Sanyang's Vietnamese Motorcycle Subsidiary Report Lucrative Results for 1st Half

Taipei, Aug. 27, 2008 (CENS)--Taiwan-based powered two-wheeler (PTW) manufacturer Sanyang Industry Co., Ltd. (SYM) recently announced that its subsidiary in Vietnam, the Vietnam Manufacturing Export Processing Co. Ltd. (VMEP), continued to report growing revenue and profits in the first half despite sharp deprecation of Vietnam Dong against U.S. greenback and the worsening inflation.

In the first half, VMEP enjoyed a 17% revenue growth, and the subsidiary's net earnings climbed by 18% from a year earlier to reach US$16.5 million.

Sanyang chairman S.H. Huang deemed that the stiff Vietnam Dong depreciation is only a short-term phenomenon and wouldn't scare away foreign investors. He estimated that the Vietnamese motorcycle market would remain prosperous for at least 20 to 30 years. So, Sanyang has decided to pour an additional US$15 million into upgrading VMEP into a regional motorcycle R&D and production base in the Southeast Asia. A high-level test track at VMEP's plant complex is under construction and is scheduled for inauguration in April 2009 for both motorcycle and automobile tests (Sanyang also runs an automobile-manufacturing subsidiary in Vietnam, the Sanyang Motor Vietnam Co., Ltd., or SMV).

Industry sources pointed out that Vietnam has been facing a serious inflation problem in recent years. Early this year, for instance, the Vietnamese government adjusted upward the minimum monthly labor salary to 900,000 Dong (around US$60) from 790,000 Dong, and plans to continue to elevate the amount to 1.2 million Dong by the end of 2010. Most foreign investors think Vietnam's investment environment will worsen further and the high inflation rate will undermine sales of high unit-price consumer durables.

According to ranking officials of Sanyang, VMEP sold 114,000 new motorcycles in Vietnam in the first half, compared to 104,000 units in the same period of last year, generating revenue of US$134 million. The officials attributed VMEP's brilliant sales performance to the subsidiary's successful strategy to push higher-end scooter models from 2007. Compared with the less-than-10% net margin of the cub (light commercial motorcycle) models, the net margin of a higher-level scooter is about 35%.

In the first half, VMEP's scooter sales volume grew by 19% from the same period of last year.