First-half profit for Lung Kee falls 18%

Net profit fell 18.2 per cent for Lung Kee (Bermuda) Holdings for the six months ended June 30, the mainboard-listed company reported yesterday.

For the first half of this year, profit attributable to owners of the company was HK$123.9 million (S$21.8 million), down from HK$151.3 million a year ago.

Earnings per share was 19.61 HK cents, down from 23.96 HK cents the year before.

Lung Kee (Bermuda), which manufactures and markets mould bases and related products, recorded a 13.7 per cent rise in revenue to HK$1.37 billion from HK$1.2 billion a year ago.

Profits fell despite higher sales revenue as operating costs rose on higher raw material and labour costs. Excluding one-off profit from the disposal of a factory property by its subsidiary Shanghai Lung Kee Metal Products in the year-ago period, the group's operating profit actually registered mild growth, similar to the first half of the previous year.

Domestic demand from China for automobile and electronic products boosted Lung Kee (Bermuda)'s income, with business in the southern and eastern regions of China in particular progressing steadily, it said.

The group attributed sales growth for its mould products to its effective marketing strategy and the online ordering business it has launched. To counter the increase in labour and production costs, Lung Kee (Bermuda) has made efforts to improve production skills and deploy robotic arms and other equipment to reduce manual operations.

  • AT A GLANCE

  • REVENUE: HK$1.37 billion (+13.7%)

  • NET PROFIT: HK$123.9 million (-18.2%)

  • DIVIDENDS PER SHARE: 12 HK cents (-40%)

Prices of local mould steel continue to rise, but the group forecasts that they will gradually stabilise. Meanwhile, it will monitor the market, try to buy raw materials at a reasonable price and regulate its inventory and product price to manage costs.

As the trade war between China and the United States drags on, Lung Kee (Bermuda) expects some China customers to be more conservative in investment. But the company expects its diverse customer base to mitigate this; it also expects the rising standard of living in China to continue driving demand for high-end products.

It said: "The group expects that the China market and overseas markets such as Europe, Japan and South-east Asia will not be affected too much and will experience mild growth, contributing a balanced development to the group's business."

An interim dividend of 12 HK cents per share was declared.

For the year-ago period, an interim dividend of 12 HK cents and an interim special dividend of eight HK cents were declared.

The counter last traded on June 19 and closed at 71.5 cents.

A version of this article appeared in the print edition of The Straits Times on August 18, 2018, with the headline 'First-half profit for Lung Kee falls 18%'. Print Edition | Subscribe