SGOCO Group, Ltd.

Full-year 2013 revenue was $201 million, up 20.6% year over year from $166.7 million. Gross profit rose 27.6% to $15.9 million from $12.5 million, and gross margin improved to 7.9% from 7.5%. Operating income increased 70.4% to $11.1 million, net income increased 100.4% to $8.4 million, and basic/diluted EPS was $0.49 versus $0.25 in 2012. Cash and cash equivalents were $13.5 million, up from $11.5 million. Management did not provide quarterly or full-year 2014 numerical guidance, but said it expects to continue investing in new display solutions, e-commerce, brand building, and expansion into commercial and corporate clients.

David Xu framed 2013 as a transformation year, saying the company moved toward a smart, solution-based, application-specific portfolio for China’s display market. He emphasized a shift toward higher-margin products, broader distribution, stronger branding, and upgraded R&D, and said the company is close to announcing a strategic partnership with a leading e-commerce player in China. His tone was upbeat and forward-looking, with 2014 positioned as a year to build on those investments and launch new channels and products.

Johnson Lau focused on the full-year numbers and repeatedly cautioned that 4Q 2012 was unusually strong, making year-over-year quarterly comparisons less meaningful. He cited revenue of $201 million, gross profit of $15.9 million, gross margin of 7.9%, operating margin of 5.5%, net margin of 4.2%, and EPS of $0.49, highlighting margin gains from higher-margin product mix and lower sourcing costs. He also noted cash of $13.5 million, receivables of $48.1 million with 98 days outstanding, inventory of $7.0 million, and a current ratio of 6.2, explaining that receivables rose due to longer payment terms to retain distributors and inventory increased ahead of Chinese New Year demand.

The main analyst question asked for David Xu’s short-term and long-term strategic plan. He answered that 2014 priorities are higher-margin ASP products, new sales channels including e-commerce, stronger online visibility, and expansion into corporate clients such as Internet cafes and budget hotels with AIO products. He also said the company is shifting away from OEM and toward strengthening and potentially expanding its SCOGO-brand portfolio.