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Revenues closer to bottom, signs of demand recovery in many segments
● We hosted Ms. Sheila Ng (CFO and Deputy CEO) and Ms. Jocelin Soon (Deputy CFO) for lunch with investors.
● Management is keen to achieve a reversal in the revenue decline seen over the past two financial years which was driven by sustained weakness in end-demand in both the consumer and enterprise segments. The automation and cost saving initiatives implemented over the past couple of years should provide the additional boost to the bottom line when revenue growth returns.
● Signs of a demand recovery are imminent in many segments, given the record tooling sales seen through FY13. Amtek is also seeing many new customer wins in segments like consumer electronics, automotive and casings. Mass storage is the only segment expected to see continued weakness. There is also potential for M&A to consolidate positioning in certain segments.
● At 7x 12-month forward consensus P/E and 1.1x P/B, valuations do not appear to be pricing in any growth or ROE improvements. A dividend yield of 6-7% also looks very defensive
Casings. Customers unlikely to delay investments in enterprise servers further. Seeing traction with new customer wins. Normalised growth in this segment in the high single digit to mid-teens range.
Mass storage. Steady decline likely, but with some likely support from the 5 mm segment.
Consumer electronics. Demand likely to recover going by the strength in tooling sales. Also seeing good traction with the medical and healthcare segments. Expect mid to high single-digit growth potential for this segment in a normalised environment.
Automotive. A fast growing segment, could deliver 10%+ growth in a normalised environment. Could be a high-margin business given the sticky nature of relationships. Amtek is seeing both new customer wins (especially in the steering columns segment) and increasing wallet share with existing customers.
Electrical. Growth potential in a normalised environment could be around high single digit to teens, but expect weakness in the next 12- 18 months due to softness in infrastructure spending.
Imaging and printing. Revenues close to bottom but unlikely to see significant growth near term as Amtek tries to increase penetration into higher value add products and de-emphasise low value products.
Source/Extract/Excerpts/来源/转贴/摘录: Credit Suisse
Publish date: 04/10/13