Ken Wu: Strong contribution expected from 3 newly-acquired disc manufacturers. Photo by Leong Chan Teik

INCREASINGLY PROVING to be a turnaround story, Anwell Technologies ended Q3 ended Sept ?07 with its third consecutive quarter of sales and profit growth.

The various businesses of Anwell Group now include manufacturing DVD discs in China. The OLED equipment business will make its first sale next year.

Anwell's current and only business of making equipment for manufacturing optical discs is on the upswing, as reflected in the Q3 results:

Boom in sale of DVDRs

Umedisc in Hong Kong, and Media Delta and Metroworld in China.

They will contribute two months (Nov and Dec) of their performance to Anwell?s top and bottom line for FY ?07.

Franky Fan: Anwell has significant cost and efficiency advantage.

With the acquisition, which was paid for through the issue of about 1.33 billion new Anwell shares at 6 cents a share and HK$50 million in non-convertible notes, Anwell is vertically integrated: not only does it manufacture equipment that makes optical discs, it also manufactures optical discs themselves.

And it does so from China, where the relatively low operating costs will enable it to perform better than its Taiwanese rivals.

Anwell's rising operating profit: HK$2.3 m (1Q07), HK$3.3 m (2Q), HK$19 m (3Q)

Here are highlights of the Q&A session analysts had with Ken Wu after the Q3 results were announced:

Q: For the disc-manufacturing business, is Q4 the highest production quarter in the year?
A: Usually, Q3 and Q4 are the best because the consumer market is the best during the Christmas season. The order book for our disc manufacturing business has been very good. And because of the scale of our group, our purchase price for polycarbonate and some other key materials are lower compared to a year ago. So, the gross margin for this disc business has improved compared to a year ago.

Q: Is Anwell affected by the rise in oil price?
A: No. Oil price is one of the factors that influence the price of optical-grade polycarbonate but it is not the most important factor. We are one of the biggest customers of suppliers in HK and China, and we are getting better terms and prices.

A: Our capacity utilization now is more than 90%. To us, that?s almost 100% because some machines are going through modification. 

If we expand capacity, we target to have a return period of two years: Every dollar we put in will have to come back within two years.

Q: Can you comment on the stock purchase by 3 directors recently?
A:  We ? the CEO, COO and myself ? are major shareholders and we are of the view that the current stock price doesn?t reflect the true value of the company. Instead of investing in property or other shares, we think our company is a good investment for ourselves.

 

In Dongguan, China: Anwell's manufacturing plant for optical disc equipment