New orders boost industry

Some electronics and electric appliance makers have put their workers on overtime to complete orders for third-quarter delivery as foreign buyers grow more optimistic about a speedy economic recovery.

"Demand for electric appliances from China and Asean is increasing, while many other countries have placed higher orders for electronic goods," Katiya Greigarn, chairman of the Federation of Thai Industries' Electronics and Electrical Appliances Industry Club, said last week.

The economic stimulus packages, primarily in the US and China, have started to bear fruit, he said.

Exports dropped only slightly last month compared to the collapse of 30-40 per cent in the first quarter.

China has recently had banks extend loans for such electric appliance purchases.

Henry Shieh, president of Delta Electronics, a producer of electronics for telecommunications and industrial applications, recently confirmed the outlook.

As orders have returned, Delta's second-quarter net profit should not be lower than the first quarter, he said, but added that he was unsure if the situation would be stable.

The Board of Investment recently reported that orders for electric and electronics products - such as hard disk drives, circuit boards, air-conditioners, micro-wave ovens, washing machines, and TV sets - had increased by 80 per cent last quarter, particularly in such major markets like the Middle East, Asia, Russia and Eastern Europe.

The electronics industry was one of the hardest hit by the global economic downturn. Export of electronic goods plunged by 32.4 per cent in the first quarter, while exports of electric appliances crashed by 30.4 per cent.

As these exports accounted for 25 per cent of the country's total exports, they were acting as a heavy drag on economic growth this year.

Delta, and two other listed companies - Hana Microelec-tronics and Cal-Comp Electronics (Thailand) - reported plunges in first-quarter net profits of 36 per cent, 55 per cent and 83.22 per cent, respectively, from the corresponding period last year.

Brokerages have been bullish on the stocks' outlook given the pick-up in demand.

An analyst at UOB KayHian Securities (Thailand) said electronics companies' second-quarter earnings are expected to surpass first-quarter results.

Charuek Hengrasamee, president of the Electrical and Electronics Institute, believes that second-quarter exports of electrical and electronics products will show positive signs.

However, the UOB KayHian analyst said the second-quarter revival in orders could be temporary, as it was for some equipment, not the entire industry. This view is supported by the 0.4-per-cent contraction in US retail sales last month. "If this is sustainable or not would become clearer in the third quarter," he said.

The FTI's Katiya said that despite the recent improvement, the industry club is convinced that the industry's exports would drop by 20-25 per cent this year due to the significant slump in the first quarter.