Against the challenging backdrop, the Group still managed to pull through and deliver a sterling set of results for FY2020. The Group’s turnover increased by 22.9% to RMB1,029.4 million from RMB837.2 million in FY2019.
“We look forward to your continued support as we ride out this crisis together and emerge stronger.”
Dear Shareholders,
On behalf of the Board of Directors, we are pleased to present to you the annual report of World Precise Machinery Limited for the financial year ended 31 December 2020 (“FY2020”).
2020: YEAR IN REVIEW
The COVID-19 pandemic took the world by surprise. While much of the world is still grappling with anaemic demand, millions of job losses, and businesses shutting down, China has bucked the global trend and emerged as the only major economy to grow in 2020. Despite the brutal lockdowns causing output to slump in early 2020, China’s full year economy grew 2.3% as a result of the government’s swift and strict containment measures and emergency relief for businesses. China’s industrial production maintained steady expansion in 2020 as the country’s value-added industrial output went up 2.8% year on year last year, picking up from the 2.3% increase registered in the first 11 months.
Against the challenging backdrop, the Group still managed to pull through and deliver a sterling set of results for FY2020. The Group’s turnover increased by 22.9% to RMB1,029.4 million from RMB837.2 million in FY2019. This was mainly due to the increase in sales volume of the Group’s conventional stamping machines and high performance and high tonnage stamping machines which was partially offset by a downward revision in the average selling prices of the stamping machines. The Group’s gross profit for FY2020 increased by 26.4% to RMB198.3 million from RMB156.8 million in FY2019 while gross profit margin for FY2020 increased by 0.6 percentage point from 18.7% in FY2019 to 19.3%. The Group’s operating expenses increased 17.3% year-on-year from RMB152.8 million to RMB179.2 million.
INDUSTRY OUTLOOK
The COVID-19 pandemic has left national economies and businesses counting the costs, as governments struggle with new lockdown measures to tackle the spread of the virus. Despite the development of new vaccines, the emergence of more-infectious coronavirus variants and a slow start to vaccine rollout may further delay the shift towards normalcy. Apart from the geopolitical risks like the US-China tensions and Brexit, the world now also faces threats that have emerged as a result of the economic, political and social changes that have come about due to the impact of the ongoing pandemic.
The fifth plenum of the Chinese Communist Party’s 19th National Congress, which concluded on 30 October 2020, laid out the guidelines for China’s 14th Five-Year Plan (2021–25). It signalled a major strategic shift in China’s approach to economic and social development to build a well-off society in an all-round way. The focus on high-quality development, expansion of domestic demand via dual circulation policy, innovation and technology self-reliance, advanced manufacturing and urbanisation bodes well for our customers in various sectors which will spur strong demand for our products.
China is looking to prop up its automobile industry with favourable government policies and some major Chinese car makers were seeing sales nearly quadruple in the first two months of 2021 as the industry rebounds. Premier Li Keqiang told the National People’s Congress in March 2021 that the government will encourage steady increases on spending on cars and abolish excessive restrictions on the sale of used vehicles. In addition, more car parks, electric vehicles (EV) charging stations and battery-swapping facilities will be built, and battery recycling systems will be developed at a faster pace. China made 145 million EVs last year, an increase of nearly 20 per cent from the year before. It is already the largest commercial EV market in the world, and is likely to become the world’s largest market for private passenger EVs in the coming months.
Domestically, the home appliance industry had been riding on China’s urbanisation, rising household disposable income and government subsidy schemes. The Chinese home appliance industry is likely to expand further, mainly supported by the robust replacement demand, rising smart appliance sales and ongoing premiumisation progress. The structural trend of younger Chinese consumers’ evolving preference towards premium and smart home appliance products should continue to boost overall average selling prices for white goods. Given the gradually saturating domestic demand, leading Chinese home appliance players will focus on the export markets more aggressively to achieve sustainable growth.
China is the largest producer and exporter of consumer electronics in the world. While overall volume sales of consumer electronics have been negatively impacted by COVID-19 last year, we believe the worse is over due to encouraging government policies, the boom in working-from-home economy as well as increasing popularity of e-commerce. In addition, the popularity of Artificial Intelligence in China has brought new development opportunities to the consumer electronics market in China. The continuously rising disposable incomes together with increasing education level have led to higher acceptance of innovative technologies especially among the younger generations. As a result, we foresee that smart homes and Internet of Things will be a huge development opportunity for consumer electronics manufacturers.
As a company, the Group is committed to the long-term creation of value for its shareholders and stakeholders. The Group will further pursue expansion and drive for new opportunities, while at the same time streamline our operations to maximise productivity and efficiency. As a responsible manufacturing technology provider, the Group will continue to innovate and drive sustainability, while strengthening its financial position. Last but not least, the Group is mindful of the pending challenges and uncertainties and will remain vigilant on how to best adjust to the dynamic situation.
A WORD OF APPRECIATION
We would like to take this opportunity to thank our Board of Directors, our business partners, our customers, our employees and most of all, our shareholders, for your unwavering support for the past 14 years.
We look forward to your continued support as we ride out this crisis together and emerge stronger.
Please take care and stay safe.
Executive Chairman
Chief Executive Officer
