[Thailand's] Hana plugs into Cambodian market

Wage issues could prompt Thai exodus 

Published: 8 Mar 2013 
Bangkok Post

Hana Microelectronics Plc is investing 1.5 billion baht to build a new factory in Lamphun and another in Koh Kong, the latter marking a plunge into the Cambodian market. Chief executive Richard Han also hinted yesterday that the SET-listed electronic-parts maker could relocate some production from Thailand to Cambodia if it cannot cope with rising wages here over the next 3-5 years.

Wages in Cambodia are one-third those in Thailand but will certainly rise as well, he said.

"But the wages will grow faster in Thailand and China," said Mr Han.

"Shoes and textiles are now the major industries in Cambodia. We are the pioneer in electronics."

Some 120 million baht has been allocated for buying a 60-rai plot of land in the Koh Kong special economic zone, while 360 million is slated for the factory.

Construction is scheduled to start by mid-year for the first phase comprising a 23,000-square-metre facility that would begin operation in April 2014, with another plot available nearby for future expansion.

Meanwhile, 750 million baht is slated for the new Lamphun plant plus 75 million for land costs. The 28,000-square-metre high-end manufacturing facility will be operational by mid-2014.

Hana's existing printed circuit board assembly plant in Lamphun is running near full capacity.

The integrated circuit plant in Ayutthaya, which was ravaged by the 2011 floods, is at 60% capacity and will probably ramp up to 80% by year-end, said Mr Han.

Last year net capital expenditures totalled 1.37 billion baht. As of Dec 31, the debt-free company had cash reserves of 5.5 billion baht and will receive some flood insurance compensation to finance the investments.

Mr Han said Hana had received 300 million baht of 1.2 billion in insurance property claims. It expects further payment by the third quarter.

For business interruption claims, 400 million baht out of 1.6 to 1.8 billion has been paid, with further payments expected late this year or early next, he said.

The company achieved flat revenue last year, rising by 4% in US-dollar terms to $555 million and 6% in baht terms to 17.2 billion amid a weak global electronics industry. Net earnings edged up 3% to 1.66 billion baht on a continued combination of flood issues.

In the fourth quarter, turnover was up 12% year-on-year to about 4 billion baht but down 9% quarter-on-quarter. Net profit surged 291% from a very low base in 2011 to 228 million but fell by 64% from the previous quarter.

Shares of HANA closed yesterday on the SET at 25.25 baht, up 55 satang, in trade worth 12.1 million baht.