Apex Ace's 2018 Interim Net Profit Surges 37.3% to HK$21.7 Million

Excluding the listing expenses during the Review Period, the adjusted net profit would be HK$33.2 million.

Mr. Lee Bing Kwong, Chairman of Apex Ace, said, "The increasing popularity of electronic products continued to boost the market demand for electronic components. With an extensive product portfolio and an experienced engineering team, the Group mainly offers downstream manufacturers in the technology, media and telecom (TMT) sector in the PRC and Hong Kong products with quality electronic components produced by brand name upstream manufacturers. Furthermore, Apex Ace's listing in March has provided the Group with a more effective fund-raising platform to strengthen its financial capability and have more flexible responses to cope with the ever-changing demand of the TMT market. All of these enabled the Group to embrace the continuous development of its business and to achieve encouraging growth in performance".

Business ReviewDuring the Review Period, the Group's Memory Products business segment saw a 46.0% revenue surge year-on-year to HK$1,327.8 million, which accounted for approximately 63.5% of the Group's total revenue. The improvement was attributable to notable growth in demand for memory components underpinned by increasing sales of multimedia and mobile devices, such as set-top boxes, smart TVs, wearable devices and mobile phones. Gross profit of the segment increased to HK$41.3 million, up by 10.6% when compared with the same period last year.

The Group's other two business segments, Data & Cloud Products and General Components, also recorded satisfactory results. Attributing to more than double the sales amount from one of its major Data & Cloud customers, revenue of the Data & Cloud segment leaped by 114.8% year-on-year to HK$522.6 million, making up one-fourth of the Group's total revenue. Gross profit of the segment increased by 92.9% to HK$33.2 million from HK$17.2 million in the same period last year.

Sales of the General Components business segment soared by 116.2% to HK$239.2 million, driven by the Group's success in securing new customers and increasing purchases of inductors, capacitors and main chips for smart TVs and set-top boxes to meet market demand from its existing and new customers. Gross profit of the segment rocketed by 252.8% to HK$21.9 million.

ProspectsLooking ahead, market demand for memory and data & cloud products is set to increase due to the widespread application of 5G mobile technology expected in the future and continuous pursuit of fiber-to-home products, which has substantially increased the Internet penetration in Mainland China. At the same time, supportive of a digital economy development in China, the Mainland Government has hastened to implement measures to help traditional industries to adapt to a new digital and intelligent technologies era, creating new opportunities for its economic development. The "Made in China 2025" strategic directive published in 2016 clearly states that integrated circuit and information processing and communications products are the key categories in the information technology industry. Also, with Internet of things (IoT) identified as one of the five emerging strategic industries in Mainland China, efforts will be made to widen application of IoT and effect in-depth integration of IoT with the new digital economy. It will further drive market demand for related electronic components, such as increasing the scale of production for data & cloud application components. Therefore, the associated components distribution operators like our Group are expected to grow at a remarkable rate.

Mr. Lee concluded, "Given the sustained success of Apex Ace's business as a provider of semiconductors and other electronics components, the Group shall continue to adhere to its low-margin high-volume business strategy. The Group will strive to maintain its gross profit margin at a reasonable level and aim for a balance between sales volume and profit, so that its business can continue to expand at a sustainable level. The Group also plans to maximize its newly developed market research team, which has been actively studying market intelligence and conditions, enhancing the Group to secure distributorship of more product lines from existing and new suppliers. The Group shall focus more on the sales of electronic components used in medical equipment, automobile and industrial applications which shall seize more new business opportunities in those promising markets to generate additional contributions to its operating results in the future."

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 providing technical support. The Group's customers are primarily market players in the TMT sector in the PRC and Hong Kong. The electronic components the Group supplies are classified into three major segments, including Memory Products, Data & Cloud Products and General Components.

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