Resilient Business Performance amid Macro Uncertainties
Revenue Increased by 13.8% YoY to HK$2,090.5 million
Gross Profit Increased by 4.6% YoY to HK$ 267.5 million
Financial Highlights
| For the six months ended 30 September | FY2022 HK$ million | FY2021 HK$ million | Change | |||
| Revenue | 2,090.5 | 1,836.2 | +13.8% | |||
| Gross profit | 267.5 | 255.8 | +4.6% | |||
| Gross profit margin(%) | 12.8% | 13.9% | -1.1p.p. | |||
| Profit attributable to owners of the Company | 30.2 | 34.2 | -11.6% | |||
| EBITDA | 138.7 | 118.0 | +17.5% | |||
| Basic earnings per ordinary share (HK cent(s)) | 3.58 | 4.06 | -11.8% |
(23 November 2022 – Hong Kong) A leading technology, brand, and manufacturing solutions specialist focusing on smart and sustainable living, Computime Group Limited (the “Company” or “Computime”, together with its subsidiaries, collectively the “Group”; stock code: 320.HK) is pleased to announce its interim results for the six months ended 30 September 2022 (the “Period”).
Results Overview
Despite the prevailing conservatism among industry players and end consumers, the Group was able to leverage its technological capability and customer stickiness, in securing a steady increase in orders across both operating segments during the Period. Hence, total revenue increased 13.8% year-on-year (“YoY”) to HK$2,090.5 million (1HFY21/22: HK$1,836.2 million). As a result of the increase in revenue, gross profit also increased 4.6% YoY to HK$267.5 million (1HFY21/22: HK$255.8 million), yet gross profit margin suffered a drop of 1.1 percentage point to 12.8% (1H FY21/22: 13.9%), mainly due to the depreciation of European currencies as well as the spike in raw material and logistics costs. Coupled with the sharp increase in interest rate, as well as the increase in interest-bearing bank borrowings in support of various corporate projects, profit attributable to owners of the Company decreased 11.6% YoY to HK$30.2 million (1H FY21/22: HK$34.2 million). On the other hand, EBITDA for the Period increased from HK$118.0 million last year, to HK$138.7 million this year.
The Group also remained its prudent approach in managing its financial. As at 30 September 2022, cash and cash equivalents increased 16.9% to HK$406.4 million (as at 31 March 2022: HK$347.7 million), with trade receivables greatly improved as it decreased from HK$499.2 million, to HK$365.2 million, despite an increase in total revenue. Trade and bills payables also increased from HK$807.0 million to HK$943.1 million, whereas inventories increased 19.5% to HK$1,118.1 million (as at 31 March 2022: HK$935.9 million), largely due to the integration of Braeburn Systems LLC’s (“Braeburn”) inventories as well as the advanced preparation of materials amid global unpredictability. Gearing ratio maintains at a healthy level at 44.0%, slightly above last fiscal year end at 40.8% as at 31 March 2022.
Overall, the Company was able to report an improvement in its cash conversion cycle to 46 days during the Period (1H FY21/22: 53 days), and that should provide enough agility for the Company to navigate the fluctuating market.
Segment Review
The Group continues to advance smart and sustainable living through its two key operating segments, with Control Solutions focusing on the design, engineering, technology and manufacturing solutions of heating, ventilation, and air conditioning, home appliance and industrial controls for international branded customers, whereas its Branded Business offers smart home, energy efficient, and environmental control products to professional installers, property developers, and wholesalers under its house brand Salus.
During the Period, revenue of Control Solutions reached HK$1,863.6 million (1H FY21/22: HK$1,656.0 million), representing a YoY growth of 12.5%, thanks to the increase in order volume during the Period. However, despite the Group’s best effort in cost control and price adjustment, segment profit margin decreased 1.2 percentage point to 6.6% (1H FY21/22: 7.8%), as a result of the surge in material and the depreciation of European currencies.
Benefitted from the contribution of the top-up investment in Braeburn, revenue of Branded Business increased 25.9% YoY from HK$180.2 million last year, to HK$226.9 million this year. Yet, it was partially offset by the depreciation of European currencies, resulting in a narrowing loss, from HK$27.1 million last year to HK$17.8 million this year. Nonetheless, Braeburn’s integration has been ongoing. Through its extensive sales network, it is expected that the Group can improve segment performance in the future, by raising the Group’s penetration and contributions from the North American market.
Business Review and Outlook
During the Period, the Group continued to enhance its capability by streamlining its operations, investing in new technologies, refining its global manufacturing footprint, and maintaining a solid financial position in case of the unexpected. The Group has invested in its technological infrastructure to develop its Platform-as-a-Service (“PaaS”) business, on applications such as smart irrigation, robotics, and smart home construction. To support the PaaS development, the Group has further invested in its research and development (“R&D”), particularly on artificial intelligence (“AI”), machine-learning (“ML”), cloud computing, robotics, professional security solutions and electrical vehicle (“EV”) chargers, so that it can create better products for its future servicing business. The Group has also tapped into new product categories and industries through its robotic investment, allowing it to acquire new customers from the medical and hospitality sectors.
On its production footprint, while the development of new sites in Mexico and Romania remains on track, the Group has greatly strengthened its control and enhanced the efficiency of the Malaysian plant during the Period. This should also lay a solid foundation for future performance, as the improved in efficiency should become a competitive advantage for existing and new customers.
Regarding outlook and strategies, Chairman and Chief Executive Officer of Computime Group Limited, Mr. AUYANG Pak Hong Bernard, commented, “In order to counter the headwinds ahead, the Group will continue to focus on cost control and efficiency enhancement, allowing us to have the maximum resources and margins available to respond to the market. Specifically, the Group will continue to boost the efficiency of its Malaysian plant, as well as to reduce the operating cost of its other plants through its level-loading strategy so that it can enjoy a higher margin. The Group will also preserve cash to efficiently respond to market shocks, and will continue to diversify its manufacturing footprint in order to gain competitive advantage in new regional markets.”
Mr. AUYANG continued, “The Group remains cautiously optimistic over the future, and the successful integration of Braeburn should offer the Group a new business dimension. The Group is looking forward to leveraging its solid distribution network in North America to quickly expand its Branded Business. The Group has started offering a true end-to-end solution through its PaaS to its customers. The platform will also be expanded to cover other new product categories that the Group will tap into in the future. While the Group continues to invest in R&D, focusing on AI, ML, robotics, cloud computing, professional security solutions and EV chargers, the subsequent new product development should also lay a solid foundation for future ecosystem and service revenue, allowing the Group to offer more and better products and solutions to drive smart and sustainable living.”
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