Net profit rises 26pc on economic rebound

PUBLISHED : Monday, 15 March, 2010, 12:00am
UPDATED : Monday, 15 March, 2010, 12:00am

Listed conglomerate Dah Chong Hong (DCH) Holdings expects a further boost to its business this year as it sees an improvement in the economies of Hong Kong and the mainland.

The company announced that its net profit grew 26.1 per cent to HK$710 million for last year, compared with HK$563 million in 2008, while its mainland business turnover grew 43 per cent.

The company recorded a 13.5 per cent increase in total turnover to HK$22.1 billion, from HK$19.5 billion in the previous year.

Basic earnings per share increased 26.2 per cent to 39.49 HK cents for the year, compared with 31.30 HK cents a year earlier.

The board of directors recommended a final dividend of 11.29 HK cents per share. The company earlier paid an interim dividend of 4.51 HK cents.

'In the beginning of 2009, the economic outlook was pessimistic for the year because of the financial crisis,' says DCH chief executive Donald Yip Moon-tong. 'However, as we announced our interim results, our business on the mainland was doing well due to a pickup in the mainland and Hong Kong economies.

'Working on a firm foundation that DCH has built over the past few decades in the market, we took practical and viable measures in developing our business and managed to deliver satisfactory growth in the year.'

The group is engaged in motor and motor-related business, food and consumer business, and logistics.

DCH's motor and motor-related business recorded a surge in turnover of 21.8 per cent to HK$15.6 billion during the year, and accounts for 70.4 per cent of the company's total turnover, compared with HK$12.8 billion a year earlier.

'Our motor business has over 30 years experience on the mainland,' Yip says. 'Our strong foundation enabled us to develop our motor businesses rapidly, while increasing our number of dealerships on the mainland.'

The segment recorded a profit after taxation of HK$634 million, up 30.7 per cent, while its margin rose to 4.1 per cent from 3.8 per cent a year earlier.

The company attributes the increase in the segment's turnover to a surge in domestic consumption on the mainland following the government's stimulus package. It says the number of vehicles sold jumped 71.2 per cent.

The robust turnover came thanks to a rise in sales of Bentley and Isuzu vehicles, and the expansion of the group's 4S dealership network on the mainland.

However, turnover of the motor and motor-related business in Hong Kong and Macau dropped 27.7 per cent to HK$3.2 billion, from HK$4.4 billion in 2008.

As for its overseas markets, DCH obtained the distributorship of Foton, a passenger and commercial vehicle brand from China, in Singapore and launched its Audi dealership operations in Taipei in April last year.

Turnover of the group's logistics business from third-party logistics services rose 20.1 per cent to HK$233 million, compared with HK$194 million in 2008.

The group's new Yuen Long Logistics Centre, which starts full operations in the first quarter of this year, will provide value-added services, and is expected to further improve segment results.

The Yuen Long Logistics Centre will provide customers with multi-temperature warehousing, repacking and food processing capacities.

Meanwhile, the group's food and consumer products business saw a 3 per cent drop in turnover to HK$6.24 billion, from HK$6.43 billion a year earlier.

Profit from the segment, which accounts for 28.2 per cent of DCH's total turnover, remained the same at HK$144 million, while the margin increased slightly from 2.2 per cent to 2.3 per cent.

The drop in turnover for food and consumer products was caused by a decrease in sales of edible oil and worldwide commodity prices last year.

'In the coming year, we will continue to expand our business on the mainland as well as in Taiwan,' Yip says. 'We are also planning to expand our motor, and food and consumer business in Singapore.'

Sales boost

For the year to December 2009, the group reported a total turnover of HK$22.1 billion, an increase of: 13.5%