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Charlotte So

Hong Kong Aircraft Engineering Co (Haeco) reported a 27 per cent rise in net profit to HK$1.07 billion for last year  on strong demand for its aviation maintenance and repair services.
The company is expanding in Hong Kong and Xiamen, but an appreciating yuan will increase its labour costs because almost a third of its profit comes from the mainland.
There  was profit margin improvement at the company because of strong demand, said Cazenove analyst Andrew Au,  adding that 'earnings were in line with market consensus'.
Earnings per share increased 26.7 per cent to HK$6.45 on a 20.2 per cent increase in sales, which reached HK$4.6 billion  with the first full year of operations  for its second hangar at Hong Kong International Airport.
The company recommended a final dividend of HK$2.20 per share,   but will not distribute a special dividend because of heavy planned capital expenditure.
A third hangar in Hong Kong and a sixth hangar in Xiamen are under construction. Both facilities are scheduled to come on stream as early as mid-2009.
The company said it continued to look at  opportunities to expand its aviation maintenance and repair services.
Line maintenance operations in Hong Kong  would  see moderate growth from additional flights at Hong Kong International Airport, the company said. However, profit growth in Xiamen would be slowed  by cost increases in an inflationary operating environment, it  said.
The outlook for the industry  remained good, said Mr Au. 'The initial phase of the economic downturn won't hurt the industry as airlines  squeeze in more time to do maintenance when the market is not good.'
Demand for heavy airline maintenance services  allowed the Hong Kong division  to sell 2.53 million man-hours of services in 2007,  up from 1.85 million in 2006. Line maintenance  saw a moderate 6 per cent rise in business per day  last year.
Sales soar
Haeco reported a 20.2 per cent  jump in sales last year to, in HK$: $4.6b



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