About a year ago KGI Asia recommended Skyworth Digital Holdings, which designs, manufactures and sells televisions, as a 'trading buy'' and suggested a target price of 90 HK cents. Skyworth had just reported a net profit of HK$62.23 million for the year to March 31, 2002, bringing the company back into the black for the first time in two years. KGI said the improved performance, mainly achieved in the second half of the financial year, was due to the easing of price competition in the mainland market, the launch of higher-margined TVs and aggressive expansion overseas. Skyworth is the mainland's No 3 producer of television sets. KGI expected to see expansion for Skyworth in Japan, South Korea and Western Europe and overall sales of six million to seven million in the coming financial year. Skyworth had already added nine new overseas clients to its first-quarter order books. In December Skyworth reported that net profit in the first half of its 2002-03 year to September 30 was $22.3 million, against a loss of $65.75 million in the equivalent half of 2001-02. Turnover jumped a year-on-year 68 per cent to $2.95 billion, helped by pioneering sales in Japan and South Korea. Sales in rural China rose 70 per cent. Chairman Stephen Wong attributed the strong figures to the easing of a price war among mainland manufacturers, and to cost controls and lower material costs. The gain also reflected industry consolidation. Skyworth took over share from rivals who bailed out of the market. The number of mainland TV makers dropped to about 50 from more than 100. In January it was reported that Skyworth planned to export high-end models to Europe this year to bypass a quota on low-end models. The company was to launch a new cathode ray tube projection TV, claiming it was the first mainland manufacturer to master the technology involved. Skyworth sold 6.53 million TV sets in 2002, or 64 per cent more than the previous year, with domestic sales growth of 55 per cent and export growth of 97 per cent. Skyworth reported this week that TV sales had risen 10 per cent year on year in the first quarter ended in June to 1.31 million units. The counter closed on Friday at 89 cents.