TWO TRENDS are positive for homegrown equipment relocation specialist, Chasen: First, the robust outlook on semiconductor demand.  Second, escalating labor cost in coastal Chinese cities is making factories move inland.

Chasen is a niche logistics player for relocating sophisticated equipment, such as those used in wafer fabrication, IFT LCD panel production, chip testing and assembly, solar panel and pharmaceutical manufacturing.

”We command about 80% of the Singapore market for relocation of sophisticated equipment,” said Mr Eric Ng, Chasen’s independent director who spoke at CIMB’s investor meeting on Tue.

Given its position, the boom in global demand for semiconductor sales this year is auguring a strong set of results for Chasen’s financial year ending Mar 2011.

On the same day, iSuppli upped its forecast for this year’s global semiconductor sales growth to 35.1%, up from its previous forecast of 30.9% issued in May.

Rising prices, inventory buildups by manufacturers in response to strong consumer demand for electronic products and richer chip content in key electronic products like smart phones and advanced LCD-TVs were cited by the market research agency for the electronics industry as factors contributing to this year’s semiconductor boom.


  

For example, in May, it formed a JV with Sinotrans Air Transportation Development, a PRC-listed airfreight and delivery agency with a network of 85 branches and 300 logistics outlets in China.

In Feb, it entered a joint venture with its Shanghai engineering and fabrication subcontractor to break into the PRC construction market.

CIMB has a ‘Buy’ call on Chasen with target price at 56 cents.


Below is a summary of questions raised by investors at the CIMB meeting, and Mr Ng’s replies.

Q: Why is there a need for specialist relocation services?

Manufacturers cannot afford accidental damage to their equipment.  Firstly, it is difficult to retune damaged sophisticated equipment.  Secondly, replacement takes 6 months.  Equipment cost can be covered by insurance, but they cannot afford 6 months of production downtime.

Chasen's FY10/09 gross profit breakdown.

Data forecasts by iSuppli on 3 Aug 2010.

Chasen is always targeting up and coming industries like solar power currently, said independent director Eric Ng. Photo by Sim Kih