Revenue surges 38%, Net profit significantly increases by 100%

HONG KONG, Feb. 10, 2015 /PRNewswire/ —

Financial Highlights

For the 6 months ended 31 Dec

HK$

2014

2013

Change (%)

Turnover

192,672,954

139,654,722

+38.0%

Gross profit

56,989,218

38,792,545

+46.9%

Gross profit margin

29.6%

27.8%

+1.8p.p

Net profit attributable to owners of the Company

22,201,973

11,117,949

+99.7%

Basic earnings per share

0.08

0.04

+100.0%

Dividend (HK cents)

2.5

0

Huazhang Technology Holding Limited ("Huazhang" or the "Group", stock code: 1673) announced its interim results for the six months ended 31 December 2014. The Group’s turnover in the reporting period amounted to approximately HK$192,672,954 (2013: HK$139,654,722), representing an increase of approximately 38.0%. Net profit attributable to owners of the Company surged by 99.7% to HK$22,201,973 (2013: HK$11,117,949). The Group’s gross profit margin for the reporting period was 29.6%.

The Board of Directors declared an interim dividend of 2.5 HK cents per share (2013: nil).

Business Review

The Group is principally engaged in research and development, manufacture and sale of industry automation systems, sludge treatment products and corresponding services. It is also engaged in the provision of after-sales and other services Group’s existing customers, including system improvement projects. The Group’s industrial automation systems and sludge treatment products are custom-built in accordance with the specifications and requirements provided by the Group’s customers. The Group has established a project division to provide customers with comprehensive one-stop service. The division has proceeded to become the Group’s new business engine, and has then secured accumulated contract amounts of HK$225,487,000.

The construction of the Group’s new production plant has been completed in September 2014. Production has commenced in the end of December 2014. The increase in production capacity is expected to enhance the economies scale of the Group and provide enough capacities to sell Huazhang’s products to various industries.

Industrial automation business

The industrial automation business has recorded steady growth and remained the Group’s major income source and growth driver. For the six months ended 31 December 2014, revenue from the sales of this segment increased by approximately 80.2% to approximately HK$ 163,741,676 (2013: HK$90,853,359), mainly attributable to provision for one-stop services in relation to industrial automation systems.

Sludge treatment products

During the reporting period, revenue from sales of sludge treatment products decreased by approximately 56.2% to HK$15,929,907 (2013: HK$36,371,748), mainly due to the keen market competition which led to a decrease in number of contracts completed.

After-sale and other services

There was an increase in demand for after-sales and other services from our customers during the reporting period, resulting in a slight increase in the revenue from this segment. Revenue from provision of after-sales and other services increased by approximately 4.6% to HK$13,001,371 (2013: HK$12,429,615).

Prospects

Mr. Zhu Gen Rong, Chairman of Huazhang, said, "The paper industry in China currently faces excessive production capacities problem. But demand on some types of papers, including household papers and packaging papers, is still strong with inadequate production capacities. The industry has also been required to meet higher environmental standards, which resulted in the paper companies establishing new production line or modifying existing ones to meet new demands. With our strong R&D team, we will continue to focus on research and development and adapt to our customers’ needs. Looking forward, we will: (i) strive to expand the market share of the Industrial Automation Systems Segment in non-paper market; (ii) promote of "design" "production" "service" business model; (iii) invest in new capacity and cost effectiveness; and (iv) make use of existing customer resources to explore the after-sales service business."

About Huazhang Technology Holding Limited

The Group is principally engaged in research and development, manufacture and sale of industry automation systems, sludge treatment products and corresponding services. The Group’s industrial automation systems and sludge treatment products are custom-built in accordance with the specifications and requirements provided by the Group’s customers. The Group is also engaged in the provision of after-sales and other services Group’s existing customers.