ROBUST demand in the plastic moulding sector helped Tech Group Asia (TGA) to post sequentially higher second quarter earnings and also enabled Taiwanese firm Huan Hsin Holdings to post record net profit and sales for the full year 2003.

TGA, which acquired Omni Mold in October, reported an 84 per cent quarter-on-quarter jump in net profit for the three months ended December 2003 to $4.6 million, from $2.5 million in the quarter ended September.

Year on year, its Q2 pre-tax profit surged 58 per cent to $8 million on the back of a 27 per cent increase in sales to $39.6 million, but net earnings were just 15 per cent higher because the company took a greater tax expense this time round. Chief executive Neo Age Seng said TGA made higher tax provisions as it expects to pay a higher tax rate in Hong Kong and because a tax exemption position the company used to enjoy in China has expired. For the six months to December, TGA's net profit of $7.1 million was up 29 per cent from a year ago, while sales grew 28 per cent to $73.1 million. For Q2, earnings per share rose to 1.42 cents from 1.25 cents. Net asset value per share rose to 25.85 cents at end-December 2003, up from 23.08 cents at end-June 2003.

The company also paid off a substantial part of its loans during the period, reducing its bank borrowings to $20.3 million as at Dec 31, 2003, from $34.3 million as at June 28, 2003. For the same comparison dates, net gearing fell to one per cent from 14 per cent, resulting in a fall of net cash to $19.3 million from $23.9 million. No interim dividend was proposed.

Huan Hsin, meanwhile, said strong orders for notebook casings sent its full-year sales soaring 96 per cent to $335.8 million. Second-half sales exceeded the first half by 46 per cent as it achieved record notebook casing shipments amid the post-Sars recovery. Huan Hsin's net profit grew 38 per cent to $29.8 million and earnings per share rose to 9.04 cents from 7.2 cents.

The group yesterday also proposed a tax-exempt final dividend of 1.2 cents per share, the same rate as last year. It had earlier paid out an interim dividend of 0.8 cent per share.

Yesterday, executives from both TGA and Huan Hsin expressed optimism about the outlook for the electronics industry.

Mr Neo said there are signs of an improving operating environment, and the China market, where TGA has a significant presence, should continue to see strong growth. 'But as everyone is expanding capacity very quickly now, I believe that we should be more careful,' he added.

Huan Hsin managing director Hsu Cheng Chien said the group's commencement of operations at two new plants in China have helped it expand its capabilities.

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The Straits Times