|Turnover Surges 45%; Net Profit Soars 98.7% to Record High, Return on Equity Jumps to 23%|
HONG KONG, Mar 2, 2011 - (ACN Newswire) - Dah Chong Hong Holdings Limited ("DCH" or the "Group"; SEHK: 1828) announced today that it recorded total turnover of HK$32,211 million for the year ended 31 December 2010, an increase of 45.0% against the previous year (2009: HK$22,209 million), and profit attributable to shareholders of HK$1,411 million, up by 98.7% compared to HK$710 million in 2009.
The Board of Directors proposed payment of a final dividend of 12.77 HK cents per share for the year ended 31 December 2010. Together with the interim dividend of 10.68 HK cents per share already paid during the year, total dividend for the year ended 31 December 2010 amounted to 23.45 HK cents per share, equivalent to a dividend payout ratio of 40%.
Mr. Clement Hui, Chairman of DCH, said, "We have been greatly encouraged by our ability to exceed business targets and achieve strong CAGR for turnover and net profit over the past several years. Our achievements in 2010 demonstrated that DCH is moving proactively ahead. Leveraging our solid business platform, we are striving to continue this growth momentum in coming years by focusing on the Greater China market, especially the rapidly expanding middle-class in mainland China."
BUSINESS REVIEW & PROSPETCS
MOTOR AND MOTOR RELATED BUSINESS
Segment turnover increased by 57.4% to HK$24,643 million (2009: HK$15,652 million), accounting for 76.5% of DCH's total turnover. Segment result from operations leaped by 59.6% to reach HK$1,301 million with segment margin at 5.3% compared to last year's 5.2%.
Turnover of mainland China business achieved a year-on-year rise of 64.6% to HK$19,350 million, thanks to the strong growth of China's auto market in particular the huge demand for mid-to-high-end vehicles, the rapid expansion of our 4S shops network and the increase in sales of imported heavy duty trucks in line with the infrastructure development in the PRC. Segment margin remained the same as last year at 4.9%.
DCH's China Motor Business has grown 45.9% in terms of units sold, outperforming the overall market in the country. A total of 58,800 vehicles were sold through DCH's sales and distribution network in 2010, including 44,800 passenger cars and 14,000 commercial vehicles.
In 2010, DCH has appointed four more Bentley dealerships, reaching a total of 13 within the country. DCH's professionalism and the superior quality of Bentley have combined to achieve great result with sales volume increased by 93.6% to 815 units in 2010. In terms of commercial vehicles, DCH has successfully established Isuzu as the leader of the imported Japanese heavy duty truck market in the country. In 2010, sales volume of Isuzu doubled to close to 7,000 units, a truly astounding result.
DCH has increased the number of 4S shops from 40 in 2009 to 55 by the end of 2010, including eight 4S shops of Shenye Group that the Group acquired during the year. The same store car sales and service units increased by 20.9% and 9.1% respectively.
Regarding the motor related business, DCH has added two more motor leasing branches in mainland China, covering a total of five cities including Beijing, Tianjin and Shanghai. DCH's joint-venture lubrication oil blending plant in Xinhui has commenced production in November 2010. Full scale production is expected to start in 2011.
Looking ahead into 2011, DCH will speed up extending the network of Bentley dealerships by appointing more quality dealers, with an aim to increase the sales volume of Bentley by 50% and appoint five more Bentley dealerships in 2011, forming a comprehensive and extensive sales and service network in this emerging market. In dealership business, DCH's target is to add 10 to 15 4S shops each year and continue to focus on middle-range to luxury brands dealerships. Followed by DCH's first independent service outlet opened in Dongguan by end of 2010, the Group is planning to add one more in the first quarter of 2011.
Hong Kong and Macao
Boosted by economic recovery, turnover from the Hong Kong and Macao motor business amounted to HK$ 4,217 million for the year, up 32.3% from last year whilst segment margin improved to 7.8% versus 7.1% in 2009. Audi recorded a growth of 35.4% in units sold which sustained the growth path for seven consecutive years. To meet the rising demand of Audi customers, the new Audi showroom in Tsim Sha Tsui was launched in December 2010.
DCH remained a major player in the new vehicle market with 22.7% market share. A total of 9,200 vehicles were sold in 2010, including 6,800 passenger cars and 2,400 commercial vehicles. The year-on-year growth in the total number of vehicles sold was 22.4%.
As a forerunner in the industry, DCH will bring in 200 units of Nissan LEAF electric passenger vehicles to the Hong Kong market in the first quarter of 2011 to capture the increasing demand for green vehicles. Besides, the trial run of the electric bus the Group introduced last year has been successful. The industry feedback was encouraging, strengthening DCH's confidence in the sales in coming years.
In other markets, DCH's newly established Audi business has performed satisfactorily in Taiwan, with sales volume accounting for 25.9% of the Audi's total sales volume in the market. The second Audi Terminal in Hsinchu has commenced operation in December 2010.
FOOD AND CONSUMER PRODUCTS BUSINESS
This business segment recorded a 15.5% rise in turnover to HK$7,206 million compared with HK$6,240 million in 2009. Segment result from operations jumped by 63.1% to HK$181 million while the segment margin improved to 2.5% compared with 1.8% in last year, due mainly to the improvement in segment margin in the PRC market whilst the operating loss in the overseas market also reduced.
Segment Turnover from mainland China increased by 26.0% year-on-year to HK$2,863 million and segment margin improved to 2.5% versus 2.3% in 2009, mainly attributable to the substantial sales growth in FMCG with a year-on-year turnover growth of 34.2%.
Turnover from Hong Kong and Macao climbed by 13.6 % to HK$3,439 million year-on-year, thanks to the increased consumer spending spurred by a reviving economy. The new Yuen Long food processing centre commenced operation in 2010 which increased the Group's production capacity by 100%. During 2010, the Group expanded its food retail network in Hong Kong at a faster pace. There were a total of 79 Food Mart retail outlets by the end of 2010. The same store sales per square foot rose by 11.7% over the last year.
Looking forward, DCH will keep sourcing more high quality FMCG products, while extending the distribution network to more second- and third-tier cities in mainland China. In terms of food retailing in Hong Kong, DCH will add more than ten Food Mart outlets in Hong Kong while stepping up its marketing and promotion efforts.
Logistics Business reported a 12.0% rise in turnover to HK$365 million from HK$326 million in 2009. Segment result from operations dropped by 12.0% to HK$22 million year-on-year and the segment margin decreased to 6.0% compared with 7.7% in 2009, mainly due to the reduction in segment margin of Hong Kong and Macao after absorbing start-up expenses of some newly developed logistics facilities in Yuen Long whilst the mainland China operation started making profit in 2010.
In the future, DCH will establish its first mainland China food inspection centre in Xinhui to address consumers' growing awareness of food safety as well as to safeguard the quality of our products.
Mr. Hui concluded, "Looking into 2011, double-digit growth in mainland China's automotive industry is expected to continue within the impressive economic environment. Induced by the growing concern of food safety and the pursuit of better living standards, quality imported food and luxury products will become more desirable. Demand for mid-to-high-end products will be boosted. These trends offer DCH and unimaginable immense potential in the mainland China market and we shall capitalize on our well-established business network to grasp these opportunities to achieve significant growth."
Dah Chong Hong Holdings Limited
Francis Wai (Investor Relations)
Buston Chu (Corporate Communications)
Strategic Financial Relations Limited
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Mar 2, 2011 10:00 HKT/SGT
Source: Dah Chong Hong
Sectors: Daily Finance
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