Armstrong

Armstrong: FY12 revenues flat at $216m, earnings up 61% to $11.5m; mainly due to lower impairment losses and absence of mark-to-market loss on the Group’s forward FX contracts. The Automotive segment was the largest revenue contributor, posted growth of 12.4% y/y to $84.7m, contributing 39.2% of Group's revenues. Data Storage business contracted by 10.0% as a result of lower turnover as the segment recovered from the effects of the Thailand flood in 1H2012 and lower demand by key customers in 3Q2012. In terms of geographical segments, China remains the top revenue contributor accounting for 30.4% of the Group’s revenue, followed by Thailand and Singapore which accounted for 26.3% and 25.2% of the Group’s revenue respectively. According to iSuppli, an IT market intelligence firm, the global HDD market is expected to decline by 12% in 2013, putting downward pressure on HDD prices and operating margins; whilst the China Automotive segment is expected to grow, albeit at a slower pace. Disputes between China and Japan extending into 2013, the Group is cautious of the possible impact on its business as China-Japan trade is highly integrated into Asia’s supply chain. Dividend of 0.6¢/ share declared; 2.3% indicative yield NAV/ share at $0.203 as at 31 Dec 2012; Company trading at 12.6x P/E, 1.5x P/B; OSK DMG is NEUTRAL on the counter, with TP of $0.27;