• 4Q14 net profit remain in positive territory. Gross margins stable q-q at 9.4%.
• Management expect higher revenue and profit in FY15 on increasing metal demand and improving operational yields.
• Maintain Buy with target price of S$0.88.

What is the news?

Hi-P recently restructured operations into 4 business units to better cater to customers’ product demand and improve resource management.

Maintain positive outlook in view of increasing demand for metal components in smartphones and better operational efficiency with CNC equipments.

Albeit expected loss in 1Q15, management guided for better FY15 performance, benefiting from new orders from both existing and new customers.

How do we view this?

While FY14 results was lacklustre mainly due to a drag from 1H14, we noted a significant improvement in net margin (adj.) to 3.7% in 2H14 (1H14: -3.9%), highest margin seen in the last 3 FYs. We continue to be positive in view of better performance in FY15 ahead over favourable smartphone industry trends and strong order sales for Xiaomi’s Mi4 phones.

Investment Actions

Maintain Buy with a target price at S$0.88, expecting stronger performance in FY15.

Source: Phillip Securities Research - 16 Feb 2015