TK GROUP (2283) H1 2024 earnings summary

Executive summary

• Revenue for the first half of 2024 rose 17.7% year-over-year to HK$1,007.2 million, driven by strong rebounds in plastic components manufacturing, consumer electronics, and commercial telecommunications.

• Net profit increased 45.8% to HK$79.7 million, with net profit margin up 1.5 percentage points to 7.9% and EPS up 45.5% to HK9.6 cents.

• Gross profit margin improved to 24.8% from 23.3% year-over-year, reflecting higher capacity utilization, production efficiency, and cost optimization.

• Interim dividend of HK4.0 cents per share declared, up from HK2.8 cents per share in the prior year.

• Orders on hand increased 24.3% to HK$1,066.6 million, indicating a positive outlook.

Financial highlights

• Gross profit rose 25.2% to HK$250.0 million, with gross margin at 24.8%.

• Net financial income surged 120.1% to HK$8.4 million due to full repayment of bank loans.

• Inventory turnover days decreased by 12 days to 104; trade receivable turnover days increased by 5 days to 66.

• Net cash position at HK$1,060.5 million, up 13.3% year-over-year; net current assets at HK$1,164.3 million.

• Current ratio: 241.8%; gearing ratio: N/A (no bank borrowings).

Outlook and guidance

• Management is cautiously optimistic for the second half of 2024, expecting continued recovery in global economic activity and robust demand in consumer electronics.

• Anticipates full production capacity in Q3, with gross profit margin expected to further improve.

• AI technology and new product launches in consumer electronics are expected to drive demand and further growth.

• Focus remains on innovation, cost control, and risk management.