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SIM Technology 2016 Interim Profit Surges 88% Strong Growth in Core businesses Driven by Successful Business Transformation





Results Highlights

· Profit attributable to owners of the Company surged by 88.4% to HK$31 million

· Revenue increased by 17.9% to HK$1,326 million as compared to the last corresponding period

· Gross profit rose by 13.3% to HK$201 million

· Basic earnings per share were HK1.2 cents

· Revenue of four core businesses including handsets & solutions, wireless communication modules, Internet-of-things and intelligent manufacturing delivered satisfactory growth, the remarkable results signified SIM Technology’s successful business transformation


(Hong Kong, 25 August 2016) – 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 2016. During the period under review, the Group continued to maintain a steady course of business development as profit attributable to owners of the Company surged by 88.4% to HK$31 million, while revenue increased by 17.9% to HK$1,326 million. Gross profit rose by 13.3% to HK$201 million, with overall gross profit margin of 15.2%. Basic earnings per share were HK1.2 cents. In the first half of 2016, the revenue of four core businesses including handsets & solutions, wireless communication modules, Internet-of-things (“IOT”) and intelligent manufacturing delivered satisfactory growth, the remarkable results signified SIM Technology’s successful business transformation.


During the period under review, the handsets and solutions business recorded a 10.0% growth in revenue to HK$687 million. Demand for industrial application terminals has continued to increase along with the further development of the IOT and Business-To-Business (“B2B”) sectors. In addition to strengthening traditional terminals, the Group has been expanding into two-to-three target industries with an aim to become the industry’s leading solution provider. For the China market, in view of the intensifying competition in the open consumer handset market, it continues to develop products for various segments to capture the development trend in differentiated product market and accommodate demands from different customer segments, which is expected to contribute to revenue in the second half of the year. As for the overseas market, the Group has continued to focus on the consumer terminal market and is expanding into the IOT and the industrial application terminal segments in Europe, Japan and North America. New products are expected to launch within next two years.


For the wireless communication modules business, revenue increased by 15.6% to HK$331 million. Owing to higher demand in Europe for which sales volume grew more than 30%, and doubled shipment volume of 3G modules in North America. During the period under review, the Group actively participated in undertaking tenders for 3G and 4G products in Europe, South Asia, Southeast Asia and Australia. Its 4G module has been applied by customers in North America, and customers’ terminal products has also commenced in the Japan market. The Group expects that these modules and terminal projects would generate more revenue in the second half of 2016. Turning to the China market, it has continued to develop new products due to the diversification of terminal products with the high growth development trend, while also achieving satisfactory results in the emerging industries including security and surveillance, smart home and health care sectors.


The Group always strives to develop the IOT business, its big data platform has continued to focus on a series of IOT application integrated solutions, such as intelligent community and intelligent elderly care services. During the period, the Group recorded a segmental revenue of HK$122 million. It enabled multiple online payment functions of its vending machines such as QuickPass and Alipay. It has also optimised POS, adjusted the product structure of several models and developed new POS. Besides, the Group has expanded the intelligent elderly care services and intelligent community businesses, of which its Shanghai project was given high recognition.

For the intelligent manufacturing business, the Group has developed an automated testing system and subsequently entered the intelligent manufacturing market in the first half of 2016. Leveraging its significant advantages of integrated technological expertise, prompt attentive service and strong R&D capability, the Group has achieved impressive results in the China market. Segmental revenue jumped by 1.8 times to HK$73 million. During the period, the Group has continued to allocate substantial resources to its R&D and design team, so as to enhance the R&D in industrial Internet. Currently, the Group has attained a level comparable to major integrated enterprises in the industry with the capacity to develop and design more than 20 projects concurrently.


With respect to the properties development business, the revenue amounted to HK$113 million for the first half of 2016. Projects of the Group include “The Riverside Country” (晨興‧翰林水郡) in Shenyang City and “Seven River in Sweet” (七裏香溪) in Taizhou City, the PRC.


Looking ahead, the Group will continue to implement its ongoing strategies. As for the handset business, more new products developed in the first half are to be launched in the second half of 2016. The shipment to several major domestic and overseas customers will create room for increasing profitability. The global IOT industry is still in a fast-growth stage and has enormous scope for expansion. As such, the Group will continue to enrich and optimise 2G modules and launch 3G modules with a higher price-performance ratio. As for 4G modules, this product will be the key driver of the module businesses in the future, and the Group will launch a series of modules boasting technological advantages in the second half of the year.


Moreover, the Group will also continue to enhance the development of value-added business within the intelligent automatic vending machine segment, and to expand the cloud computing and big data service platform in both domestic and overseas markets. It will step up its efforts to promote the O2O business and accelerate cooperation within the cloud-based business. For the intelligent manufacturingbusiness, expecting to be the greatest development potential in the future, the Group will develop the industrial Internet by increasing investment in areas such as intelligent storage and logistics. Focusing on Industry 4.0 with the country’s direction, the Group will build an intelligent factory, in which operations of robots, visual systems and artificial intelligence to replace the repetitive work.


Mr Wong Cho Tung, Executive Director of SIM Technology, said, “We are glad to see the successful transformation of the Group’s businesses as we have identified new growth points and development directions. We have also completed formulating our strategy, which includes generating stable income from providing handsets to differentiated customers, expanding both domestic and overseas industrial application terminal markets, maintaining our leadership position in the global IOT module application and solutions market, as well as developing the intelligent manufacturing business which offers huge potential. The concerted effort of the management team and the entire staff has laid a foundation for the Group’s sustainable development and we believe this will lead the Group’s business to new heights in the future.”


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