Industry Prospects

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Our prospects are driven by the development and trends in the end-user market. Going forward, we expect our business to continue to be driven primarily by the following trends in the electronics and precision engineering industries and construction and infrastructure building industries:-

(a) Electronics industry

Regional growth in demand for electronics, computers and computer peripherals components

We expect the global electronics industry to be one of the fastest growing sectors in the world. In particular, areas which we expect to develop most rapidly include consumer electronics, telecommunications and computer-related manufacturing. We believe that a significant amount of the expected growth will centre around the Asia-Pacific region, in particular China. Such an expected increase in manufacturing presence of OEMs as well as the growth in domestic demand from local enterprises in these industries may potentially lead to an increase in demand for aluminium extruded components such as heat sinks, printer parts, monitors, motor shafts etc, and will thereby benefit us.

HDD industry

We expect the HDD industry, which has been an important source of growth for our Company, to continue to grow as the industry continues to generate opportunities for the HDD manufacturers for storage devices with higher capacities and smaller form factors. We believe that the emerging consumer electronics industry is also generating new opportunities for the HDD manufacturers as HDDs are used in more consumer electronics such as personal video recorders, video game consoles, DVD recorders, photocopiers and portable digital music players.

We feel that as HDD manufacturers continue to develop HDDs with better performance, they will need to look for lighter, stronger and more reliable materials components to assemble the HDDs. This, in turn, may further fuel demand for quality aluminium extruded components and will benefit us.

(b) Precision engineering industry

After a worldwide dip in capital spending by manufacturers over the last two years, we expect capital investment to return within the near future. In particular, we expect capital spending for the semiconductor industry to grow significantly over the next few years as companies put in place plans for additional fab construction. Specifically, we believe that a significant portion of this capital expenditure will come from the Asia-Pacific and we could benefit from the supply of extruded profiles for these clean room structures.

We also believe growth opportunities exist for us in the automotive industry as it is our opinion that there is an increasing trend of aluminium being used as an alternative material in place of steel in order to achieve better fuel consumption efficiency. We believe our ability to deliver extruded profiles which meet the stringent requirements of the automotive industry at competitive prices will lead to the further demand of our services.

(c) Increased outsourcing by MNCs to Asia

We believe that there is an increasing trend in the outsourcing of non-core activities by MNCs and OEMs to companies which specialise in such activities and produce at lower costs. Outsourcing relieves MNCs of these non-core activities and allows them to focus on their business efforts and allocate resources to their core competencies of product design and development, marketing and distribution and certain critical manufacturing activities. With many of these outsourcing activities taking place in Asia, our Directors believe that the presence of many precision engineering companies in Singapore and this region will benefit us from such activities. In particular, the outsourcing of manufacturing of aluminium components that need to be produced by extrusion method may benefit us.

(d) Construction and infrastructure building

Over the years, we have established ourselves as a reliable service provider who can deliver quality aluminium extruded profiles within specified deadlines. With the Iraq war behind us and the containment of the SARS virus in this region, we believe that we will see more construction and infrastructure projects being undertaken in the region when the regional economy recovers. In addition, with the Singapore government bringing forward some major infrastructure projects, the construction industry could experience an increase in such activities.

In view of the above development in industry trends, our Directors are confident of the prospects of our Company.