Amtek Engineering

Amtek Engineering: Reported 2Q11 results which were generally in-line with expectations, with Rev at US$174.8m, +4%YoY and +5%QoQ, while Net Profit at US$14m, +46%YoY and +6%QoQ, despite incurring a non-recurring US$0.7m charge for IPO expenses....

Rev was driven by Grp’s Automotive and Electrical/Electronic Component Products segment, which saw healthy growth of approximately 13% each over 2Q10, while grp’s Imaging/Printing segment also grew significantly, due to increased contribution from Grp’s newly set-up Vietnam plant. Mass Storage and Casing segments registered decline in revenue of 7% and 2% respectively, due to weaker demand of IT Products…

Gross margins saw a slight improvement, at 18.7% vs 18.5%YoY, due to Grp’s strategy to progressively grow its Automotive segment and Electrical/Electronics segment and other industrial segments….

Going forward, grp plans expand its design and manufacturing services and has jointly developed, an innovative CPU housing for mounting “pinless” CPUs, (potential run rate/yr of US$12m) to go into mass production in 1Q12. Also plans to enhance and develop core capabilities, especially in precision progressive cold forging and robotic laser bonding processes....

We note that result brings 1H11Rev to US$341m, +7%YoY and Net Profit at US$27m, +72%YoY, and appears on track to meet full yr Net Profit estimates of US$57m, while balance sheet remains strong at a comfortable 32.2% Net Gearing Ratio. At current price, valuations appears compelling, with grp trading an an annualized 10x FY11E PE vs peers average of 18.2x