RIM / HI-P

RIM / HI-P: RIM is up 12% so far this year, with the Co's CEO noting the newly launched smart-phone Z10 has drawn more users than expected, both from competitors as well as from upgraders of feature phones. Since its launch 2 mths ago, sales have been tracking above their expectations and the co is planning to increase production. Mobile phone operators have been supportive of Z10 as they want it to be a viable alternative to the current dominant smart-phone players such as Samsung and Apple. The Z10 will be rolled out in another 21 new countries by the end of this wk (including Canada, UK, Mexico and India) and to the US market by the end of this mth. Recall Hi-P is in the midst of preparing to ramp up for Blackberry and results will start to reflect this in 2H13.However, in 1H 2013, Hi-P will have to incur start up expenses such as higher overheads and manpower to prepare for this ramp and are expecting just to breakeven in 1H 2013. With Hi-P having declined a significant 60% since peaking in Nov ’12 and with the stock currently trading in line wit its 5-year historical average price to book of about 1x, down-side risks is likely to be limited-moderate from here.