SINGAPORE (May 12): Midas Holdings has announced earnings of RMB28.7 million ($5.8 million) for the first quarter ended March 31, nearly three times up from the RMB10 million posted in the same quarter a year ago on a surge in revenue.

Revenue for the quarter grew 31.3% to RMB398.4 million from RMB303.5 million a year ago, largely due to the inclusion of aluminium alloy stretched plates division’s revenue of approximately RMB76.6 million over the quarter.

For the aluminium alloy extruded products division, revenue grew by 6% to RMB320.8 million, which represented contributions of approximately 80.5% of total revenue as compared to 99.8% for the same quarter a year ago.

Overall gross profit margin was 27.9% versus 31% in 1Q16 due to the higher revenue from aluminium alloy extruded products, which commanded a higher gross profit margin and thus formed a lower proportion of 1Q17 total revenue as compared to the year before.

Gross profit margin for the aluminium extruded products division was 30% for 1Q as compared to 31.2% the year before, while gross profit margin for the aluminium alloy stretched plates division was 19.8%.

Other income grew by about RMB14.3 million due to an unrealised foreign exchange gain arising from US dollar-denominated medium term notes.

In line with the higher business volume over the quarter, selling and distribution expenses grew 24.3% to RMB20.8 million from RMB16.7 million in the previous year.

Administrative expenses increased by about RMB4 million, mainly due to higher depreciation expenses in addition to the amortisation of intangible assets of approximately RMB2.2 million.

Finance costs grew 53.5% to RMB40 million due to higher interest rates and the higher amount of outstanding borrowings as compared to the same quarter a year ago – where about RMB24.9 million of the interest on borrowings that were used to finance the construction of property, plant and equipment for the group’s new production lines were capitalised.

In the medium- to long-term, Midas expects the Chinese government’s One Belt One Road (OBOR) initiative to bring about significant opportunities for its export of China’s high-speed realway expertise to international markets.

In order to sharpen its competitive advantage, the group says it will remain focused on its diversification strategy such that it is able to expand its customer base and serve new industries in future.

Shares of Midas closed flat at 24 cents on Friday.