Not vested. From DMG:-
PE 18; Rev growth 20% ?
Strong turnaroundEarnings exceeded expectations; Reiterate BUY. Hi-P International’s 3Q10 PATMI tripled YoY to S$32.2m, swinging nine month earnings back to the black (S$31.1m).
We attribute this to:-
1) a strong project pipeline boosting the top line and
2) effective cost control measures improving the bottom line.
1H10 was loss-making due to an
early project termination, but we believe that is largely behind the company and the full potential will be seen in FY11.
We revise our EPS forecast upwards by 15% and 14% for FY10 and FY11 respectively. We maintain our BUY call, but raise TP to S$1.25 (previously S$0.97), pegging FY11 earnings to
its 5-yr historical P/E of 12.9x.Outlook gets brighter. Hi-P International currently derives 40% of its revenue
from the smartphones and 20% from the PC industry.
Smartphone shipments are forecasted to grow by 24.5% in 2011 by IDC, and PC shipments are expected to rise by 12.5% according to iSuppli.
The group is currently handling four big projects with average project life lasting at least six months. This implies a stable revenue stream until 1Q11, and with its established track
record, we are optimistic on management securing new projects next year.
Cost in check. Unlike competitors who have been relocating their plants towards western China due to continuing wage hikes, Hi-P has no plans to follow suit as management view the costs of retraining workers would outweigh the savings from wage reductions.
Along with intense competition continuing to exert downward pressure on prices, management has taken the following steps to maintain margins:
1) Consolidate operations by shutting down underperforming plants;
2) apply lean manufacturing practices to shorten production cycle; and
3) increase investment to automate processes.
http://www.remisiers.org/cms_images/Hi-P_DMG-031110.pdf
It's all about "how much you made when you were right" & "how little you lost when you were wrong"