oncard posts 13 per cent rise in profit

AAP

Prepaid card provider OnCard says soaring card sales in China have helped propel its half year profit 13.4 per cent above the previous corresponding period.

The company says also that it is relatively well insulated from any slowdown in the Chinese economy as the card is used as an alternative to cash, not credit.

The $3.21 million profit for the six months to December 31 was supported by steady revenues of $7.53 million, but sales of loyalty, rewards and pre-paid cards across Asia jumped 120 per cent to 29 million cards, the company said.

OnCard sold 23 million cards in China alone, chairman Peter Abotomey said on Wednesday.

"China is predominantly a cash economy with few personal cheques and credit cards in circulation," he said.

"Chinese consumers are using this card like an electronic purse to purchase goods and services, from food at the local supermarket to other daily necessities."

"And there is no doubt OnCard has gained the major share of the prepaid charge card market in China."

Mr Abotomey said OnCard's China operations and its Shanghai Smart Service joint venture contributed a combined $3.23 million profit. This was an increase on the $3.17 million for the same period in 2007.

The Hong Kong, Singapore, Australia and New Zealand divisions recorded a profit, although there was a slowdown of demand in all four markets.

"China is 80 per cent of our business," Mr Abotomey told AAP.

"In Hong Kong and Singapore we sell what might be termed a luxury program.

"In China we sell a quantity program, so what happens there is unlikely to be affected by what the economy does."

He said the company, which was debt free and cash-flow positive, expected to make further announcements regarding possible Asia-based acquisitions and joint venture opportunities in the coming months.

"We took a choice to get into cash-only several months ago, I think we're well placed to expand," Mr Abotomey said.