Penang MNCs

GEORGE TOWN: The improvement in orders seen in the electronics sector in Penang in the second quarter is expected to expand into the third and fourth quarters. This is a departure from four months ago when the state’s electronics companies had been mixed in their forecasts for the second half outlook when they were interviewed. The increased orders seen in the second quarter came largely from South Korea, Japan, the US, and European multinational corporations (MNCs).

This trend is expected to improve in the third and fourth quarters, as distributors and wholesalers are now stocking up to prepare for the festive season sales in the fourth quarter, according to industry players.

P.I.E. Industrial Bhd managing director Alvin Mui said the third and fourth quarters were traditionally the best quarters of the year.

“We anticipate that demand will continue to increase for the rest of the year, although it will not be able to match the result of last year’s corresponding period,” he said.

For the second quarter, P.I.E. Industrial posted RM8.5mil in pretax profit on the back of RM52mil in revenue, compared to RM6.9mil and RM46mil achieved respectively in the first quarter.

“The increase in demand is due to the higher orders from most of our existing customers in the US and Europe,” Mui said. “The electronic manufacturing services business has become more competitive during this economic downturn.”

Eng Teknologi Holdings Bhd chief executive officer Datuk Y.K. Teh said the global demand for hard disk drives was expected to grow by about 6.6% to 140 million units in the third quarter compared to the second quarter, according to US-based research firm TrendFocus.

“In the fourth quarter, the global demand is expected to increase by 3.8% to 145 million units over the third quarter,” he said. “The group is spending RM15mil to expand its hard disk drive operations in the country and overseas this year.”

GUH Holdings Bhd managing director Datuk Kenneth H’ng said the company’s month-to-month sales for the third quarter so far were as good as the corresponding period last year, just before the crisis started in October 2008.

“For such challenging economic times, we are not disappointed at all,” he said. “In fact, due to the growth in the second quarter, we are going to spend RM15mil to expand the production capacity of our plants in Penang and Suzhou for the second half of 2009.”

In the second quarter, the group posted RM20mil in pretax profit on the back of RM74mil in revenue, compared to RM4.7mil in pretax profit and RM53mil in revenue achieved in the first quarter of 2009.

For the first six months of 2009, the group generated RM25mil in pretax profit on the back of RM127mil in revenue, compared to RM2mil in pretax profit and RM133mil in revenue a year earlier.

“The orders for our printed circuit boards (PCBs) products in the second quarter, secured by the group’s operations in Suzhou, came largely from Korean and Japanese MNCs operating in China,” H’ng noted.

Globetronics Technology Bhd chief financial officer Ng Kok Choon said the group’s business for the third quarter was expected to improve compared to the second quarter.

“We have increased monthly production by 10% to about 30 million units of integrated circuits and light emitting diode dies for the third quarter,” he said. “The group also expects to receive more orders from customers in Japan, the US and China.”

Ng said Globetronics’ overseas sales “should comprise about 35% of the group’s revenue for 2009, representing a 10% to 15% increase from last year’s overseas contribution” with the MNCs and local factories in the country contributing the remainder.

For the second quarter ended June 30, Globetronics’ sales revenue improved by 38% to RM52mil from RM38mil, while its profit after tax improved 18-fold from RM200,000 to RM3.6mil.

“The improvement has to do with the customers’ replenishment programme to stock up the inventory,” he said.

Category: Economy, Penang News