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SCMP Reporter

THE name MTC Electronic Technologies Co may be unfamiliar, but if its grand plans in China's telecommunications market mean anything, the company's stock is probably the best of its kind.

  In terms of penetration into the mainland's cellular and paging markets, Hongkong stocks such as Star Paging, S. Megga and Champion can offer very little in comparison.

  Little-known MTC Electronic is a medium-sized Canadian company whose shares have been quoted on New York's National Association of Securities Dealers' Automated Quotations (NASDAQ) system since January 1990.

  Its headquarters are in Richmond, British Columbia, and it is known to be raising capital by offering new shares to US investors.

  MTC surprised Hongkong investors with its recent announcement of a joint venture that would give it access to China's so-far restricted telecommunications network.

  MTC claims the agreement entitles it to own and operate a public phone network of which the territory's telecommunications operators could only dream.

  Foreigners have been permitted to form joint ventures to produce telecommunications equipment, but local experts thought networking was still a forbidden area.

  However, to those following the development of the Canadian company, the latest joint venture is a small part of its big projects in China.

  According to the share-offer document MTC put to the New York Stock Exchange last October (revised several times since then), the company provides telecommunications services and manufacturing investments in China.

  In 1992 the company signed letters of intent to construct, own and operate cellular telephone and paging systems in Beijing and the provinces of Hubei and Zhejiang.

  In October 1992, MTC entered into a contract with an off-shoot of the Ministry of Posts and Telecommunications to establish a joint venture to be the primary supplier of cellular handsets, pagers and fax machines to the Chinese market.

  The contracts called for initial production volumes of 70,000 cellular handsets, 55,000 fax machines and 200,000 pagers in the fiscal year to January 31, 1994.

  These are all formidable achievements, considering that MTC only initiated its mainland business in 1987 through manufacturing and exporting consumer electronic products such as colour televisions.

  However, its financial record in the past two years is not as impressive.

  Sales increased 6.8 per cent in 1992 from 1991 to C$50.4 million (about HK$307 million), mainly due to the sale of fax machines to China.

  This is against a 19 per cent decrease to $6.3 million in gross profit in 1992, representing 12.4 per cent of revenues compared with 16.5 per cent during 1991.

  MTC's board should not be unknown to Hongkong investors.

  A director, Mr Edilberto Pozon, has been the chairman of First South China Corp, a Hongkong-based financial institution, for the past 10 years.

  It is perhaps ironic that such a major China telecommunications play is not within the easy reach of Hongkong investors, but for those prepared to do a bit of digging, MTC is worth investigating.



Canadian firm steals a march in China telecoms