(December 9, 2002 - Hong Kong) - Ngai Lik Industrial Holdings Limited ("Ngai Lik" or "the Group" stock code: 332), a leading player in the Electronics Manufacturing Services (EMS) industry, announced its interim results for the six months ended September 30, 2002.
During the period under review, the Group's turnover totaled HK$1,721,754,000, representing a 5.7% increase over the corresponding period of 2001. Net profit slightly increased 2%, from HK$122,838,000 to HK$125,300,000. Basic earnings per share was 15.8 HK cents. The Board of Directors has recommended the payment of an interim dividend of 6 HK cents per share.
Commenting on the results, Mr. Lam Man Chan, Chairman of Ngai Lik, said, "Despite the continuous weakened economic climate during the period, the consumer demand for low cost electronics products in the mass market was still growing. We are pleased that overall performance of the Group was sound, and along with the continuous expansion to achieve vertically integrated production establishment. We expect further benefit from the economies of scale, diversified vertical integration and stringent cost control to contribute to the profitability to the Group in the near term.”
During the six months under review, EMS division contributed approximately 94.2% to the Group's total turnover. The division enjoyed continuous growth in sales as a result of fairly strong demand for consumer electronics products during the period. Its sales reached HK$1,621,642,000 and representing a 5% increase from the previous year. The US West Coast Port Strike incident, which affected the sales of EMS division in September, has been recently resolved. As a result, the stock built up during the Strike was subsequently delivered to the respective customers and the Group recorded a positive increase in sales turnover in October and November to compensate for the dip in turnover that was attributable to the Strike. The Management expects actual growth potential of the EMS division to be reflected in the second half of the fiscal year.
The Group's further diversified its vertically integrated production bases, the new component production lines added during the period are spring production, electroplating and flexible circuit board were added so as to further reduce the production cost. Certain Surface Mount Technology (SMT) machines and assembly lines were also added to increase the automation and production capacities.
The Motorcycle division remains the secondary segment of the Group, contributing 5.8% to total turnover. As the construction of Phase 1 of the new motorcycle plant in Dongguan has been completed, it has contributed to the increase in sales turnover from HK$91,218,000 to HK$100,112,000. In fact, the operation and development of this division in the PRC has encountered certain challenges as the moderate market development in the PRC was not quite up to the Group's previous expectations. However, the Group still managed to achieve break-even results during the period.
During the period under review, the Group has successfully signed a syndicated loan with six banks, amounting to HK$210 million. The loan will mainly be used for repaying parts of existing bank loans and financing the construction of the Qingyuan Industrial Estates. The loan allows the Group to improve overall liquidity in both short and medium financing and to entire corporate cost structure by significantly lowering the Group's borrowing costs in the future.
Looking ahead, EMS business will continue to be the core business of the Group. With the gradual completion of the new Industrial Estate in Qingyuan and the motorcycle production plant in Dongguan, the Group's production capacities will be further enhanced. Consequently, greater synergies and benefits of the economies of scale in overall operations will be crystallized. A more efficient and well-streamlined cost structure will provide the Group with tremendous advantages over major competitors by ensuring higher profit margins. As the motorcycle industry in the PRC is expected to remain competitive in the coming future, the Group will review the business prospects and viability in a regular manner so as to enhance the overall return from the investment already made.
Mr. Lam concluded, "The Group has preserved its leading position in the market and fostered amicable relationships with our renowned customers. Our EMS business has benefited as Wal-Mart, our major client who has cooperated with us for over 7 years, recorded an increase in sales recently. We believe that our continuous efforts and commitment to diversifying the vertically integrated production processes will subsequently increase our profitability. Coupled with our strong financial performance, the Group is highly confident that we will continue to generate promising results and returns to our supportive shareholders and valuable customers in the coming second half year. "
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Company Background
Ngai Lik is principally engaged in the manufacture and sales of a wide variety of home audio, digital and multimedia products. In addition, the Company also manufactures motorcycle and motorcycle engines. It has been listed on the Stock Exchange of Hong Kong Limited since 1992.
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