Postby winston » Wed Nov 13, 2019 8:59 am

not vested

Trading Buy: FPI - 9172
Solid net cash, strong DY and attractive valuations
(Last price: RM1.60, Potential upside +16.3%)

Company Profile

FPI (listed in June 1994) is a leading contract manufacturer for speakers, audio components, and musical instruments. Overall, the audio system and component segment and musical instrument division contribute about 70-80% and 20-30% to revenue, respectively.

Trading Catalyst

We like FPI due to its fruitful diversification from conventional speakers into richer margins audio system and component/ musical instrument segments coupled with the synergistic partnership with an established global EMS, Wistron (parent company with 28% stake).

Despite facing higher costs, FPI’s prospects remain bright, driven by
(i) bullish speaker market outlook
(ii) capacity expansion
(iii) strategic tie-up with Wistron
(iv) weak RM and
(v) beneficiary of the US-China trade war.

In anticipation of a seasonally stronger 3Q results, the stock is ripe for a relief rebound towards RM1.65-1.86.

Technical View
Resistance: RM1.65 / RM1.74 / RM1.86
Support: RM1.53 / RM1.50
Cut loss: RM1.48

Key Financial Stats
Trading at 11.4x trailing P/E (23% below peers), supported by RM0.65 net cash and 6.3% DY.

Source: Bloomberg, HLIB
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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