In our recent article titled “An Interview With Jubilee Industries Holdings”, we interviewed with the group’s chairman Mr. Terence Tea to understand the Jubilee Industries Holdings’ (Jubilee) restructuring efforts to turnaround the business. In its latest 1H18 earnings announcement, positive results continued to show.
For 1H18, Jubilee’s revenue expanded 83.7 percent to $87.5 million, mainly owing to its electronics distribution (ECD) segment. Jubilee’s ECD segment almost doubled its contributions to $83.5 million from $44 million last year.
Meanwhile, Jubilee’s precision injection moulding (PPIM) and design, fabrication and sale of precision injection moulds (MDF) segments saw contributions increase marginally from $3.6 million in 1H17 to $4 million, showing that restructuring efforts of the once ailing legacy business are finally starting to bear fruits.
In 1H18, Jubilee saw gross margin expand to 6.4 percent compared to 2.7 percent in 1H17. This translates to a gross profit of $5.6 million, as compared to just $1.3 million last year. Margin expansion was a result of higher machine utilisation rates, leaner manufacturing processes as well as better product mix.
In our previous article, we highlighted that Jubilee has secured distributorship agreements with companies like Samsung Electro-Mechanics, Innodisk Corporation and Neophotonics, all of which are renowned global brands.
Following the improvements, Jubilee officially returned to profitability, posting a net profit of $0.8 million compared to a net loss of $2.7 million last year.
Going forward, Mr. Tea plans to start expanding Jubilee’s mechanical business by increasing its capacity by five-folds from existing 30 machines to 150 machines. We view that the eventual expansion will reap better economies of scale and hence more margin expansion is expected.
On the other hand, insatiable demand for smart products will continue to drive Jubilee’s electronics business. Adding more products to its distribution line and securing more distributorship agreements from well-known principal suppliers will definitely bode well for the group.
With all these said, Jubilee’s latest result is a testament that the group is now on a positive trajectory and hence why its stock should warrant more attention.