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COMMUNICATIONS, TECHNOLOGY & TRANSPORT
Electronic products on an upturn due to rising demand Growth comes on the back of increasing market for more gadgets with more functions By ARANEE JAIIMSIN Soaring demand for multi-functional consumer electronics products from the second half of 2005 was expected to boost the performance of listed companies in the electronic components sector this year.  In the first half of last year the semiconductor business was in a down cycle, but improved healthily in the second half due to rising demand for chips used in mobile phones, MP3 players and digital cameras.In addition, several consumer electronics products are now being designed with more functions. For example, new models of mobile phones can be used as video recorders, MP3 players and digital cameras as a result of technological upgrades, leading to rising demand for chips to increase memory capacity. The average one-year total shareholder return (TSR) generated by the nine companies in the sector in 2005 was 32.1%. Only three companies -- Magnecomp Precision Technology Plc (MPT), Team Precision Plc (TEAM) and Hana Microelectronics Plc (HANA) -- performed better than the average.  MPT paid the highest one-year TSR for 2005 of 74.6%, followed by TEAM and HANA, respectively. MPT's one-year TSR was extraordinary because its financial performance in 2005 was mostly the result of amerger between the data-storage business of Singapore-based Magnecomp International Ltd and KR Precision Plc, which had the poorest one-year TSR in 2004. MPT posted a 28.4% three year TSR and 1.9% over five years. Executives said the company would not be able to pay dividends this year because it was still in the red with an accumulated loss of 248.59 million baht at the end of 2005. The poorest-performing company in terms of one-year TSR was SVI Plc at -18.3%, but it returned a good 11.4% over three years, and a low of -7.3% over five years. SVI posted a total revenue for 2005 of 4.34 billion baht with a net profit of 256.66 million baht in 2005. Poe Lothongkam, chief executive of SVI, said sales in 2005 dropped by 9% compared with 2004 as SVI shifted to higher value-added products that would start to show outstanding results in 2007. In addition, the company did not pay dividends in 2005 partly because of a 60 million baht investment in constructing a third plant in China, said Mr Poe. Richard D Han, chief executive of The poorest-performing company in terms of one-year TSR was SVI Plc at HANA, said the microelectronics business -18.3%, but it returned a good 11.4% had been consistently strong throughout over three years, and a low of -7.3% over the previous year driven by demand for telecom infrastructure, touch pads for five years. SVI posted a total revenue for 2005 of laptop computers and MP3 players, computer mouse parts and RFID (radio frequency identification) cards and readers for access controls. Mr Han added that since second quarter of 2005 the semiconductor business had been recovering from its down cycle, thanks to high demand for chips used in mobile phones, MP3 players and digital cameras. HANA, the sector's largest company in terms of market capitalisation at 21.360 billion baht, recorded a 46.5% one-year TSR, 32.8% for three-year returns and 13.4% over five years. The company reported a total revenue for 2005 of 12.35 billion baht, increasing from 11.23 billion baht in 2004. Despite increasing revenue, the company's gross margin last year decreased by 1% from 23% due to higher material costs. Still, the change in depreciation policy from five to seven years helped increase the margin by 1%. According to an analyst from United Securities Plc, several industrial research institutes in the United States have forecast world wide IC industry growth of 8-10% from the expansion rate in 2005, and that demand for wireless devices and microelectronic equipment such as mobile phones and MP3 players would increase by more than 15% year-on-year. The analyst said that the appreciation of the baht could curb stock price growth in the electronic components sector, because 80-90% of these companies realised their costs and revenues in foreign currency. However, companies in the sector would not be affected by current political uncertainties as most of their clients were not in Thailand, the analyst added.
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