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2002-9-19 09:31:00 a.m. HKT, XFNA
Topsearch H1 sales down due to PCB ops pricing presures; strong H2 demand seen
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HONG KONG (AFX-ASIA) - Topsearch International (Holdings) Ltd (2323.HK)
said sales in the six months to June fell by 5.3 pct due to heavy pricing
pressures on its PCB division, but added it expects stronger demand to offset
this in the second half.
The company sees demand for its products ""to soar"" in the third and
fourth quarters, which will boost sales and shift its product mix to the
higher layered sector significantly.
In the first half, the company reported a net profit of 46.505 mln hkd,
down from 48.074 mln a year earlier, while sales fell to 508.005 mln hkd from
536.694 mln.
Output rose by 10.3 pct but average selling price fell by about 14.2 pct,
the company said in a statement.
Although the cost of materials, which accounts for 48 pct of its total
production costs, fell by 29.5 pct, total production overheads which account
for 52 pct of production costs rose in line with the increase in output
levels.
The overall gross profit margin therefore remained stable at 27.2 pct, it
said.
As of end-June, the company's gearing ratio stood at 26 pct, down from 26.
7 pct at end-December.
The company said that while sales are seen improving in the second half,
margins will be squeezed by price erosion, a situation which will continue
until excess capacity is cleared.
In the third quarter, the company is seeing a strong rebound in the
computer and peripherals industry and expects utilisation rates to have risen
in the period.
Topsearch said it is also working to develop new business with large
electronic companies in various markets, especially those with head offices
in the US, Japan and South Korea, and with factories in China or other low
cost production centres.
It is currently in talks with large potential accounts for qualified
vendor status in the near future.
rachel.arputharajoo@afxnews.com
ra/tr
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