Yen's slide helps ease Semi-Tech costs
Consumer electronics-maker Semi-Tech (Global) will have lower research and development costs because of the sliding yen, even though price competition in Asia has intensified, its chairman said.
Speaking after the annual shareholders meeting, chairman James Ting said all purchases and sales were done in US dollars, so the region-wide currency slide in the past year had minimal impact on its operations.
'We have no currency exposure to Southeast Asia's problems,' he said.
'Semi-Tech has large research and development expenditures in Japan, so, in fact, a lower yen will help lower our costs.' In addition, he said competition had intensified as rivals had cut prices.
Mr Ting said the company would not be hurt by a cut in its parent's credit rating.
Earlier this month, US ratings agency Standard & Poor's cut the rating of Canada-based Semi-Tech Corp, the parent of both Semi-Tech (Global) and Singer Co, to single B-minus from single B-plus, with a negative outlook.
'The downgrading reflects anxiety about Asia, and it's not specifically directed at Semi-Tech,' Mr Ting said. 'We have no problems with our debt.' Almost all its debt was short-term, its annual report said.
It had about US$429.9 million in cash and equivalents as of January 31 and liabilities of $1.17 billion plus bank loans and payments of $465.2 million.
Semi-Tech also had $692.1 million in accounts payable against $656.6 million in receivables.
Long-term liabilities amounted to $236.2 million.
Minority shareholders attacked management after the meeting, charging that the company lacked focus and transparency.
Allan Lam, a director with Templeton Asset Management which owns 5 per cent of Semi-Tech through several investment funds, complained about the lack of information coming from the company.
'They are very vague about their plans,' Mr Lam said.
He said he had been trying to arrange a meeting with its management for weeks to no avail.
'Information should flow better, not just because it would help the share price, but because it also builds goodwill,' Mr Lam said.
Another investor said: 'The company just acquired a bunch of rag-tag investments . . . when the market was hot, they looked good, but now they're just rag-tag.' Mr Ting said Europe contributed 40 per cent of sales, while those to Southeast Asia made up 21 per cent. Sales to India and the mainland were 27 per cent of sales.
He said sales to Europe had 'surged' about 13 per cent last year because of low interest rates and the booming economies of Spain and Portugal.
