Credit Suisse upgrades Hi-P to outperform; 4Q beats consensus

Stock Name: Hi-P
Company Name: HI-P INTERNATIONAL LIMITED
Research House: Credit Suisse

Credit Suisse upgrades Hi-P International (H17.SG) to Outperform from Neutral and raises its target to $1.40 from $0.75. 

It says the firm’s 4Q10 results, with revenue +102% on-year/+20% on-quarter at $343.8 million, and net profit +715% on-year/+8.0% on-quarter, at $35.9 million, were ahead of consensus and its estimates, largely due to stronger-than-expected margins. 

“Gross margin improved to 23.9%, driven by the ramping up of new programs in 4Q. Hi-P’s balance sheet remains strong at $211 million net cash ($174 million at end 3Q), and management announced a dividend of 3.6 cents (+20% on-year).” 

The house expects Hi-P’s smartphone and media-tablet programs to gain traction in FY11, and has raised its FY11/FY12 earnings forecasts by 51%/42% on the back of stronger volume growth and margin outlook. 

“Going forward, we see Hi-P as well-leveraged into two core themes in our tech portfolio -further momentum in smartphone demand (in 1H11) and media-tablets as a key new product cycle starting 2H11.” 

Shares are up 1.8% at $1.13.