April 7th, 2021 saw a meteoric 44% rise in the price of shares of Bonso Electronics International Inc. (BNSO) stock overnight. The jump from USD$6.86 to USD$9.89 came a week after BNSO stock released its financial results for the 6-month period ending 30th September 2020. These reports were promising, indicating a net income of USD$0.20 million and net revenue of USD$8.1 million. The net income for the same 6-month period in 2019 reported a USD$0.59 million net loss and net revenue of USD$4.4 million. The less than stellar numbers from 2019 are reflective of the struggling market succumbing to the chokehold of the pandemic, compounded with the termination of their leasing contract with a third party for their Shenzhen factory.
How Did BNSO Thrive in a Struggling Economy?
The CEO, Mr. Andrew So, attributed much of the success of the latest reported numbers to the growth in online sales, primarily of electronic pet products and weighing devices. With so many people being home-bound because of the pandemic, online sales in general increased (tempered by the reduced spending power in the midst of a struggling global economy). However, as contactless became the norm and buyers moved their purchasing online, so too did businesses with their selling. With increasing competition in the market space and reduced spending power of consumers, Mr. So warned against being complacent with the growth they had experienced, even suggesting it may not be sustainable.
What Does the Future of BNSO Look Like?
With this in mind, BNSO stock has both expanded and improved their product line with the release of electronic bathroom scales, as well as improvements to their existing products. Following the cessation of their rental income from the leasing out of their Shenzhen factory, BNSO had anticipated acquiring the necessary government approvals to redevelop by September of 2020. At this time, however, they still predict another 12-months before the redevelopment of their Shenzhen factory will start. It is expected to take 3-4 years to complete, but they are hopeful it will prove to be financially lucrative in the longer run from the rental revenue generated. Until that time, BNSO stock has signed a short-term leasing contract to bridge that gap and capitalize on the rental income.