CHEN Hsong Holdings is one of the world's largest producers of injection-moulding machines, with production facilities in Hongkong, Taiwan and China. While many of Hongkong's industrial companies have branched out with varying degrees of success into other fields, particularly property development, the company has remained focused on its core businesses. Unlike many smaller industrial companies in Hongkong, Chen Hsong is not a one-man band. It has put considerable emphasis on the development of its management structure, and has acquired a reputation as one of the best-run industrial enterprises in Hongkong. All three production facilities in Hongkong are in the Tai Po Industrial Estate, where land costs are relatively low, and where dedicated infrastructure is provided for industrial enterprises. Factory A is chiefly engaged in the fabrication, drilling, painting and heat treatment of metal components. Factory B contains the injection-moulding machine assembly lines organised on a flexible manufacturing system. Factory C contains the largest foundry in Hongkong producing high quality ductile iron castings used in the mould platens of the injection-moulding machines. Chen Hsong Machinery Taiwan Co is a 100 per cent-owned subsidiary producing for the local plastics industry. In 1987 a 51 per cent joint venture was set up in Shunde in Guangdong province. It is equipped with computer numerically controlled machining centres and other advanced technology with the aim of producing high-quality machines for both local and export markets. The capital investment in this project was paid off in less than three years. The second joint venture in China is Chen Tec, again 51 per cent owned by the company in Hangzhou. The company's total investment is to be $103 million, which will go to provide advanced equipment to improve the quality of production. By 1995, annual production of this plant should be up to 3,000 injection moulding machines. The exposure to the China economy is therefore around 54 per cent, and this figure is likely to grow as the new joint ventures in China come into production during the course of this year. Because the company is heavily dependent on supplying the Chinese market, it is inevitably exposed to the depreciation of the renminbi. Up to now it has been partly insulated because the bulk of its sales to China have been indirect sales via Hongkong manufacturers. Brokerage SB Warburg forecasts a 23 per cent earnings growth to $117 million in 1993 and 30 per cent growth to $152 million in 1994. It is now trading 20.5 times on 1993 earnings prospective. Although the shares are no longer cheap, further out-performance can be expected as the share price rises in line with EPS.