HI-P

HI-P: CIMB maintains UnderPerform with $0.74 TP. House note that though Hi-P highlighted the gradual improvement in the issues affecting its customers’ supply chain, remain cautious given the poor visibility. Grp’s mgt confirmed that the delays came from three major projects from new and existing customers. These delays resulted from yield issues in other parts of the supply chain for smartphones, tablets and e-book customers, leading to a tardy production ramp-up. Mgt revealed that production has started for two projects but the remaining project is still facing a hold-up. While the supply issues in other parts of the supply chain are easing gradually, orders could still be slow for Hi-P. On the subject of its capacity expansion in China, mgt still believes that the investment is justifiable after reviewing its current project pipeline. Overall, given the lack of visibility, believe that the stock will continue to Underperform the market. A better time to relook at the stock would be in 2Q13 when there is more clarity on the progress of its new projects.