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HI-P reignites buyback program, SERIAL shares sought by chairman



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Hi-P stock has dived by about 50% in the last six months or so. The company now has a market cap of S$526 m and a trailing PE of 7.6

Hi-P International: For 8 months, from Feb 25 till early Nov, Hi-P laid off buying its shares from the market.

However, when its share price tumbled by about 50% from its Feb 25 price of $1.20, the company re-started its buyback programme.

Between early Nov and 13 Dec, it made purchases on eight days, totaling 2,383,000 shares.

They were made at between 59 cents and 66 cents, which is below its Net Asset Value of 70.65 cents.

An integrated contract manufacturing services provider, Hi-P is in a strong net cash position of S$200 million (as at end of Sept) to buy aggressively its shares if it so wishes.

The company has a track record of strong buying. Under the previous year’s buyback mandate, the company scooped up a whopping 41,992,000 shares, or a 4.8% stake.

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Yao Hsiao Tung, chairman of Hi-P. File photo by Sim Kih

Recently, Hi-P’s stock price has been dragged down by poor 3Q profit of $6.5 million, an 80.5% plunge compared to the same period last year.

The company, whose key customers are RIM and Apple, attributed the decline mainly to a shift in product mix to more high level assembly with higher cost of materials and an increase in headcount and wages.

It, however, expects the current 4Q to be stronger than 3Q2011 as the delayed programs of its customers come on-stream.

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Serial System: Its chairman, Derek Goh, is a true believer in his company’s stock, going by his regular purchase of shares of Serial shares.

In his most recent buying spree, he has raised his holding to 305.9 million shares or a 33.78% stake in Serial, which he founded.

The dividend yield is a key attraction of Serial stock: At the recent price of 10.1 cents, the 12-month trailing yield is about 11%, according to Bloomberg.

Serial has paid out 0.3 cent a share at half-time and 0.16 cent a share after its 3Q results.

Investors can expect a final dividend to be paid also, as in past years, said Derek recently, guiding for an overall payout ratio of 40-50% of the net earnings for FY11, which is unchanged from the past few years.

For FY10, the final dividend was 0.67 cent, compared to 0.38 cent for FY09.

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Serial System is a major semiconductor and electronics components distributor in the Asia Pacific region with revenue of S$746 m in FY10. Photo at top right: Derek Goh, exec chairman of Serial.


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Comments  

 
0 #3 Tactical Trading Academy 2012-11-02 12:05
I prefer stocks with more consistent earnings growth.
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0 #2 hI hI 2011-12-15 16:07
Hi-P bought another 150,000 shares today! Stock is weak today, closing 1.5 cents lower at 61.5 cents. Can you imagine what it would be without the buyback support?
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0 #1 Ah Pad 2011-12-15 11:23
Not clear what Hi-P will pay out in dividend. It's not quite a dividend play as a result. Hi-P does not have a standard dividend policy. Payout ratio has been increasing over the years from 8% in 2005 to 45% in 2010. Ratio was 49% in 2009. Being in big net cash position of S$200m is great for supporting share price via share buyback prog. Current price level might look like being supported, so the upside is the only question.
Hi-P has been free cash flow positive over the last 3-4 years
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