Share Awards - The total number of shares awarded to the top five highest-paid individuals in the group as of December 31, 2023, is 924,279 shares[2]. - The fair value of shares awarded in 2023 is HKD 1.53 per share, with a total of 271,448 shares awarded during the year[2]. - The total number of shares awarded to other employee participants is 5,387,730 shares, with 1,675,094 shares unvested as of December 31, 2023[2]. - The total number of shares awarded in 2024 is 6,312,009 shares, with 5,263,630 shares unvested as of June 30, 2024[5]. - The fair value of shares awarded in 2020 is HKD 2.76 per share, with a total of 1,270,320 shares unvested as of June 30, 2024[5]. - The total number of shares unvested for the top five highest-paid individuals is 52,005 shares as of December 31, 2023[2]. - The total number of shares unvested for other employee participants is 4,578,000 shares as of December 31, 2023[2]. - No shares were awarded to any directors during the reporting periods[3][6]. Company Information - The company has not disclosed any new product developments or market expansions in the provided reports[1][4]. - The company continues to maintain all other information in the annual and interim reports unchanged, aside from the disclosed share award details[4][6].

Financial Performance - Revenue for the six months ended June 30, 2024, was HK$1,007,209,000, representing a 17.6% increase from HK$855,914,000 in the same period of 2023[15]. - Profit for the period increased to HK$79,742,000, up 45.7% from HK$54,699,000 in the prior year[15]. - Basic earnings per share rose to 9.6 HK cents, compared to 6.6 HK cents in the previous year, reflecting a 45.5% increase[15]. - Proposed interim dividend per share increased to 4.0 HK cents, up from 2.8 HK cents, marking a 42.9% rise[15]. - Gross profit margin improved to 24.8%, up from 23.3% in the previous year[15]. - Net profit margin increased to 7.9%, compared to 6.4% in the same period last year[15]. - Return on equity rose to 5.1%, up from 3.6% in the previous year[15]. - Return on assets improved to 3.2%, compared to 2.2% in the prior year[15]. - Gross profit for the first half of 2024 was approximately HK$250.0 million, representing an increase of approximately HK$50.3 million or 25.2% compared to HK$199.7 million in the same period of 2023[42]. - Operating profit increased to HK$102,045,000, a 50.4% rise compared to HK$67,977,000 in the previous year[124]. Revenue Breakdown - Revenue from the mold fabrication business was approximately HK$268.9 million, a 2.1% increase from HK$263.2 million in the same period last year, accounting for 26.7% of total revenue[27]. - The mobile phones and wearable devices segment generated revenue of HK$326.2 million, a 51.2% increase from HK$215.7 million in the first half of 2023[21]. - The commercial telecommunications equipment segment saw revenue rise by 44.2% to HK$90.0 million from HK$62.4 million in the previous year[21]. - The plastic components manufacturing business segment generated revenue of approximately HK$738.3 million, a 24.6% increase from HK$592.7 million in the first half of 2023, accounting for approximately 73.3% of the Group's total revenue[33][35]. - Revenue from the personal health care brand customer increased by 18.2%, while revenue from medical consumables for in-vitro diagnostics and blood glucose monitoring rose by 38.6%[38][40]. Cost and Expenses - Selling expenses increased by approximately HK$6.2 million or 22.0% to HK$34.3 million, representing 3.4% of total revenue[48]. - Administrative expenses rose by approximately HK$10.1 million or 8.1% to HK$135.5 million, accounting for 13.5% of total revenue[49]. - Total cost of sales, selling expenses, and administrative expenses rose to HK$927,029,000 in 2024, up from HK$809,721,000 in 2023, a 14.5% increase[165]. - Employee benefit expenses increased to HK$332,941,000 in 2024 from HK$277,017,000 in 2023, a rise of 20%[165]. - Raw materials and consumables used rose to HK$381,488,000 in 2024, compared to HK$287,212,000 in 2023, an increase of 32.8%[165]. Cash Flow and Assets - The Group's net cash position improved to HK$1,060.5 million, a 13.3% increase from HK$935.7 million as of June 30, 2023[25]. - Cash and cash equivalents decreased to HK$1,060,484,000 from HK$1,158,156,000, a decline of 8.4%[127]. - Net cash generated from operating activities for the six months ended June 30, 2024, was HK$145,324, a decrease of 16.7% compared to HK$174,316 in the same period of 2023[133]. - The company reported a net decrease in cash and cash equivalents of HK$92,474 for the period, compared to a decrease of HK$4,347 in the previous year[133]. - Current assets included a total of HK$457,268,000 in inventories, up from HK$360,082,000, marking a 27% increase[181]. Shareholder Information - As of June 30, 2024, Mr. Li Pui Leung holds 54.90% of the shares, while Mr. Yung Kin Cheung Michael and Mr. Lee Leung Yiu hold 6.67% and 6.44% respectively[93]. - The Group's share capital as of June 30, 2024, was HK$833,260,000 with a share premium of HK$251,293,000[188]. - The number of awarded shares as of June 30, 2024, decreased to 5,263,630 from 6,312,009 as of January 1, 2024[195]. - The Group's total consideration for shares held under the employee share scheme was HK$13,103,000 as of June 30, 2024, down from HK$17,679,000[190]. Market Outlook - The global GDP growth rate for 2024 is expected to be revised upwards to 2.6%, indicating a steady state of growth in the global economy[82]. - The consumer electronics industry is anticipated to see a significant rebound in the second half of the year, with brand owners preparing for new product launches[82]. - The Group remains optimistic about the long-term development of the medical and health care industry and will continue to explore well-known medical brand customers in both domestic and overseas markets[38][40]. - The Group's implementation of Industry 4.0 has significantly enhanced production efficiency and market competitiveness, contributing to the overall growth in revenue and profit margins[43]. Corporate Governance - The company complied with all code provisions of the Corporate Governance Code during the six months ended June 30, 2024[100]. - The company is committed to strengthening corporate governance measures to ensure transparency and accountability[100]. - The interim financial information has been approved for issue by the Board of Directors on August 26, 2024[134].

Financial Performance - Revenue for the six months ended June 30, 2024, was HKD 1,007,209,000, representing a 17.6% increase from HKD 855,914,000 in the same period of 2023[2] - Profit for the period increased to HKD 79,742,000, up 45.7% from HKD 54,699,000 year-on-year[2] - Basic earnings per share rose to HKD 9.6, compared to HKD 6.6 in the previous year, reflecting a 45.5% increase[2] - Gross profit for the group was HKD 250,018,000, an increase of 25.16% from HKD 199,728,000 in the previous year[16] - The company achieved a net profit of HKD 79.7 million, a substantial increase of 45.8% compared to HKD 54.7 million in the first half of 2023, with a net profit margin of 7.9%[33] - Other income for the six months ended June 30, 2024, totaled HKD 19,518,000, compared to HKD 13,343,000 in 2023, marking a 46.16% increase[19] - Net financial income for the period was HKD 8,394,000, significantly up from HKD 3,814,000 in the previous year, indicating a growth of 120.66%[19] Profitability Metrics - The gross profit margin improved to 24.8%, up from 23.3% in the prior year[2] - The net profit margin also increased to 7.9%, compared to 6.4% in the same period last year[2] - The return on equity (ROE) was 5.1%, up from 3.6% in the previous year[2] - Gross margin improved to approximately 24.8%, up 1.5 percentage points from 23.3% in the same period last year, driven by sufficient orders and enhanced production efficiency[37] - The mold manufacturing segment's gross margin improved by 4.3 percentage points to 33.5%[34] Revenue Breakdown - The revenue from the mold manufacturing segment was HKD 322,132,000, up from HKD 291,250,000, representing an increase of 10.59%[16] - The revenue from the injection molding components manufacturing segment was HKD 738,297,000, compared to HKD 592,661,000, reflecting a growth of 24.59%[16] - The mobile and wearable devices segment generated revenue of HKD 326.2 million, a significant increase of 51.2% year-on-year[32] - The injection molding components manufacturing segment's revenue was approximately HKD 738.3 million, up 24.6% from HKD 592.7 million in the previous year, accounting for 73.3% of total revenue[35] - The automotive segment's revenue decreased by 11.4% to HKD 143.7 million, while the medical and personal care segment saw a decline of 8.5% to HKD 142.5 million[32] Assets and Liabilities - Current assets net value was HKD 1,164,345,000, slightly down from HKD 1,193,086,000 at the end of 2023[2] - The current ratio decreased to 241.8% from 276.0% at the end of 2023[2] - Total assets increased to HKD 2,500,673,000 from HKD 2,451,591,000 at the end of 2023[6] - The company's inventory as of June 30, 2024, was HKD 457,268,000, an increase from HKD 360,082,000 as of December 31, 2023[25] - Trade receivables as of June 30, 2024, totaled HKD 423,304,000, compared to HKD 320,225,000 as of December 31, 2023, indicating a significant increase in sales[26] - Trade payables increased to HKD 371,783,000 as of June 30, 2024, from HKD 227,712,000 as of December 31, 2023, reflecting increased operational activity[28] Taxation and Expenses - Income tax expense for the period was HKD 31,697,000, compared to HKD 8,429,000 in the same period last year, representing a substantial increase of 274.73%[20] - The effective tax rate for the first half of 2024 was 28.4%, an increase of 15.0 percentage points from 13.4% in the same period of 2023[44] - Operating expenses were reduced by 5%, reflecting improved efficiency in operations[69] Dividends and Shareholder Information - The company declared an interim dividend of 4.0 HK cents per share, totaling HKD 33,330,400, compared to 2.8 HK cents per share in the previous year[30] - The board declared an interim dividend of HKD 0.04 per share, totaling HKD 33,330,400, expected to be paid on September 26, 2024[67] - The company held a 43.01% stake in Motlles and a 32% stake in Shenzhen New Meili Technology, with the share of profit from these associates amounting to HKD 1,000,000 for the first half of 2024, compared to HKD 307,000 in the same period of 2023[24] - The group’s major shareholders hold 30.61%, 19.04%, and 18.36% of the company, respectively[1] Operational Insights - Inventory turnover days improved to 104 days, down from 116 days in the previous year[2] - Trade receivables turnover days increased to 66 days, up 5 days compared to the same period last year, attributed to increased sales with a credit period of 60 to 90 days[50] - The order backlog as of June 30, 2024, was HKD 1,066.6 million, representing a 24.3% increase from HKD 858.1 million a year earlier[33] - The company plans to invest in capacity expansion and projects to capture potential growth in future business, primarily funded by internal resources[57] Market Outlook and Strategic Initiatives - The consumer electronics sector is expected to see a significant rebound in demand in the second half of 2024, driven by a traditional consumption peak and new product launches by brand owners[61] - The group is enhancing its injection molding technology and developing differentiated product solutions, including direct printing circuit technology, to meet market demand[62] - The establishment of an overseas production base in Vietnam allows the group to adapt to geopolitical risks and enhance supply chain flexibility, focusing on serving consumer electronics brands[62] - The company is expanding its market presence in Southeast Asia, targeting a 25% market share by 2025[69] - Research and development investments increased by 30%, focusing on innovative solutions and enhancing product offerings[69] - The company is exploring potential acquisitions to strengthen its market position, with a budget of HKD 500 million allocated for this purpose[69] - A new strategic partnership was announced, aimed at enhancing distribution channels and improving customer reach[69] Workforce and Employment - As of June 30, 2024, the group had 3,515 full-time employees, an increase from 3,225 on December 31, 2023, and 257 workers from third-party labor companies, up from 128[58] Miscellaneous - The company has not adopted several newly issued accounting standards, which are expected to have no significant impact on future financial performance[13] - No significant acquisitions or disposals of subsidiaries occurred in the first half of 2024, consistent with the same period in 2023[59] - The group reported no significant contingent liabilities as of June 30, 2024, unchanged from December 31, 2023[60] - The World Bank raised its global GDP growth forecast for 2024 to 2.6%, with the U.S. growth rate revised from 1.6% to 2.5%, indicating economic resilience in a high-interest environment[61]

Investment Rating - The report maintains a "Buy" rating for TK Group with a target price (TP) of HKD 2.79, based on a FY24E price-to-earnings (P/E) ratio of 8.2 times, consistent with its 5-year historical forward P/E ratio [2][17][28]. Core Views - TK Group reported a positive profit for the first half of 2024, with a year-on-year profit growth exceeding 40%. The optimistic outlook is supported by strong order momentum, new customer acquisitions, and recovery in revenue/profit margins across most segments [2][17]. - The company is expected to achieve a revenue growth of 20% and a profit growth of 38% in FY24E, driven by increased orders in the consumer electronics sector and improved operational efficiency [17][35]. - The report highlights that TK Group has a solid cash position after repaying a significant portion of its bank loans in FY23, allowing for potential acquisitions and maintaining a high dividend payout level [17][35]. Financial Summary - Revenue projections for TK Group are as follows: - FY22: HKD 2,279 million - FY23: HKD 1,946 million - FY24E: HKD 2,339 million (20.2% YoY growth) - FY25E: HKD 2,705 million (15.6% YoY growth) - FY26E: HKD 3,135 million (15.9% YoY growth) [3][30][32]. - Net profit estimates are: - FY22: HKD 226.9 million - FY23: HKD 204.2 million - FY24E: HKD 281.4 million (37.8% YoY growth) - FY25E: HKD 334.8 million (19.0% YoY growth) - FY26E: HKD 399.1 million (19.2% YoY growth) [3][30][32]. - The report indicates an expected gross profit margin (GPM) increase to 24.3% in 1H24E from 23.3% in 1H23, reflecting improved operational leverage [17][35]. Valuation Metrics - The report provides the following valuation metrics: - P/E ratio for FY24E: 5.6 - P/B ratio for FY24E: 0.9 - Dividend yield for FY24E: 8.1% [3][32]. - The report emphasizes that the stock offers an attractive risk/reward profile, considering the expected EPS growth of 38% in FY24E and a dividend yield of 8% [17][35].

Investment Rating - The report maintains a "BUY" rating for TK Group with a target price of HK$2.79, indicating a potential upside of 46.8% from the current price of HK$1.90 [8][21][40]. Core Insights - TK Group announced a positive profit alert for 1H24, projecting over 40% year-on-year earnings growth, primarily driven by strong orders in the smartphone and wearables segments [4][7]. - The company is expected to achieve 20% sales growth and 38% earnings growth year-on-year in FY24, supported by new client orders and improved operational efficiency [4][7]. - The gross profit margin is anticipated to improve to 24.3% in 1H24, up from 23.3% in 1H23, due to a better product mix and utilization improvements [4][37]. Summary by Sections Earnings Summary - TK Group's revenue for 1H24E is projected at HK$1,025 million, reflecting a 19.8% increase year-on-year, with net profit expected to reach HK$77 million, a 41.4% increase [37]. - The gross margin is expected to rise to 24.3%, while the operating margin is projected at 6.2% for 1H24E [37]. Financial Forecasts - Revenue is forecasted to grow from HK$1,946 million in FY23 to HK$2,339 million in FY24, representing a 20.2% year-on-year increase [30][42]. - Net profit is expected to increase from HK$204.2 million in FY23 to HK$281.4 million in FY24, marking a 37.8% growth [30][42]. Valuation - The stock is currently trading at a P/E ratio of 5.6x for FY24E, which is considered attractive given the expected earnings growth and dividend yield of 8% [4][40]. - The target price of HK$2.79 is based on an 8.2x FY24E P/E, aligning with the company's historical valuation metrics [40]. Growth Drivers - Key growth drivers include strong order pipelines from major clients such as Meta, SONOS, and Polycom, alongside anticipated product launches from major tech companies [4][7]. - The company is well-positioned for potential M&A opportunities due to substantial cash reserves following debt repayments [4][7].

Investment Rating - The report maintains a "BUY" rating for TK Group (Holdings) Limited with a target price of HK$2.44, indicating an upside potential of 28.5% from the current price of HK$1.90 [6][8]. Core Insights - The company is expected to recover in FY24E, supported by a strong balance sheet and operational efficiency improvements. Despite a decline in FY23 revenue and net profit due to weak downstream demand, the blended gross margin increased to 26.4%, the highest since FY20, driven by significant improvements in the mold fabrication segment [6][8]. - The financial position remains robust, with net operating cash inflow up 20% YoY to HK$445 million in FY23 and a net cash position of approximately HK$1.1 billion, which is about 72% of the market cap [6][9]. Revenue and Profit Forecast - Revenue is projected to grow at a CAGR of 12.5% from FY23 to FY26E, with net profit expected to grow at 18.5% CAGR during the same period. The FY24E PE ratio is estimated at 6.1x, which is considered undemanding compared to historical averages and peers [8][9]. - The order book for FY23 was HK$830 million, primarily driven by automotive and healthcare sectors, which accounted for 46% of the total order book. The order book is expected to increase to approximately HK$1 billion by April [6][8]. Segment Performance - The mold fabrication segment's revenue is expected to grow from HK$620 million in FY23A to HK$718 million by FY26E, with a gross margin projected to remain above 30% [3][6]. - The plastic components manufacturing segment is forecasted to recover from a revenue drop in FY23A to HK$2,060 million by FY26E, with gross margins expected to stabilize in the mid-20s percentage range [3][6]. Dividend Policy - The company raised its dividend payout ratio to 80% in FY23, supported by low CAPEX and strong cash flow. The expected payout ratio for FY24E is projected to remain above 50%, translating into dividend yields of 10.8% and 13.6% for FY23 and FY24E, respectively [9][6]. Market Position and Client Diversification - TK Group continues to diversify its client portfolio, successfully engaging with leading global brands in various sectors, including automotive and healthcare. The company is optimistic about the growth potential in electronic atomizers, which are increasingly used in both e-cigarettes and medical devices [6][8].

Financial Performance - Revenue for 2023 was HK$1,945,721 thousand, a decrease from HK$2,279,321 thousand in 2022[75] - Profit for the year in 2023 was HK$204,191 thousand, down from HK$226,909 thousand in 2022[75] - Gross profit margin improved to 26.4% in 2023 from 23.7% in 2022[75] - Net profit margin increased to 10.5% in 2023 from 10.0% in 2022[75] - Inventory turnover days increased to 102 days in 2023 from 98 days in 2022[75] - Trade receivable turnover days rose to 58 days in 2023 from 54 days in 2022[75] - Trade payable turnover days increased to 61 days in 2023 from 57 days in 2022[75] - The company's current ratio improved to 276.0% in 2023 from 219.1% in 2022[75] - The gearing ratio significantly decreased to 1.5% in 2023 from 21.6% in 2022[75] - Net profit for 2023 amounted to HK$200 million, marking the eighth consecutive year above HK$200 million, with net cash on hand reaching HK$1.13 billion[86][89] - Revenue for the year decreased by 14.6% to HK$1,945.7 million, while gross profit margin and net profit margin increased to 26.4% and 10.5% respectively[87][98] - The company declared a final dividend of 7.5 HK cents per share and a special dividend of 10.0 HK cents per share, with a total annual dividend of 20.3 HK cents per share for the year ended December 31, 2023[114] Corporate Governance - The Board consists of 7 members, including 4 executive directors and 3 independent non-executive directors[30] - The Chairman of the Board is Mr. Li Pui Leung, and the Chief Executive Officer is Mr. Yung Kin Cheung Michael, with clearly defined responsibilities[31] - Mr. Lee Leung Yiu, an executive director, has approximately 40 years of experience in plastic mold fabrication and injection molding[32][49] - Mr. Yue Yiu Chung, corporate financial controller, has over 30 years of experience in auditing and finance and manages finance, IT, HR, and EHS for the Group[35] - Mr. Tsang Wah Kwong, an independent non-executive director, has extensive experience in corporate governance and serves on multiple committees[42] - The Group has implemented a written code for employee securities transactions, with no violations reported[29] - Directors are appointed for 3-year terms, with renewal options, and executive directors are subject to service agreements[39] - The Board oversees strategic decisions, financial performance, risk management, and key personnel appointments[46] - All directors have completed continuous professional training in compliance with corporate governance codes[48] - The Group emphasizes transparency, accountability, and adherence to corporate governance standards[28][47] - The Board comprises 7 members, including 4 executive Directors and 3 independent non-executive Directors, with at least one independent non-executive Director possessing appropriate professional qualifications or accounting/financial management expertise[124][128] - The Audit Committee held 3 meetings during the year ended December 31, 2023, and performed major corporate governance functions as delegated by the Board[111][133] - The company has established three Board committees (Nomination, Remuneration, and Audit) with defined written terms of reference, ensuring sufficient resources and the ability to seek independent professional advice when necessary[139] - The Nomination Committee, comprising 4 members (majority independent non-executive Directors), oversees the selection, appointment, and reappointment of Directors, with plans for orderly succession if necessary[144][142] - The company has adopted a Director Nomination Policy to manage changes in Board composition without undue disruption, including formal procedures for Director selection and periodic review of succession plans[142] - The Nomination Committee held 1 meeting in 2023 to review the Board's structure, size, and composition, ensuring a balance of expertise, skills, and experience appropriate for the Group's business requirements[169][172] - The Remuneration Committee held 2 meetings in 2023 to assess the performance of executive Directors and review the Company's remuneration policy and structure[168] - The Company achieved measurable goals in 2023, including having at least one-third of the Board as independent non-executive Directors, at least one female Director, and at least one Director with relevant industry experience[171] - The gender ratio of the Company's employees (including Directors and senior management) was 58% male and 42% female as of December 31, 2023, achieving gender diversity[171] - Directors are encouraged to attend relevant training courses at the Company's expense to continuously update their knowledge and skills[149][162] - The Board includes four members in the Nomination Committee, with the majority being independent non-executive Directors[157] - The Company has adopted a formal and transparent Director nomination policy, including a succession plan if necessary, to ensure orderly transitions[158] - Directors have timely access to relevant information and can request independent professional advice at the Company's expense when appropriate[153][154] - The Board reviews the implementation and effectiveness of the Nomination Policy annually to maintain the Company's competitive advantage[160] - The Company believes greater diversity of Directors is beneficial for corporate governance and is committed to attracting and retaining candidates with a wide range of competencies[160] - The company achieved measurable objectives including at least one-third of the Board being independent non-executive Directors, at least one female Director, and at least one Director with relevant industry experience as of 31 December 2023[177] - The male-to-female ratio in the company's workforce (including Directors and senior management) was 58% male and 42% female, representing a ratio of 1.4:1 as of 31 December 2023[177] - The Remuneration Committee reviewed and approved the bonus for Directors and senior management for 2022 and proposed salary increments for 2023[179][185] - The company's senior management (including executive Directors) had annual remuneration ranging from HKD 2,000,001 to HKD 5,500,000 for the year ended 31 December 2023[188] - The Audit Committee held three meetings in 2023, reviewing financial statements, risk management, and internal control systems[194][190] - The company paid fees to PricewaterhouseCoopers for audit and non-audit services for the year ended 31 December 2023[193] - The company's workforce diversity policy aims to maintain a gender balance and increase female representation on the Board when suitable opportunities arise[176][178] - The Remuneration Committee met twice in 2023 to evaluate executive Director performance and review remuneration policies[179][184] - The company's risk management and internal control systems were reviewed for adequacy and effectiveness by the Audit Committee[190] - The company's external auditor attended meetings to discuss audit and financial reporting issues with the Audit Committee[195][197] Product Development and Innovation - The Group is developing new products integrating silicone and traditional plastic injection molding technology, offering diversified solutions and enriching the product portfolio[12] - The Group has introduced Printing Direct Structure (PDS) technology, a circuit printing solution applicable in medical equipment, electronics, sports equipment, and clothing industries, providing low-cost, high-compatibility, and environmentally friendly production solutions[12] - The Group's liquid silicone products offer flexibility at low temperatures, high-temperature resistance, and various hardness levels, suitable for consumer electronics, medical equipment, optical products, and more[12] - The company upgraded its protective cover products, reducing weight from 65.9g to 54.6g, achieving a 17% weight reduction[67] - The company achieved a 96% weight reduction in the first nozzle, reducing its weight from 13.8g to 0.5g, and a 22% reduction in the second nozzle, from 19.7g to 15.2g[79] Global Expansion and Production - The Group successfully established an overseas production base in Vietnam, focusing on serving consumer electronics brand customers and expanding its customer base in Southeast Asia, Europe, and America[14] - The Group is exploring the establishment of another production base in North America through mergers, acquisitions, or investments to provide lower tariff costs for North American customers[14] - The company is considering establishing an injection molding production line in North America to meet customer demand, in addition to its existing production bases in China and Vietnam[95] Strategic Collaborations and Industry 4.0 - The Group is actively collaborating with leading domestic medical and innovative technology companies, leveraging its expertise in precision molds to secure high-quality domestic clients, including a leading bone conduction headphone brand and a wearable camera brand[13] - The Group is adopting Industry 4.0 to optimize production and operational structures, aiming to improve efficiency and reduce costs while continuing to create value for customers and shareholders[15] - The Group is extending its product value chain to provide one-stop services, aiming to deepen its presence in advantageous industries and expand its business territory[14] - The company has streamlined its mold production structure and deepened Industry 4.0 to enhance production efficiency and management efficiency[98] Risk Management and Economic Outlook - The Group's major revenue is denominated in US dollar, Euro, RMB, and HK dollar, while major expenses are denominated in RMB, with no RMB hedging agreements in place[8] - As of December 31, 2023, the Group had no mortgaged assets, compared to bank borrowings of HKD 116,060,000 secured by bank deposits of HKD 157,138,000 as of December 31, 2022[10] - The company has successfully navigated economic turbulence, with operating risks and fluctuations being basically controllable[98] - The company believes that the most difficult days have passed and is poised to seize opportunities arising from global economic recovery[98] - The U.S. economy showed resilience with falling inflation and a stable job market, leading to sound consumption, and the company actively cooperated with consumer electronics brand customers for new product releases and project development in 2024[113] - The company plans to strengthen its leading position in the plastic injection molding industry chain, focusing on product innovation and technological breakthroughs while managing risks prudently and improving operational efficiency[112] Financial Position and Cost Management - The company has maintained a strong financial position with a net cash of HK$1.13 billion, reflecting effective operational and financial strategies[86][89] - The company has implemented cost reduction and efficiency improvement reforms, enhancing competitiveness and maintaining stable financial conditions[86][89] - The company has diversified its production layout and explored new business directions, seeking breakthroughs in production technology[86][89]

Investment Rating - The report maintains a "BUY" rating for TK Group with a target price (TP) adjusted to HK$2.79, based on an 8.2x FY24E P/E ratio, which aligns with its 5-year historical forward P/E [2][20][34]. Core Insights - Management expressed a positive outlook on order restocking, new client acquisitions, and capacity expansion in Vietnam and Huizhou, particularly in the automotive, medical device, and e-cigarette sectors. Following a challenging FY23, net profit is expected to grow by 38% and 19% year-on-year in FY24 and FY25, respectively, driven by new orders and operational efficiency improvements [2][38]. - The stock is currently trading at 4.4x FY24E P/E with a yield of 10%, indicating an attractive risk/reward profile [2][38]. Financial Summary - FY23 revenue and net profit declined by 15% and 10% year-on-year, respectively, primarily due to weak demand in consumer electronics and communications, although the automotive and e-cigarette segments showed growth [38]. - Revenue projections for FY24E are set at HK$2,318 million, with a year-on-year growth of 19%, and net profit is expected to reach HK$282 million, reflecting a 38% increase [9][10][38]. - Gross profit margin improved to 26.4% in FY23 from 23.7% in FY22, attributed to favorable foreign exchange rates and easing supply chain issues in the automotive sector [38]. Revenue Breakdown - The revenue mix indicates a significant contribution from various segments, with mobile and wearable devices, medical devices, and automotive sectors being key growth drivers [6][9][10]. - The automotive segment is projected to grow by 25% in FY24E, while the e-cigarette segment is expected to continue its strong performance with a 40% growth forecast [9][10][38]. Valuation Metrics - The report highlights a P/E ratio of 4.4x for FY24E, which is considered attractive compared to historical averages, alongside a dividend payout ratio of 83% [2][38]. - The expected return on equity (ROE) is projected to improve to 16.0% in FY24E, reflecting enhanced profitability and operational efficiency [10][15][38].

Financial Performance - Revenue for the year ended December 31, 2023, was HKD 1,945,721, a decrease of 14.7% from HKD 2,279,321 in 2022[4] - Net profit for the year was HKD 204,191, down 10.0% from HKD 226,909 in the previous year[4] - Basic earnings per share decreased to HKD 0.25 from HKD 0.27, representing a decline of 7.4%[4] - The company's gross profit for the year was HKD 512,793 thousand, down from HKD 541,275 thousand in 2022[52] - The net profit for 2023 was HKD 204,191,000, a decrease of 10% from HKD 226,909,000 in 2022[56] - Basic earnings per share for 2023 was HKD 0.25, down from HKD 0.27 in 2022[56] - The group's revenue for the year ended December 31, 2023, was approximately HKD 1,945.7 million, a decrease of about HKD 333.6 million or 14.6% compared to HKD 2,279.3 million in 2022[71] - Gross profit for the year was approximately HKD 512.8 million, a decrease of about HKD 28.5 million or 5.3% from HKD 541.3 million in 2022, with a gross margin increase of 2.7 percentage points to 26.4%[73] - The net profit for the year was approximately HKD 204.2 million, a decrease of 10.0% from HKD 226.9 million in 2022, with a net profit margin increase of 0.5 percentage points to 10.5%[79] Dividends - Proposed final dividend per share is HKD 0.075, down from HKD 0.086 in 2022, and a special dividend of HKD 0.10 is proposed[4] - The company reported a basic earnings per share of HKD 7.5 for the final dividend, down from HKD 8.6 in 2022[37] - Total dividends paid in 2023 were HKD 94,991,000, maintaining the same amount as in 2022[58] - The board proposed a final dividend of HKD 0.075 per share and a special dividend of HKD 0.10 per share, subject to shareholder approval, totaling HKD 62,494,500 and HKD 83,326,000 respectively[159] - The total dividend for the year ended December 31, 2023, including an interim dividend of HKD 0.028 per share, amounts to HKD 0.203 per share[159] Assets and Liabilities - Current assets net value increased to HKD 1,193,086 from HKD 1,090,873, reflecting a growth of 9.4%[4] - Total liabilities decreased from HKD 1,091,928 thousand in 2022 to HKD 766,414 thousand in 2023, representing a reduction of approximately 29.7%[24] - The total equity and liabilities amounted to HKD 2,451,591 thousand as of December 31, 2023, compared to HKD 2,697,523 thousand in 2022[24] - The total equity of the group as of December 31, 2023, was approximately HKD 1,685.2 million, compared to HKD 1,605.6 million on December 31, 2022[109] Operational Efficiency - Gross margin improved to 26.4% from 23.7% in 2022, while net margin increased to 10.5% from 10.0%[4] - The current ratio improved to 276.0% from 219.1%, indicating better short-term financial health[4] - The return on equity decreased to 12.1% from 14.1%, while return on assets slightly decreased to 8.3% from 8.4%[4] - Inventory turnover days increased to 102 days from 98 days, indicating a slower inventory movement[4] - Trade receivables turnover days increased to 58 days from 54 days, while trade payables turnover days increased to 61 days from 57 days[4] - The group’s inventory turnover days as of December 31, 2023, were 102 days, an increase of 4 days from 2022, mainly due to an increase in long production cycle orders[110] - The group reported a trade receivables turnover of 58 days for the year ended December 31, 2023, an increase of 4 days compared to 2022, primarily due to sales growth to customers with credit terms between 60 to 90 days[137] - The trade payables turnover was 61 days for the year ended December 31, 2023, also an increase of 4 days compared to 2022, as some suppliers extended credit terms due to the group's good reputation[138] Business Segments - The injection molding component manufacturing business declined by 20.7% due to reduced overseas consumer demand, while the mold manufacturing business recorded a growth of 2.2% as global supply chains returned to normal[42] - Revenue from the automotive segment increased by 22.7% to HKD 368.7 million in 2023, compared to HKD 300.5 million in 2022[63] - Revenue from the injection molding components manufacturing segment decreased by 20.7% to HKD 1,326.1 million in 2023, compared to HKD 1,673.1 million in 2022[68] - The revenue from the mold manufacturing segment was approximately HKD 619.6 million, an increase of about HKD 13.4 million or 2.2% from HKD 606.2 million in 2022, accounting for approximately 31.8% of total revenue[80] - The revenue from the medical and personal care segment decreased by 18.0% due to reduced orders from personal care brand customers amid high inflation and interest rates[83] - The revenue from the electronic vaporizer segment increased by 63.4%, reflecting strong demand in the overseas market[83] Strategic Initiatives - The company plans to continue focusing on high-quality and cost-effective design solutions in the mold manufacturing sector, particularly for automotive and high-end consumer electronics[45] - The company aims to enhance product precision and expand its customer base in high-end sectors such as medical and consumer electronics[67] - The group plans to invest in capacity expansion and projects to capture potential growth in the future, primarily funded by internal resources[143] - The group has established an overseas production base in Vietnam to serve electronic consumer brand clients, aiming to expand production capacity gradually based on market demand[149] - The group is exploring the establishment of another production base in North America through acquisitions or investments to provide lower tariff-cost products and services[149] - The group is actively preparing to launch new products, integrating silicone with traditional injection molding technology to provide diverse product solutions[121] - The group plans to continue its diversification strategy and optimize internal organizational structure to enhance operational efficiency in response to economic uncertainties[123] Corporate Governance - The group emphasizes the importance of good corporate governance to maintain investor confidence and ensure sustainable growth[152] - The group has adhered to all provisions of the corporate governance code during the year ended December 31, 2023[153] Other Information - The company has adopted revised standards effective from January 1, 2023, which did not have a significant impact on the consolidated financial statements[28] - The company will suspend share transfer registration from May 28, 2024, to May 31, 2024, to determine eligibility for attending the annual general meeting and voting[160] - The company will also suspend share transfer registration from June 6, 2024, to June 7, 2024, for the proposed final and special dividends[166] - The annual report for the year ending December 31, 2023, will be sent to shareholders and published on the company's website[167]

Financial Performance - Profit for the period for the first half of 2023 was approximately HK$54.7 million, representing a decrease of approximately HK$3.8 million or 6.4% from approximately HK$58.5 million for the corresponding period in 2022[15]. - The Group's revenue for the first half of 2023 was HK$855.9 million, a decrease of 11.7% compared to HK$969.2 million in the same period of 2022[58]. - Profit for the period was HK$54.7 million, down 6.4% from HK$58.5 million in the first half of 2022[63]. - Basic earnings per share decreased to 6.6 HK cents, down 5.7% from 7.0 HK cents in the same period last year[63]. - Other income for the first half of 2023 was approximately HK$13.3 million, a decrease of 48.8% from HK$26.0 million in the same period of 2022[93]. - Net finance income for the first half of 2023 was approximately HK$3.8 million, down from HK$10.7 million in the same period of 2022, mainly due to increased interest expenses[95]. Profitability Metrics - The Group's gross profit margin for the first half of 2023 was 29.2%, an increase of 6.6 percentage points from 22.6% in the same period of 2022, due to cost reduction and efficiency improvement measures implemented over the past two years[2]. - The Group's gross profit increased by 10.4% to HK$199.7 million, with a gross profit margin rising by 4.6 percentage points to 23.3%[66]. - The gross profit margin increased to 23.3%, up 4.6 percentage points from 18.7% in the corresponding period last year, due to enhanced capabilities and cost reduction measures[112]. - The gross profit margin for the mold fabrication segment increased by 6.6 percentage points to 29.2% in the first half of 2023, up from 22.6% in the same period of 2022[90]. - The gross profit margin for the plastic components manufacturing segment rose by 3.4 percentage points to 20.7%, attributed to cost reduction efforts and falling raw material prices[92]. Revenue Breakdown - The Group's sales in the mobile and wearable devices and smart home sectors decreased by 24.4% and 38.6%, respectively, compared to the same period last year[11]. - Revenue from the mold fabrication business increased by approximately 6.5% to HK$263.2 million, accounting for approximately 30.8% of the Group's total revenue[70]. - Revenue from the plastic components manufacturing segment generated approximately HK$592.7 million, down 17.9% year-on-year, accounting for about 69.2% of the Group's total revenue[86]. - Revenue from the medical and personal health care segment experienced an 18.4% decline in revenue, primarily due to reduced orders from customers in the U.S. and Europe, although domestic medical customer revenue increased[87]. - Revenue from electronic vaporizer products increased by 93.2% year-on-year, reflecting strong demand in overseas markets[109]. Equity and Financial Position - Total equity of the Group as of June 30, 2023, was approximately HK$1,526.4 million, down from HK$1,605.6 million as of December 31, 2022[16]. - The gearing ratio as of June 30, 2023, was approximately 11.3%, a decrease from 21.6% as of December 31, 2022, primarily due to a reduction in bank borrowings[16]. - Net current assets as of June 30, 2023, were HK$1,050.7 million, compared to HK$1,090.9 million at the end of 2022[52]. - The current ratio as of June 30, 2023, was approximately 231.3%, an increase from 219.1% as of December 31, 2022[131]. - The Group maintained a high level of net cash at HK$935.7 million, a year-on-year increase of 24.6%[68]. Operational Efficiency - The Group is focusing on cost reduction and efficiency improvement measures to enhance production efficiency and management effectiveness[63]. - The Group has implemented employee training programs to enhance productivity in response to various job requirements[10]. - The Group is focusing on internal optimization, technological upgrades, and adopting Industry 4.0 to enhance operational efficiency and reduce costs[186]. - The Group's inventory turnover days decreased to 116 days, a reduction of 7 days compared to the same period last year, reflecting improved logistics and transportation[105]. - Trade receivable turnover days decreased to 61 days, down 2 days from the previous year, indicating effective credit policies[139]. Market and Strategic Developments - The Group has successfully established overseas production bases in Vietnam to provide supply solutions outside of China and is actively developing new customers in Southeast Asia and Europe[21]. - The newly developed medical business has gradually become a new growth point for the Group, focusing on innovative product solutions using silicone integration technology[21]. - The Group aims to develop optical silicone components to meet the demand for light output capabilities in Mini LED display parts, targeting a "blue ocean" market[21]. - The Group's mold business benefited from the gradual recovery in the automotive industry, with a significant increase in order volume[72]. - The group plans to invest in capacity expansion and projects to capitalize on potential growth opportunities in the coming years[146]. Shareholder Information - As of June 30, 2023, Eastern Mix holds 357,014,000 shares, representing 42.85% of the issued share capital[192]. - Lead Smart Development Limited owns 89,400,000 shares, accounting for 10.73% of the issued share capital[192]. - Cheer Union Development Ltd. has 55,620,000 shares, which is 6.67% of the issued share capital[192]. - Normal Times International Limited holds 53,640,000 shares, representing 6.44% of the issued share capital[192]. - FMR LLC has an interest in controlled corporations amounting to 49,212,000 shares, or 5.91% of the issued share capital[192]. - FIL Limited and its affiliates collectively hold 249,726,000 shares, representing 9.99% of the issued share capital[192]. - Brown Brothers Harriman & Co. holds 42,716,200 shares, which is 5.13% of the issued share capital[192]. - The company purchased 1,930,000 shares for its share award scheme during the six months ended June 30, 2023[196]. Compliance and Governance - The company complied with all code provisions as set out in the CG Code during the six months ended June 30, 2023[199]. - No major subsequent events affecting the Group have occurred since the end of the period[197].