Published February 7, 2009

More firms sound profit warnings

By JESSICA YEO

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MORE companies issued profit warnings yesterday, for the quarter or financial year ended December 2008.

The list includes Asia-Pacific Strategic Investments, China Dairy Group, Jadason Enterprises, Kinergy, Kyodo-Allied Industries, Pacific Healthcare Holdings and Sinostar PEC Holdings.

Similar to other companies which have issued profit warnings earlier this year, the global economic downturn was cited as a leading reason for the losses or weaker earnings.

Three companies said that they saw a drop in demand for their products and services due to the financial crisis and resulting recession.

Kinergy warned of a loss for the full year ended Dec 31, 2008. The credit crunch caused a significant drop in demand for its electronic manufacturing services and proprietary equipment business division. The slowdown also led to over-capacity in its newly expanded factory.

Sinostar warned of lower sales and profits for FY2008 due to a fall in demand. The group said that the uncertain global economic climate caused a slowdown, which affected demand for its products and also their selling prices.

Also affected by soft demand is Jadason Enterprises, which expects a loss for fourth quarter 2008 mainly due to weak demand for its printed circuit board (PCB) drilling and PCB mass lamination services.

Two companies saw lower profit margins due to higher costs.

Asia-Pacific Strategic Investments expects a loss for its second quarter ended Dec 31, 2008, due to a decrease in revenue and lower gross profit margin as a result of higher costs from the construction of infrastructure, as well as the slowdown in sales. Also, higher operating expenses were incurred in its effort to secure deeper market penetration.

Kyodo-Allied Industries warned of a loss for the half year ended December. The group attributed this to lower profit margins due to high material costs and intense market competition. Kyodo-Allied also said that a significant decline in fair value of available-for-sale financial assets resulted in an impairment loss of $230,000.

Pacific Healthcare is expecting a full-year loss for FY2008, as the results for the second half will be affected by a material provision for the impairment of its investment in a subsidiary and its related operations in China, it said.

China Dairy Group also expects to record a loss for its full-year and fourth quarter ended Dec 31, 2008, but did not give reasons.