Image Venue: Jurong Country Club
Time & date: 3 pm, Apr 26.

 




HIT BY a slump in global consumer electronics demand in 2009, Hi-P’s FY09 net earnings went down 47.9% year-on-year to S$53.2 million, but the good news is: shareholders will be getting a 36% increase in dividends soon.

At its AGM on Mon, shareholders approved the payment of a first and final tax-exempt dividend of 3 cents per share (FY08: 2.2 cts).

This is not surprising, considering that the consumer electronics contract manufacturer has a net cash hoard of S$242 million and a low gearing of 0.9% as at 31 Dec 2009.

Based on its last close price of 67 cents, the dividend yield is now 4.5%. The dividend payout ratio near-doubled to 49% as a result.


Hi-P is a precision plastic tooling and secondary processes supplier. It has manufacturing facilities in Singapore, China, Poland and Mexico.

It has a vertical integration strategy to be a leading mechanical solutions provider to tier-1 handset OEMs.

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The operating environment is challenging now, says executive chairman Yao Hsiao Tung. NextInsight file photo
 

According to Citibank in a report dated 9 Mar, its top 5 customers now account for 85% of its revenue. These include Huawei, Apple, HTC and Nokia, and Palm, mostly in handset products and accessories.

Below is a summary of questions raised by shareholders at the AGM and the management’s answers.

Q:  How many shares have you repurchased?

We bought back 18,429,000 shares at an average price of 42.6 cents.  We decided to buy back the shares as we have a strong cash flow and the shares were trading at a steep discount to our NAV of 66 cents per share.

Q: What is the mechanism that triggers a share buyback transaction?

The board of directors will make the proposal, which will be approved by the chairman.  The CFO will then buy from the open market.

Q: Are directors’ fees (S$326,000) shared equally?

Yes.  However, if the director is a committee chairman, he will get slightly more as compensation for his additional responsibilities.

Q: How many directors do you have?

There were 6 directors in 2009.

 

Q: How do you determine directors’ remuneration (S$3.4 million)?

Their remuneration is determined by the remuneration committee, who are non executive directors.  Last year, we recognized that Mr Yao and his team made an outstanding contribution.  It is set at a level that recognizes past contribution and motivates them to continue such contribution.


Related story:  HI-P: NRA initiates coverage with ‘Buy’; 94-ct px tgt means 41% upside

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