Wednesday, 25 August 2021, 21:51 HKT/SGT

Continues Diversification Strategy to Drive Business Momentum

HONG KONG, Aug 25, 2021 - (ACN Newswire) - Apex Ace Holding Limited ("Apex Ace" or the "Company"; Stock Code: 6036) and its subsidiaries (collectively referred as the "Group"), a Hong Kong-based supplier of digital storage products and electronics components along with relevant technical support, has posted a revenue of approximately HK$1,423.9 million, representing a year-on-year leap of approximately 97.6% for the six months ended 30 June 2021 ("1H2021" or the "Review Period"). Profit attributable to owners of the Company rocketed to approximately HK$26.6 million from the HK$1.0 million recorded for the six months ended 30 June 2020 ("1H2020" or the "Last Corresponding Period").

During the Review Period, the semiconductor market saw a strong surge in demand and increasing number of customers sought to build more resilient local supply chains or self-sufficiency in competitive technologies in lieu of a reliance on imported chips in anticipation of post-coronavirus disease 2019 (the "COVID-19") economic recovery. The global shortage of semiconductors has led to an increase in the average selling price of electronics products, and consequently contributed to the Group's expansion. Coupled with the Group's strong ties with major local manufacturers, Apex Ace acted as a stable supplier of digital storage products and general electronics components and achieved an outstanding performance during the unprecedented market situation.

Business Review

The Group's two major product segments, namely digital storage products and general components, contributed 79.7% and 20.3% of the Group's total revenue during the Review Period, respectively.

Revenue generated from the Group's digital storage products was approximately HK$1,135.5 million (1H2020: HK$487.3 million). Gross profit of the segment increased to approximately HK$109.2 million (1H2020: HK$30.4 million), up by 259.4% when compared with the Last Corresponding Period. Gross profit margin increased to 9.6% (1H2020: 6.2%), which was mainly attributable to a further broadening of the customer base and a higher average selling price driven by an industry-wide semiconductor shortage and supply chain constraints.

The Group's another business segment, general components, achieved stable growth, with revenue having increased by 23.5% year-on-year to approximately HK$288.4 million for the Review Period from approximately HK$233.5 million for the Last Corresponding Period. Gross profit of this segment grew by 15.0% to approximately HK$31.9 million (1H2020: HK$27.7 million) and gross profit margin decreased to 11.1% (1H2020: 11.9%)

Prospects

Looking forward, the Group is optimistic about the overall electronics market over the next couple of years on the back of heavy demand for electronics products and the rapid increase in the use of emerging technologies in automotive and industrial electronics. Furthermore, the supply of semiconductors has not kept up with the demand and the chip drought is rippling through supply chains worldwide. The shortage is further complicated by geopolitical tensions, as the US government's decision to restrict technology exports to China has prompted the end customers of the semiconductor industry to move away from a just-in-time inventory system to a just-in-case system. Stockpiling has been a priority in the manufacturing sector in anticipation of further restrictions.

Many multinational corporations are reviewing their global supply chains in order to ensure a more stable supply of key components. Thanks to the local availability of chips and other components, on top of the ease of securing skilled labor, the majority of companies are likely to remain in China. Indeed, those who have faced shuttered production lines in Southeast Asian countries due to the continued pandemic situation in the region are moving back to China.

In view of the industry trends, the Group will continue its diversification strategy and take measures to expand its business in the telecommunications, automotive and consumer electronics end markets. It will serve its customers with a wider product portfolio in the rapidly changing and advancing electronics components distribution market. The Group will establish a more resilient supply chain and expand ties with local electronics manufacturers, while strengthening its ability to respond to supply chain risks or opportunities at pace. The Group believes that its enhanced and broadened product portfolio will not only drive business momentum and improve customer engagement, but also add significant value to its future operations.

Mr. Lee Bing Kwong, Chairman and Chief Executive Officer of Apex Ace, said, "The Group remains cautiously optimistic about market developments as it has worked to maximize the potential of its product portfolio and operating model. We believe that its growing portfolio addresses emerging and disruptive automotive, industrial and cloud-based applications and it will position itself as a future leader in the microelectronics distribution industry. The Group will continue to diversify its product portfolio and customer base in order to maintain its resilience against economic headwinds and industrial challenges and enhance its competitiveness to stride forward in a prosperous manner".

About Apex Ace Holding Limited (Stock Code: 6036)
Apex Ace principally engages in the supply of digital storage products including memory and data & cloud products and general electronic components as well as technical supports. The Group's customers are primarily market players in the TMT sector in the PRC and Hong Kong. The Group's products are classified into two major segments including digital storage products and general components.

Topic: Press release summary Sectors: Electronics
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