Thu, Mar 16, 2006 - Page 12 News List

Lock maker Tong Lung vows to conquer region


With sales growing steadily and a new capacity to secure more orders, Tong Lung Metal Industry Co (東隆五金), a leading door lockset maker that was hovered on the brink of bankruptcy eight years ago, vowed to become the No. 1 lock maker in Asia, company executives told investors yesterday.

The company will be listed on the over-the-counter GRETAI Securities Market next Wednesday as a common stock that can be traded normally, instead of through full-payment transactions.

"I'm proud to announce that Tong Lung has completed its corporate restructuring," chairman Wang Chung-yu (王鍾渝) said.

Tong Lung incurred a debt of NT$6.2 billion (US$190.8 million) in 1998 after the company's then president lost NT$8.8 billion as a through stock-market speculation.

The company managed to earn NT$2.2 billion by 2000, and according to the Chiayi District Court was the first Taiwanese firm to complete its restructuring in such a short period.

"To me, a successful restructuring requires satisfaction of creditor banks, employees, clients and shareholders. Therefore the restructuring had not been completed until today," Wang said.

Tong Lung is known for making "Ezset"-brand locks for the overseas markets, as well as "Lucky" and "Posse" brands for the domestic market. The company reported sales of NT$2.07 billion last year, a 15.6 percent jump from 2004. It posted after-tax earnings of NT$375 million, or earnings per share of NT$5.28, last year. The company's gross margin for last year was 25.6 percent.

Wang said that the company issued NT$1 in cash per share and a NT$0.2 dividend per share to its stockholders last year, and would determine the size of bonuses for this year after the board meeting.

He refused to give a forecast for this year, saying merely that Tong Lung was conducting good business because of larger overseas lock makers outsourcing to cheaper Asia manufacturers.

Orders from North America constitute 77 percent of Tong Lung's sales, followed by the local market with 17 percent.

A research report issued by Taiwan Securities Co (台証證券) early this month was bullish on Tong Lung, assigning the stock a "buy" rating with target prices of NT$44.2 to NT$55.3.

Taiwan Securities predicted that the company would see sales increase to NT$2.66 billion, with after-tax earnings rising to NT$389 million, or earnings per share of NT$5.53.

The earnings per share could be higher if the NT$104 million worth of preferred shares are not converted to common shares in September, said Shih Chi-pin (施啟彬), executive vice president of Taiwan Securities' capital market division.

"We are very positive about the company due to its fundamentals and the prospering industry," Shih said. "We may hike our target price for the stock further."

After a few days of soaring to the stock exchange's daily 7 percent limit, shares of Tong Lung weakened by 2.46 percent to close at NT$47.6 yesterday.

Looking ahead, Tong Lung plans to gradually move its low-end production to

its factory in the Philippines to save costs, deputy general manager James

Chien (簡詩宏) said.

The factory started mass production this year with initial capacity of

300,000 units per month. The Taiwan plant's current capacity is 1.5 million

units per month.

High-end production, the company's brandname products and the

research-and-development center will remain in Taiwan to create higher added

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