Hong Kong plastics firms report mixed results

HONG KONG (Oct. 27, 12:30 p.m. ET) -- Hong Kong-based compounder Ngai Hing Hong Co. Ltd. said it is seeing signs of recovery in its Chinese factories, while other plastics firms reporting financial results recently at the Hong Kong stock market were more cautious.

Ngai Hing Hong said its sales for the year ending June 30 plunged HK$460 million (US$ 59.3million), to HK$1.12 billion (US$140 million) and it recorded a loss of HK$20.7 million (US$2.67 million), compared with a modest profit in the year before, but the company argued that its markets are starting to rebound.

“Looking ahead to 2010, with the markets showing signs of recovery recently, the Group believes the worst of the financial crisis has retreated,” Ngai Hing Hong said in a Sept. 25 filing. “The Group is … cautiously optimistic about its prospects.”

The company, which employs about 670 workers in factories in mainland China and Hong Kong, said cost cutting measures and shifting some production to Hong Kong to take advantage of some tax laws helped to save money.

The firm also said it was focused on new product development in engineering plastics for electronics and kitchenware, and it was targeting Northern China for possible expansions.

Other Hong Kong-listed plastics firms were more cautious in assessing the market, however.

Macau-based injection molder and electronics contract manufacturer V.S. Industry International Group Ltd. said the beating taken by global electronics makers pushed sales down 13 percent to HK$1.19 billion (US$150 million).

The company said it closed its Shenzhen, Guangdong province factory in December, as plastic and mold making sales fell more than 18 percent. The firm said the assembly side of its business grew 20 percent as it expanded its services.

Another firm heavily involved in providing plastic and metal components to electronics firms, Eva Precision Industrial Holdings Ltd., said sales fell 6 percent in the year ending June 30, to HK$493.7 million (US$63.7 million).

The company said an expansion push it began prior to the financial crisis left it with excess capacity, but it contended that some of the investments, such as a mold development center in Shenzhen, would help capture more business from its Japanese office automation customer base who are looking for cheaper suppliers.

“Management believes that there are still ample opportunities for the continuous expansion of the group in this market,” the report said. “The Group was able to maintain a similar level of turnover for the six months ending 30 June 2009, as compared to that of the same period last year, despite the contraction in the office automation equipment market.”

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