Not vested
Gems remain as concerns over rising wages on the coast overblown
Friday, September 03, 2010
The rise of factory workers' salaries in China's coastal provinces has raised concern that many international manufacturers will relocate to lower-cost countries such as Indonesia, Vietnam and Cambodia.
But as China has built an efficient transport network, and its massive population provides a good market for consumer goods, multinational firms would like to maintain their exposure there. These companies will be able to absorb the relative small labor cost increase.
But a labor shortage will intensify in parts of China, especially when many find jobs nearer their hometowns as factories move inland.
With these factors in mind, I recommend Chen Hsong Holdings (0057). The 50-year-old company which makes plastic injection moulding machines is expecting more orders from its top clients.
They include Foxconn (2038), TPV Technology (0903) and VTech (0303).
Chen Hsong's net profit rose 78.9 percent to HK$154 million for the year year ended March.
Standard Chartered Securities targets it at HK$4.25. Closing yesterday at HK$2.90, Chen Hsong now looks like a good buy.
http://www.thestandard.com.hk/news_deta ... 00903&fc=8