Demand for computer chips boosts VST earnings

PUBLISHED : Tuesday, 20 June, 2006, 12:00am
UPDATED : Tuesday, 20 June, 2006, 12:00am

VST Holdings, which distributes computer hard disk drives and chips, said profit more than quadrupled last year on strong demand for its products.

Net profit for the year ended March soared to $111.76 million from $27.42 million in the previous year while turnover rose 32.28 per cent to $3.7 billion.

The company proposed to increase the final dividend to 4.5 cents per share from 0.7 cent a year earlier.

Gross profit margin widened by 2.3 percentage points to 4.6 per cent as rising demand for AMD computer chips exceeded supply, chairman and chief executive David Li Jialin said.

VST sold 1.3 million units of AMD computer chips in the year to March, about 6 per cent of the whole market. AMD chip sales accounted for 24 per cent of turnover.

VST, the largest distributor of Seagate and Maxtor hard disk drives on the mainland, sold 6.5 million sets of hard disk drives during the year, accounting for about 30 per cent of the market.

Mr Li said the company planned to distribute computer parts to Southeast Asian markets including Thailand and Singapore during this financial year, and it had hired some experts to start working on the moves.

He said the firm's cash flow was $219 million, which could cover two months of spending, while gearing ratio was only 25 per cent.

VST shares fell 1.57 per cent yesterday to close at $1.25.