(Hong Kong, 30 March 2017) – SIM Technology Group Limited (“SIM Technology” or the “Group”; SEHK stock code: 2000), a leading mobile handset, wireless communication module and IOT solutions provider in China, has announced its annual results for the year ended 31 December 2016 (the “Year”). During the Year, the Group maintained a steady growth in core businesses driven by successful business transformation. Profit attributable to owners of the Company increased by 19.5% to HK$77.3 million, while revenue amounted to HK$2,724 million. Gross profit was HK$402 million, with overall gross profit margin of 14.7%. Basic earnings per share were HK3.02 cents. To reward shareholders for their unwavering support, the Board of Directors recommended payment of an annual dividend of HK1 cent per share (2015: NIL).
During 2016, the Group’s successful business transformation started to bear fruit. The revenue of handsets and intelligent terminal business was HK$1,271 million. In view of the PRC smartphone market approaches saturation and increasing of concentration of brands and models, as well as bearing higher gross profit margin and strong customer loyalty, certain brands and models stood out and began to target niche markets by introducing differentiated handset models. Therefore, the Group has strengthened the development of the terminals business in the Year, and mainly focused on mid-to-high-end differentiated consumer handset products of handset Original Design Manufacturer (“ODM”) business. Meanwhile, the Group is closely monitoring the trend of various specialized Internet of Things (“IOT”) technology such as the increasingly popular NarrowBand IOT (“NB-IOT”), and is prepared to enter the market when suitable opportunities arise. For the China market, the domestic terminal market has continued on the growth path, especially product areas such as scan terminal, mobile Point of Sale (“POS”) device and logistics terminal, the Group (Enterprise)’s dedicated intercom network terminal, outdoor waterproof, dust-proof and sock resistant terminal and vehicle terminal arenas, which have huge room for development. During the Year, the Group has maintained a similar level of sales volume for those categories, and also proactively expanded the business of Augmented Reality (“AR”) terminals for industrial enterprises. As for the overseas market, the Group has continued to develop the markets of Europe, the U.S., Japan and Middle East. As the same time, the Group has also continued to expand the potential overseas markets such as Southeast Asia and India to open up more profitable channels for the Group. The Group has, according to plan, customized its industrial terminal and consumer products for Japanese operators and overseas customers in the U.S. and Europe. Delivery of most of the newly developed products is expected to start in the third quarter of 2017, therefore will contribute to the Group in the second half of 2017 and year 2018.
Benefit from rising in market demand for IOT, overall shipments have increased by more than 27% when compared with last year, with sales volume of 3G and 4G products boasting higher growth, while intelligent POS, intelligent meter and healthcare modules accounted for larger shipment volume. Also, 4G module products have higher selling prices, resulting in an increase in revenue of the wireless communication modules business by 27.6% to HK$815 million. To seize market opportunities, the Group had launched a full range of products to meet customers’ needs in the PRC market; turning to the overseas markets, of which some high-end markets such as the U.S. and Japan, most of the Group’s 4G products had obtained international accreditation and operator certifications. Also, the Group’s 2G and 3G security and vehicle businesses have achieved a significant growth in shipment volume in Europe. In order to cope with the strategic transformation, the Group has been looking for strategic partners with strengths that can complement its own in the hope of giving new impetus to the modules business.
During the Year, the Group has strived to develop the IOT business to cloud-based automatic vending machine, which is switched its development path from the originally asset-heavy operation mode of direct managing operations, financing, leasing and recruiting businesses, to asset-light Online-to-Offline service platform. Apart from having its backstage systems to provide operators with data services, the Group has used its strengths in IT to provide upgrading services for operators with old and outdated machines, so that they could upgrade the machines such as enjoying integrated online payment and adding advertisement monitors in order to increase sales. In addition, the service platform has provided operators with an integrated value-added service, together with beverages wholesale distribution services, financial and leasing services, which enables the Group to become an integrated service platform designed for vending machine operators and beverages manufacturers. As a result, asset-light operation mode could best unleash the Group’s current core advantage in the existing technology, which facilitates the business operation more stable.
For the intelligent manufacturing business, the Group has focused on three main business divisions in the past year, including the use of automatic facilities such as robots to replace works in the production line, using machines for optical purposes as well as the use of artificial intelligence technology as main optical product to replace operations in the production line that requires large amount of procedures, and the development of industrial internet intelligence system such as backstage software to replace simple computer operations. During the Year, the Group’s robots for automatic testing of circuit boards in handsets have received large procurement orders from various top handset factories in China, contributing profits to this business. At the same time, the Group has also launched many automatic facilities to fulfill the vision of fully automated and intellectualisation of handset manufacturing, and expand its business to other 3C electronics, vehicles parts manufacturing, as well as low voltage electrical appliances industries. Regarding the technology in optical software and artificial intelligence, the Group’s Automatic Optical Inspection (“AOI”) detection software and warning system have received recognition from the two largest manufacturers in China, which is expected to bring in substantial revenue to the Group in 2017. In addition, the Group has also continued to develop a more comprehensive Manufacturing Execution System (“MES”) and Warehouse Management System (“WMS”) etc., as well as establish an intelligent three-dimensional warehouse, which will start demonstration and promotion to its customers in this year.
With respect to the properties development business, sales from properties development during year amounted to HK$192 million, with gross profit margin at 12.1%. The Group’s projects include “The Riverside Country” (晨興‧翰林水郡) in Shenyang City, the PRC, which sold 1,338 units in all its four phases; as well as Phase I of “Seven River in Sweet” (七里香溪) in Taizhou City, the PRC, which sold 251 units. Construction of Phase II had already commenced and expected to complete in the second half of 2017.
Looking ahead, the Group will thoroughly change its strategic direction in the aim of fulfilling “shifting from the manufacturing industry to the information technology services industry, and from a product-oriented manufacturer to a service-oriented service provider”. For the handsets and intelligent business, the Group will continue to strive for more support from its high-end differentiated customers and increase the investment in industrial IOT terminal in order to continuously expand the product range and service scope. To maintain the leading position of the wireless communication modules business, the Group will introduce a strategic partner to transform its existing business model to echo with the Group’s transformation. After the transaction is completed, the business nature of the wireless communication module business will switch from product-orientated (having its own brand with independent R&D and marketing team) to service-orientated for EMS providers (only responsible for purchasing, logistics to manufacturing).
Moreover, the Group will continue to strengthen its development of IOT business by investing resources to expand its automatic vending machine value-added business, and also continue to grow its cloud computing and big data service platform in order to support the smart home and elderly care service systems, health monitoring systems and vehicle security systems as well as the marketing of these systems in China and overseas markets. In view of the huge development potential from intelligent manufacturing business, the Group will continue to develop according to the three main divisions, namely robotic integrated applications, optical system and artificial intelligence, and industrial internet, to replace repetitive work procedures. The Group believes that the technical knowledge from this business will help the Group reduce its production cost, improve labour working environment and avoid the occurrence of human error, and thereby significantly improving the overall quality of enterprises.
Mr. Wong Cho Tung, Executive Director of SIM Technology, concluded, “Through dedicated efforts made over the past year, our business transformation has brought new growth drivers and development direction to the Group. Such efforts have also laid the foundation for the Group’s sustainable development going forward. We believe that the growth of our new businesses in the coming years will drive the Group’s overall business to reach new heights.”
