Hi-P

Hi-P: Weak set of 2Q12 results, which was expected after grp issued a profit guidance prior to results. Rev at $251.7m, +9.5% yoy and -9.7% qoq, while net loss at -$2.1m vs a $11.2m yoy and $1.5m. Gross margins slumped to 6% vs 13.2% yoy and 7.1% qoq. Rev increase was mainly due to an increase in high level assembly projects with higher material content, but resulted in lower value-add. Bottom-line was however hit with the provision for the closure of grp’s Mexico operations and as grp made changes to its product mix. Going forward, grp tips its 2H12 performance to be lifted by increased orders from new and existing customers and has guidance for its FY12 sales and net profit to outperform FY11. Despite the uncertainty, the IT industry is expected to grow 4.5% in 2012 driven by strong tablet and smartphone sales as consumers continue to flock to these devices for ease of mobile computing.