HONG KONG--(BUSINESS WIRE)--Financial Highlights
| For the year ended 30 Jun | ||||||
| HK$ | 2016 | 2015 | Change | |||
| Revenue | 393,779,000 | 381,355,000 | +3.3% | |||
| Gross profit | 97,145,000 | 94,274,000 | +3.0% | |||
| Gross profit margin | 24.7% | 24.7% | - | |||
| Profit attributable to owners of the parent | 34,159,000 | 34,454,000 | -0.9% | |||
| Net profit margin | 8.3% | 9.0% | -0.7 ppt | |||
| Basic earnings per share | 0.11 | 0.13 | -18.2% | |||
| Final Dividend (HK cents) | 4.0 | 2.3 | +42.5% | |||
Huazhang Technology Holding Limited (“Huazhang” and its subsidiaries, together, the “Group”, stock code: 1673) announced its annual results for the year ended 30 June 2016. The Group’s revenue in the reporting period amounted to approximately HK$393,779,000 (2015: HK$381,355,000), representing an increase of 3.3%. Profit attributable to owners of the parent slightly decreased by approximately HK$295,000 to HK$34,159,000 (2015: HK$34,454,000).
The Board of Directors declared a final dividend of 4.0 HK cents per share (2015: 2.3 HK cents).
Business Review
For the year ended 30 June 2016, the Group has entered into contracts with amount of approximately HK$509,752,000, as compared with last year, an increase of 48.6%. As at 30 June 2016, the outstanding contracts amount was HK$274,709,000. Most of them were expected to be completed in the financial year ending 2017.
Under the difficult business environment faced by the Chinese paper industry, the Group tried to expand overseas market. Through a domestic import and export company, the Group recorded export sales of approximately HK$30,625,000 during the year (2015:Nil). In order to expand overseas market, the Group's sales staff participated in a number of international exhibitions, including: Paperex in India and International Print and Pack of Iran, and have visited various Southeast Asian countries to understand the latest information of the paper industry in these countries.
The Group completed a placement to issue 33,000,000 shares on 21 July 2015. The net proceeds was approximately HK$116,593,000 which would be used in expanding the sewage treatment business, repayment of a third party’s loan and general working capital. On 21 December 2015, the Group completed the acquisition of 70% interests in Wukong. The purchase consideration was RMB7,420,000 (equivalent to approximately HK$8,882,000). Wukong is principally engaged in the business of design and construction of wastewater treatment facilities in the PRC as well as other construction and fixture installation projects and the ancillary services.
Industrial automation business
Revenue from sales of Industrial Automation Business increased by 2.7% to approximately HK$289,657,000. The increase was primarily attributable to provision of one-stop services in relation to industrial automation systems. In early 2014, the Group established project division which have contributed revenue of approximately HK$180,811,000 for the year ended 30 June 2016, as compared with the same period in last year, revenue increased by 22.7%. Such services include sales of industrial automation systems and provision for installation and testing services. The gross profit margin of Industrial Automation Business increased from 22.6% to 24.4%.
Sludge treatment products
Revenue from sales of sludge treatment products decreased by 41.0% to approximately HK$37,788,000, primarily attributing to more keen competition in the market. The Group intended to participate high-end projects, as a result, projects scales decreased and gross profit margin improved. The gross profit margin of our sludge treatment products increased from 27.5% to 33.5%.
After-sale and other services
Revenue from provision of after-sales and other services increased by 36.2% to approximately HK$48,300,000. Such increase was primarily attributable to the increase in sales of the electrical components and increase in after-sales services. The gross profit margin for provision of after sales and other services decreased from 36.2% to 26.2%. Such decrease is attributing to sales of the electrical components with a lower gross profit margin.
Prospects
Mr. Zhu Gen Rong, Chairman of Huazhang said, “The Thirteenth Five-year Plan of China has clear indications for implementing Made in China 2025 to advance the progress of industrialisation and modernisation of the manufacturing industry in China. We expect that the development of the production process of the paper industry will align itself with national policies, and paper corporations will proactively promote the paper industry’s own “Made in China 2025”. The Group will increase its investment in research and enhance its digital and smart products and services to meet the future development needs of the paper industry through collaboration with universities or technology corporations. Moreover, “The Belt and Road” is a major economic policy over the next decade of China. The Group has set up a branch in Southeast Asia of which mainly serves Thailand, Indonesia, Malaysia and other markets, to capture overseas market share. The branch is expected to generate revenue for the Group for the financial year ended 2017.”
About Huazhang Technology Holding Limited
The Group is principally engaged in the research and development, manufacture and sale of industrial automation and sludge treatment products, the provision of after-sales service and wastewater treatment business in the PRC.