(Hong Kong, 21 August 2015) – SIM Technology Group Limited (“SIM Technology” or the “Group;” SEHK stock code: 2000), a leading mobile handset and wireless communication module solutions developer in China, has announced its interim results for the six months ended 30 June 2015. . During the period under review, the Group continued to maintain a steady course of business development as turnover strongly increased by 21.5% to HK$1,125 million (1H 2014: HK$925 million). The overall gross profit margin was 15.8% (1H 2014: 13.8%). Profit attributable to owners of the Company was approximately HK$16.5 million (1H 2014: HK$5 million) for the first half of 2015. Basic earnings per share were HK0.6 cent (1H 2014: HK0.2 cent).
In the first half of 2015, the Group has recorded growth in revenue, gross profit and gross profit margin in all of its core businesses, which has laid a solid foundation for the future sustainable growth of the overall business. The revenue and gross profit of the handsets and solutions business increased by 1% and 12% to HK$625 million and HK$92 million (1H 2014: HK$82 million) respectively. The shipment volume of its handset terminals has recorded greater growth. Due to the increase in the shipment proportion of industrial application terminals, the gross profit margin for this segment increased by 1.4 percentage points to 14.8% (1H 2014: 13.4%). The Group has focused on developing more customised and differentiated products serving mid-range to high-end branded customers in the industrial applications and internet-of-things (IOT) terminals businesses. For its consumer product lines, the Group has collaborated with a domestic electronics product brand to develop a product which is soon scheduled to commence mass production and shipment. Meanwhile, it is negotiating with other major brands for partnership opportunities. As for industrial application terminals, the Group has continued to develop new products and new markets in the logistics, scanning, payment, police operation, and other specific areas as well as terminals with waterproof, dust-proof and shock-resistant functions. As products developed in the first half of the year have commenced mass production, the Group expects its industrial application terminal business to grow steadily in the second half of the year. The Group is also actively exploring overseas markets such as Japan, Europe and the US so as to lay a solid foundation for future business growth.
For the wireless communication modules business, both shipment volume and revenue has grown strongly by more than 25%. The growth was attributable to the varying increases in demand in domestic and overseas markets, especially a 30% year-on-year increase in overall shipments to Europe and the US., as well as a year-on-year surge of 120% in the shipment of the 3G/4G products with higher unit prices.Revenue increased by 25.5% to HK$286 million (1H 2014: HK$228 million), while the gross profit margin was 15.3% (1H 2014: 15.0%). In the 4G demand in the electricity market in the PRC, the Group has won more than 80% of the bids in relation to module projects in the first round of government project tendering during the first half of 2015, demonstrating its market leadership. In the mobile payment POS area, it has forged strategic alliances with several major customers, thereby generating a handsome volume of business. As for the “internet of vehicles” market, the Group’s wireless communication modules business has maintained more than 50% of market share. This year, it has stepped up efforts in the development of new products – China-made GPS modules – commencing mass production in order to meet the tender requirements set by the PRC’s Ministry of Transport.
In overseas markets, the Group’s own high-price performance product line has pushed it ahead of its European and US competitors and at the same time has satisfied the increasing demand of the overseas 3G/4G LTE module markets. Consequently, it has recorded a growth of 30% in European sales during the period under review. In addition, our LTE module SIM7100A was certified by the US operator AT&T which is expected to boost the shipment volume, sales and profit of our modules in the US. In India, Asia’s second largest market, the Group has leveraged its leading position in the global market to achieve significant results in different fields such as AMR and fleet telematics resulting in a record sales performance in that country. In Japan and Korea, the operators have completed construction of the 4G LTE network and we have also attained certification by major local operators. For example, our 4G LTE module has been certified by SOFTBANK.
As for the Internet of Things business, the revenue increased over 16 times year-on-year to HK$121 million (1H 2014: HK$7 million), while the gross profit margin increased more than 10 percentage points to 14.5% (1H 2014: 4.2%). The Group has continued to accelerate the development of the value-added services for the intelligent automatic vending machine industry. Most of the Group’s vending machines are located in economically prosperous regions such as the Yangtze River Delta and Pearl River Delta regions as it expands the cloud-based vending machine network through franchises and cooperation business models. During the period under review, owing to rapid business growth of Shanghai Yunhao and the increase in franchisees, the number of automatic vending machines has risen substantially. Besides, the Group has leveraged its advantages in IT and has built a cloud computing and big data service platform to address the needs of various industry sectors. A series of IOT application integrated solutions has been developed, including smart home elderly service systems, health monitoring systems, vehicle anti-theft management systems, management systems for property security and maintenance, management systems for student safety and an automatic vending machine online-to-offline (O2O) service platform.
For the intelligent manufacturing business, the Group has officially entered into the non-handset robotic segment, and this business has experienced the fastest growth during the reporting period. The revenue of this new business segment amounted to HK$26 million for 1H 2015 and the gross profit margin was 43.9%. It has been developing integration technology for robotic applications for nearly three years. The equipment can replace a large number of labourers on the production line. The Group’s handset automated test equipment has secured orders from domestic handset manufacturers and gained widespread recognition. As such, the Group has set up a robotic intelligent manufacturing association. It has also acquired seven small companies with expertise in robot integration technologies, including robot arms for CNC engraving and stamping. The business of several co-operative companies engaging in automation integration has been progressing well with their key products focusing on today’s most labour-intensive sectors in the PRC manufacturing industry.
With respect to the properties development business, the sales recognised in the first half of 2015 amounted to HK$66.4 million (1H 2014: HK$57.5 million) with a gross profit margin of 18.5% (1H 2014: 27.4%).
Looking ahead, the Group will continue to establish a presence in the ODM consumer handset business and develop its industrial application terminals business which are in line with the “Internet Plus” strategic directive of the government. In view of the continuous global uptake of 4G applications, the Group will adhere to its customised and differentiated approach. Business from high-end customers is expected to generate stable revenue growth. Industrial application terminals in line with the “Internet Plus” strategic directive are to be delivered gradually, which should generate reasonable gross profit as well. The Group will continue to develop local and overseas markets and further enlarge its market share in the wireless communication module business. It is confident it can maintain the position as a major supplier of wireless communication modules. As 3G/4G LTE modules have obtained the certification in the US and Japan, and their unit price and gross profit are much higher than 2G products, a significant increase in turnover and margin is set to occur.
Regarding the system, equipment and operation of IOT, the Group will continue to enhance the development of value-added business in the smart vending machine industry, and capitalise on the franchise and cooperation models to quickly expand the scale of its cloud vending machine trade business. Besides, it will continue the development of the smart city, smart community and the “internet of vehicles” businesses, as well as IOT projects in retirement homes and healthcare and education industries. Intelligent robotic manufacturing is a new business, robust growth should occur and the Group will increase related investment and strive to seize the available opportunity so as to expand its business scale.
Mr Wong Cho Tung, Executive Director and President of SIM Technology, said, “We believe that the Group has passed through the most challenging time in its transformation process, and the new growth driver has found its way, established the foundation for sustainable growth and completed its layout. Therefore, we have confidence that the new business will lead the Group’s development to the next level in the coming years.”
