Amtek Engineering succumbing to weakening macro environment

Hard-hit earnings could extend past 1Q13.

Here's more from DBS:

Net profit of US$6m (-33% y-o-y) was 38% below our US$9m estimate. Revenue declined 11% y-o-y to US$162m as the weakening macro environment dragged down all SBUs particularly HDD (-18%) and consumer electronics (-12%). Imaging/Printing also fell 17% due to push back in deliveries by some Japanese customers due to Sino-Japanese tensions over Diaoyu Islands. Gross margin held up at 16-17% but negative operating leverage as a result of lower sales caused operating margins to shrink by 2ppts y-o-y. Despite Sep being a seasonally stronger quarter, sales and profit declined 6% and 31% respectively.

Weakness to persist near term; new programmes to start only in 2014. Notwithstanding new businesses secured recently, macro headwinds which hit 1Q13 earnings is expected to last for another quarter. Near term, we can only expect benefits from automation from 2H13. As 1Q13 met only 17% of original FY13F vs 27% historically, we cut our FY13/14F estimates by 31% for both years.

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