Samudy Announces 2023 Annual Results

Samudy Holdings Limited

Announces 2023 Annual Results

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Revenue reaches HK$1.95 billion; profit reaches HK$200 million

Final dividend of 7.5 HK cents; special dividend of 10.0 HK cents; full-year payout ratio of 82.8%

Orders on hand reach HK$830 million; further diversifying the customer portfolio

Continuing to deepen presence in advantaged industries and actively expand domestic business in 2024

One of the world's leading one-stop injection molding solution suppliers — Samudy Holdings Limited ("Samudy" or the "Group"), announced its annual results for the year ended December 31, 2023 (the "Year").

In 2023, the global pandemic restrictions were lifted, but economic growth still faced multiple challenges, leaving the overall recovery momentum weak. Meanwhile, under the impact of uncertain geopolitical conditions and reduced energy supply, prices and living costs remained high, and major Western economies continued to raise interest rates to curb inflation, leading to subdued terminal consumer demand. The consumer electronics industry thus faced high inventory pressure, affecting the order pace of European and American consumer electronics customers and in turn dragging down the Group's performance. The Group's full-year revenue for 2023 reached HK$1,945.7 million (2022: HK$2,279.3 million), down 14.6% year on year. Among this, the injection molding component manufacturing business fell 20.7% as overseas consumer demand cooled, while the mold making business recorded 2.2% growth as the global supply chain largely returned to normal.

Amid a weak economy and softening demand, customers continued to digest the inventory accumulated after the pandemic, and new product production plans were delayed, forcing the Group to adjust production schedules, which in turn affected production efficiency. Over the past two years, amid volatile external market conditions, the Group strengthened comprehensive optimization and improvement of its production processes, striving to enhance efficiency and management effectiveness, and its cost reduction and efficiency improvement strategy has shown results. During the Year, the Group's gross profit only fell 5.3% to HK$512.8 million, with gross margin up 2.7 percentage points to 26.4%. The Group's base-laying in Vietnam and Huizhou for silicone product production involved additional expenses, briefly affecting profitability, and the Group recorded a profit of HK$204.2 million for the Year. Net margin rose 0.5 percentage points to 10.5%. Basic earnings per share were HK$0.25.

The Board has resolved to recommend a final dividend of 7.5 HK cents per share and a special dividend of 10.0 HK cents per share for the year ended December 31, 2023. Together with the interim dividend of 2.8 HK cents per share already paid, total dividends for the year amount to 20.3 HK cents per share, with the payout ratio increased to 82.8%.

Business Review

As a world-leading one-stop integrated injection molding solution supplier, Samudy provides tailor-made, cost-effective and high-precision injection molded products and services to numerous internationally renowned companies.

In 2023, affected by factors such as a weak economy, high inflation and high interest rates, European and American consumers became more conservative in spending, and demand for consumer electronics and smart products was notably sluggish during the Year. In addition, brand customers, burdened by excessive channel inventory, successively de-stocked and adjusted their product production and shipment plans, suspending new product launches. The smartphones and wearables and smart home segments fell 15.2% and 42.5% year on year, respectively. Revenue from business communication equipment fell 57.8% year on year, as brand customers conducted large-scale product recalls during the Year, affecting overall product sales. Revenue from medical customers grew during the Year, but under the dual pressure of high inflation and high interest rates, global consumer sentiment was subdued, and the Group's personal care brand customers reduced orders, directly causing the medical and personal care segment to fall 18.0% year on year. In addition, with promising prospects for the overseas e-vaporizer market and continuously rising demand, the Group's multi-cavity precision molds and high-efficiency injection molding technology were highly recognized by overseas brand customers, and the e-vaporizer segment revenue increased 63.4% year on year.

Injection molding component manufacturing business (approximately 68.2% of total revenue)

The overall revenue of the injection molding component manufacturing business was approximately HK$1,326.1 million, down 20.7% from the same period last year. In 2023, the Group's injection molding business order volume was dragged down by the shrinking consumer market, and coupled with changes in product mix, the gross margin of the injection molding business fell 1.4 percentage points to 21.4% (2022: 22.8%). The Group expects global inflation to continue to improve in 2024, with easing economic tightening policies, rising consumer purchasing power, and more active order volume from customers and an increase in new projects helping to improve capacity utilization, which is expected to further improve gross margin.

Mold making business (approximately 31.8% of total revenue)

In 2023, revenue from external customers of the mold making business was approximately HK$619.6 million, up approximately 2.2% from approximately HK$606.2 million last year. Over the past two years, due to pandemic prevention and control measures and shortages of semiconductors and components, automobile production was constrained, impacting the automotive mold industry. With supply chain adjustments and relief in the supply shortage of key components such as semiconductors, the automobile industry is moving toward recovery. The Group's mold orders have gradually recovered as well; given the long production cycle of molds, segment revenue growth will gradually materialize. The Group's Industry 4.0 initiatives in recent years have been effective, greatly improving production efficiency and market competitiveness. In 2023, the gross margin of the mold making segment rose 10.6 percentage points to 37.0% (2022: 26.4%).

Outlook

Looking ahead to 2024, uncertainties remain in economic growth. The monetary policies of major central banks in the US and Europe, and geopolitical risks such as the Russia-Ukraine war, the Israel-Palestine conflict and the Red Sea crisis, are all variables affecting the global recovery. De-stocking at the retail level for overseas consumer electronics products has largely come to an end. Some products purchased by consumers during the pandemic are reaching the end of their life cycles, and the rapid development of artificial intelligence (AI) applications is driving upgrades of consumer electronics products, so the consumer electronics industry is expected to usher in a strong recovery. The Group's domestic business is also growing steadily. In recent years, many Chinese companies have successfully expanded overseas and have become more stringent about product quality, and demand for high-precision injection molded components and molds continues to grow, providing the Group with many opportunities. The Group is actively preparing to launch new products with brand owners and holds a cautiously optimistic view of business development in 2024.

Mr. Li Peiliang, Chairman and Executive Director of Samudy, said: "Diversification is Samudy's winning strategy, enabling it to remain flexible and agile in a volatile market. As China's economy shifts toward high-quality and new-technology development, we will focus on the medical technology and innovative technology industries and more actively develop promising leading corporate customers in China, thereby driving the geographic diversification of the Group's markets." He also pointed out: "At the same time, we are exploring the establishment of another production base in North America, considering quickly building injection molding capacity through mergers and acquisitions or investment, so as to provide North American customers with products and services at lower tariff costs and further develop North American customers."

Mr. Weng Jianxiang, Executive Director and CEO of Samudy, added: "Samudy strives for excellence. The development of new products integrating silicone and traditional injection molding technology provides more diversified product solutions and enriches the product portfolio. We have also introduced the new direct printing structure (PDS) technology, and together with our mature IML process, multi-color material application technology, multi-cavity precision molds, high-efficiency injection molding and automation technology, we are able to provide a diversified range of high-quality products to help customers gain competitive advantages in the consumer market." He further added: "Management is reviewing various possibilities of extending the product value chain, on the one hand providing one-stop services and convenience to customers, while deepening presence in advantaged industries and expanding the business territory, laying a more solid scale foundation for long-term development."