Memstar net profit up 3.8% to RMB65.7m in FY13

Driven by a 20% revenue spike.

Memstar Technology Ltd (Memstar) achieved a 20.0% year on year (yoy) growth in revenue to RMB220.9 million and a 24.0% yoy increase in profit before tax to RMB87.8 million for its full year ended 30 June 2013 (FY2013).

In line with the increased revenue, gross profit went up 29.9% yoy to RMB134.0 million for FY2013. The Group recorded a 4.7 percentage point improvement in gross profit margin for FY2013 on higher margins from sales of membrane applications for larger scale projects.

The increase in revenue was partially offset by higher research and development costs (to enhance product development and processes), higher finance costs on new bank loans drawdown. Despite that, profit before tax increased by 24.0% yoy from RMB70.9 million for FY2012 to RMB87.7 million for FY2013.

Income tax expense increased 209.7% to RMB22.1 million due mainly to deferred tax liabilities on temporary differences on accounting for service concession arrangements and tax incurred by subsidiaries on higher profits. As a result, net profit after tax for FY2013 improved 3.8% yoy to RMB65.7 million.

For its outlook, Dr. Ge Hailin, Chief Executive Officer and Founder of Memstar, commented, “As we embark on a new fiscal year, we are positive that our proprietary membrane technology, track record and operational capabilities will be able to raise our profile in the international membrane market. We shall make concerted effort to boost our global competitiveness by expanding our global OEM customer base.

The Group said it believes it will benefit from the strong demand for clean water on China’s urbanization trend and her advocacy on creating “beautiful China” with clean water being one of the foremost priorities under the concept. As China continues to tighten wastewater effluent discharge standards, the Group foresees higher demand for its membrane technology to treat both municipal and industrial wastewater.