During the Period, the intelligent manufacturing business enjoyed the best performance among the Group's four major businesses, with revenue of HK$90.3 million and gross profit of HK$21.5 million, surging by 103.2% and 38.4% respectively when compared with last year. The increase was mainly from the sales of the 3C product robotic testing line of the first business unit. With excellent product quality, and strong word-of-mouth reputation, the Group has not only gained wide recognition among customers, but also secured lucrative orders that drove revenue and profit growth. In addition, to maintain a stable core management team and key technicians while enhancing its competitiveness, the Group has devised a staff shareholding scheme for the first business unit. The scheme has facilitated greater financial benefits, which should drive the revenue and profits of the business.
The consumer handsets market has continued to focus on specific models and brands as the domestic and international markets have remained highly competitive. The prices of Internet-of-Things (“IOT”)/industrial application terminals and some differentiated high-end handsets products have also been adjusted. The revenue of the handsets and IOT terminals business was recorded at HK$431 million with a 16.4% decrease when compared with last year. The Group strictly implementing cost control during the Period, including the reduction of procurement costs and the processing cost of individual products, and automatic testing in its handset and terminal production lines which effectively reduced the labor costs, hence, the gross profit margin of the business has slightly increased to 12.3% compared with last year.
As for the wireless communication modules business, the Group has recorded revenue of HK$501 million and gross profit of HK$26 million. During the period, the business has been transformed into electronic manufacturing services (“EMS”) upon the completion on disposal of the research and development (“R&D”) and sales operations of the shared wireless communication modules business, which has aligned with the strategy of the Group's business transformation. Considering that the Group is no longer responsible for the R&D and sales expenses of the modules business, nonetheless it is expected that the business will drive its revenue and maintain a reasonable growth if cost control efforts improve efficiency.
During the Period, the Group has actively developed a strategy for IOT systems and O2O business, which focuses on provision of various types of “cloud” system solutions with a back-end software system as the core, and provision of an online-to-office (“O2O”) cloud trading platform to vending machine operators. The business has achieved good results, with significant decrease in losses when compared with the same period last year. The revenue and gross profit increased by 6.9% and 25.6% respectively. Instead of vigorously exploring different niche markets to attract new clients alone, the Group has strengthened the cooperation with beverage manufacturers and ChinaUMS to increase advertising income, open up profit channels and improve overall efficiency.
Looking ahead, the Management will maintain a sound and enterprising business development strategy to execute the established strategic direction. The proceeds from the disposal of part of the wireless communication modules business will be used to build an operations center in Dongguan and a factory to upgrade handsets. This is expected to deliver more efficient production and higher profitability afterwards.
For the handsets and IOT terminals business, the Group has adhered to its development strategy of "retaining its high-end handset ODM business, and actively developing IOT/Industrial application terminals”, while continuously striving to secure more domestic and international value-added clients. At the same time, the Group will make full use of IOT applications to provide more one-stop “cloud” services for industrial customers to better cultivate the high-end market and seize market share.
Regarding the IOT systems and O2O business, the Group will pay extensive attention in each niche market to grasp opportunities, so as to seize the market at the early developmental stage of different segments. In addition, the Group will adopt a scheme to bolster the management in the second and the third business units of the intelligent manufacturing business, and continue to optimize the automated robotic line in order to maintain a competitive advantage.
Mr. Wong Cho Tung, Executive Director of SIM Technology, concluded, "Although the process of business transformation presents tough challenges, the Group will still pursue adjusting its business strategy and restructuring its business portfolio. In order to reduce labor costs and enhance the Group’s operational efficiency, we will continuously reform and optimize the automated production system. The above initiatives will bring positive and sustainable development to the Group as we adopt a business strategy that is both robust and enterprising, and strive to achieve long-term stable growth and bring the best returns to shareholders."