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Source: Media Outreach

Gross Profit Grew by 33.7% to HK$ 457 million with an Increased Gross Profit Margin of 13%
HONG KONG, CHINA – Media OutReach – 14 August 2019 – Tonly Electronics Holdings Limited (“Tonly Electronics” or “the Group”; SEHK stock code: 01249) today announced its unaudited interim results for the six months ended 30 June 2019 (“the period under review”).
During the period under review, the Group recorded a turnover of approximately HK$3,518.2 million, up by 25.6% year-on-year. Gross profit increased by 33.7% year-on-year to approximately HK$457.2 million. Operating profit rose by 14.2% year-on-year to approximately HK$133.0 million. Profit attributable to the owners of the holding company climbed by 15.1% year-on-year to approximately HK$98.3 million. Attributed to the improvement of production layout and efficiency, the gross profit margin of the Group in the period under review increased to 13.0% comparing to the same period last year.
Benefiting from the rapid growth in the global market of smart products and the Group’s advantage in product technology, the Group’s audio product business recorded a revenue of HK$2,502.6 million, representing a year-on-year increase of 24.3%. The new audio business maintained its advantage in scale, and maintained a relatively rapid growth together with the smart audio speaker business. In the period under review, the revenue of headphones increased by 71.2% year-on-year to HK$421.5 million, reinforcing the Group’s leading position in the headphone industry and securing more new customers. True Wireless Stereo (TWS) earphone business also achieved a breakthrough and strengthened its competitiveness. For the ancillary product business, benefiting from the overall market growth and entering into the supply chain of an overseas mainstream internet corporation, the ancillary products contributed a revenue of HK$304.9 million to the Group, representing a year-on-year increase of 63.6%.
During the period under review, the Group continuously enhanced its capabilities in speaker units and structural components, especially the new structural parts related to precision moulding in order to reinforce its vertical integration capability of the supply chain. Leveraging on its extensive experience in professional electro-acoustic design and pioneer advantages in smart speakers, the Group constantly innovates in product development. During the period under review, the Group’s product research and development (R&D) expenses amounted to HK$169.5 million, accounting for 4.8% of its total revenue. The R&D team is devoted to introducing news products epitomised by smart voice speakers in response to consumers’ specific requirements, as well as developing screening-equipped smart products centring smart voice and all kinds of smart voice eco-ancillary products to secure more new customers and explore new fields.
The Group also continuously refines its production and supply chain management. The Group used Huizhou Zhongkai as a core base and moulding centre integrating research, production and sales. Phase Two of Seaond Plant on land parcel No.42 commenced operation in March 2019, enhancing the overall production management and efficiency, as well as reducing external fees. The Group’s Huizhou Puli Electroacoustics Tongqiao Industrial Park was also put into operation, foriming a comprehensive industrial chain integrating carpentry, speaker assembly, high-end wooden boxes, speakers, and plastic injection. In orfer to enhance the overseas supply chain capability and to proactively respond to the potential impact of the U.S. tariff, the Group set up a subsidiary in Vietnam in the first half of the year, and plans to establish its own overseas plant which was strived to commence operation in the second half of 2020 to realise the overseas extension of the Group’s vertical integration capability of the supply chain.
The management of Tonly Electronics stated: “The smart product industry is likely to maintain a relatively rapid growth amid the sluggish global economy. The Group strives to provide brand companies and customers with outstanding quality products and services by expanding new businesses, exploring new technologies and products, and enhancing its productivity. As the smart and ancillary product business is becoming more mature, we believe the smart products, headphones and ancillary products of the Group will account for an increasing proportion to its turnover in 2019, contributing to a strong business growth in the future. Meanwhile, more intense market competition can be foreseen along with the continuous development of smart audio products. In face of the various risks and opportunities, the Group will keep on looking for business expansion opportunities, which, coupled with its own strengths, will enlarge its business portfolio, enhance the long-tern value of the Group, and proactively generate more return for its shareholders.”
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