Wai Chi : Achieved Turnaround in profit with optimized product mix - Automotive LED backlight segment continues to lead growth and strengthen our forefront position in China

【Press release - For Immediate Release】

Wai Chi Holdings Company Limited

偉 志 控 股 有 限 公 司

(Stock Code：1305)

Achieved Turnaround in profit with optimized product mix *** Automotive LED backlight segment continues to lead growth And strengthen our forefront position in China

Financial Highlights

HK'000	For the six months ended 30 June
2017	2016	Change
Revenue	$624,156	$432,618	+44.3%
Gross profit	$90,628	$76,758	+18.1%
Gross profit margin	14.5%	17.7%	-3.2points
Profit (loss) for the period	$10,533	($801)	-
Segment highlights
1) LED backlight products
- Automobile on-board displays	$145,651	$97,558	+49.30%
- Television displays	$53,938	$69,539	-22.43%
- Industrial equipment displays	$123,283	$71,673	+72.00%
2) LED lighting
- Public lighting	$16,839	$18,846	-10.65%
- Consumer lighting	$12,798	$10,147	+26.13%
3) Non-core high-tech electronic components and products sourcing	$271,647	N/A

(24 August 2017, Hong Kong) Wai Chi Holdings Company Limited ("Wai Chi Holdings" or the "Group", Stock Code： 1305), a superior LED backlight and LED lighting products manufacturer and services provider in China, is pleased to announce its unaudited interim

condensed consolidated results for the six months ended 30 June 2017 (the "period under review"). During the period under review, thanks to the prompt and proactive strategic measures taken to restructure product mix by terminating the smartphone LED backlight business and

Wai Chi Company Holdings Limited 2017 Interim Results Announcement Press Release

24 August, 2017

adding a high-tech electronic components and products sourcing business in the second half of 2016, the revenue of the Group recorded a significant growth of 44.3% to approximately HK$624,156,000 (2016: approximately HK$432,618,000); the gross profit increased by 18.1% to approximately HK$90,628,000 (2016: approximately HK$76,758,000); net profit of the Group recorded a turnaround to HK$10,533,000 (2016: Loss HK$801,000).

In spite of a drop of revenue of 20% in the LED backlight products to approximately HK$322,872,000 from approximately HK$403,625,000 in the same period of 2016, that mainly caused by the absence of revenue contribution from smartphone LED backlight, the performance of new LED backlight product mix was satisfactory during the period under review, of which automobile on-board displays and industrial equipment displays recorded a revenue growth of 49.3% and 72% to approximately HK$145,651,000 and HK$123,283,000 respectively. Attributable to the strong growth of automobile on-board display business during the period under review, the negative impact from the cessation of smartphone LED backlight business taken place in the fourth quarter of 2016 had been largely offset.

For LED lighting business, revenue from public lighting and commercial lighting was rather stable. The revenues of which were approximately HK$16,839,000 and HK$12,798,000, representing a decrease of 10.65% and an increase of 26.13% respectively. During the period under review, the Group reported satisfactory sales in both Europe and North America markets for new and existing projects. The Group has also been conducting research and building its profile in LED street lighting market in Mexico over the years and six projects are now progressing in full speed.

The revenue from the newly added non-core high-tech electronic components and products sourcing business was approximately HK$271,647,000, which becomes the third pillar of the business structure. The addition of the new business proved to be a successful expedient in the migration to a high-margin business portfolio. However, the Group has adopted prudent strategies on developing the non-core business to ensure minimal impact to the normal operations and the operating cash flow of the Group.

The Chairman of the Group, Mr. Yiu Chi To commented:

"We take a prudent yet pragmatic strategy in further develop our business in different regions. We believe the LED lighting industries with excessive capacities will continue to go through consolidation process. In view the automotive LED backlight market, automotive manufacturers are committed to improving users' experience by enhancing the intelligent and safety functions inside the vehicles which match the ease of use of smartphones, and other requirements for safety and reliability, the room of growth and profitability of automotive LED backlight segment will continue to be optimistic."

Wai Chi Company Holdings Limited 2017 Interim Results Announcement Press Release

24 August, 2017

According to LEDinside estimate, being the only promising segment among interior applications, the market value of car interior panel LED is expected to grow by 70.4% between 2016 and 2018. The market shipments of thin film transistor liquid crystal display (TFT LCD) automotive display panel is prospected to increase to 200 million units in 2022 from 135 million units in 2016,which mainly attributable to the current strong volumes for infotainment display panels and the future double digit growth on demand for display panels with safety control and monitoring functions. Therefore, more than 67% share of automotive display shipments will be occupied by TFT LCD technology.

Chairman Yiu further added:

"As a seasoned player in the industry with over 30 years of history, we will leverage on our forefront position in the LED backlight industry, sophisticated R&D and manufacturing capabilities and our global network to tap into the growth of fast growing business segment such as automotive LED backlight and global LED lighting business. Further, thanks to China's "Belt and Road" Initiatives, the Group is also actively exploring business opportunities in Southeast Asia including Indonesia."

- Ends -

About Wai Chi Holdings Company Limited

Wai Chi Holdings Company Limited, listed on the Main Board of the Hong Kong Stock Exchange since November 2014, is one of the Chinese superior LED backlight and LED lightings products manufacturers and service providers in China with over three decades of industry expertise and experience and is renowned of its strong and advanced R&D capability in the market. The Group currently owns well-equipped production facilities in Shenzhen, Huizhou and Yichang in the PRC which are capable of handling the requisite production procedures (including product design, mold production, mass production, quality control and maintenance) for LED backlight and LED lighting products. The four major categories of LED backlight business include smartphones, automobile on-board displays, television displays and other industrial equipment displays. LED lighting business mainly includes commercial lighting and public lighting. The Group has adopted strict quality control system in ensuring LED product quality. The Group has been awarded various certifications, including ISO 9001:2008 and ISO 14001:2004 for our quality and environmental management systems.

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