Hi-P

Hi-P: Grp has entered into a major investment agreement with the Nantong Economic & Tech Dev Area (Netda) committee, in Jiangsu province. (Phase 1 at S$300m) whereby Hi-P will set up a production plant to manufacture and sell its electrical components in Netda. CIMB believes that Hi-P’s decision to make this large investment can only be induced by Apple. Hi-P has over the recent few years made significant inroads into the Apple supply chain with the quality of its products, and house believe this has resulted in Apple increasing its allocation to Hi-P at the expense of its competitors. Expect to see contributions from this project to come in during 2H13. Also cautious when house modelled in this new stream of earnings as believe production yields from the new facility could be low initially House note that with this piece of news, expect Hi-P’s share price to rise even further. House maintain Outperform call and increase TP to $1.06 from $0.96. Add that investors should continue to accumulate the stock on any weakness in its price.