June 30 (Bloomberg) -- Investors in Swiss small caps should buy component suppliers such as LEM Holding SA or Interroll Holding AG as they benefit from Chinese contracts for companies including ABB Ltd., said Juerg Schiller, a portfolio manager.

“Many Swiss companies are very strongly represented in Asia and people perhaps underestimate that,” Schiller, who advises funds totaling more than 500 million Swiss francs ($460 million) for VV Vorsorge Vermoegensverwaltung in Zug, Switzerland, said in an interview. “We’ve profited from these trends toward energy efficiency, convenience and security.”

Swiss exports to China doubled in the five years through 2008 to 6.1 billion francs with chemicals, machines and electronics accounting for more than half. Zurich-based ABB has won contracts for power stations in India, Mexico, China and the Middle East. Swiss lock maker Kaba Holding AG is boosting output in Asia as the region switches to electronic locks.

“I find it difficult to think that these trends will suddenly be abandoned in this economic environment,” said Schiller, 53, who co-manages the funds with Peter Lehner.

LEM Holding sells electricity-measuring devices used in high-speed trains and Interroll makes motors used in conveyor belts. LEM’s shares closed unchanged at 250 francs in Zurich. The stock has almost doubled since the end of last year. Interroll’s stock rose 3.4 percent, to 250.75 francs, bringing the decline during the same period to 16 percent.

“When there are big projects, they supply components which are outsourced, so it doesn’t matter if Siemens AG, Alcatel- Lucent SA or ABB wins the contract,” Schiller said. “They’ll supply the components.”

Eurofighter Electronics

Pfaeffikon, Switzerland-based Huber & Suhner AG, which makes fiber optics and cables and provides wiring for the Eurofighter combat jet, may benefit from investment in infrastructure in much the same way as LEM, Schiller said. Suppliers to the automotive industry such as Komax Holding AG also stand to gain from more electronics in transport.

“There will have to be investment in the car industry at some point,” Schiller said.

Chemical supplier Ems-Chemie Holding AG, Georg Fischer AG, Europe’s largest maker of iron castings for cars, and Komax, the world’s largest maker of wire-processing machines, will benefit from a rebound in the automotive industry, he said.

Schiller and Lehner advise the SaraSelect fund of Swiss small cap stocks, which holds LEM and Interroll among its top 10 positions, as well as an AXA SA fund and other institutional clients.

To contact the reporter on this story: Joseph Heaven in Zurich at jheaven1@bloomberg.net

Last Updated: June 30, 2009 12:56 EDT