MEMSTAR Technology, a manufacturer and supplier of polyvinylidene fluoride (PVDF) hollow fibre membrane, posted a net profit of 6.24 million yuan (S$1.29 million) for its fiscal second quarter ended Dec 31, 2009 - more than two times the net profit of 2.31 million yuan for the previous corresponding three months.
The surge in earnings amid a challenging business climate came as Q2 revenue more than trebled to 31.6 million yuan from 10.3 million yuan a year ago. The bulk of this came from its industrial applications segment, which saw revenue soaring to 31.1 million yuan from 9.6 million yuan.
'The higher revenue achieved in the current quarter was due mainly to the revenue recognised for the partial fulfilment of the contract for the supply of membrane products to Guangzhou Municipal Government for China's largest membrane bioreactor wastewater treatment plant,' said Memstar.
But gross profit margin for the group dropped to 55.7 per cent from 74.9 per cent due mainly to higher production costs.
R&D costs for the quarter also jumped 68 per cent to 1.91 million yuan.
Q2 earnings per share rose to 0.24 fen from 0.09 fen a year earlier. Memstar did not declare any dividend for the three months, as was the case a year ago.
For the half year to Dec 31, 2009, revenue rose 51.1 per cent to 47.91 million yuan from 31.71 million yuan but net profit dived 31.6 per cent to 9.6 million yuan. Factors included a fall in gross profit margins, a surge in administrative expenses mainly because of a one-off borrowing cost, and a near doubling in R&D expenses.
Memstar's CEO and founder He Gailin said the company has 'weathered through the economic crisis' and will continue to focus on 'growing the membrane technology and applications', as well as 'explore new markets and secure larger projects in the use of membrane products and services'.
As one of the the few manufacturers of high performance PVDF hollow fibre membranes in the world today, Memstar places a strong emphasis on research and development. With the EDB's financial assistance, the company established its R&D centre in Singapore.
Memstar supplies membrane products to China's largest membrane bioreactor wastewater treatment plant located in Guangzhou. It also signed a contract in July 2009 for the supply of Ultra Filtration membrane products to Doosan Heavy Industries & Construction Co Ltd for their water treatment project.
As at end-December 2009, Memstar had cash and cash equivalents of 23.75 million yuan, down from 168.35 million yuan a year earlier. Memstar said this was because of a 141 million yuan deposit for a major project tender. 'The tender deposit has since been refunded,' it said.
Memstar shares closed trading yesterday unchanged at seven cents each.