The 2020/21 year was full of challenges. International oil prices rose from a trough, which in turn drove the prices of plastic materials to continuously higher levels. With respect to the COVID-19 pandemic, with vaccination drives launched across different regions in the first quarter of this year, the impact of the pandemic began to ease in the second quarter, and the global economy gradually returned to normal. As a result, overseas orders rebounded and the market demand for raw materials soared. Meanwhile, heavy snowstorms in the US at the beginning of this year and the surge in international shipping freight rates during the year under review further elevated the price of plastic materials.
An economic restart has stimulated the demand for raw materials from customers from different regions, which has led to a sharp increase in orders received by the Group.
During the year under review, the Group continued to optimise its product portfolio, endeavored to develop new customer sources and stepped up efforts to minimise costs. Consequently, overall gross profit has increased significantly since the fourth quarter of last year.
During the year, the pandemic was basically under control in Mainland China, and the Group's production lines and sales network were able to resume full operation. Moreover, as the effects of the internal circulation policy were gradually apparent, domestic demand gradually recovered, thus benefiting domestic sales. The pandemic has raised public awareness of health and hygiene, leading to a sharp rise in demand for post-pandemic products such as medical equipment and air filtration systems. In addition, the automotive and certain heavy industries have benefited from the economic recovery, which in turn has led to demand soaring for plastic materials from various industries. The plastic trading business has therefore recorded the most significant improvememt among the Group’s three major businesses. General consumer electronics and traditional automobile manufacturer customers continued to submit a steady stream of orders to the Group. The Group also broadened its clientele and successfully secured new customers such as developers of smart products, household goods and high-end kitchenware. Its revenue stream was expanded accordingly. In addition, the price of plastic materials has continued to rise during the year. As the Group was able to effectively utilise its inventory, the inventory situation has improved significantly.
Owing to the sharp rise in the price of raw materials, instability in the plastics supply market, and increased orders from new customers, the turnover of the engineering plastic business grew year-on-year. The introduction of various anti-pandemic measures by different countries according to their pandemic situation have caused dramatic changes to people’s work and life patterns. More companies have adopted flexible work-at-home arrangements, greatly increasing the length of time ordinary consumers stay at home, thus creating a series of “new” demands. The demand for general home appliances, such as kitchenware, has continued to rise. In light of this, the Group has flexibly adjusted its marketing strategy. It continues to receive orders from internationally renowned brands, while providing suitable plastic solutions to new customers from various industries. It will continue to enrich its existing product portfolio and enter the engineering plastic markets for high-end kitchenware products with higher margins to meet customers' needs for more and larger orders.
The colorant, pigment and compounded plastic resin business has also recorded growth in performance. Customers of the Group’s colorant, pigment and compounded plastic resin business come from different industries and regions, and are mainly engaged in the automobile application, food packaging and construction materials sectors. Therefore, orders have been relatively stable and less affected by external economic factors. The Group will continue to focus on producing high-end sanitary products and electronic products. It will also constantly raise the production capacity of its factories to secure high gross profit margin orders and maintain stable business development.
HUI Sai Chung