CIMB Research, May 7
DESPITE an impairment loss from a fire at one of its factories, Hi-P reported better-than-expected Q1 2013 results as its product mix improved and material costs fell. The outlook has turned sunny once again and we expect significant upward earnings revisions by the market.
Q1 2013 core net profit was 47 per cent of consensus FY2013 numbers and 48 per cent of ours. Given the outperformance and more upbeat guidance, we bump up our FY2013-15 forecasts by 102 per cent on average and revert to a target 2014 PE of 14 times, the three-year average (previously 0.9 times P/B). Our target price rises from $0.64 to $0.86. We upgrade Hi-P from "underperform" to "outperform", with these results being a potential catalyst.
OUTPERFORM
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