Highway Holdings Limited is a manufacturing company that produces a wide variety
of high-quality products mostly for large, global original equipment manufacturers
— from simple parts and components to sub-assemblies and finished products.
The Company’s administrative offices are located in Hong Kong, and its
manufacturing facilities are located in Shenzhen in the People’s Republic
of China. The Company purchased a 75% equity interest in Kayser Myanmar Manufacturing
Company Ltd. (Kayser Myanmar), a company registered to operate as a foreign
company in Myanmar. In 2017, the Company increased its ownership interest in
Kayser Myanmar to 84%. Kayser Myanmar currently assembles products for the Company
at its product assembly facility in Yangon, Myanmar.
The Company is a fully integrated manufacturer of high quality metal, plastic,
electric and electronic components, subassemblies and finished products for
OEMs and contract manufacturers (primarily in Europe, and to a lesser extent,
in the United States).
The Company currently manufactures and supplies a wide variety of high quality
metal, plastic and electric parts, components and products to its OEM clients,
which assemblies and components are used by the Company’s customers in
the manufacturing of products such as photocopiers, laser printers, print cartridges,
electrical connectors, electrical circuits , vacuum cleaners, LED power supplies,
stepping motors, pumps for dishwashers, and other washing machine components.
As part of its manufacturing operations, the Company assists customers in the
design and development of the tooling used in the metal and plastic manufacturing
process and provides a broad array of other manufacturing and engineering services.
The manufacturing services include metal stamping, screen printing, plastic
injection molding, pad printing and electronic assembly services. The electronic
assembly services include chip on board assembly, IC-bonding, and SMT automatic
components assembly of printed circuit boards. Because it is able to provide
these services, the Company eliminates the need to outsource these needed functions,
and the Company is better able to assure product quality, control overall manufacturing
costs and provide timely product delivery, all of which management believes
is essential to maintaining, expanding and increasing the Company’s customer
base. The Company believes its success as a supplier to respected multi-national
companies is mainly due to: (i) its international management culture which includes
German, Canadian, Chinese and Myanmar nationals; (ii) its comparatively low
operating costs; (iii) its ability to consistently manufacture the type of high
quality products required by the Company’s targeted customers; (iv) its
expertise in manufacturing these products in the required quality at a reasonable
cost; (v) the breadth of its manufacturing capabilities, and (vi) its engineering
design and development capabilities (which it uses to assist its customers to
design their products).
The Company has continuously tried to strategically align its manufacturing
operations with the needs of its major customers to attract new OEM customers
and retain its existing customers. For example, the Company is capable of manufacturing
and assembling a wide variety of complex products that require metal, plastics
and electronics manufacturing capabilities. In order to distinguish itself from
the many other smaller manufacturing operations in Shenzhen, the Company manufactures
more complex parts, components and entire products that utilize more of the
Company’s vertically integrated technologies. Because the Company has
the ability to design, manufacture and assemble complete functional assemblies
containing metal, plastic and electronics, the Company is able to manufacture
complete customized products for its customers.
During the past two decades, the third-party contract manufacturing industry
has experienced major increases as manufacturers worldwide have increasingly
outsourced the manufacture of some or all of their component and/or product
requirements to independent manufacturers. The benefits of using contract manufacturers
(OEMs) include: access to manufacturers in regions with low labor and overhead
cost, reduced time to market, reduced capital investment, improved inventory
management, improved purchasing power and improved product quality.
The Company first commenced its metal stamping operations in China in 1991.
At that time, the Company gained a significant cost and logistical advantage
over other manufacturers by basing its manufacturing facilities in Long Hua,
Shenzhen, China, less than 50 kilometers from Hong Kong. During the past few
years, however, many other manufacturers have located their facilities in Shenzhen
and in other similar low-cost areas in China and Asia. As a result, the Company
now faces significantly more competition as a manufacturer of OEM parts. The
Company has responded to the increased competition by restructuring its operations
and by trying to move from manufacturing low margin, low-cost individual parts
to manufacturing higher margin, more expensive components, subassemblies and
even complete units for its customers.
Initially, the Company manufactured high-quality metal parts, mostly for Japanese
customers. More recently, the Company has been manufacturing high-quality parts
and components for European (primarily German) companies. The Company has remained
flexible with respect to the types of products that it manufactures as well
as location of its customers in order to capitalize on market changes. During
the past several years, more than two-thirds of the Company’s revenues
are derived from its European customers.
4.53% 