(Hong Kong, 3 March 2011) – SIM Technology Group Limited (“SIM Technology” or the “Group”; SEHK stock code: 2000), a leading mobile handset and wireless communication module solutions developer in the PRC, achieved remarkable results with highest revenue ever reported since the Group’s listing on The Stock Exchange of Hong Kong Limited in 2005 at HK$4,034.0 million (2009: HK$2,983.5 million), up by 35.2% for the year ended 31 December 2010. Also, profit attributable to owners of the Company surged by 80.9% to HK$233.3 million (2009: HK$129.0 million).
The significant increase in revenue was mainly due to continuing success in delivering ODM services to top tier handset customers and penetration into the 3G product segment, while the “high value added” strategy drove profit growth.
For the year under review, the basic earnings per share increased by 76.5% to HK15 cents (2009: HK8.5 cents). The Group continued to maintain a strong financial position with net cash balances amounting to HK$511.0 million (2009: HK$590.3 million) as at 31 December 2010. The Board of Directors proposed payment of a final dividend of HK3.0 cents (2009: HK2.2 cents) per share. Together with an interim dividend of HK 2.5 cents (1H 2009: HK0.8 cent) per share already paid, total dividend for the year amounted to HK5.5 cents (2009: HK3.0 cents) per share, representing a payout ratio of over 36%.
Mr. Cho-Tung Wong, Executive Director of SIM Technology, said, “In 2010, our business grew rapidly, the result of having repositioned our business strategy in 2H 2008 to focus on high value-added and high growth market segments. We have endured difficult times. Now we have not only plateaued but bounced back to enjoy significant growth thanks to the trust and support from our international top-tier customers. We have thus successfully differentiated ourselves and taken the necessary actions to realise our goals.”
For the mobile handset solutions segment, revenue rose by 72.8% to HK$3,170.2 million while gross profit margin increased to 10.9% from 5.3% despite the competitive business environment. The growth was due to exceptional ODM sales, which soared by 136% year on year to HK$1,793.8 million. The Group shifted its engineering focus towards 3G handsets and smart phone solutions development covering all 3G standards and Window Mobile and Android OS. In all, the Group launched 216 (2009:152) handset models and 86 (2009: 52) handset platforms in 2010.
It is worth noting that the Group achieved growth in its traditional SKD/CKD solutions as well, reporting a jump in sales of over 35% to HK$1,370.1 million. This was due to our customers’ sales growth in both domestic and emerging markets. The volume increase provided significant economies of scale and bargaining power in terms of cost management.
Revenue from the wireless modules and modems solutions segment declined by 23.5% to HK$721.7 million, while gross profit margin improved slightly to 18.7%. The drop in sales was due to decreased modem sales, as well as the Group’s decision to replace the SIM300 family of wireless modules with the SIM900 family. Nevertheless, the new wireless modules family, which is smaller, faster and provides exceptional value, is the Group’s first module to receive AT&T certification – back in July 2010. This will open the opportunity to access the huge North American market for future growth. Additionally, as part of the 12th Five-Year-Plan, the PRC government has recognised “Internet of Things” as an important area of development; hence, this will drive demand for Machine-to-Machine (M2M) wireless modules and modules of other wireless standards, such as Bluetooth, Wi-Fi, and short range RF. Accordingly, by leveraging the SIMCom® brand and its solid experience in the M2M industry, the Group plans to expand its module portfolio to include module of other wireless standards.
LCD modules remained a strategic component supporting the Group’s ODM business. In anticipation of the strong growth of smart phones, the Group’s LCD factory focused on upgrading the facility in 2H 2010 to manufacture multi-touch capacitive displays. The Group anticipates significant adoption of these high-end displays, aligning with the increase in smart phone shipments in 2011. Conversely, the Group expects future external sales of LCD modules will be flat and even decline. Last year, external LCD sales decreased by 30.6% to HK$142.1 million.
Innovation never stops. At the end of 2010, SIM Technology had 1,016 patents granted and/or in application covering communications technology, mechanical design, and manufacturing.
On the operation front, Shenyang Operating Centre’s first phase of construction was completed last year and the second phase is underway, which will include a new R&D centre. The facility will allow the Group to tap into the vast pool of qualified engineers from nearby universities and build a stable team of engineers for future growth.
“We are delighted to see the decisive measures taken over the past two years bear fruit; establishing a strong foundation from which the Group will become a leader in 3G solutions development. We are confident in achieving sales and profit growth in the year ahead and delivering good returns to shareholders in the long term.” Mr Wong concluded.
