Hi-P: DBSV maintains Fully Valued rating with $0.44 TP. House note that grp has warmed that net profit in 3Q11 would be lower than 2Q11, as despite higher revenue, wage hikes and relocation expenses are hurting profits as well as a product mix change to one with more assembly work, which boosts revenue but not bottomline.
Despite the likelihood of higher volume in 4Q11, the rebound is insufficient to offset YTD earnings decline and house therefore cut FY11/12F estimates by 11.7% and 2.6%. Add that although Hi-P’s stock price has fallen in excess of 50% from its peak in Feb
this year, valuation is not exactly compelling at 0.5x SD FY12 P/E, vs the barometer STI –1SD FY12 P/E.
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