Hi-P proves naysayers wrong with 60% revenue surge in Q3

It’s finally back in the black.

Hi-P shot past bearish consensus expectations and managed to return to profitability in the third quarter, with its revenue surging 60% year-on-year to $394m.

Its Jinhai and Nantong factories, previously loss making, have made a turnaround in 3Q15, while gross profit margin expanded from 9.4% to 13.6% due to a shift in product mix.

According to RHB Research, Hi-P’s strong turnaround keeps it a trading buy despite uncertainties surrounding the arbitration claim with Yota.

“ Management is still in talks with the concerned parties to find a resolution relating to the arbitration claim. Currently, the USD126m claim is parked under both account receivables and inventory under the balance sheet. With Yota Devices being taken over by REX Global Entertainment (164 HK, NR), we expect a positive settlement favoring Hi-P. However, we note that there is still a risk of Hi-P needing to account for an impairment loss depending on the outcome of the claim,” said RHB.