Sun.King Electronics' Net Profit for 2017 rose by 38.7% y-o-y in Revenue

(14 March 2018, 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) announced its annual results for the twelve months ended 31 December 2017 (the "Period"). Profit attributable to owners of the Company for the Period rose by 38.7% year-on-year to approximately RMB 203.7 million on the rapid growth in revenue from power transmission sector. Basic earnings per share amounted to RMB 13.77 fen, representing a significant increase of 33% from a year ago.

Revenue from power transmission sector in the Period climbed 26% year-on-year to approximately RMB 691 million, as revenue from ultra high-voltage direct current ("UHVDC") transmission jumped 61% from the previous year. As revenue from this higher margin business accounted for 60% of the Group’s total revenue, its overall gross profit margin increased from 39% in 2016 to 40% in 2017.

In 2017, due to the urgent demand for environmental pollution controls, energy transmission in the western region and the establishment of an intelligent grid, China maintained its leading position in magnitude of investment in the high voltage direct current (HVDC) sector. Seven HVDC and ultra- high voltage direct current (UHVDA) transmission projects were underway in the country, including the“Changji to Guquan” project and “Jarud to Qingzhou” project, meanwhile, “Shaanbei-Wuhan”  project and “Qinghai-Henan”project, two domestic UHVDC transmission projects, have commenced. For overseas projects, the construction of phase II of “Brazil Meilishan” began in 2017. In addition, the State Grid procured two projects,“Matiari- Lahore” in Pakistan and “Van” in Turkey , respectively. As the sole supplier of anode saturation resistors in China and a major supplier of products such as high- voltage power capacitors, the Group provided a strong guarantee for the construction of the above UHVDC transmission projects.

During 2017, the Group benefited from the delivery of various UHVDC projects inside and outside China. Sales revenue generated from products such as anode saturation resistors and high-voltage power capacitors saw a sharp increase.

It is stated in the “Energy Sector Development in the 13th Five-Year Plan” that the energy transmission capacity of “West-to-East Power Transmission” shall increase by 130 million KW during the “13th Five-Year” period. From 2016 to the end of 2017, the State Grid and the Southern Grid had a total of seven new UHVDC transmission projects under construction or in operation, but the increased transmission capacity only reached approximately 55% of the targeted transmission capacity of the “13th Five-Year” plan. In addition, to cope with China’s “One Belt and One Road” strategy, China has planned for the construction of a number of cross-border UHVDC transmission grid lines. Last but not least, with the expansion to overseas grid market by the domestic grid companies, it will be beneficial to the promotion of China’s UHVDC transmission technology to overseas markets. Therefore, in the next three years, UHVDC transmission technology will still have relatively large  potential  market demand.

As a new direct current transmission technology, flexible direct current is particularly  suitable for the grid connection and efficient transmission of clean energy in large scale, and is particularly suitable for the enhancement of power distribution capabilities among the grids through power grid interconnection. Through self-research and development, China’s flexible direct current transmission technology has reached to the world- leading  level and  successfully engaged  in  overseas markets. In 2018, the construction of the “500 KV flexible direct current grid  project in Zhangbei” and the “800 KV direct current project in Wudongde” are expected to commence. In the long run, with China’s vigorous promotion for the strategies of clean energy, the market demand for flexible direct current technology will increase rapidly.

The Group supplies a wide range of core devices for HVDC transmission equipment,  which have been widely applied in UHVDC projects and flexible direct current  transmission projects. The Group will continue to understand the large variety of  products in the flexible direct current transmission market by launching new products with high technology and reliable performance, so as to grasp the opportunity for the rapid development in  flexible  direct  current  transmission market.

With the application of electricity in the field of energy consumption continues to  develop, the transportation field – which includes rail transportation, land vehicles, vessels and aircraft – is entering into the development stage of full electrification. New energy vehicles are becoming a focus in the electrification of transportation field, with electrified rail already in widespread use nowadays. According to information  published by the China Association of Automobile Manufacturers (CAAM), China’s production volume for new energy vehicles reached 794,000 in 2017. Based on the objectives of the “13th Five-Year National Strategic Emerging Industry Development Plan”, the sales volume for new energy vehicles will reach 2 million in year 2020. The power electronic devices, as represented by motor controller, are the important and necessary components of new energy vehicles. With the significant growth in the sales volume of new energy vehicles, the demand for various types of power electronic components used in new energy vehicles shall grow in line.

Mr. Xiang Jie, Chairman of Sun.King Electronics, commented, “As an industry-leading power electronic components and solutions provider, the Group regards the new energy vehicle sector as an important market for the Company’s long-term development.” In addition to our laminated busbars that have achieved outstanding results in the new energy vehicle sector, the Group plans to develop and promote a number of new products in the new energy vehicle sector including digital IGBT drivers and power electronic capacitors in 2018.

Mr. Xiang Jie said, “In 2017, the Group commenced R&D on power electronic capacitor for flexible direct  current  transmission projects. Leveraging on its excellent R&D capabilities and technologies accumulated over the years, the Group completed the production of the first prototype in March 2018 and is expected to be the first domestic enterprise possessing the technologies for producing high-voltage electric power capacitors for flexible direct current transmission equipment.”