BoardWare Intelligence Technology (1204) H1 2023 earnings summary

Executive summary

• H1 2023 revenue rose 59.6% YoY to HK$394.1m, while net profit fell 81.2% to HK$1.2m as gross margin contracted and operating and R&D costs increased.

• Recovery in Macau, Hong Kong and the PRC supported resumed IT project demand; PRC revenue increased 406.4% to HK$94.7m from HK$18.7m.

Financial highlights

• Revenue increased HK$147.1m; enterprise IT solutions contributed HK$116.1m of growth and distribution/resale HK$31.1m. Cost of sales rose 73.3% to HK$343.0m; gross profit increased 4.3% to HK$51.2m.

• Gross margin fell to 13.0% from 19.9%, reflecting lower-complexity projects and a higher distribution/resale mix.

• Operating profit was HK$2.0m versus HK$11.0m; profit before tax was HK$2.7m versus HK$9.7m, and net profit was HK$1.2m versus HK$7.1m.

• Basic EPS was HK0.25 cents versus HK2.06 cents; total comprehensive income was HK$1.3m versus HK$6.9m.

• Selling and distribution expenses rose 14.8% to HK$12.4m; G&A expenses rose 15.9% to HK$33.8m, and R&D expenses were HK$4.3m.

Outlook and guidance

• Enterprise IT demand was expected to remain strong; H2 2023 priorities included pursuing opportunities and updating solutions for customers in Macau, Hong Kong and the PRC.

• Project gross margins were expected to improve as customers resumed investment in more complex enterprise IT projects.

• BCI headband mass production and commercial launch were estimated for H2 2024 after final testing; possible H2 2023 fundraising was being considered to support R&D.