Hi-P

Hi-P: Takeaways from analyst meeting. The Mgmt showed confidence about 2H10 performance due to contributions from new projects among existing customers and seasonality effect. The Co’s guideline points that 3Q10 will be stronger than 2Q10 on revenue and profit and 2010 full year will be better than 2009 in terms of revenue with comparable profit…

2Q10 utilization rate was below 50% with 15.7% gross margin, while they foresees utilization rate (UR) to be around 70% in 2H. Due to calculation method, 70% UR is around fully utilized point for Hi-P. In the past, 70% UR could generate above 20% gross margin, but it will only make 15~20% GM in 2H due to higher material cost now. Based on the consensus in Bloomberg, Hi-P now is trading at 16x FY10PE, but earnings forecast has a good chance to revised up after upbeat outlook from the Mgmt.