Hi-P

Hi-P: 4Q13 net loss of $14.5m compared to profit of $15.6m in 4Q12, while revenue slipped 5.6% to $344.5m on decreased orders as a result of the volatile market situation. This brought FY13 earnings to $6.4m, significantly below street estimates of $223m, while revenue of $1,262m was in line. For the quarter, gross margin lowered 6.3ppts to 4.4% due to lower manufacturing yield and efficiency from new products secured with new customers, increased inventory provisions for slow moving projects and increased depreciation as a result of higher capex. The bottomline was also marred by higher employee compensation and refund of rental subsidy incurred from the consolidation and relocation of its Tianjin plant to Suzhou. Going into the current quarter (1Q14), management has guided for lower revenue y/y and a net loss, while for FY14, the group expects lower revenue but higher earnings from FY13. Group recommended a first and final dividend of 0.6¢/share, halved compared to FY12's 1.2¢. At $0.57, Hi-P trades at 20.4x forward P/E versus its historical average of 17x.