Ten Pao (1979) H1 2024 earnings summary

Executive summary

• Revenue rose 5.6% year-over-year to HK$2,471.0 million, driven by strong new energy business and improved industrial power supply demand.

• Gross profit increased 22.8% to HK$501.9 million, with gross margin up to 20.3% from 17.5% year-over-year, reflecting effective cost control and operational efficiency.

• Profit attributable to owners grew 28.6% to HK$175.8 million; basic and diluted EPS rose to HK17 cents from HK13 cents.

• Interim dividend declared at HK5.2 cents per share, up from HK2.8 cents last year.

• Maintained strong cash flow and healthy balance sheet amid challenging market and supply chain conditions.

Financial highlights

• Operating profit increased 21.1% to HK$200.1 million; profit before tax was HK$207.0 million (+28.2% YoY); net profit: HK$175.8 million (+28.6% YoY).

• Operating profit margin rose to 8.1% (2023: 7.1%), and profit margin attributable to owners reached 7.1% (2023: 5.8%).

• Net cash generated from operating activities was HK$332.9 million, up from HK$21.7 million in the prior year.

• Gearing ratio dropped to 12.2% from 39.7% at year-end 2023, mainly due to net repayment of bank borrowings.

• Interim dividend: HK5.2 cents/share (2023: HK2.8 cents/share).

Outlook and guidance

• Management remains cautiously optimistic amid global economic uncertainty and plans to enhance automation, expand international customer base, and focus on R&D and new product launches.

• Expects steady performance in industrial power supply, leveraging China's investments in new energy and data centers.

• New energy and industrial power supply segments expected to maintain strong growth momentum in the second half of 2024, supported by rising demand for energy storage and automotive electronics.

• Plans to launch more household-oriented products and expand clean energy solutions in response to global regulatory trends.

• Cautiously optimistic for H2 2024 amid global economic and geopolitical uncertainties.