Taiwanese Hand Tool Makers Eyeing Further Business Boom

Taipei, Sept. 26, 2005 (CENS)--Taiwanese tool suppliers are looking forward to more booming sales in the fourth quarter of the year after running their factories at nearly full capacity in the third quarter, due mainly to the upcoming Christmas shopping season and the rebuilding efforts brought about by Hurricane Katrina on U.S. Gulf Coast cities.

Basso Industry Corp., currently the world's No. 1 supplier of pneumatic nailers, estimates that the effects brought about by the two factors will be felt next quarter. Recent news that the business opportunities generated by the rehabilitation in the U.S. cities will last for two years has inspired foreign institutional investors, including Salomon Smith Barney, to aggressively buy Basso's shares. Salomon Smith Barney also raised the target price of Basso's stock to NT$92 (US$2.78 at US$1:NT$33) from NT$86 (US$2.6).

Basso reported pre-tax earnings of NT$109 million (US$3.3 million) in August alone, bringing its total pre-tax earnings for the first eight months of the year to NT$929 million (US$28 million). The August earnings represented a 118% gain from the comparable period of last year.

Chiu Ting Machinery Co., Ltd., Chang Type Industrial Co., Ltd., and Mobiltron Electronics Co., Ltd. Are running production facilities at full capacity to meet orders for the Christmas shopping season. Chiu Ting's executives also pointed out that the hurricane-hit cities are full of wooden houses, offering tool suppliers lucrative business opportunities.

Local tool suppliers think the business opportunities stemming from the reconstruction of the devastated cities will emerge only after relief work ends, and also believe that the opportunities will last for at least two years.

Taiwan's tool suppliers had a hard time in the first half of this year, mostly because of factors including material price surges and the appreciation of the New Taiwan dollar. Some of them pointed out that the situation was compounded by competition pressure from mainland Chinese suppliers, which lured a huge number of orders from Taiwanese suppliers.

The booming resurgence of the tool business has strained production capacity until November this year at Rexon Industrial Co., Ltd., which is reportedly the world's largest supplier of desktop woodworking machines.