Amtek

Amtek: Announced 1Q12 results where bottom-line was below estimates. Rev at US$181.8m, +9% yoy and +3.9% qoq, while net profit at US$9.0m, -28% yoy and -6.3% qoq. Gross margins fell slightly, at 16.7% vs 18% yoy.

Rev was driven by improved performance across most product sectors, as follow:
1) The Consumer and Electronics +4% yoy in 1Q12 due to healthy demand for home appliances and white goods products,
2) Improved demand for Enterprise Server products saw Casing and Enclosure sector rev +4% yoy.
3) Grp also won new product orders from customers in the office automation segment, which saw rev +15% yoy,
4) Group’s Electrical/Electronic component product sector continued to grow with increases in product mix and volume, as a result, rev +30% to US$22.5m.
5) Group’s PRC and European operations continued to generate growth in sales of automotive products through increases in vol and product mix, as a result, the Automotive sector registered growth of 16% to US$25.2m
6) The Others product sector, which includes tooling, moulds and dies as well as products for personal healthcare, medical and life sciences industries, +16%yoy, boosted in particular by higher sales of tooling, moulds and die.

Bottom line was however lower, due partly to lower other operating income arising from lower gain on disposal of property, plant and equipment and an unrealised foreign exchange loss vs an unrealised exchange gain of in 1QF11.

Going forward, grp note that outlook remains uncertain and challenging as a result of developments in EU. In addition, floods in Thailand will negatively impact supply chain for certain industries, in particular hard disk drives, electronics and automotive. Nevertheless, Co. believe that the current financial year will remain profitable. We note that at current price, grp trades at an annualized 6.8x FY12E P/E vs historical average of 13x, while balance sheet remains strong with a low net gearing of 14.5x.

CIMB downgrades to neutral and slashes TP to $0.66 from $1.44.