Memstar Technology, the manufacturer and supplier of polyvinylidene fluoride (PVDF) hollow fibre membrane and membrane products in China, says profit after tax rose 170.7% to RMB6.2 million ($1.28 million) in the second quarter ended Dec 31 2009 (2Q FY2010) from RMB2.3 million in (2Q FY2009).

Earnings per share correspondingly increased to RMB0.24 cents in 2Q FY2010 compared to RMB0.09 cents in 2Q FY2009.

The improvement in the group’s performance was driven by the increase in revenue from the sale of membrane products for industrial applications. Revenue and gross profit margin of RMB31.6 million and 55.7% achieved for 2Q FY2010 were higher by RMB21.3 million but lower by 19.2% respectively from 2Q FY2009.

Memstar says the higher revenue achieved in the current quarter was due mainly to the revenue recognised for the partial fulfilment of the contract for the supply of membrane products to Guangzhou Municipal Government for China’s largest membrane bioreactor wastewater treatment plant.

However, gross profit margin was lower in the current quarter due mainly to higher production costs arising from higher depreciation expense for new plant and machinery and contract installation services incurred. 2Q FY2010 net profit was also affected by higher administrative expenses due to a one-off borrowing cost of RMB4.1 million incurred in securing a bank loan, for the deposit for the tender of a potential major wastewater treatment plant project.

As at Dec 31 2009, the group has an outstanding bank borrowing of RMB58.4 million which was secured for the deposit for a tender of a potential major wastewater treatment plant project in China.

The loan has since been repaid.

As at Dec 31 2009, the group’s cash position was RMB23.7 million as RMB141.0 million was used as deposit for the tender of the major wastewater treatment plant project in China.

The tender deposit has since been refunded.

The group’s net tangible asset per share was RMB13.02 cents as at Dec 31 2009.