This sounds very negative.
From Techcomp Third Quarter Results Announcement
The recent tense Sino-Japan relations had negatively impacted the Companyâs orders received of Japanese products in PRC. Hence, the management expects the sales of Japanese products in the fourth quarter of the year will be adversely affected.
Given that a significant portion of our distribution products are Japanese products and the Groupâs revenue in fourth quarter of the year is traditionally much higher than that of other quarters of the year due to the seasonal pattern of its customersâ demand in PRC, we expect the revenue as well as the profitability of our distribution business will be adversely affected in FY2012. The Companyâs distribution business will continue to be affected in the event that the negative sentiment persists. The Group is taking steps to mitigate this impact by diversifying its supply chain.
Though more enquires from the Europe customers were received currently, the Group believes the trading condition in Europe market will remain challenging. The Group will continue to leverage on its low cost manufacturing base in the PRC to achieve cost savings and operational synergy for its operations in Europe.
If I am not wrong, Techcomp has been able to grow its revenue in double-digit % every year for a long long period. The consistency has been broken in 2012. They also had to stop paying a dividend. In stock investing, the lesson here is --- when things look good year in, year out, don't get lulled into thinking the business can continue to roll forward. Techcomp will recover in 2013? Probably not, so for now it's best to wait patiently for a good price to enter at.
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