【1286 Performance】Takpo Precision's post-earnings surge narrows significantly; last year profit increased by nearly 13%, with an 8-cent dividend; sales growth expected to accelerate in the next 2 to 3 years

Toppan Precision (01286)
Announces full-year results, with net profit attributable to shareholders increasing by 12.7% year-on-year to HKD 726 million; adjusted net profit up 12.1% to nearly HKD 690 million, both reaching new highs; declares a second interim dividend of HKD 0.08 per share, maintaining a total annual dividend of HKD 0.16, representing a payout ratio of about 44%.

Toppan performed well in the early trading session, reaching a high of HKD 8.22, up 10.6%. However, after the earnings release at noon, the gain narrowed significantly, currently up only 0.5%, at HKD 7.8.

Benefiting from AI data center demand, which drives strong revenue growth in related end markets, Toppan Precision’s revenue last year increased by 8.7% year-on-year to HKD 5.096 billion, also hitting a new high. In local currency terms, the increase was 7.5%, mainly due to the euro’s appreciation.

Over the next 2 to 3 years, sales growth rate is expected to accelerate; this year’s growth rate is projected to be in the double digits.

Looking ahead, Toppan estimates that, based on the continued strong growth of AI data center products, along with numerous new orders from the SLP park in Mexico and a recovery in demand in some end markets, the group’s sales growth rate over the next 2 to 3 years will accelerate.

Based on current backlog and new project development progress, it is forecasted that the annual sales growth rate by 2026 will be in the double digits.

Benefiting from AI data center demand, sales of high-power engines soar 43.3%

The company states that high-power engines, as key components of distributed power generators for data centers, have seen a significant increase in demand. Last year, sales rose 43.3% year-on-year to HKD 1.13 billion, accounting for 22.1% of total revenue, making it the group’s largest end-market segment.

Meanwhile, demand for liquid cooling systems for AI data centers remains strong, driving revenue growth of 38.4% in diversified industrial end markets to HKD 490 million; sales in engineering machinery, leisure and entertainment vessels, and vehicles have recovered, increasing by 11.2% and 4.0% respectively, to HKD 720 million and HKD 150 million. Although sales of agricultural machinery declined to HKD 300 million, the decrease narrowed to 6.7%.

Mexico SLP Park Still in Ramp-Up Stage

Toppan mentions that the Mexico SLP park is still in the ramp-up phase. Coupled with high employee turnover leading to increased scrap rates, the company recorded a significant net loss for the year. However, most factories in China performed well, with profits increasing notably. Additionally, the group’s financing costs decreased, boosting profitability.