@ SUNNINGDALE TECH FY2016 briefing: Plans for new facilities

Sunningdale Tech completed the construction of a 50,000 sqm plant in Chuzhou in 4Q2016. (Photo: Company) SUNNINGDALE TECH has achieved a record revenue of S$684.5 million for FY2016. Its core net profit surged 34.1% year-on-year to S$31.7 million. The Group is proposing a final dividend of 6 cents, which translates into a dividend yield of 4.67% based on its recent stock price of S$1.285. We will progressively add capacity and invest in new technologies to stay ahead of the curve. – Khoo Boo Hor Sunningdale Tech CEO (NextInsight file photo) The revenue increase was driven by the Group's automotive segment where revenue climbed 12.0% yoy to S$245.4 million. Other highlights for FY2016: Consumer / IT segment revenue grew 1.5% yoy to reach S$273.0 million. Healthcare segment revenue declined by 2.7% yoy to S$48.5 million due to delays in product launches and decreased orders. Mould fabrication segment revenue decreased 14.0% yoy to S$117.6 million due to reduced capacity and a decrease in orders billed. Group gross profit margin expanded by 0.3 percentage points to reach 13.8%. Including one-off retrenchment costs as well as forex gains and property disposal, FY2016 net profit attributable to shareholders declined by 7.2% to S$39.1 million. Net operating cash flow was S$52.8 million. Its net cash position was S$15.5 million as at 31 December 2016. Following the restructuring exercise at its Zhongshan plant in south China in 2Q2016, the Group completed the construction of its manufacturing facility in Chuzhou in 4Q2016. This year, it is planning to build a new plant in Penang as well as further invest in its Chuzhou plant. It expects its capital expenditure to increase to S$35 million for FY2017. For more info, refer to its media release here.

Below is an excerpt of questions raised at the Group’s FY2016 briefing for investment professionals on Monday (27 February) and the replies provided by CEO Khoo Boo Hor and CFO Soh Hui Ling.

Q: Why did you need to consolidate your facilities in southern China?

Mr Khoo: Generally, there is overcapacity in southern China. We had two tool rooms that were very near to each other. We consolidated the two into one location to be more effective and efficient. We retained the better machines and disposed of the older ones.

Q: How many tooling locations do you have around the world?

We have 11 facilities in Singapore, Shanghai, Suzhou, southern China, Tianjin, Malaysia, and India.

Q: Can you provide more colour regarding the new plant you are planning to build this year?

We purchased land in Batu Kawan, next to the Second Bridge towards the south of Penang Island. We are designing the plant and expect to complete its construction at the end of this year. We expect to start operations there early next year for our consumer / IT, automotive, and healthcare segments.

The area is newly developed. The Fortune 500 companies are there. A few US medical companies are also there. Our existing customers are also near there.

Q: What is the capacity of the proposed plant?

The land size is about 15,000 sq m. With this kind of space, we can significantly expand capacity. We can easily put in 100 to 200 machines, depending on the type of activity we want. We will not put in 150 machines there overnight. Rather, it is room for expansion over the next few years. We can potentially add capacity that amounts to one third of our Chuzhou plant.

Q: What is the difference between the foreign currency translation gain of S$5.3 million versus the foreign exchange gain of S$8.4 million in 4QFY2016?

Ms Soh: The foreign currency translation arises from consolidating the financials of our overseas entities in Ringgit, in USD, in Euro, and in RMB into Singapore dollars.

The foreign exchange gain / loss arises from actual transactions. For example, our Malaysian entity may sell in USD and incur foreign exchange gains or losses as a result.