(Repeats story from May 16 with no changes to text)
* Electronics contract manufacturers report profit fall
* Higher labour, material costs weigh on companies
* Firms pin hope on improved second half
* Tech shares underperform midcap index over past month
By Eveline Danubrata and Patturaja Murugaboopathy
May 16 Cost pressures are piling up for
Singapore's electronics sector, with some listed companies
reporting lower profit margins, but analysts expect an
improvement in the second half of the year as the holiday season
The slump in the sector, which contributes more than
one-third of Singapore's non-oil domestic exports, comes as the
central bank warned the industry would be a drag on economic
growth and flagged severe price erosion for electronics firms.
Nine of 15 electronics manufacturers - including Venture
Corp, HI-P International and STATS ChipPAC
, the biggest in the sector by market value - reported
declines in quarterly profit margins in January-March.
Shares of Singapore tech firms have fallen about 9 percent
over the past month, according to StarMine's aggregate for the
companies, worse than the 4 percent drop in the FT ST Mid Cap
index and the 8 percent drop in FT ST Small Cap index
"For the outlook, most of them are guiding flat or marginal
sequential improvement and pinning hope for a stronger recovery
in the second half," said Jonathan Ng, analyst at CIMB Research
"Some like Hi-P International are probably more optimistic
because they have some new projects that will start in the
second half and this will add to their existing business."
Quarterly net profit at Hi-P, which supplies parts to global
tech firms including BlackBerry maker Research in Motion Ltd
and Apple Inc, plunged 91 percent despite
It said gross profit fell mainly due to higher material
costs as well as increased labour costs and overheads partly to
prepare for a stronger second half.
Venture has seen its full-year earnings per share estimates
downgraded by two five-star analysts this month, according to
data from Thomson Reuters StarMine.
Venture and Hi-P have factories across Asia.
Singapore's central bank said the export price erosion for
the sector appeared to be worse in the city-state than the rest
of the region and that electronics manufacturers faced
pronounced cost pressures from the tight job market and higher
foreign worker levies.
Hi-P's net profit margin dropped to 0.5 percent in
January-March from 7.3 percent a year earlier, while margins at
Datapulse Technology fell to 16.6 percent from 23.8
A Purchasing Managers' Index for Singapore's electronics
sector stayed in positive territory for the fourth straight
month in April with a reading of 51.5, unchanged from March.
STATS ChipPAC has a low score of 2 in StarMine's Smart
Holding Model. A lower SmartHolding score suggests a potential
fall in institutional ownership.
(Editing by Anshuman Daga and John O'Callaghan)