Karin Technology’s (Karin) 1HFY13 revenue surged 39.7% YoY to HK$2,123.3m, exceeding our expectations (54.4% of our FY13 forecast). However, estimated core PATMI of HK$26.8m (+5.1% YoY) was in line due to lower-than-expected gross margin, forming 50.1% of our full-year projection. Karin’s strong revenue growth was driven largely by its Consumer Electronics Products and Components Distribution segments, which have significant exposure to the growing smartphone market. An interim dividend of 7.2 HK cents/share was declared. Our forecasted FY13F dividend yield stands at an attractive 7.7%. We retain our core PATMI projections, but raise our PE multiple peg from 6x to 7x in light of the improved market sentiment and Karin’s stronger financial position. We also roll forward our valuations to blended FY13/14F EPS and our fair value estimate increases from S$0.25 to S$0.295, partially offset by a lower HKD-SGD assumption. Maintain HOLD.
1HFY13 core PATMI within expectations
Karin Technology’s (Karin) 1HFY13 revenue exceeded our expectations but core PATMI was in line due to lower-than-expected gross margin. Revenue surged 39.7% YoY to HK$2,123.3m and formed 54.4% of our FY13 forecast. Reported PATMI jumped 47.5% YoY to HK$33.7m. However, after adjusting for exceptional items, we estimate that core PATMI came in at HK$26.8m (+5.1% YoY) and constituted 50.1% of our full-year projection.
Consumer Electronics Products the main revenue driver
Karin’s robust topline growth was driven largely by its Consumer Electronics Products segment, which reported a 56.7% increase in sales thanks to robust demand for a broad range of Apple products such as the iPhone 5 and fourth-generation iPad. However, this also resulted in margin compression given the high volume, low margin nature of the business. Its Components Distribution segment also recovered strongly (+45.1% YoY), attributed largely to higher demand for connectors used in the manufacturing of smartphones in China, which we believe is a fast-growing market for the smartphone industry.
Healthy dividends, supported by improved financial position
Karin declared an interim dividend of 7.2 HK cents/share, higher than the 7 HK cents/share in 1HFY12. It also returned to a net cash position of HK$69.4m at end Dec 2012 (versus net debt of HK$31.7m as at 30 Jun 2012), aided by strong free-cashflows generated (HK$99.7m). Our forecasted FY13F dividend yield stands at an attractive 7.7%.
Raise FV but maintain HOLD
We raise our FY13 revenue forecast by 9.5% (FY14 by 7.4%) as we incorporate this latest set of results in our assumptions, but keep our core PATMI projections unchanged for both FY13 and FY14. In light of the improved market sentiment and Karin’s stronger financial position, we raise our PE multiple peg from 6x to 7x, and roll forward our valuations to blended FY13/14F EPS. Our fair value estimate increases from S$0.25 to S$0.295, partially offset by a lower HKD-SGD assumption. Maintain HOLD given limited potential total returns.
Karin Technology’s (Karin) 1HFY13 revenue exceeded our expectations but core PATMI was in line due to lower-than-expected gross margin. Revenue surged 39.7% YoY to HK$2,123.3m and formed 54.4% of our FY13 forecast. Reported PATMI jumped 47.5% YoY to HK$33.7m. However, after adjusting for exceptional items, we estimate that core PATMI came in at HK$26.8m (+5.1% YoY) and constituted 50.1% of our full-year projection.
Consumer Electronics Products the main revenue driver
Karin’s robust topline growth was driven largely by its Consumer Electronics Products segment, which reported a 56.7% increase in sales thanks to robust demand for a broad range of Apple products such as the iPhone 5 and fourth-generation iPad. However, this also resulted in margin compression given the high volume, low margin nature of the business. Its Components Distribution segment also recovered strongly (+45.1% YoY), attributed largely to higher demand for connectors used in the manufacturing of smartphones in China, which we believe is a fast-growing market for the smartphone industry.
Healthy dividends, supported by improved financial position
Karin declared an interim dividend of 7.2 HK cents/share, higher than the 7 HK cents/share in 1HFY12. It also returned to a net cash position of HK$69.4m at end Dec 2012 (versus net debt of HK$31.7m as at 30 Jun 2012), aided by strong free-cashflows generated (HK$99.7m). Our forecasted FY13F dividend yield stands at an attractive 7.7%.
Raise FV but maintain HOLD
We raise our FY13 revenue forecast by 9.5% (FY14 by 7.4%) as we incorporate this latest set of results in our assumptions, but keep our core PATMI projections unchanged for both FY13 and FY14. In light of the improved market sentiment and Karin’s stronger financial position, we raise our PE multiple peg from 6x to 7x, and roll forward our valuations to blended FY13/14F EPS. Our fair value estimate increases from S$0.25 to S$0.295, partially offset by a lower HKD-SGD assumption. Maintain HOLD given limited potential total returns.
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