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Time connects with Linkz
Posted on Wednesday, 25 March 2020 10:01
Time Interconnect Technology is acquiring networking cable supplier Linkz Cables from Links Industries for HKD 802.68 million (USD 103.55 million) to diversify its customer base.
Recent tensions between the US and China brought uncertainties to the global economy and the group said it regularly reviews its business in order to weather any disturbance from a potential trade war.
Over the past years, a limited number of major customers accounted for a significant portion of revenue.
Time’s biggest client represented 48.5 per cent, 39.4 per cent and 41.5 per cent of the group’s turnover for the years ended 31st March 2017, 2018 and 2019, respectively.
Similarly, the top five customers accounted for an aggregate 85.8 per cent, 87.9 per cent and 85.2 per cent of revenue for FY 2017, FY 2018 and FY 2019, respectively.
Although Time has taken on new accounts, it still intends to maintain a relationship with its existing clients and does not plan to reduce the scale of its business dealings.
However, one of its major customers, headquartered in China, has its mobile products and telecommunication equipment specifically targeted by the US and has subsequently been blacklisted, leading to a decline in orders.
Linkz has distinct customer base and its major customers are reputable multinational corporations with domestic presence.
While certain major clients are headquartered in the US, the business directly deals with and ships to local branches and those based in Asia Pacific.
As such, Linkz is unlikely to be materially affected by additional tariffs imposed by the US and it has a stable income stream that is not prone to significant fluctuation due to a deterioration in orders by a single customer.
The business had revenue of HKD 735.34 million in the six months ended 30th September 2019.
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