Sun.King Electronics Announces 2019 Annual Results

Sun.King Electronics Announces 2019 Annual Results

Fully Promoted Research and Development of  IGBTRevenue Surged by 8.1%

(26 March 2020, Hong Kong) Sun.King Power Electronics Group Limited (“Sun.King Electronics” or the “Company”, together with its subsidiaries collectively known as the “Group”) (Stock Code: 580.HK) is pleased to announce its audited annual results for the year ended 31 December 2019 (the “Reporting Period”). During the Reporting Period, the Group recorded revenue of RMB1,396 million, up 8.1% year-on-year. Since the changes in the Group's product sales structure, and the revenue proportion of high gross profit margin product decreased year-on-year, net profit amounting to RMB196 million, up by 6.7% year-on-year. In order to give back to the shareholders for their long-term support, the Board of directors resolved to pay an annual dividend ofHK3cents per ordinary share, and proposed to recommend the payment of a special dividend of HK3  cents per share.

The Group’s business performance by sector are as follows:

Sufficient number and successful completion of power transmission and distribution orders, and stable revenue of other segments

During the Reporting Period, revenue from power transmission and distribution business and electrified railway transportation businesses increased continuously, while the revenue from industrial and other businesses dropped.

According to the breakdown by business segment, revenue from power transmission and distribution totalled RMB862 million, up by 25.4% year-on-year, and the gross profit of this segment was 28%. During the Reporting Period, benefited from the initiation of Wudongde multi-terminal DC transmission project-transmitting end (ultra-high voltage direct current technology (“UHVDC”)),  “Qinghai-Henan” (青海－河南) ,”Shanbei-Wuhan”(陝北－武漢) and “Yazhong-Jiangxi” (雅中－江西) UHVDC transmission projects, and the “Yunnan-Guizhou Interconnection” (雲(yún)貴互聯(lián)) high voltage direct current (“HVDC”) transmission project, Sun. King has sufficient orders in the UHVDC transmission sector. However, in 2019, orders in UHVDC transmission sector were only delivered on a small scale. As a result, the Company's revenue in this sector fell sharply. In 2019, orders signed under the Wudongde Multi-terminal DC Project – receiving end (flexible DC technology) and the Zhangbei Flexible Direct Project entered the stage of largescale delivery, under which the Company’s revenue in flexible DC sector grew significantly.

Underpinned by the growth in procurements of high-power electric trains and passenger EMUs, revenue sales of the electrified transportation segment increased by 12.6% year-on-year to RMB103 million, and the gross profit margin from this segment remained stable at 31%.

Revenue from industrial and others sector was RMB431 million, down by 15.8% year-on-year. During the Reporting Period, benefited from the improvement of the market environment and the increase in sales orders at home and abroad, the Group's revenue in the electrified transportation sector increased significantly. Benefited from the market expansion and the Group’s efforts in expanding the market, revenue of the Company’s new energy power generation section achieved substantial growth. Affected by the disposal of part of equity interests in Jiujiang Sun. King, revenue in metal smelting section dropped sharply.

Advanced the R&D of IGBT project with full force and achieved fruitful R&D outcomes

Sun.King Electronics adheres to the business philosophy of “motivating corporate development with scientific and technological innovation” and places great emphasis on the R&D of new technologies and R&D team building. In 2019, the Company initiated an independent R&D project for the core device of power semiconductor – IGBT, and formed excellent international R&D team and domestic technology team to achieve the goal of establishing independent high-end IGBT technologies in the PRC. As a core device of power semiconductor, IGBT serves as the CPU in the electrical equipment field and plays an essential role in a number of high-efficient, energy-saving and innovative applications of electricity represented by smart grid, rail transit, new energy vehicles, new energy power generation, frequency conversion and energy conservation. Independent R&D and production of IGBT is a major measure taken by the Group to strengthen its core competitiveness and drive long-term development through innovative R&D.

Moreover,in 2019, the Group further strengthened international R&D capability through measures such as acquiring morEnergy GmbH of Germany and establishing SwissSEM Technology AG. Currently, the Group has three international R&D teams, including a power electronics technology R&D team in Switzerland, a semiconductor technology R&D team in Switzerland and a bio-impedance measuring technology R&D team in Germany.

2019 was a fruitful year for R&D and innovation of Sun.King Electronics, as the Companysusseccfully launched a number of new technologies and products including DC support capacitor for flexible DC transmission, bio-impedance measuring technology and laminated busbar for 5G communication.

Looking ahead, the electric power industry of the PRC and across the world will continue to worktoward the “replacement of other energy with clean energy” (清潔替代) and the “replacement of otherenergy with electricity” (電能替代), and the adjustment of energy infrastructure and the reform ofenergy technology will be accelerated. The strong emphasis on and widely use of power system sectorsin new energy generation, UHVDC transmission, flexible DC transmission, intelligent grids, electrifiedrail transportation, new energy vehicle and electrified vessel will create unprecedented developmentopportunities for power electronics devices and emerging power technologies.

In 2020, Sun.King Electronics will promote the successful implementation of IGBT project with all-out effort and strive to launch the first batch of prototypes in the first half of 2020 and complete the construction of the first production line by the end of 2020. The Company will focus on the commercialisation of R&D achievements and the implementation of the development policy of “R&D-driven future”.It is expected that the market of power transmission and distribution sector will remain good.Major projects in the flexible DC transmission sector – the Wudongde Multi-terminal DC Project,the UHVDC transmission projects – Qinghai-Henan (青海－河南), Shaanbei-Wuhan (陝北－武漢)and Yangzhong-Jiangxi (雅中－江西) and the Yunnan-Guizhou Interconnection (雲(yún)貴互聯(lián)) HVDCtransmission project are expected to make large-scale order delivery in 2020. In addition, the HVDCtransmission projects – Baihetan-Jiangsu (白鶴灘－江蘇), Baihetan-Zhejiang (白鶴灘－浙江) andMin-Guang Interconnection (閩粵聯(lián)網(wǎng)) as planned in the Notice on Accelerating the Planning andConstruction of a Batch of Key Projects for Power Transmission and Transformation (《關(guān)於加快推進(jìn)一批輸變電重點(diǎn)工程規(guī)劃建設(shè)工作的通知》) are expected to start in 2020.Moreover, the projects –Water and Electricity Delivery of the Upstream of the Jinsha River, Longdong-Shandong (隴東－山東) and Hami-Chongqing (哈密－重慶) as planned in thePreliminary Work Plan forUHVDC and Cross-Provincial 500kv and above DC Projects in 2020(《2020年特高壓和跨省500kv及以上直流項(xiàng)目前期工作計(jì)劃》) are expected to start in 2021. Besides, the offshore wind power has become a new hot spot for investment and construction in the wind power sector in the PRC, and flexible DC transmission technology is the key and first class technology for offshore wind power grid. In 2020, a number of flexible DC transmission projects of the Group for offshore wind power are expected to be initiated.

Mr. Xiang Jie, Chairman of Sun.King Electronics, said, “2019 is a year for Sun.king Electronics to carry forward its cause and forge ahead into the future. After nearly two decades of development, the Company has become a pioneer in high-end power electronics in China, with a number of advanced technologies and products at home and abroad. The Company will continue to adhere to its business strategy of regarding technology leadership as the coreof its competitiveness, strengthen management, adopt a sound financial policy and focus on independenttechnological R&D, and promote the advancement of energy technologies through continuousintroduction of high-end power electronic devices, innovative technologies and solutions that spur rapidgrowth of corporate and social values.”