Daily Review, 25 September 2012 Page 3 of 4
SGX-ST Member, SGX-DT (CNCM)
HI-P
S$1.06-HIPS.SI
Hi-P’s major customer Apple fell 1.3% last night after
reports showed that in the first 3 days since the debut
of iPhone 5, the company sold 5mln units, short of
market expectations of 6-7mln units due to supply
constraints.
And it did not help that Foxconn, Apple’s key supplier
in China had to suspend production at one of its plant
in China yesterday due to employee disputes.
Notwithstanding the above, we believe Apple has a
good problem in that it is not a problem with weak
demand like what the traditional PC sector is
currently facing but that of supply constraints which
will likely to be resolved sooner rather than later.
And unlike Research In Motion whose new
Blackberry 10 will only be launched in 1H 2013,
Apple’s iPhone 5 supply constraint is likely to be
resolved in time for the crucial Christmas period in
Dec ’12.
Suppliers such as Hi-P is busy ramping up new
production capacity in China this year as well as next
year to cater to Apple’s robust demand.
Since Hi-P broke above the $1.03 resistance level last
week (first reached in Mar ’12), it has been stuck in a
narrow range of $1.03-1.09.
Notwithstanding short term set-backs, we believe the
mid-longer term demand dynamics from Apple should
see Hi-P trending up towards its next resistance level
of $1.24 reached twice in 1H 2011.
We maintain BUY on Hi-P.