09 Nov 2022

Following a spectacular FY22, Precision Tsugami (China) (PTC) encountered headwinds in 1H23 (FY ended Mar) due to the resurgence of COVID-19 pandemic in Eastern China, especially Shanghai. Under the strict prevention and control measures, this had greatly affected logistic and production in Eastern China, especially for manufacturing industry like PTC itself. The company’s turnover in 1H23 amounted to Rmb2.2bn, representing a YoY decrease of 7.2%. The decline in turnover was mainly due to a drop in order flows and delivery of PTC’s CNC machine tools. Sales of the company’s bestselling machine tools decreased considerably in 1H23, which cause greater impact on its overall GPM profile. Coupled with diseconomies of scale, GPM was under pressure by recording 3.5ppt YoY decline to 24.3% in 1H23 from 27.8% in 1H22. In all, PTC’s net profit in 1H23 decreased by 20.4% YoY to Rmb300.7m.

CROSBY Research – Precision Tsugami (China) (1651 HK/BUY): Tough 1H23 amid pandemic headwinds