Crosby Research: Tonly Electronics (1249 HK): Mild revenue growth in FY19, GPM recovery is the key
Tonly announced 2018 results with 2H18 revenue of HK$4,501, which grew 17.0% YoY, slowed from 35.7% YoY in 1H18. Growth driver were headphones products, smart voice speakers, wireless mini speakers, sound bars and IOT products. Gross margin remained weak in 2H18, which shrunk by 2.5ppt YoY and 1.3ppt HoH respectively in 2H18 to 10.9% given: 1) high component costs; 2) rising labor costs; and 3) fluctuation in Rmb exchange rate. In 2H18, net profit increase 15.2% YoY to HK$138m. The company proposed a final dividend of 30 HK cents, represented a 36% payout ratio, decrease from 47% a year ago.