Hi-P has revised upwards its 1Q ’13 bottom-line from its previous guidance of a loss to profit of more than $1.5mln due to improvement in productivity, higher cost savings, change in product mix.
If not for a $4.8mln provision for fixed assets that were damaged by a fire that broke out in their Shanghai facility, profit would have been even better.
The $4.8mln loss is expected to be covered in whole or in part depending on their negotiations with the insurers.
The turnaround is notable and likely reflects the initial production ramp phase of their key customer Blackberry as they prepare for the global launch of their new smart-phone Z10 in 1Q ’13.
However, just last week, concerns have been raised about the actual sell-through of the product and that there have been product returns due to customers being unhappy about the product’s functionalities.
While the stock may react positively to the profit upgrade this morning, we would caution against chasing it as we do not believe the strength is sustainable as its still early days to determine if the Z10’s sell-through demand is sustainable.
Publish date: 15/04/13