The Group recorded revenue of RM99.64 million and profit before income tax of RM6.22 million in this reporting quarter compared to RM97.70 million and RM8.1 million respectively, as recorded in the preceding quarter.

The higher revenue and lower profit before income tax for this quarter are due to higher demand for the product and higher cost of raw materials purchased in the preceding quarters.

Kinda too short in my opinion.

Remember, it was just back in Aug 2007 when Tong Herr reported net earnings of around 24 million per quarter..

now net earnings is only 6.235 million! ( Sorry it shud be 4.44 million!)

Cash flow showed an increse of 53.9 million highly impressive... but... this one needs to see and understand why the increase and not look at it blindly... and under the BS, there is an entry of 68.638 million under trades payable and this amount is so much more versus what it had over the same period last year of 1.481 million. Ahem..

Under posting 6.

anyway... another interesting note is that its Thailand plant recorded a revenue of 3.4721 million with a profit before tax of 521k.

Somehow.. i have seen in recent times, so many companies spending a lot of moola, setting up plants in Thailand, Vietnam or China but somehow I do not see much justifications from the earnings contributed by these plant expansions....

And the following screenshot of TongHerr's Balance sheet yet again highlights the incredible paltry earnings from its Thailand plant.

Now you might ask why the big fuss?

Consider the following newsclip posted back in May 2007 on Star Biz.

Wednesday May 30, 2007

Tong Herr expanding markets, raising capacity

By GOH EE KOON

PETALING JAYA: Following a positive financial performance in its first quarter (Q1), stainless steel fastener manufacturer and exporter Tong Herr Resources Bhd is looking towards expanding its markets and production capacity. 

Currently, its products - bolts, nuts and screws - are used in the construction, infrastructure, petrochemical, automobile, marine engineering and machinery industries, and about 90% of total production is exported. 

Europe is Tong Herr's largest market, taking 52% of total exports. A source from the company said while its largest market in Europe had been Germany, Tong Herr was keen to explore new markets, particularly in southern Europe, like Spain and Portugal. 

“There are not many stainless steel fastener makers in that area, unlike nearby countries like Italy and France” he told StarBiz. “And we would like to capitalise on the dearth of players there.”

Tong Herr also exports to Japan, Australia and Africa as well as the Asean region.

It is also seeking to improve exports to the US from its manufacturing facility in Thailand. “Our Thai plant brought in RM3.5mil operating profit (in Q1) and we are hoping to grow that,” the source said. 

Additionally, he added, since Tong Herr exported to the US directly from Thailand, “we don't need to pay a duty, unlike countries like Taiwan, China and Malaysia. In that sense, we enjoy cost savings and that could be why the Thai plant has seen growth in terms of turnover.” 

About 60% of the Thai facility's production goes to the US, and the remainder sold to the domestic and Asean markets. 

The source said Tong Herr was considering expanding production capacity at its Prai and Thai plants' next year.

It has purchased a 22,000 sq m plot next to its present factory in Penang, and will likely build a second facility there.

The source said Tong Herr invested RM20mil in the Thai plant, and might inject another RM20mil to expand it.

The company reported a 265% year-on-year increase in net profit for Q1 ended March 31 to RM18.9mil on revenue of RM111.36mil. 

Earnings per share for the period rose to 22.3 sen from 6.11 sen in the previous corresponding period. 

Ahem... invested already 20 mil.. and may inject another 20 mil!

LOL!

And you look at results... does it ever justify such an investment?

What's the ROI of such investment???

ps... here is how TongHer had been doing recently... i wonder if the market wud take its earnings too kindly.

Last edited on Tue May 27th, 2008 02:17 by Moolah

Tong Herr to invest RM70m on production

By Marina Emmanuel Published: 2008/05/27

TONG Herr Resources Bhd will spend RM70 million this year to boost its capacity in Malaysia and Thailand on strong demand for steel fasteners.

The Penang-based company will triple the production of nuts, bolts, screws and other threaded items at its Perai Free Trade Zone facility on mainland Penang by September, its chairman Tsai Ching-Tung said yesterday.

"We have earmarked RM45 million for machinery and the construction of a facility adjoining our existing one," he told reporters after the company's annual shareholders' meeting.

Tsai said Tong Herr will also invest RM25 million to expand its 7,000 sq ft Thai factory located at the Amata Nakorn Industrial Estate in Chonburi, adding that rising steel prices had very little impact on Tong Herr's bottom lines.

For its 2007 financial year ending December 31, Tong Herr recorded its highest ever revenue of RM487.67 million while net profit jumped 31 per cent to RM73.22 million.

The Group recorded revenue of RM99.64 million and profit before income tax of RM6.22 million in this reporting quarter compared to RM97.70 million and RM8.1 million respectively, as recorded in the preceding quarter.

The higher revenue and lower profit before income tax for this quarter are due to higher demand for the product and higher cost of raw materials purchased in the preceding quarters.