2Q18 in Line; Still, It All Hinges on 4Q18

• Hi-P International’s 2Q18 PATMI was in line with our forecast, falling 19% y-o-y despite a surprise 8% y-o-y increase in sales on higher volumes. This is a concern as we may have underestimated pricing pressures; hence, we trim FY18-20E EPS 10-17%. 
• 3Q18 product ramp-up appears intact, although 4Q18 hinges on the reception of the products of HIP’s key wireless and IOT customers. 
• ROE-g/COE-g Target Price is cut 12% to SGD1.27, based on 1.8x FY18E P/B (prev: 2.0x), based on FY18-20E average ROE of 14.8% and COE of 9%. 
• HOLD.

Source: Maybank Kim Eng Research - 03 Aug 2018