On behalf of the board of directors (the “Board”) of Wing Lee Holdings Limited (the “Company”), I am pleased to present the audited consolidated results of the Company and its subsidiaries (collectively referred to as the “Group”) for the year ended 31 December 2010.

For the year, the Group achieved a revenue of HK$425 million (for the year ended 31 December 2009: HK$332 million), representing an increase of 28% as compared with the same period of last year. Profit for the year attributable to owners of the Company was approximately HK$80 million (for the year ended 31 December 2009: restated as HK$58 million), representing an increase of 38% as compared with the same period of last year. Earnings per share were HK22.41 cents (for the year ended 31 December 2009: restated as HK16.28 cents).

Business Review

During 2009, the impact brought by the financial tsunami had once caused global economic panic which led to substantial contraction in the electronic consumer product market. As a result, the number of orders received by the Group for the same period of last year was severely affected, so was the sales of electronic components manufacturing sector. Fortunately, the global economy stabilized and revitalized gradually in 2010 and customers enlarged their production volume, such that the Group maintained a high level of sales. In addition to a marked improvement in overall sales as compared with the same period of 2009, through operating with caution and stringent cost control, the Group has also recorded growth in terms of gross profit, gross profit margin, profit and profit margin as raw material and peripheral costs were relatively stable.

In spite of improvement in global market conditions when it came to year 2010, there are a number of uncertainties lurking in the economy of major consumption countries like Europe, the US and Japan, coupled with soar of domestic inflation and production costs. Therefore, as a manufacturing enterprise, the Group has to act cautiously though it remained fully confident of the prospects and continued implementing a series of policies as follows:

1. as the overall production has realized effect of scale when it came to the third year after the relocation of plant to Heyuan, the management will continue to develop with full effort to unceasingly enhance efficiency and enlarge production capacity for additional order execution, and will focus on optimizing products design and overall quality management to control quality cost;
2. the electroplating production line of Heyuan plant will have its production scale enlarged to synchronize other processes, which allows better control over electroplating quality, and saves considerable subcontracting costs of electroplating for the Group;
3. more resources will be deployed to automatic assembly production lines, and new products allow assembly on automatic equipments will be developed with clients, in addition, orders relied on manual assembly in the past will be lessened, so as to reduce reliance on labor and to avert effects of issues like wage hikes and labor shortages, and then to secure profit;

4. deteriorating business environment for electronics component manufacturing sector, fluctuating raw material and energy prices from time to time, severe labor shortage and concern over RMB appreciation, all impose no less pressure on our competitors, so we believe that small, poorly managed and less-equipped manufacturers will be eliminated. Meanwhile, integration of the industry is expected to be accelerate and the Group’s market share will continue to rise; and
5. The Group’s main customer base is dominated by Japanese brands. Affected by the high value yen, the cost of these customers has sharply risen in recent years. If the customers change the company operations, outsourcing part of production process by OEM and ODM, may cause a loss of order to the Group. As such, the Group will increase efforts to expand in Korean market in 2011 and 2012, where the leading customers have made orders and the products were well delivered. The management expects Korean market will become another important revenue source of the Group, and will contribute twenty percent of total sales; and
6. based on excellent product quality and well-established cooperation relationships, the Group has secured the world’s leading manufacturers of electronic consumer products as major customers, which guarantees a sufficient product demand. Moreover, the Group is striving to expand into other product markets for these manufacturers. Meanwhile, for products the price of which is too low and unprofitable, we will gradually raise the sales price or even waive them, in order to maintain profitability and effective ultilization of production capacity.

Regarding the properties investment segment, the Group acquired a total of four properties located in Hong Kong in 2010, including two commercial shops located in Wan chai, a single building property located in Mong Kok and a single building property located in To Kwa Wan for long-term holding and leasing purposes, making a total of seventeen groups of properties in the portfolio with fourteen in Hong Kong (including a total of eighteen commercial shops) and the other three in the PRC.

At the reporting date, the aggregate market value of property investment porfolio, being appraised by independent valuers, amounted to HK$491 million. A fair value gain of approximately HK$36 million on investment properties and an annual rental income of approximately HK$15 million were recorded by the Group. The management is of the opinion that the Group’s commercial shops properties primarily invested in Hong Kong, have relatively lower risk as compared to other investment instruments. The value of investment properties and the rental yield are expected to pick up continuously when the market conditions take a turn for the better.

In light of the continued expansion of property investment business, the management has established a property department to handle lease matters with directors assigned for direct participation, and will keep on identifying quality properties for investment with an aim to enrich the Group’s investment property portfolio and to generate a steady income source for the Group.

PROSPECTS

As compared with last year, the Group has made remarkable improvement in its overall performance in 2010. The management is optimistic about the operation conditions and believes that the worst times have passed away, and orders in 2011 will maintain a high level. The Group has sufficient cash reserve and low borrowing rate, and its customer base comprises a majority of internationally renowned electronic consumer product brands. We will seek to lay a solid foundation for the future through expanding customer and product coverage. At the same time, we will adhere to sound investment strategies in identifying low-risk assets for investment so as to reap a reasonable return, and will exercise caution in considering new investment projects.

In the long run, we have full confidence in the future and believe that our various segments and investments will surely be able to generate considerable and stable income along with the general economic recovery.

FINAL DIVIDEND

The recent tragic earthquake and tsunami disasters in Japan are expected to bring the world economy into a turmoil again, as such, the Directors believe that the Group should hold on to excess cash to encounter any kinds of market fluctuations and uncertainties. After careful consideration, the Board has resolved to recommend a final dividend of HK2.0 cents per share for the financial year ended 31 December 2010 to be payable on or around 16 May 2011 to the Company’s shareholders whose names appear on the register of members of the Company on 6 May 2011 subject to the approval of the Company’s shareholders at the forthcoming annual general meeting.

CLOSURE OF REGISTER OF MEMBERS

The register of members of the Company will be closed from Wednesday, 4 May 2011 to Friday, 6 May 2011 (both days inclusive) during which period no transfer of shares will be registered. In order to qualify for receiving the final dividend, all transfers of shares, accompanied by the relevant share certificates and transfer forms, must be lodged with the Company’s branch share registrar in Hong Kong, Tricor Tengis Limited, at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong for registration not later than 4:30 p.m. on Tuesday, 3 May 2011.

APPRECIATION

On behalf of the Board, I would like to take this opportunity to thank all our beloved shareholders, respectable customers, dedicated vendors and professional bankers for their support over the year and look forward to a closer cooperation in coming years.

I would also like to personally thank all management and staff for their hard work and commitment to the Group and cheer them as we tackle future challenges successfully.

CHOW TAK HUNG
Chairman

Hong Kong, 25 March 2011