SU Group Holdings Reports 20% Revenue Growth For Fiscal Year 2023
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Insights
The reported 22% increase in gross profit and 19% increase in net income for SU Group Holdings Limited represents a robust financial performance and indicates operational efficiency. The consistent gross profit margin of 29% over the two fiscal years suggests that the company has maintained cost control despite increased revenue. The 20% revenue growth, particularly the 27% increase in the higher-margin security-related engineering services, reflects a strong demand in this sector, likely driven by heightened security concerns globally.
Investors should note the per-share income increase of 25%, which is particularly relevant for evaluating the stock's earnings performance. This growth in earnings per share could be a positive signal for the market, potentially influencing the stock's valuation. The completion of an initial public offering on Nasdaq is another critical factor, as it implies an infusion of capital and increased credibility, which might attract further investment and support expansion plans.
From a market perspective, SU Group's focus on security-related engineering services is strategically significant. The increasing global security threats create a growing market for such services and SU Group's reported revenue growth in this area suggests they are capturing market share. Their commitment to leveraging innovative technologies could further solidify their market position and offer a competitive edge.
The intention to expand into additional markets in the Asia-Pacific region and beyond, as well as the potential for strategic acquisitions, indicates an aggressive growth strategy. This expansion could diversify revenue streams and reduce geographical risk. However, it's essential to monitor how the company manages this growth, particularly the integration of acquisitions, to maintain profitability.
On an economic level, SU Group's performance must be contextualized within the broader economic environment. The company's financial growth during a period of global economic uncertainty underscores the resilience of the security sector. As economic factors can influence investment in security infrastructure, the company's ability to maintain and grow its revenue streams is commendable.
Furthermore, the initial public offering on a major exchange like Nasdaq can be seen as an indicator of economic optimism within the company and could signal confidence to the market. However, it's important to consider the broader economic conditions, including exchange rate fluctuations, as the company expands internationally. Currency risks could impact the company's financials, given their reporting in HK dollars and operations potentially spanning different currencies.
22% Increase in Gross Profit Year over Year19% Increase in Net Income Year over Year
Select Financial Highlights:
- For the fiscal year ended September 30, 2023, SU Group reported a
20% increase in revenue on a year over year basis, led by growth in the Company's higher profit margin security-related engineering services business, which increased27% on a year over year basis. - Gross profit increased by
23% on a year over year basis toHK ($48.0 million US ) for the fiscal year ended September 30, 2023, with gross profit margin at$6.14 million 29% in both years. - Net income increased by
19% on a year over year basis toHK ($9.8 million US ) for the fiscal year ended September 30, 2023, which represents a$1.25 million 25% increase on a per share basis for the fiscal year ended September 30, 2023 compared to the fiscal year ended September 30, 2022.
SU Group's Chairman and CEO, Dave Chan, commented, "We are pleased to report strong financial results, with a significant
Mr. Chan continued, "While we take pride in the significant progress we've made, our enthusiasm is even greater when considering the growth opportunities that lie ahead. Our competitive advantage, coupled with an expanding portfolio of advanced security solutions and services, a track record, and sophisticated customers, positions us strategically. We believe that we are poised to broaden our market presence and expedite growth by supporting customers in additional markets in the
SU Group's Chief Financial Officer, Calvin Kong, noted, "We drove a nearly
SU Group Holdings Limited (Nasdaq: SUGP) provides security-related engineering services and security guarding and screening services:
- Security-related engineering services: The Company offers security-related engineering services to customers, including providing (i) security systems and products, provision of installation, and related maintenance services; (ii) security systems and products only; or (iii) maintenance services only. In addition, SU Group provides equipment rental services to its customers with use of dedicated security-related systems and equipment for contractual periods.
- Security guarding and screening services: The Company provides security guarding services, by dispatching security guards with corresponding abilities and qualifications on demand, to fulfill the customers' needs such as securing and guarding physical properties by, among other things, conducting patrols, entrance guarding, access control and alarm monitoring and response such as fire and gas detection, burglary detection and emergency management such as first aid service and communication and evacuation. SU Group also offers security guarding services targeted at crowd coordination and management, and provides security screening services, where its certified screeners work to detect of explosives, incendiary devices in air cargo consignment and dangerous goods for safety purpose through the operation of threat detection systems. In addition, the Company provides a variety of related vocational training courses.
Financial Results for the Fiscal Year Ended September 30, 2023
Revenues increased by
Cost of revenues increased by
Gross profit increased by
Gross profit margin of project and maintenance income under security-related engineering services increased 660 basis points to
Selling, general and administrative expenses increased by
Losses on disposal of property and equipment decreased by
Other income decreased by
Income tax expenses increased by
Net income increased by
Trade receivables, net increased by
Inventories increased by
Capital expenditures were
For the fiscal year ended September 30, 2023, net cash used in operating activities was
The Company had a balance of cash and cash equivalents of
Conference Call and Webcast Information
SU Group will hold a conference call to discuss the Company's fiscal year 2023 results at 8:00 a.m. Eastern Time today. The conference call will be accessible on SU Group's Investor Relations website under "Events" at www.sugroup.com.hk, or by dialing 1-877-704-4453 (
About SU Group Holdings Limited
SU Group (Nasdaq: SUGP) is an integrated security-related services company that primarily provides security-related engineering services, security guarding and screening services, and related vocational training services in Hong Kong. Through its subsidiaries, SU Group has been providing turnkey services to the existing infrastructure or planned development of its customers through the design, supply, installation, and maintenance of security systems for over two decades. The security systems that SU Group provides services include threat detection systems, traffic and pedestrian control systems, and extra-low voltage systems in private and public sectors, including commercial properties, public facilities, and residential properties in
Forward-Looking Statements
Certain statements in this press release are forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks and uncertainties and are based on the Company's current expectations and projections about future events that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Investors can identify these forward-looking statements by words or phrases such as "anticipate," "estimate," "plan," "project," "continuing," "ongoing," "expect," "we believe," "we intend," "may," "should," "will," "could" and similar expressions. These statements are subject to uncertainties and risks including, but not limited to, the following: the Company's ability to renew contracts with recurring customers; the Company's ability to secure new contracts; the Company's ability to accurately estimate risks and costs and perform contracts based on the Company's estimates; the Company's relationship with the Company's suppliers and ability to manage quality issues of the systems; the Company's ability to obtain or renew the Company's registrations, licenses, and certificates; the Company's ability to manage the Company's subcontractors; the labor costs and the general condition of the labor market; the Company's ability to effectively manage inventories; the Company's ability to compete effectively; the Company's dependence on a small number of suppliers for a substantial portion of the Company's supplies; the Company's ability to successfully manage the Company's capacity expansion and allocation in response to changing industry and market conditions; implementation of the Company's expansion plans and the Company's ability to obtain capital resources for planned growth; the Company's ability to acquire sufficient products and obtain equipment and services from the Company's suppliers in suitable quantity and quality; the Company's dependence on key personnel; the Company's ability to expand into new businesses, industries, or internationally and to undertake mergers, acquisitions, investments, or divestments; changes in technology and competing products; general economic and political conditions, including those related to the security-related engineering services industry; possible disruptions in commercial activities caused by events such as natural disasters, terrorist activities, political, economic, and social instability, and fluctuations in foreign currency exchange rates, and assumptions underlying or related to any of the foregoing and other risks contained in reports filed by the Company with the Securities and Exchange Commission (the "SEC"), including the Company's most recently filed Annual Report on Form 20-F and its subsequent filings. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company's registration statement and other filings with the
(Financial Tables Follow)
SU GROUP HOLDINGS LIMITED CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands, except per share data) | |||||||||||||||||||||
For the years ended September 30, | Variances | ||||||||||||||||||||
2022 | 2023 | Amount | % | ||||||||||||||||||
HK$ | % | HK$ | % | US$ | HK$ | ||||||||||||||||
Revenues | 136,447,442 | 100.0 | 163,690,966 | 100.0 | 20,907,484 | 27,243,524 | 20.0 | ||||||||||||||
Cost of revenues | (97,220,327) | (71.3) | (115,648,013) | (70.7) | (14,771,182) | 18,427,686 | 19.0 | ||||||||||||||
Gross profit | 39,227,115 | 28.7 | 48,042,953 | 29.3 | 6,136,302 | 8,815,838 | 22.5 | ||||||||||||||
Operating expenses | |||||||||||||||||||||
Selling, general and | (30,539,155) | (22.4) | (36,805,428) | (22.5) | (4,700,985) | 6,266,273 | 20.5 | ||||||||||||||
Gains (losses) on disposal of | (1,862,704) | (1.4) | (485,957) | (0.3) | (62,069) | (1,376,747) | (73.9) | ||||||||||||||
Income from operations | 6,825,256 | 4.9 | 10,751,568 | 6.5 | 1,373,248 | 3,926,312 | 57.5 | ||||||||||||||
Other income (expenses) | |||||||||||||||||||||
Other income | 3,576,366 | 2.6 | 1,445,506 | 0.9 | 184,628 | (2,130,860) | (59.6) | ||||||||||||||
Finance expenses | (82,843) | (0.1) | (55,080) | (0.1) | (7,035) | (27,763) | (33.5) | ||||||||||||||
Other expenses | (96,028) | (0.1) | — | — | — | (96,028) | (100.0) | ||||||||||||||
Total other income, net | 3,397,495 | 2.4 | 1,390,426 | 0.8 | 177,593 | (2,007,069) | (59.1) | ||||||||||||||
Income before income tax | 10,222,751 | 7.3 | 12,141,994 | 7.4 | 1,550,841 | 1,919,243 | 18.8 | ||||||||||||||
Income tax expenses | (1,972,577) | (1.4) | (2,338,850) | (1.4) | (298,730) | 366,273 | 18.6 | ||||||||||||||
Net income | 8,250,174 | 5.9 | 9,803,144 | 6.0 | 1,252,111 | 1,552,970 | 18.8 | ||||||||||||||
Net income (loss) per share | |||||||||||||||||||||
Basic | 0.65 | 0.81 | 0.10 | ||||||||||||||||||
Diluted | |||||||||||||||||||||
Weighted-average common | |||||||||||||||||||||
Basic | 12,000,000 | 12,000,000 | 12,000,000 | ||||||||||||||||||
Diluted | 12,000,000 | 12,000,000 | 12,000,000 | ||||||||||||||||||
SU GROUP HOLDINGS LIMITED CONSOLIDATED BALANCE SHEETS | ||||||||||||
As of September 30, | ||||||||||||
2022 | 2023 | 2023 | ||||||||||
HK$ | HK$ | US$ | ||||||||||
Assets | ||||||||||||
Current assets | ||||||||||||
Cash and cash equivalents | 25,185,630 | 16,400,123 | 2,094,711 | |||||||||
Trade receivables, net | 23,696,180 | 34,978,153 | 4,467,596 | |||||||||
Inventories | 22,692,161 | 40,919,214 | 5,226,420 | |||||||||
Prepaid expenses and other current assets | 973,791 | 1,590,259 | 203,116 | |||||||||
Contract assets, net | 4,653,025 | 3,187,403 | 407,112 | |||||||||
Amounts due from related parties | 22,810 | — | — | |||||||||
Total current assets | 77,223,597 | 97,075,152 | 12,398,955 | |||||||||
Non-current assets | ||||||||||||
Property and equipment, net | 10,723,617 | 8,405,563 | 1,073,603 | |||||||||
Intangible assets, net | 229,880 | 144,879 | 18,505 | |||||||||
Goodwill | 1,271,160 | 1,271,160 | 162,359 | |||||||||
Deferred offering expenses | 1,571,254 | 3,853,500 | 492,190 | |||||||||
Operating lease right-of-use assets, net | 1,449,859 | 1,113,926 | 142,277 | |||||||||
Investment in key management insurance policy | 1,065,480 | 1,157,520 | 147,845 | |||||||||
Deferred tax assets | 1,242 | 1,418,419 | 181,168 | |||||||||
Total non-current assets | 16,312,492 | 17,364,967 | 2,217,947 | |||||||||
TOTAL ASSETS | 93,536,089 | 114,440,119 | 14,616,902 | |||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||
Current liabilities | ||||||||||||
Trade payables | 3,174,806 | 16,104,581 | 2,056,963 | |||||||||
Notes payables | 2,931,934 | 3,503,768 | 447,520 | |||||||||
Other payables | 2,365,624 | 2,633,447 | 336,358 | |||||||||
Amount due to a related party | 195,958 | — | — | |||||||||
Accrued payroll and welfare | 8,797,841 | 8,228,964 | 1,051,047 | |||||||||
Operating lease liabilities – current | 541,118 | 204,156 | 26,076 | |||||||||
Income tax payable | 2,446,138 | 1,058,040 | 135,139 | |||||||||
Contract liabilities | 27,225,278 | 22,748,443 | 2,905,553 | |||||||||
Total current liabilities | 47,678,697 | 54,481,399 | 6,958,656 | |||||||||
Non-current liabilities | ||||||||||||
Operating lease liabilities – non-current | 38,000 | 61,229 | 7,820 | |||||||||
Other payables – non-current | 1,433,190 | 996,069 | 127,223 | |||||||||
Deferred tax liabilities | 1,768,737 | 1,468,575 | 187,574 | |||||||||
Other liabilities | 956,388 | 1,008,306 | 128,786 | |||||||||
Total non-current liabilities | 4,196,315 | 3,534,179 | 451,403 | |||||||||
Total liabilities | 51,875,012 | 58,015,578 | 7,410,059 | |||||||||
Commitments and contingencies | ||||||||||||
Shareholders' Equity | ||||||||||||
Ordinary shares | 120,000 | 120,000 | 15,327 | |||||||||
Shares subscription receivables | (119,990) | (119,990) | (15,326) | |||||||||
Additional paid-in capital | 8,000,000 | 14,642,029 | 1,870,158 | |||||||||
Retained earnings | 32,085,133 | 41,782,502 | 5,336,684 | |||||||||
Total SU Group Holdings Limited shareholders' equity | 40,085,143 | 56,424,541 | 7,206,843 | |||||||||
Non-controlling interests | 1,575,934 | — | — | |||||||||
Total shareholders' equity | 41,661,077 | 56,424,541 | 7,206,843 | |||||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 93,536,089 | 114,440,119 | 14,616,902 | |||||||||
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SOURCE SU Group Holdings Limited
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