Hi-P revenue crashed 24.6% to $951.4m in 4Q14

Due to a significant decline in orders from Motorola and Blackberry.

The two telecommunications companies are struggling.

Hi-P’s revenue decreased 24.6% to SGD951.4m due to a significant decline in orders from Motorola (MSI US, NR) and Blackberry (BB CN, NR), coupled with the steep learning curve and setbacks it encountered pertaining to its Xiaomi production yield.

According to OSK-DMG, what is more disappointing is that its NPAT of SGD10.5m was mainly made up of one-offs totalling SGD9.1m from insurance claims and liquidation of its Mexico subsidiary. Without these one-offs, Hi-P would only have a recurring NPAT of SGD1.4m for FY14.

Management highlighted that it expects to incur another loss in the next quarter (1Q15) due to several setbacks it encountered with its Xiaomi production yield. Analysts are a little more bearish after this disappointing quarter, the next two quarters are expected to continue to be loss making, due to a higher cost base incurred with the addition of the Nantong factory in China.

OSK-DMG believes that any potential turnaround, provided it does not encounter any more setbacks, can only happen from 2H15 onwards as there has not been any new product launch from its largest US customer since the start of the year. Furthermore, most new product launches typically only come in 2H15.