Yongmao Holdings was listed on the Singapore stock exchange in 2008. The company’s chairman is Sun Zhao Lin, and its CEO is Tian Ruo Nan, the founders of the group. Tat Hong’s involvement in Yongmao goes back to 2005. It owns 24% of Yongmao Holdings. Tat Hong Holdings president and group CEO Ng San Tiong sits on the Yongmao Holdings board as deputy chairman and non-executive director; Tat Hong’s China CEO is Roland Ng.
The company reports its results in Chinese Renminbi. For the full year to 31 March 2010, Yongmao Holdings reported revenue down 22.4% to RMB461.24m (SGD94.75m, USD67.53m). Full year gross profits were down 28.1% to RMB129.98m. In the fourth quarter, however, revenues were up 127.2%, to RMB157.89m, from RMB69.5m in Q4 2009.
The company said that over the year, revenues had been impacted by lower export sales, as a result of weak demand from overseas markets. Exports to the USA, Europe, the Middle East and Asian markets outside of China (PRC) had fallen by 74.3% compared to the previous year.
The decline in exports was mitigated, the company said, by a 59.7% increase in sales to the domestic market. The company has focussed its marketing over the last year on domestic sales. The share of its revenue to domestic customers has increased from 38.7% last year to 79.7% today.
The benefits of this focus are most marked in its results for the fourth quarter. The 127.2% year-on-year revenue growth in the quarter was driven by an improvement in domestic sales of 156.9%. Over the quarter, the group also benefited from falling steel material prices and lower per unit costs, due to higher production volume. As a result, average gross profit margin for the quarter increased to 32.7%, from 8.5% in Q4 2009.
The change in the focus of the company’s marketing, and of acquisitions made over the year, have had a mixed effect on operating expenses. On one hand, lower export sales meant freight and distribution costs were less, and the company suffered less foreign exchange loss. However, factory rental costs have increased, and the company has paid a land use rights tax related to a new factory it is currently building. As sales have picked up in the last quarter, distribution costs have increased.
Reviewing the results, the company said, “The continuing growth in the PRC economy has brought about a more favourable outlook for the group. With the PRC economy expected to continue to grow in 2010/2011, sales in the PRC is expected to continue to form a significant portion of the group’s turnover. However, measures to cool the PRC domestic property market may affect demand for towercranes.
“On the export front, the group expects business environment in our principal export markets to continue to be challenging going forward especially with sovereign debt crisis in Europe which is clouding the outlook for the export market in Europe and this is likely to continue to affect our export sales to Europe for the coming financial year.
“Our group’s marketing effort within PRC is showing results as our product continue to gain market acceptance and market share. To tap into this opportunity, the group is channeling its efforts and resources to the PRC domestic market to participate in the various infrastructure projects including the development of road and railway transportation networks, nuclear power plants, shipyards and residential projects.
“The group’s entry into the tower crane rental business in the PRC is contributing to the bottom line and is expected to feature more prominently in the coming financial year.”
