As we approaches the end of the 2nd quarter in 2011, we continue to register steady growth momentum for our existing products as we see increased level of procurement from most of our key customers including LG, Samsung, TPV, Compal, Quanta and Foxconn, further demonstrating our market share gaining capability as a result of our proven research and innovation capability, competitive cost advantages and production scale.
In terms of product mix and production capacity, we have also registered good progress on several fronts including:
- The successful acquisition of a majority stake in a communication cable manufacturer in early May 2011, which strengthen our presence in the Southern China market through improving our product mix, production capacity and also helped us gain access to important telecommunication customers such as Huawei and China Telecom.
- We continue to increase our LVDS internal signal cable assembly production capacity in our Chongqing facility, which started production in March 2011 and now boast a monthly capacity of 250,000 units of LVDS cable assembly.
- For antenna products, our relatively new product since 4Q 2010, we continue to experience increase in sale volume due to continued investment in market development and research & development.
- For solar photovoltaic connector project which we commenced in February 2011, we continue to focus research & development to develop relevant products and product certifications. We are currently in the process of applying for two patents and expect to get the necessary product certifications in place by 4Q 2011.
Even though it has been reported that global notebook (including netbook) PC market has registered slower growth in the first quarter of 2011 mainly due to the impact of tablet PC, we have continued to experience increase in customer demand for our notebook related products such as internal signal cable assembly which is one of our key target markets. In addition to our ability to win market share in our target markets as stated above, the other reason for not experiencing a cutback in order from our customers for our notebook related products is that we believe the strong demand for tablet PC has mostly impact the sale of netbook PC (which is not our main market) instead of notebook PC, where sale of notebook PC according to our channel checks and communication with our customers has shown and is expected to show steady growth mainly driven by the professional PC sector. On the other hand, tablet PC still requires similar type of external and internal cable assembly and antenna products for data and signal transmission and given our existing expertise and manufacturing knowhow to leverage on, we are also putting effort and resources to develop the tablet PC market.
Despite the positives, we remind ourselves to remain vigilant in a market, which even though has rebounded strongly from the global economic crisis remain challenging due to several factors including the impact of the March 2011 Japanese earthquake, Middle East political uncertainties and fragile economic environment in Europe and US. Due to such uncertainties, we have noticed a slower growth in the overall global consumer electronics industry and reduction in production by some manufacturers as a result of insufficient supply of certain raw materials in the supply chain. Under such circumstances and given that May to July is the traditional off peak season for the industry and our Group, we expect slower growth in these few months ahead but continue to remain positive of our Group’s overall performance for the full year.
Despite ongoing monetary tightening policy in China and PRC financial institutions adopting a more prudent approach on loans approval, thus affecting many small and medium enterprises’ working capital and operating needs, the Group is nonetheless financially in good shape and is not affected by the current tightening policy. As at 31 May 2011, the Group has bank and cash equivalent balance of about RMB600 million and unutilized banking facilities of about RMB900 million and moreover, over 70% of our outstanding loans are US$ denominated loan, thereby reducing our exposure to PRC interest rate fluctuation risk.