Hi-P's 3Q12 results confirm turnaround delay: CIMB

Hi-P’s 3Q12 results were weak, as expected, but slightly ahead of forecast, CIMB says, noting 9M12 net profit was 24% of its FY12 forecast.

It notes the weak 3Q12 was due to iPhone 5 supply constraints and weakness in other major customers, but Hi-P guided for higher 4Q12 revenue and profit on an on-year basis.

While management remains confident robust sales of tablets and smartphones will continue to affect the industry and company positively, Hi-P’s record FY12 capex of $180 million, with not much to show for it so far, keeps the house skeptical of the company’s ability to generate the kind of profit initially expected.

“Hi-P’s weak set of results, caused by delays in new projects from new and existing customers, has affirmed our view that its turnaround has been pushed back. We believe 2H13 will be a better time to relook at this stock.”

CIMB expects the stock to find some support at book-value level as the company has a large share-buyback mandate. It keeps an Underperform call with $0.70 target. The stock is up 4% at $0.78.