Joyson Electronics:Introducing strategic investor to KSS for
KSS capital increase from Joyson and strategic investor。
Stronger revenue offset weaker margins
Joyson announced after market close on 3November that the company enteredan agreement with an external investor, SDIC (State Development & InvestmentCorp.) Fund Management regarding the capital increase in Joyson's auto safetysubsidiary KSS. Joyson and SDIC Fund will invest USD150m and USD250m,respectively, in KSS (for a total amount of USD400m) for auto safety businessexpansion, global M&As and working capital. Following the capital increase,Joyson's stake in KSS will decrease to 84.85% from 100% previously and SDICFund will take the rest 15.15% stake in KSS.。
1H17revenue expanded 1.2x YoY to RMB13.1bn, driven by RMB8.5bncontribution from full-period KSS/PCC consolidation (65% of revenue) but partlyoffset by 7.3% YoY drop in HMI segment due to sales decline at one major OEMcustomer. Meanwhile, gross profit grew 93.3% YoY to RMB2.3bn in 1H17with2.5ppt YoY gross margin deterioration. The margin contraction was mainly due to1.8ppt YoY margin dip from HMI and 0.6ppt drop from KSS. Together with 1.1xYoY jump in SG&A expenses and 53.0% YoY increase in finance cost, but partiallyoffset by RMB320.3m one-off disposal gain (before-tax) of industrial automationbusiness, 1H17net profit increased by 1.5x YoY to RMB615.6m (62% of FY17DBeand 53% of consensus). Excluding after-tax disposal gain of RMB220m, 1H17core net profit grew 61.5% YoY to RMB395.6m, with 1.1ppt deterioration in corenet margin.
澳门皇冠844网站， Joyson acquired KSS in June 2016and the business recorded close to USD5bnnew orders last year. According to the announcement, KSS reported RMB12.1bnrevenue (+22.2% YoY) and RMB398.8m net profit (+77.1% YoY) in 2016.。
On a quarterly basis, 2Q17revenue was flattish QoQ (+73.0% YoY). Gross margindeteriorated 1.1ppt QoQ (2.3ppt YoY) to 17.4%. 2Q17net profit increased by96.1% QoQ (2.3x YoY) to RMB407.7m.