Amtek Engineering Ltd.
Price (29 Aug 13, S$) 0.48
TP (prev. TP S$) 0.56 (0.70)
Signs of bottoming; cheap valuations and 7-8% yield to provide downside support
● Amtek's 4Q13 net profit of US$10.9 mn (25% YoY) was better than expected with help from gain on sale of properties. Overall, while group revenue weakness (-7% YoY) continued, there were signs of bottoming in certain segments and margins were resilient.
● Reversing two years of revenue decline, some of the key segments are showing signs of bottoming: 1) casings sales have started growing due to new programmes; 2) increasing market share in automotives with new programme wins; 3) continued record tooling sales could mean higher volumes going into FY14.
● The key risk remains end demand. With the exception of mass storage, other segments should be helped by a recovery in global demand which could be further boosted by new programme wins.
● We lower our target price to S$0.56 (from S$0.70), and revise down our EPS estimates by 44-46% driven mainly by lower revenue assumptions. While timing of a demand recovery still remains uncertain, bottoming of profits, cheap valuations (6x P/E) and defensive dividend yield of 7-8% should provide downside support. Maintain NEUTRAL.
Casings – relatively better performance driven by new sales flowing through from tooling sales early in FY13.
Mass storage – continues the weak trend, exacerbated by Amtek exiting the 'top cover' segment with the closure of a plant.
Consumer Electronics – weaker end market demand continued.
Automotive – weaker demand more than offset by new programmes.
Electrical – weaker demand from Europe infracture continued.
Others – tooling sales hit another high as management continues to work on winning new programmes and increasing market share.
Source/Extract/Excerpts/来源/转贴/摘录: Credit Suisse