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(Hong Kong, September 28, 1999) -- Leading audio-visual ODM and OEM manufacturer Tonic Industries Holdings Limited ("Tonic") (Stock code: 978) announced after its annual general meeting, that the Company will commence production of its own MD players and DVD players by the end of this year.

Mr Simon Ling, Chairman of Tonic said, "We are pleased to see our MD production progressing as we planned. Since we commenced the production of MD Hi-Fi systems in March, we have produced more than 250,000 MD Hi-Fi Systems for our OEM customers. This has already exceeded our expected production volume 2 times. This demand indicates that market response to MD HiFi is overwhelming. We expect the demand for other MD products especially portable MD players and recorders are also significant. ODM customers are looking forward to the commercial production of our own portable MD players at the end of the year."

Since Tonic signed a MD license agreement with Sony Corporation in 1998, entitling it to manufacture its own MD products, the Group has been working to develop its own MD products with advanced features. With the commercial production of a portable MD player by the end of the year, Tonic will become the pioneer Hong Kong manufacturer to produce such a MD model. Currently, 3 MD models with various features are being designed.

Mr Ling said, " To maintain our competitiveness, we consistently need to introduce new product designs to our customers. We therefore maintain a team of over 30 designers and engineers including consultants from Japan, who enable us to cater for the changes in consumer trends with the latest technical innovations. Apart from the portable MD players, we have also successfully developed production technology for DVD (Digital Versatile Disc) players, which are expected to appear on the market in the first quarter next year."

Mr Ling pointed out, "Our existing 21 production lines are already operating in full capacity. With the successful launch of these new products, we need to re-allocate our production lines to produce higher profit margin products such as MDs, and DVDs. We are also actively planning to expand our existing production facilities to meet the increasing number of orders."

Apart from the manufacturing of audio and visual products, Tonic is also diversifying to develop and manufacture high-tech products. Recently, Tonic formed a new division, Tonic Technology Limited, which will specialize in the development of high-tech products, such as Home AV Centers, the total control of audio, video and surveillance central console and satellite receivers. These products will be exhibited at the 1999 Hong Kong Electronics Fair from October 12 to October 15, 1999.

Mr Ling concluded, " This new product division complements our existing AV business and provides more choice to our customers. We are confident that with our upgraded product portfolio, we will be able to maintain our leading position in the industry."

All resolutions were passed at the annual general meeting.