SINGAPORE (Apr 30): Serial System, the distributor of electronic components and consumer products, reported earnings nearly doubled to US$5.2 million ($6.9 million) in 1Q18 compared to US$2.7 million in 1Q17.

Total revenue grew 22% to US$405.2 million, crossing the US$400 million mark for the first time in any quarter since the company’s inception.

The electronic components distribution business generated sales of US$386.5 million, 23% more than in 1Q17, on higher contributions from all markets except South Asia, which faced keen price competition and weak demand for certain product lines.

Revenue from consumer products distribution rose 3% to US$17.6 million on higher demand in Malaysia and Indonesia.

Overall gross profit margin edged up from 7.2% in 1Q17 to 7.7% in 1Q18, the highest in nearly three years, as the group focused on more profitable electronic components and consumer products and higher-margin customers.

Besides improvements in overall revenue and profit margins, the group’s 1Q18 earnings also got a boost from a US$1.6 million currency translation gain and higher finance income.

It also benefited from a US$1.2 million write-back of an earlier provision for inventory

The group is pushing ahead with plans to spin off its 91%-owned electronic components distribution subsidiary Serial Microelectronics (HK) (SMHK) via a listing on the mainboard of the Stock Exchange of Hong Kong.

Shareholders of the company voted in favour of the proposed spin-off at an extraordinary general meeting held on Saturday.

Listing SMHK will enable it to raise funds to support its own distribution business in China and Hong Kong, says Serial System. The business currently accounts for about 70% of the group’s total revenue.

Dr Derek Goh, the group’s executive chairman and CEO, says: “We are grateful to shareholders for supporting the proposed listing of SMHK in Hong Kong. This exercise will offer SMHK independent access to capital to augment its position in the burgeoning China market and free up Serial System to channel resources to businesses elsewhere in Asia.”

As at 11.20am, shares in Serial System are up 0.5 cent at 17 cents.