Taiwanese Connector Component Makers' Stock Prices Fall Sharply

Taipei, July 17, 2008 (CENS)--Taiwanese suppliers of connector components have seen poor profit performance due partly to severe loss via foreign exchanges and partly to skyrocketing prices of raw materials this year. Consequently, these companies' stock prices have fallen sharply, according to industry sources.

Uncertainty in Taiwanese stock exchange has forced institutional investors to cash in recent weeks, causing the bottom to fall out of a bearish market. As a result, stock prices of listed companies, especially connector component manufacturers, have seen their price-to-book ratios drop below unity.

Noteworthy is that Cheng Uei Precision Industry Co., Ltd., the leading supplier in the industry, however, is also managing to maintain its price-to-book ratio at only 1.36, as the firm's moderate sales performance in the first half of this year is not enough to push up the ratio, despite news about its new order from Apple for connectors used in new iPhone, which has fueled the popularity of its stocks to investors.

At the moment, a 45% of connector components companies are suffering lackluster stock prices, which are even lower than their net market value. Industry insiders explained that losses from foreign exchange in the first quarter and increasing costs of raw materials, like copper, in the second quarter have severely eroded their sales and profit performance, adding that maybe only launch of new connectors can help them to overcome the tough times.

They mentioned that price hikes of copper have widely limited cash flow, particularly stressing small-sized operations. If the situation continues, large-sized companies may also be threatened by cash flow problems, as their unattractive stock prices will probably hinder plans to raise capital from the public market in the future.