Excerpts from analysts' reports
Analyst: Loke Chunying
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INVESTMENT HIGHLIGHTS
Hi-P’s top customers, Apple and Xiaomi (above), are market leaders with a market share of about 36% and 7% in the high-end and mid-low range smartphone segments respectively.
Photo: http://www.techinasia.com/Hi-P is a global integrated manufacturing service provider, specialising in precision plastic injection moulding, precision metal stamping and ancillary value-added services.
With its comprehensive suite of manufacturing capabilities (from plastic to metal), Hi-P has been supplying parts and also involved in the partial assembly of products for its major customers like Apple, Blackberry and Xiaomi.
Global smartphone market to grow at a 5-year CAGR of 12.7%. According to IDC, more than 1.25b (+23.8% yoy) of smartphones will be shipped in 2014. Total smartphones shipments are forecast to reach 1.8b units in 2018 (2013-18 CAGR of 12.7%).
Of these, more than 50% of annual smartphone shipments are expected to be attributed to emerging markets.
Riding on the leaders in smartphones. Hi-P supplies components to Apple and Xiao-mi, which had a global market share of 11.9% and 5.1% of the global smartphone market respectively as of 2Q14, according to strategy analytics. 
Hi-P executive chairman Yao Hsiao Tung.
NextInsight file photo.Serving both the high-end (Apple) and budget (Xiao-mi) smartphone makers, we believe Hi-P is well positioned to benefit from the global smartphone boom. Note that Hi-P’s top customers, Apple and Xiaomi, are market leaders with a market share of about 36% and 7% in the high-end and mid-low range smartphone segments respectively.
Strong earnings recovery expected in 2H14. As a key supplier to Xiaomi and Apple, we believe Hi-P is likely to benefit from the recent new product launches from these two major customers. With the manufacturing of new products from its customers expected to commence in 2H14, we expect Hi-P to report stronger sales and higher utilisation (and hence higher margins), underpinning a strong 2H14 recovery.
Successful production of Xiaomi’s Mi4 steel frame may open doors to new business opportunities. While there have been some technical bottlenecks (due to the complicated manufacturing process) affecting the production yield of the Mi4’s steel frame, we understand Hi-P is near a breakthrough. We believe the successful production of Mi4’s steel frame may open new business opportunities for Hi-P.
Recent story: HI-P INTERNATIONAL: Xiaomi orders augur 2HFY2014 turnaround
