Hisaka

Hisaka: FYSep12 results. Weak business conditions led revenue to fall by 28% to $49.1m. Gross margin rose to 23.1% vs 22.5% last yr as the co focused on selling higher margin pdts. Marketing & admin expenses fell 7% to $7.8m, suggesting that the co did reduce costs to maintain profitability. However the Tianjin JV swung from a $1.4m profit last yr to a loss of $0.3m, more than offsetting lower costs. This JV has since been disposed and should no longer be a drag on Hisaka’s results in FY13e. Net profit was $0.4m, which included $1.3m of allowance for inventory impairment, $0.6m of loss on disposal of JV and $0.3m operating loss from the JV. Excluding these items, net profit would have been $2.9m instead. Sias anitipcates some recovery in 2HFY13e and forecasts revenue growth of 5% in FY13e and net profit of $3.6m in the absence of further write offs. Believes Hisaka should return to strong growth in Fy14e on the back of new pdt sales. Notes Hisaka’s portable blood bag warmer system (PBBWS) received the CE Mark of approval earlier this yr and the co has participated in overseas trade exhibitions. The system is now in process of being approved by the Spore Health Sciences Authority before it can be exported to overseas mkts. At the same time, Hisaka is seeking relevant authority approvals in Europe, Taiwan, Thailand and Philippines. The house believes contribution will be more significant in FY14e. Hisaka declared a combined final div of 0.75ct and special dividend of 0.25 ct. Together with the interim div of 0.5cts, this translates to a yield of 8%. Sias keeps its Buy rating with TP $0.315.