January 15, 1998 (MANILA) -- Ionics Circuits Inc., an exporter that is benefiting from the weaker peso,
is seen by most analysts as one of few bright spots in an otherwise bleak Philippine stock market.
Ionics is one of the Philippines' largest assemblers of electronics products, mostly printed circuit
boards. Its clients are major international computer companies including IBM Corp.
The company's revenues are all from exports and it isn't burdened by any dollar obligations.
"Many companies are either falling into dire straits or nearing bankruptcy because of the peso's
depreciation. But Ionics actually gains every time the peso weakens," said Melvin Sico, an analyst at
All Asia Securities Inc.
At 42.765 pesos, the local currency has fallen 62 percent against the U.S. dollar since its average of
26.40 pesos prior to the central bank's decision to allow the peso to trade more freely against the
Mainly due to the weaker peso, the rise in interest rates and the slowing of the economy, most analysts
are advising investors to avoid the local stock market in the first half of this year.
Around 200 issues are actively traded on the Philippine Stock Exchange, and most analysts are
recommending no more than about 10 stocks to their clients. They also are advising short-term trading
plays. Ionics is on most recommendation lists put out by analysts.
"Ionics is one of the few Philippine companies delivering growth," Merrill Lynch & Co. said in a recent
report, referring to the company's robust earnings despite the regional currency crisis.
With the windfall from export revenues, Ionics' net profit grew 28 percent to 346.1 million pesos
(US$8.1 million) in the first nine months of 1997 from 269.8 million pesos (US$6.3 million) in the
year-earlier period. Full-year figures are expected to be released either later this month or early
The company's upcoming investments totaling about US$3.6 million in three U.S.-based technology
companies also are among the reasons that analysts are bullish about the company. The investments are
expected to be made within the first half of the year, although the company hasn't released a
About US$2.5 million is expected to be invested in Wireless Link, an R&D; company specializing in
wireless communications technology. It will invest US$1 million in Stream Machine, which produces DVDs
and system chips used in computers. And the company will invest about US$100,000 in Virtual Press,
which produces a portable computer called Softbook.
Such upcoming investments are expected to result in a steady flow of orders for Ionics, which will add
to the company's own revenues from exports.
Analysts expect Ionics to report a 1997 net profit in the range of 444 million pesos (US$10.4 million)
to 480 million pesos (US$11.2 million). They project net profit in 1998 of between 555 million pesos
(US$13 million) and 639 million pesos (US$15 million).
The company posted net profit of 391 million pesos (US$9.2 million) in 1996.
Bradford Ti, an analyst at Citicorp Securities International Philippine Inc., said Ionics won't have
any difficulty in making payments for its investments because it had around US$12 million in cash as of
September. A third of that amount is in dollars, with the rest in pesos.
(Margarita Roa, Asia BizTech Correspondent)