Rechi aims for world No.1 manufacturer of compressor in three years

Taipei, June 15, 2004 (CENS)--Rechi Precision Co., Ltd., Taiwan's largest and the world's fourth-biggest manufacturer of air compressors, is expected to see annual output exceed 10 million units to challenge the world's top-three manufacturers in the next three years.

Rechi Precision currently concentrates on the production of scroll compressors, refrigerant rotary compressors, reciprocating- and screw-type air compressors, and golf club heads.

The company estimated it would see annual shipment exceed five million compressors this year and receive orders for seven million units next year.

Seeing the influx of orders, over the past several months the company has been making all-out efforts to boost production capacity by cooperating with mainland Chinese large-sized manufacturers of home appliances, including Haier Group.

The company said it would cooperate with Haier to set up a joint-venture compressor assembly plant in Qingdao, Shangdong Province by the end of this year. With a paid-in capital of US$15 million, the joint venture with Haier will have an initial output of 2.5 million compressors. In three years, the plant will see annual output reach five million units.

In addition, the company has recently broken ground for a joint-venture plant of compressor pumps in Huizhou, Guangdong Province with mainland's TCL Group. The plant is expected to begin pilot production sometime in December this year.

If the construction of these joint-venture plants goes smoothly, Rechi Precision will see annual output mount to between 7. 5million and eight million compressors next year.

At present, Japan's Matsushita Group ranks No.1 in the world's compressor industry with annual output hitting 11 million units, followed by South Korea's LG Electronics with 10 million units, and Hitachi Shanghai with seven million units. Rechi Precision said it would see annual shipment amount to 5.5 million units this year, standing firmly as the world's No.4 producer in this sector.

Rechi Precision President Lee Wen-chin said his company currently has three production lines, each with an annual output of 1.5 million compressors. If these production lines make maximum production capacities, the company will be able to see annual output reach 1.9 million units in each production line.

The company boasted it is facing glut of orders because the world compressor market is encountering a shortfall of four million units. To meet the excessive demand, the company is making all-out efforts to expand production capacity in the mainland.

With expected earnings per share targeted at NT$3.5 (US$0.1 at US$1:NT$33.5) this year, the company has seen its share price hitting an all-time high over the past two years because of the buying spree of long-term stock players.

Rechi Precision boasted it saw combined shipments reach 554,000 compressors in May, up 47% from the corresponding period a year earlier. The company posted NT$720 million (US$21.49 million) in combined sales in May, a record monthly high and up 74% from the same month last year.

The company saw combined shipment and sales amount to 2.622 million units and NT$3.05 billion (US$91.04 million) in the first five months of this year, up 43.45% and 52.05%, respectively, from one year earlier.