Hi-P reports 2Q19 net profit rose 17 percent as margins increased

Hong Kong money-changer with yuan symbol signHong Kong money-changer with yuan symbol sign. Photo taken pre-Covid

Hi-P International reported Thursday its second quarter net profit rose 16.9 percent on-year to S$14.38 million as a change in product mix and better cost management boosted margins.

Revenue for the quarter ended 30 June fell 5.2 percent on-year to S$286.45 million, the contract manufacturer of consumer electronics said in a filing to SGX.

The decline was mainly due to the deconsolidation of flexible printed circuit board (FPCB) unit Hi-Flex (Suzhou) Electronics in the fourth quarter of last year after Hi-P’s interest was diluted, Hi-P said, adding price pressure and lower sales volume from some customers also weighed revenue. But the company added this was offset by demand from customers in other segments, such as consumer electronics products, as Hi-P moves to diversify its business.

The net profit margin for the quarter rose to 5.0 percent form 4.1 percent in the year-ago period, while the gross profit margin rose to 13.9 percent from 9.8 percent in the year-ago quarter, Hi-P said.

“The rise in gross profit margin was driven by a change in product mix, better cost management, more effective spending on new product
introduction and the deconsolidation of losses from the FPCB business unit,” Hi-P said.

In the outlook, Yao Hsiao Tung, executive chairman and CEO, pointed to a “volatile and uncertain” market amid China-U.S. and Japan-South Korea trade tensions.

“To reduce the impact of trade war, we have initiated new projects in Thailand and worked on some plans out of China to cope with customers’ business demand. In the meantime, we have also fought diligently for non-U.S. related business to fill our operations in China,” Yao said in the statement.

Yao added that within the company, Hi-P has been “working aggressively on growth transformation,” and pointed to the second quarter earnings as a sign of positive results.

He said Hi-P has been seeking suitable M&A opportunities, and it has increased its sales team in some regions to seek new business, including in the medical and automotive industries.

Hi-P issued guidance for the third quarter to post higher revenue and similar profit on-year, with the second half of the year expected to post higher revenue and profit than the first half. It added it expects similar revenue and lower profit for 2019 as in 2018.

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