APPLIED International's interim results have shown a strong earnings growth, largely due to profits from its sales subsidiary Quorum International, which contributed for the first time. The company has cash reserve of more than $240 million and will not have any need to raise funds in the near future. For the fiscal year 1993 brokerage Standard Chartered Securities is predicting a net profit rebound to $170 million. The company is expected to double its net profit in 1994. However, Standard Chartered stresses that this stock is a very speculative buy. Profit forecasts are based on the assumption that sales of Quorum products will register a 20 per cent increase per month to US$30 million. Therefore, Applied appears to be exceptionally cheap at a prospective 3.2 times 1994 earnings. However, earnings on industrial stocks often fluctuate as they are very dependent on market trends. Therefore, it is difficult for the company to maintain high earnings. For example, in 1988 the company's business was adversely affected by the collapse of World of Wonder and Coleco, two major US toy companies who were Applied customers. The company was established in September 1975 by Mr Raymond Hung, manufacturing calculators for Texas Instrumnets on an OEM basis and listed on the Stock Exchange of Hongkong in 1986. The OEM business has remained Applied's core business. Today Applied manufactures several products on a pure OEM basis. Products developed by Applied include LCD hand-held games and educational learning aids for Texas Instruments. These products are also sold in Europe with different language modules. The company is also a major OEM manufacturer of VCR Plus for Gemstar Development Ltd. But it is security products, manufactured for Quorum, which generates the biggest profit margin. Applied's production capacity has been fully booked up to the end of this year and the company expects a 30 per cent growth over the same period last year. The establishment of Quorum (a 70 per cent-owned subsidiary) in June 1991, marked the start of strong earnings growth. Quorum is a network marketing firm based in Arizona, principally engaged in the distribution of Applied security products. Like many of its local counterparts, Applied has become involved in China's real estate business. The company is a joint venture partner with a China party to develop a 25 million square feet site in Dan Shui and has another joint venture in Jiangmen involving land of one million square feet. Applied has also bought land for the expansion of its manufacturing facilities in Ping Wu.