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Legend Reports Soaring Profits
China's top personal computer maker, Legend Holdings Ltd., announced Tuesday that its net profit soared 135 percent to 408.3 million Hong Kong dollars (US$52.3 million) for the six months to September 30.
Legend attributed the profits to a sharp improvement in sales of home and notebook personal computers.
In the previous corresponding period, Legend recorded HK$173.54 million net profit.
Legend's interim results were in line with market expectations.
Turnover surged 78.5 per cent to HK$13.09 billion during the period, compared with HK$7.33 billion the previous year.
Fully diluted earnings per share rose 125 per cent to 5.4 HK cents, against 2.4 cents last year. The company declared an interim dividend of 1.1 HK cents per share. It did not pay an interim dividend in the previous corresponding period.
Liu Chuanzhi, chairman of Legend, said the strong earnings growth was boosted by substantial growth in PC demand, especially for home PCs.
Legend's home PC unit shipments grew 164 per cent year on year during the half-year period, while Legend's notebook PC unit shipments were up 115 per cent.
Legend's PC sales amounted to HK$7.79 billion, accounting for 59.6 per cent of the company's turnover. In the same period last year, Legend's PC sales amounted to HK$3.61 billion and accounted for 49.4 per cent of the company's revenue.
The PC-maker believes its share in China's PC market could grow from the existing 26 per cent to more than 30 per cent by the end of the year, Mr Liu said.
The gross profit margin for Legend's PCs was down slightly to 12.44 per cent from 13.09 per cent in the previous year.
Yang Yuanqing, executive director and senior vice-president of Legend, said the drop in the gross profit margin was as a result of a summer price-cutting campaign to boost PC shipments.
Prices of PCs are expected to drop slightly in the future, said Mr Yang, but the company would continue to generate an increase in the net profit margin of the entire group by enhancing its technologically advanced and higher profit margin software business.
During the period, Legend's net profit margin lifted to 3.12 per cent from 2.37 per cent last year.
Among Legend's five main businesses, its Internet service was the only one that suffered operating losses. The new business lost HK$47 million in the interim period. However, it also recorded HK$59 million in turnover.
Mr Yang said the company planned to invest HK$200 million in the Internet business unit and was expected to record about HK$100 million in losses for the full year to next March 31.
However, he expected the Internet business could break-even by the second half of next year.
Mr Liu said Legend was in talks with several overseas PC and Internet players for partnerships. Market rumours suggest Legend is courting Nasdaq-listed America Online for strategic investment in Legend's Internet portal FM365.com.
Shares in Legend lifted 15 HK cents or 2.3 per cent to finish at HK$6.60.
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