DESPITE MC Packaging recently announcing declining interim results, its potential is still encouraging. MC Packaging makes two-piece aluminium cans and three-piece tin containers for Hong Kong and China. It registered a 3.8 per cent sales drop to $375 million in the first half of 1993 owing to declining sales of two-piece aluminium beverage cans. Sales of two-piece cans were affected by a slowdown in business from major local customers and by shark-attack fears, which discouraged consumption on local beaches in May and June. However, the three-piece can and plastic bottle divisions recorded growth. Operating profit for the first half of the year fell 10 per cent to $44 million. If the $10 million exceptional profit from disposal of staff quarters in the 1992 results had been excluded, profit from underlying manufacturing activities for the first six months of 1993 would have expanded 13 per cent. However, the company will benefit from a strong demand in China market for beverage cans. Brokerage Smith New Court forecasts the company will register a 13.8 per cent profit growth to $115 million in 1993 and a 27.8 per cent to $147 million in 1994. The company's Guangzhou joint-venture, Guangzhou MC Packaging, has been performing well. Its sales in the first half of this year were up 50 per cent. The impressive sales growth is attributable mainly to the addition of production lines for can ends and beverage as well as aerosol cans. The factory is running at full capacity, but rapid renminbi depreciation in the first half resulted in a 33 per cent drop in attributable profits. Its new joint-venture in Hangzhou, which is a three-piece 18-litre can production line, has been operating since January. Facilities for metal printing and coating, and for the production of aerosol cans and three-piece beverage cans are being installed and will be operational by October. The company's Shenzhen joint venture's land formation is finished, factory construction is expected to be completed by mid-1994. The new joint-venture manufactures easy-open-ends, two-piece cans, three-piece cans, plastic bottles and metal-sheet printing. MC Packaging's Hong Kong's factory business has been expanding steadily. The management of the company predicts an eight per cent annual earnings growth for Hong Kong operations. Production of two-piece cans is running at 65 per cent capacity and that for three-piece cans at 60 per cent. Production of plastic bottles and the metal-printing division are almost running at full capacity. However, Smith New Court has lowered MC Packaging's 1993 earnings forecast by seven per cent, mainly because of its cautiousness over the likely impact of the translation of profits from the company's China operations.