Email This Print ThisChairman's Statement

*Extracted from Annual Report 2018

Dear Shareholders,

The financial year ended March 31, 2018 ("FY2018") was a record year for Willas-Array Electronics (Holdings) Limited ("Willas-Array" or together with its subsidiaries, the "Group") with our sales and earnings hitting a record high since our listing on the Main Board of Singapore Exchange Securities Trading Limited in 2001.

As Chairman of the Group, I am proud and at the same time humbled because this achievement would not have been possible without the support of many.

Our industry is not an easy one. The many challenges include, but are not limited to, rapidly changing trends and applications for electronic components across our various business segments, volatile demand and intense price competition. On a macro level, we are affected by global economic factors as well as trade relations between nations that may affect the export demand of our customers' products.

As an organisation, Willas-Array is well aware of its strengths and weaknesses and we also make regular assessments of threats and opportunities in our industry and take measures to respond nimbly to the ever changing environment. This has enabled us to maintain a healthy market share and to forge strong supplier and customer partnerships that have endured both the test of time and the increasingly difficult operating environment. Our FY2018 performance is a reflection of the success of this strategy. We have invested financial and engineering resources in key growth segments, working hand-in-hand with our partners to find new applications for components and to design solutions that are relevant to their needs.

Our experience in our core China market and our relentless pursuit of opportunities has enabled us to correctly identify key business segments to focus on. I want to commend our Managing Director, Mr Alvin Hon, and all the staff of Willas-Array for their dedication, which has enabled the Group to achieve its best performance since our listing.

CELEBRATING A GOOD YEAR

The Group reported a 198.4% year-on-year ("YOY") surge in net profit attributable to shareholders to HK$112.0 million in FY2018 as it continued to reap positive results from its highly effective strategy to focus and invest in key growth segments. Revenue over the same period rose 17.3% YOY to HK$4,556.4 million driven by double-digit increase in sales from our Industrial, Home Appliance and Automotive segments.

As a result of our emphasis on high value-added products, which led to better returns and improved margins, the Group's gross profit jumped 24.8% YOY to HK$395.4 million in FY2018 with gross profit margin rising in tandem by 0.5 percentage points to 8.7%.

FY2018 was indeed a year worth celebrating, and to do that, the Board of Directors (the "Board") of Willas-Array has recommended a final dividend of HK$0.42 per ordinary share, which represents a total dividend payout of 28.6% for FY2018. The dividend is payable on August 28, 2018 subject to approval by shareholders at the Group's upcoming annual general meeting on July 27, 2018 (the "2018 AGM").

The Board has also proposed a bonus issue of one new share for every ten existing shares held by shareholders, whose names appear on the Register of Members at the close of business on August 10, 2018, to give due recognition for their continuing loyalty to and support of the Group. The relevant resolution will be proposed at the 2018 AGM.

OUTLOOK

China's GDP growth rate of 6.9% in 2017, the fastest since 2015, and exceeded previous forecasts of around 6.5%1. For the first quarter of 2018, its GDP grew at about 6.8%2 and IMF has put its growth forecast for the country at 6.6% for the year3.

This acceleration of GDP implies more demand and viable business in the market. Therefore, the Group needs to continue to expand our product offering by leveraging on our existing supplier relationships and sourcing more new suppliers in order to meet the higher demand of the market. Yet we do notice that there is a slowdown in certain segments such as telecommunications due to the maturity of the market and a significant increase in industrial segment due partly to China's "One Belt, One Road" strategy.

With existing resources, our strategy is to keep the revenue increasing steadily by focusing on high-growth, high-value segments such as automotive, industrial and high-end inverter-type home appliance. Our service to provide ready-made solutions and value-added features for the product supports our long term growth and sustainability.

The recent surge in demand has led to a shortage of certain electronic components particularly those that apply to the industrial and automotive segments and to the Internet of Things as devices get increasingly connected and smarter and require more power. According to a report by WiseGuyReports titled "Global Active Electronic Components 2016 to 2022"4, the aforementioned trends will be the driving forces of the electronic component industry over the next few years. The report also predicted that the global active electronic components market will reach US$332.20 billion by 2022.

The findings of the WiseGuyReports support our confidence in the key growth segments, namely automotive, industrial and home appliance and we will continue to put more resources into our core China market to expand the coverage and enrich our product offerings to capture more opportunities.

At the same time, the Group is closely monitoring the considerable downside risks and certain headwinds in the macro-environment led by the United States and China trade tensions. It will continue to be prudent in managing its operations and costs, while sustaining a healthy liquidity position in order to support long-term growth.

APPRECIATION

The growth of a company requires new blood. In FY2018, our routine business operations have been successfully shifted from the founders to the second generation staff and our performance was a reflection of this change. As part of our human resource succession plan for business continuity, we are currently training up the third generation of employees.

In closing, I would like to thank the management and staff of Willas-Array for their hard work. Our record performance would not have been possible without your effort.

I would also like to thank our suppliers and customers for the support you have given the Group over the years and your willingness to partner with us in order to achieve mutually positive outcomes.

My deep appreciation to my fellow Directors on the Board for your guidance and contribution and to all shareholders who have placed their trust in us.

The Group will leverage its strong track record as a distributor of electronic components and do its best for the financial year ending March 31, 2019.

Leung Chun Wah
Chairman

May 30, 2018


1 Financial Times – China's 2017 economic growth fastest in two years, January 18, 2018
(https://www.ft.com/content/9bf532a8-66de-37bf-b515-03589957ada4)
2 CNBC – China says its economy grew 6.8% in the first quarter of 2018, topping expectations, April 16, 2018
(https://www.cnbc.com/2018/04/16/chinese-q1-gdp-china-reports-first-quarter-gross-domestic-product.html)
3 China Daily – IMF ups China 2018 economic growth forecast, January 23, 2018
(http://www.chinadaily.com.cn/a/201801/23/WS5a66ea17a3106e7dcc13610d.html)
4 ACTIVE ELECTRONIC COMPONENTS MARKET 2018 INDUSTRY ANALYSIS, GROWTH, SIZE, SHARE, TRENDS,
FORECAST TO 2022 (http://www.digitaljournal.com/pr/3705695#ixzz5GHsfOdSN)



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