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To: StanX Long who wrote (63822)	5/16/2002 2:33:15 AM
From: StanX Long	Read Replies (1) \| Respond to of 70976

Datacraft warns of loss on China woes By Jennifer Tan Thursday May 16, 1:29 PM sg.news.yahoo.com SINGAPORE (Reuters) - Singapore networking specialist Datacraft Asia Ltd stunned the market on Thursday when it warned of a full-year loss, its first since its 1995 listing, due to bad debt problems at its China operations. It shares fell as much as 17 percent after it said it was likely to take an accounts receivables (AR) provision of US$19-$23 million for the nine months to September 30, on top of a provision of about US$5 million it made during the first half of the year. "With this exceptional additional AR provision the company will not report a profit for the six months ending 30 June, 2002," it said in a statement. Datacraft shares plunged as much as 17 percent when they resumed trading following a two-hour suspension requested by the company after the announcement. At midday, the stock was down 15 percent or 29 cents at US$1.67. Analysts cut their second-half forecasts for Asia's largest systems integrator as recently as March, due to the debt woes in China, but the former market darling was still expected to stay in the black for the six months to June 30. This is the second profit warning that the company has made in six months. In November, Datacraft warned that it expected profits for the first half ending December 31 to be only 30 to 40 percent of what it made in the first half of last year following the September 11 attacks. "We're maintaining a 'sell' on the stock as things could turn much worse -- the valuations are high and will continue to be compressed," said Russell Tan, analyst at independent research outfit Netresearch Asia. OUTLOOK STILL MURKY Datacraft, a unit of South African tech group Dimension Data, said trading conditions remained challenging and the outlook uncertain. Its concerns relate mostly to acquired subsidiary Datacraft Networks (China) Inc (DNI), separate from and significantly smaller than its main operation in China, Datacraft China. Datacraft said DNI faces payment collection problems with five Chinese import-export firms. DNI had used these firms for several years and, up until the end of 2001, payments had been received on a regular basis. Since then, the level of payments from these firms had fallen sharply, it said. "The company suspects impropriety in the non-payment of some of these debts. Where there is any evidence of wrongdoing, the company intends to vigorously pursue recourse," it said. Datacraft recently strengthened its management team by appointing a new group CFO, a new regional director for Greater China and a new finance manager for Greater China.