (IMT)

- High Precision and

Advanced Decorative Plastic

- Laser Direct Structuring

(LDS)Technology

- Glass

- Composite Material

Cover Lens

- Glass

- PMMA Display Lens

- In-Mold Lamination

(IML)

- In-Mold Decoration

(IMD)

One-stop Solution Provider of Mechanical and

Decorative Components for Smart Mobile Communication

Picture Source: Cdn.ihs.com

Wordings in Red: Newly developed technology

Internal Parts

- Precision O Ring

Middle Frame

- Metal

- CNC Machining

- Nano Molding

Technology (NMT)

- Composite Die-

Casting

- Insert Molding

- Laser Direct

Structuring (LDS)

Technology

- Glass Fiber

Reinforced Plastics

Display Frame

- Metal stamping

- Insert Molding

P. 18

Major

Customers Major Handsets Models

Huawei

Xiaomi

OPPO

Others

R7 N3 A31 3007 A53

Coolpad

Qiku Youth

Coolpad

FengShang Max

P8 Max Media Pad M2 Mate 7 Huawei G8 Honor 4C

Redmi Note 3 Mi 4 Redmi 3

Asus Zenfone 2 Meizu -meilan2 LeTV - Le1

Major Customers and Handsets Models

Handsets

P. 19

355,563

49,421 63,560

492,973

208,070 135,440

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

China Mobile China Unicom China Telecom

4G Others

User Distribution Among Telecom Providers in China in Jan 2016

The domestic 4G network in China is expected to expand from cities into towns and

administrative villages. Also, the 4G base stations will account for more than 50% of all

base stations in 2016, according to the China Academy of Telecommunication Research.

（’000 users）

828,536

199,000 257,491

Sources: MIIT, China Mobile, China Unicom, China Telecom websites

Handsets

P. 20

108

72 70

52 49

188

130

81 85

56 55

214 20.0%

13.3%

13.0%

9.6% 9.1%

34.9%

20.9%

13.0%

13.7%

9.0% 8.9%

34.5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

0

50

100

150

200

250

Huawei Xiaomi Lenovo TCL OPPO Others

2015 Shipment 2016 Shipment

2015 Market Share 2016 Market Share

2015 Annual Shipment and 2016 Estimated

Shipment of Major Domestic Brands

Source: Trendforce, Jan 2016

（Million Units）

0%

12%

19%

29%

37%

0%

5%

10%

15%

20%

25%

30%

35%

40%

2013 2014 2015E 2016E 2017E

Adoption Rate of Metal Casing Among

Smartphones in China is Further Rising

Source: Credit Suisse estimate, Jan 2016

Global:

2015 -1.293 billion units

2016 – 1.397 billion units

China:

2015 - 539 million units

2016 – 621 million units

Handsets

P. 21

Applications

Smartphones

Notebooks

Tablets

Wearable Gadgets

Diversified Production and Decoration Methods

Unibody (CNC) Machining

Nano Molding Technology (NMT)

Composite Die-casting Technology *

Metal Stamping/ Forging technology*

7 Series Aluminum Anodizing*

Metal Injection Molding Technology （MIM）

Sand Blasting

Laser Etching

Polishing

Metallic Brushed Surface

The increasing popularity of metal casings in Mainland China resulted in notable growth in the Group’s

metal casings order volume:

Metal Casing

Handsets

*Latest technology

P. 22

Applications

Smartphones

Notebooks

Tablets

Wearable Gargets

Home Appliances


In-Mold Transfer (IMT) Technology

In-Mold Lamination (IML) Technology

HTVM + Diamond Coating

Baby Skin Coating

UV Painting

Soft Touch

Automatic Mirror-effect Coating

Vacuum Metallization (NCVM)

Laser Etching

Metal Embedded Components

2K Molding

Thin Wall Molding

High Precision Clear Lens Molding

Sub-assembly

The Group has hydraulic/electric injection machines ranging from 40 tons to 2500 tons:

High Texture Vacuum Metallization

(HTVM) + Diamond Coating

Brushed Coating Baby Skin Coating Mirror-effect Coating

High Precision and Advanced Decorative Plastic Components

Handsets

P. 23

Rubber Compression Molding

Applications

Smartphones

Wearable Gadgets


Automotives


Cost effective tooling manufacturing process

Maximized cavitation

Economical manufacturing process for silicone functional parts

Rubber Compression Molding is a process that involves taking a rubber compound mixing with raw

material, applying heat and pressure to form a finished product, mainly for waterproof application:

Precision O Ring Precision O-ring cross section:

Able to produce 120 O-rings with 0.02mm discrepancy

and 0.02-0.04mm flash in one session with our moulds.

Handsets

P. 24

Spray and Polish Automated Assembly Injection Molding

2012 Manual

polishing

Fixture

assembly

line

2013

Automated

coiler type

polishing

machine

First

generation

ring-shaped

lamination

line

Manual assembly line

2014

Single-station

6-axis robotic

polishing

machine

Flexible

automated

lamination

line

Robotic arm+

automatic steel coil feeding

2015

Automated

polishing and

shaping line

All-in-one

polishing,

shaping,

surface

inspection

machine

Smart

assembly

line

Automatic steel coil

feeding +

all-in-one machine

One robot serving two

injection machines for

common embedded

components, achieving

24-hour fully automated

production

2016 Automated

assembly

workshop

Group’s Automated Production Milestones

P. 25

2015 Awards & Achievements

Awards Received From Market And Suppliers In 2015

2015 DHL/SCMP

Hong Kong Business Awards－

Enterprise Award

Selected as a constituent stock in

Hang Seng Composite SmallCap Index,

Hang Seng Broad Consumption Index

Excellent Supplier Award from Huawei

(Mechanical parts)

Supplier Quality Excellence Award

from Coolpad

Core Supplier of Coolpad

Excellent Technology Award from Xiaomi

P. 26

Applications

Touch control for smart

home appliances

Panels of electrical

appliances

Advantages

Wide range of artwork selection

Internet Connection

Cost-effective solution


Internet of Things (IoT) Related Casings

IML front panel

Printing sensor

IML plastic film

Inner structure showing sensor integrated into IML

front panel

P. 28

Notebook Computers/ Tablets

Applications

Notebooks

Tablets

Home Appliances

Black Brushed Finish Notebook Palm-rest Cover

Notebook Computers/ Tablets

Diversified Decorative Technologies

Technical Effects

Laminated Metal Filming (LMF)

Two-color Injection Molding

Anodizing

Magnesium-Aluminum Alloy Plating

Brushed Surface

Spray Painting

In-Mold Lamination (IML) technology

Laser Etching

P. 30

Ironware Parts,


Ironware Parts,


Applications

Interior decorative

components of automotives

Digital satellite TV receivers

High precision plastic set-top

boxes

Household durables

Sports accessories

Baby trolleys

Advantages

Provide one-stop solution of components to customers and boost

competitiveness

Produce aluminum components and high precision metal mechanical

parts with different surface effects

Advantages

Years of experience in plastic injection and surface decoration, with sizable

capacity

Provide one-stop solution of components to customers and hence enhance

competitiveness

Applications

Handles and bases of

electrical appliances

Metal casings of electrical

appliances

Metal casings of set top boxes

Ironware Parts


P. 32

Automotives

Automotives

Production Volume of Automotives in China

from 2012-2015

Sales Volume of Automotives in China

from 2012-2015 (Ten thousand

units)

(Ten thousand

units)

Source: Statistics, China Association of Automobile Manufacturers

Development Trend of the Automotive Industry

1,552

1,809 1,992

2,108

375

403

380 342

0

500

1,000

1,500

2,000

2,500

3,000

2012 2013 2014 2015 Passenger Cars Commercial Cars

1,927

2,212

2,372 2,450

1,550

1,793 1,970

2,115

381

406

379

345

0

500

1,000

1,500

2,000

2,500

3,000

2012 2013 2014 2015

Passenger Cars Commerical Cars

1,931

2,198

2,349

2,460

P. 34

Speed Meter IP Trim Faceplate and Button Light Panel Air Vent

Application

Automotive interior

decorative components

Advantages

Wide range of artwork selection

Full utilization of production machinery and IML technology

Interior Accessories – In-Mold Lamination (IML) Technology

Door Trim

SPK Mesh Shift Knob Shift Cover Trim Door handle Steering Wheel Door Trim

P. 35

Automotives

Appendix

Group’s Development Milestones

1990 2000 2010 2020 1978

Ironware

Components

White Home

Appliances

Handsets

MP3

Players VCD/DVD

Players

Notebooks

Smart-

phones

(2.5/3G)

Smart-phones

(4G/metal casing)

Automotives

Group’s Major Products at Different Development Stages

Smart

Home

Appliances

Smart-

phones

(5G)

P. 37

Scalable R&D Centers and Factories

Kaohsiung, Taiwan

Nan’an City, Fujian

Shanghai

Changshu, Jiangsu

Shishi City, Fujian

Shenzhen, Guangdong

Xiamen, Fujian

Hong Kong

Headquarters

Factories

LDS R&D Centre

P. 38

Forward-Looking Statement

FORWARD LOOKING STATEMENT: This presentation contains “forward-looking statements” which are statements

that refer to expectations and plans for the future and include, without limitation, statements regarding Tongda’s future

results of operations, financial condition or business prospects as well as other statements based on projections,

estimates and assumptions. In some cases, these statements can be identified by terms such as "expect," "intend,"

"plan," "believe," "estimate," "may," "will," "should" and comparable words (including the negative of such words).

The statements in this presentation are based on current expectations, forecasts and assumptions involving risks and

uncertainties that could cause actual outcomes and results to differ materially. Many risks, uncertainties and other

factors, some of which are unpredictable and beyond Tongda Group’s control, could affect the matters discussed in

these forward-looking statements. These risks and uncertainties include, but are not limited to: our determination as we

finalize our financial results of fiscal year 2014 that our financial results and conditions differ from our current

preliminary unaudited numbers set forth herein; fluctuations in our stock’s market price; fluctuations in operating results

and cash flows; unexpected, adverse seasonal impacts on demand; changes in macroeconomic conditions, both in

China and internationally; changes in applicable laws and regulation; the occurrence of, success and expected financial

results from, the expected multiple product trends; our financial performance during and after the current economic

conditions; our ability to maintain and improve costs, risks and costs inherent in litigation; quality and delivery for our

customers; pricing trends and competition; ability to service customers and labor relations; our ability to take advantage

of perceived benefits of offering customers vertically integrated services; whether our realignment of our capacity will

adversely affect our cost structure; changes in technology; competition; anticipated growth for us and our industry that

may not occur; managing rapid growth; managing rapid declines in customer demand and other related customer

challenges that may occur; our ability to successfully consummate acquisitions and divestitures; managing the

integration of businesses we acquire; risks associated with international sales and operations; retaining key personnel;

our dependence on a limited number of large customers; business and competitive factors generally affecting the

casings manufacturing services industry, our customers and our business; other factors that we may not have currently

identified or quantified; and other risks, relevant factors and uncertainties identified in our Annual Report. Tongda Group

disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new

information, future events or otherwise. All forward-looking statements in this presentation are qualified by reference to

this paragraph.

P. 39

Disclaimer

The material contained herein is a presentation of general background information about

the Company’s activities at the date of the presentation, and is not an offer of securities

for sales. It is information given in summary form and does not purport to be complete. It

is not intended to be relied upon as advice to potential investors. This presentation may

not be reproduced or redistributed to any other person and you agree to keep the

contents herein confidential. No representation or warranty, express or implied is made

and no reliance should be placed on the accuracy, fairness or completeness of the

information presented herein.

Confidentiality

The documents being given to you are given to you on a confidential basis and must not

be passed to, or their contents disclosed to, any other person.

Disclaimer

P. 40

Thank you!

Tongda Group Holdings Ltd.

Rm1201-1203, 12/F, Shui On Centre,

6-8 Harbour Road, Wanchai, Hong Kong

Ms. Long Li

（852） 2872-2628

（852） 2510-0991

[email protected]

Contact Person:

Tel :

Fax :

E-mail :

Investor Relations Contact

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