IF appearances count, the head office of Herald Holdings makes it abundantly clear that the company's way of working is no frills, all business. The reception area is cluttered with cookware, watches and toys - three of Herald's businesses - while the walls feature a diverse collection of art from chairman George Bloch's highly regarded collection. ''We are great believers in minimising overheads and maximising profit,'' Mr Bloch said in his cosy office which sports a large bust of Winston Churchill and autographed photographs of former US presidents Ronald Reagan and Lyndon Johnson. During the past decade, Herald has become a diversified manufacturer with interests ranging through toys, computer parts, shoes, cookware and watches. The stock had largely been ignored, languishing around $1 since the company went public in 1988 despiterising profits and sales. However, things have been different recently for Herald's stock and its management after investors picked up on rumours, later confirmed, that the company would be making dinosaur figures related to Steven Spielberg's movie Jurassic Park, which has livedup to expectations and become this summer's blockbuster. Herald, best known for making GI Joe action figures, has seen its stock jump 43 per cent since June 2 to a close of $2 on Friday as investors gamble on whether Jurassic Park will replicate the merchandising success of the Teenage Mutant Ninja Turtles, which propelled the stock price and profits of both Playmates and Harbour Ring. Given the fickle world of toys, it is difficult to speculate how much money Herald could make from Jurassic Park, and the managers would much rather talk about other parts of the business. ''I don't think the dinosaurs are really the big story,'' said Mr Bloch, who nevertheless conceded there were strong indications that Jurassic Park products could have long-term interest. The marketing of Jurassic Park merchandise received a huge boost when the movie racked up record box office sales of more than US$100 million in less than two weeks. If Jurassic Park toys do become hits, Herald should get its fair share of orders from US toy giant Hasbro because of close relations between Mr Bloch and Hasbro chairman Alan Hassenfeld, who spent 30 hours travelling to attend the opening of Herald's computer plant in Shanghai last month. Although Herald attempts to play down the dinosaur factor, director Robert Dorfman says the attention has given the company's profile a much-needed fillip. ''It was an excellent way to get people interested in the company,'' said Mr Dorfman. ''Now I think people are looking beyond that and seeing the quality of the company and what we are offering.'' Managers are excited about the joint venture factory in Shanghai that will make thin film heads for use in hard disk drives. With its cheap labour force, Herald is confident it can effectively compete in computer parts manufacturing. The business was boosted when a contract with IBM was signed for joint co-operation in the manufacturing and marketing of thin-film cartridge tape heads. The agreement allows Herald to participate in tape head development and positions it to become a major international player. ''For turnover, it could become unbelievably big,'' said Mr Bloch, adding that toys and computer parts each now accounted for 35 per cent of total sales. Schroder Securities analyst Peter So said the investment community should start viewing Herald as a high-technology stock rather than a low-tech toy maker. As a result, he believes the company should be re-rated and trade at a much higher price-earnings ratio. Mr So says Herald's tape head operation has provided it with a stable source of income and he expects the Shanghai disk head plant to start producing profits late this year or early next. ''The market potential for the [disk head] is much higher than tape heads, although the competition will be relatively keener,'' he said. ''The company feels the manufacturing process of this involves a lot of labour so being based in Shanghai it should be cost competitive with rivals in Japan or the US.'' A key to Herald's success has been the acquisition of troubled manufacturers, which have been nurtured back to health with strong doses of capital and management expertise. The houseware business, for example, was bought from Hongkong Bank's credit control department in 1984 after it went into receivership, while the computer business was acquired from a receiver in 1985. ''We look for companies that are either in receivership or under-utilised, where a work-out is required,'' said Mr Dorfman. ''We look for ways to improve economies of scale and possibly shift production into China.'' Given Herald's reputation as a turnaround artist, Mr Dorfman says it has been approached with numerous offers. Herald's interest is predicated on its ability to add value. ''If it's something where people want funds, we're not interested,'' he said. ''If it's something where we can add something material, we're interested.'' Another part of Herald's history is the close relationship between the Bloch and Cheung families, which have managed Herald since 1955 and hold a combined 45 per cent stake in the company. Mr Bloch's son, Gershon, runs the computer business while Cheung Tsang-kay's son, Stan Chang, is the company's managing director, overseeing the toy and houseware businesses and maintaining contact with China. ''In all the years of working together, we've never had a disagreement that lasted beyond a meeting,'' Mr Bloch said. ''Anything we don't see eye to eye on, we iron it out within that meeting.''
