Amtek Engineering’s profit disappoints at US$9m in 1Q12

DBS says 2Q12 will be negative for Amtek as its Mass Storage segment has been affected by the floods in Thailand.

Also, new products in its Casings & Enclosures segment were deferred due to macro uncertainty.

Here’s more from DBS:

1Q12 net profit of US$9m (-27.8% y-o-y) fell short of our US$11.3m forecast. Key variance was weaker than expected gross margin, down 1.3ppts to 16.7%, because of higher tooling works, which were strategically sold at costs to drive future component sales. Strong USD against operational currency (SGD, RMB) also resulted in forex losses vs gains last year. We had expected Sep quarter to be seasonally strongest but 1Q12 earnings only met 20% of original FY12F.

Revenue improved 9% y-o-y to US$182m, thanks to growth in all segments except Mass Storage (-1%). For the quarter, Amtek generated US$3.8m of FCF and lowered net gearing to 0.12x from 0.14x last quarter.

2Q12 is uncertain and negative. Firstly, Mass Storage (15% of sales) will be dragged by disruption in the HDD supply chain as a result of the floods in Thailand even though Amtek’s plants and customers are not directly affected. Over at Casings & Enclosures, (25% of sales) new products were deferred due to macro uncertainty. Automotive (14% of sales) is equally fluid because growth in China (60% of auto sales) could continue to slow on cooling measures and Europe (40% of auto sales) could be affected by the European debt crisis.

Downgrade to Fully Valued on potential downside to new TP of S$0.51. Although our original earnings were 13% below consensus, we have cut FY11/12F by another 20% as we impute lower gross margin and weak demand outlook. Consequently, our TP is reduced to S$0.51, still based on –1SD valuation peg at 5.5x FY12 PE.

Also Read

Institution of Engineers sets up new board to promote faster chartership registration

Hanwha raises offer to $0.67 to acquire full control of Dyna-Mac Holdings

Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

I want to download the media kit