Amtek

Amtek: Announced 3Q13 results which was below estimates. Rev at $147.8m, -11% y/y and -5% q/q, while net profit at $4.1m, -47% y/y and -29% q/q. Weak results was largely due to a drop in all product segments, while the co’s cost reduction exercise saw operating expenses fall 3% yoy in the third quarter and a subdued 3% yoy rise for 9M13. 3Q13 performance was impacted by the Lunar New Year holiday in February and the ramp-up costs involved in shifting capacity from Singapore to Batam, Indonesia. Amtek's measure to adapt to the inflationary environment via shifting to less expensive locations and automation has helped to mitigate wage escalation. While the cost base has been reduced, the earnings kicker must come from better sell-through of its customers’ products. Going forward, Dividend yields of 4.4% will support the share price but the company may have to consider inorganic growth options. Ratings as follows: CIMB maintains neutral with $0.50 TP