China Kunda Technology swings to loss for fiscal 3Q as plastics sales decline

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China Kunda Technology reported on Monday it swung to a net loss of HK$286,000 (S$49,340) for its fiscal third quarter from a year-earlier net profit of HK$648,000 amid declining sales in its plastics business and start-up costs for its shift toward the furniture business.

Revenue for the quarter ended 31 December was HK$13.28 million, down 13.7 percent on-year, it said in a filing to SGX on Monday after the market close.

The revenue fall was due to sales declines in the in-mould decoration (IMD) and plastic injection parts business, it said, noting those segments mainly supply to manufacturers in China who supply consumer electronics and electrical appliances to domestic and international markets.

Those manufacturers were hurt by a combination of poor market sentiment in China and a decrease in export sales to the U.S., the filing said.

The IMD and plastic injection parts business posted revenue of HK$11.93 million, down 22.5 percent on-year, it said.

The new furniture business began operations in December, contributing revenue of HK$1.3 million and gross profit of HK$100,000 in the quarter, but due to initial operating expenses, including marketing and administrative expenses, the segment posted a third-quarter net loss of HK$500,000, China Kunda said.

For the nine-month period, it reported a net loss of HK$1.27 million, compared with a year-ago net profit of HK$153,000, on revenue of HK$29.26 million, down 19.4 percent on-year.

In its outlook, the company was cautious, noting its current business is mainly dependent on electronics manufacturers.

“With the continuing uncertainties over the PRC economic condition and weakening demand in the international markets, the manufacturing industry in PRC faces the challenge of slowing demand and rising cost,” it said. “The group does not expect significant improvement in our IMD and Plastic Injection business.”

It added that the furniture business only recently began operations and will need time to gain traction and market share.

“The group is likely to continue incurring losses in the short-run,” China Kunda said.

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