Highway Holdings Stock

Highway Holdings Limited operates as an integrated manufacturer of high-quality metal, plastic, electric and electronic components, subassemblies and finished products for original equipment manufacturers (OEMs) and contract manufacturers (primarily in Europe, Asia, and to a lesser extent, in the United States).

The company 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 of printed circuit boards.

Segments

The company operates through two segments, Metal Stamping and Mechanical OEM, and Electric OEM.

Metal Stamping and Mechanical OEM

This segment focuses on the manufacture and sale of metal parts and components.

Electric OEM

This segment focuses on the manufacture and sale of plastic and electronic parts, components, and motors.

Manufacturing

The company’s manufacturing business consists of various stages, such as tooling design and production; manufacturing parts made by metal stamping and plastic injection molding; mechanical and/or electric/electronic assemblies; and finishing, packaging and shipping.

Tooling Design and Production: The metal manufacturing process generally begins when a customer has completed the design of a new product and contacts the company to supply certain metal and plastic components to be used in the product. Generally, the company must design and fabricate the tooling necessary to manufacture these components in its tooling workshop that is located at its Shenzhen, China factory. In some instances, however, the customer already possesses the tooling necessary to manufacture the metal component and simply delivers the tools to the company. Customers will sometimes also pay the company to purchase and install the equipment necessary to manufacture the customer’s products. The company uses various computer controlled manufacturing equipment to efficiently produce high quality tools designed to produce a high quality product. Many of the metal parts manufactured by the company make use of progressive, multi-stage stamping techniques. In order to conduct and maintain this fully automated stamping method, tools and machines must be precisely fine-tuned and aligned to achieve the required quality standard and maximum efficiency.

The company also makes highly sophisticated plastic injection molds based on its customers’ orders and requirements in a manner similar to the company’s metal tool manufacturing process. The company maintains its ISO 9001 quality management system certification and its ISO 14001 environmental management systems certification.

Metal Stamping and Plastic Injection Molding: Following the completion of the tooling, the materials required for the specific product is selected and purchased. Often the customer specifies the materials to be used and the supplier. The completed tooling is fitted to the press, which is selected for its size and pressing force.

Finishing, Packaging and Shipping: After their manufacture, the parts and components are inspected for defects and checked with custom-built test gauges. Some components are then painted either at the company’s Myanmar facilities or by specially trained, third party spray-paint facilities. After being painted, the parts are baked at high temperatures in drying ovens before final inspection and packaging. Some parts are also screen printed by the company. Each of the parts, assemblies and products is then inspected, packaged to the customer’s specific requirement and delivered to the final quality audit department for final quality inspection, which is conducted on a random sample basis.

Customers and Marketing

The company’s sales are generated from customers primarily located in Hong Kong/China, Europe, the United States/Mexico, and other Asian countries. Most of the company’s customers for its components and subassemblies generally are themselves manufacturers. The company’s products are sold primarily to European owned companies to be used in finished goods produced by customers at their own manufacturing facilities in China and Europe. However, the company also has in the past produced finished products, such as light fixtures, which it sold to its customers.

The company markets its services through existing contacts, word-of-mouth referrals and references from associated or related companies of the customers, as well as attendance at some trade shows. During the past few years, the Company has employed a number of foreign sales persons to complement the activities of its officers and in-house sales personnel. The Company has, from time to time, commissioned sales agents in Mexico, U.S. and Germany. These sales agents typically receive an expense allowance and an on-going commission for sales made by the Company to customers introduced by the agents. Due to the international nature of senior management, the Company believes that it has been able to bridge the cultural, language and quality perception gaps that concern certain German companies when dealing in China.

Strategy

The key elements of the company's strategy are to capitalize on and leverage its manufacturing strength; upgrade equipment-increased automation; maintain customers; maintain production quality; and operate as a socially responsible company.

Seasonality

The first calendar quarter (the last quarter of the company’s March 31 fiscal year) is typically the company’s lowest sales period because, as is customary in China, the company’s manufacturing facilities in China are closed for one to two weeks for the Chinese New Year holidays. In addition, during the one month before and the one month after the New Year holidays, the company normally experiences labor shortages, which further impact the operations during this period.

Government Regulation

In addition to enhanced governmental environmental regulations, the company has to comply with environmental laws applicable to its customers, such as the regulations of the European Union and Japan known as the Restriction on Hazardous Substances (known as ‘RoHS’) and the European Union’s Regulation for Registration, Evaluation, Authorization and Restriction of Chemicals (known as ‘REACH’). The company sells its products to customers in Hong Kong/China, Europe, and the United States/Mexico.

History

Highway Holdings Limited was founded in 1990. The company was incorporated in 1990 as a limited liability international business company under the British Virgin Islands International Business Companies Act, 1984.