• Slightly above expectations. 3Q07 net profit of US$5.6m (+36% yoy) came in
7% above consensus and our expectations with the key variances being strongerthan expected revenue growth and an exceptional gain of S$0.2m. 9MFY07
results represent 76% of consensus and our full-year forecasts.
• Sales jumped 23% yoy in 3Q07, as the group registered healthy growth in all
business segments, especially in the consumer electronics (driven by LCD-related products), automotive (riding the outsourcing trend into Asia), and computerrelated sectors.
• EBITDA margins slipped 40bp yoy, as margins for stamping and tooling were
affected by the relocation of its Shanghai facilities to Nanhui and possibly higher material costs. However, pretax and net profits grew 45% and 37% yoy
respectively, ahead of the topline growth, due to lower depreciation charges and an exceptional gain of US$0.2m (3Q06 exceptional loss of US$0.2m).
• Generated US$12m of positive free cash flow through higher profitability, better working-capital management and controlled capex. As a result, net gearing improved further from 0.22x as at end-Dec 06 to 0.19x.
• Positive momentum to continue. We expect the business environment to improve in the coming quarter as 3Q is typically the slowest quarter for Amtek due to shorter working days and Chinese New Year plant shutdown. Growth should
continue to come from an improved operating environment for its Europe and US
operations, increased demand for consumer electronics and automotive-related
products, and the completion of its relocation exercise in Shanghai.
• Forecasts and Outperform rating unchanged. We have kept our FY07-09 numbers but raised our target price from S$1.00 to S$1.08 as we roll over our 10x target P/E from CY07 to CY08. Maintain Outperform. We see catalysts from more sets of positive results and possible dividend surprises.
