Anwell Technologies Limited has announced its results for the 3 months ended 30 September 2009 (3Q09). Revenue for the quarter improved by 12.1% quarter on quarter (qoq) to HK$214.4 million. Contributing 72.2% of revenue or HK$154.7 million for the quarter, the Group maintained its position as one of the key manufacturers of recordable optical media in China.
Financial Highlights
| 3Q09 (HK$'000) | 2Q09 (HK$'000) | Change (qoq) % | 3Q08 (HK$'000) | Change (yoy) % | |
| Revenue | 214,363 | 191,306 | 12.1% | 234,082 | (8.4%) |
| Gross Profit | 37,781 | 27,378 | 38.0% | 43,584 | (13.3%) |
| Gross Profit Margin | 17.6% | 14.3% | - | 18.6% | - |
| (Loss)/profit from operations | (34,886) | (33,879) | - | (1,042) | - |
| Net (loss)/profit att to equity shareholders | (42,865) | (44,932) | - | (10,278) | - |
Though conditions remain challenging for the Group’s optical disc equipment division, the recent improvements in economic conditions has had a positive impact on overall business sentiment. The Group sold a number of its in-house developed DVDR equipment to customers in China, bringing in sales of HK$59.5 million in 3Q09.
Consequently, gross profit increased by 38.0% qoq to HK$37.8 million in 3Q09. In line with the higher gross profit, gross margins increased from 14.3% in 2Q09 to 17.6% in 3Q09 on the back of the improvement in sales of higher margin equipment. All in, the Group recorded a net loss attributable to equity shareholders of HK$42.9 million in 3Q09 as it increased R&D spending to fund the impending launch of its solar business.
Optical discs: an industry in transition
Spending on pre-recorded entertainment in the world’s largest consumer market saw a decline of 3.2% to US$4 billion reflecting an ongoing decline driven by the economic downturn, according to figures released by Digital Entertainment Group. Bucking the trend was the sales of Blu-ray Disc that grew 66.3% to US$161 million in 3Q09 compared to the same period last year, which benefitted from greater adoption of the media among US consumers. The Group is set to benefit from the gradual shift towards Blu-ray Disc in the coming years. The media product division continues to be a stable source of cash flow, contributing towards a net cash generated from operations of HK$19.7 million in 3Q09.
Future is bright for solar division
Having announced its entry into the solar business by producing its first amorphous silicon (“a-Si”) thin film solar panel this September, the Group is currently concentrating on fine tuning its production process to ensure a smooth transition into mass production of its 40MW production line in 1Q10.
Given China’s high demand for energy to support its vast manufacturing and industrial sectors, there has been a need by the Chinese Government to promote sustainability and greater energy independence. With a target of 20GW of photovoltaic capacity to be installed by 2020, this represents opportunities for the Group to market both its in-house developed turnkey production lines and thin film solar panels.
"Given the deluge of the Chinese Government incentives to promote the solar industry, concerns have been raised about a possible oversupply of panels. However, much of the excess supply conditions have been limited to crystalline silicon (“c-Si”) solar technology, whereas our technical expertise will be formed based on the newer a-Si thin film solar technology.
a-Si technology offers a range of advantages over c-Si technology, ultimately offering a lower cost per watt in production. This also makes a-Si technology the preferred choice of large scale utility solar farms and on the path to wider acceptance presenting a vast untapped market for our products. The recent MOU with Solargen is proof of our determination to expand into this area.”
