As of 14.42 local time in Thailand, the share price of HANA Microelectronics Public Company Limited (HANA) was at ฿30.25/share, increased ฿1.50 or 5.22%. During the session, the highest of HANA’s share price was ฿30.75/share and the lowest war ฿29/share with a trading value of ฿158 million.
Tisco Securities expects HANA’s turnover in 2Q19F to increase 24% YoY and 10% QoQ to THB 334 million because there is no any extraordinary items but an operating profit will decrease 33% YoY from a sale and weak profit margin. HANA earns a profit from a foreign exchange with the amount of THB 60 million and a provision for employees with the amount of THB 66 million.
Moreover, Tisco estimates HANA to earn a revenue of THB 5.23 billion, decreasing 4.1% YoY, increasing 1.9% QoQ. From the information of SIA, a sale of semiconductor will decrease by 14.6% YoY in May due to weak demand and a 40% of revenue proportion based on the mobile phones which impacted from an economic slowdown.
The gross profit margin of 2Q2018 was 10.7%, fell by 13.6% from strengthening Thai Baht and moving production base of the customers in China factory. As a result, HANA’s production capacity had decreased which pressured on a profit margin.
Tisco stated HANA to beware of 2H2019 due to baht appreciation and a decrease of ability to compete with the regional factories, including trade war situation and banning Huawei. All of these factors will pressure on a turnover of 2Q19.
Tisco recommends “HOLD” HANA share with a fair value at ฿27.25 based on PER 12x after the share price has recovered more than 20% from the lowest point, however, Tisco is awaiting HANA’s basis business to be better before revising the estimation. Moreover, HANA’s dividend yield is 7% based on the current price. The key risk is increasing minimum wages, copper price and strengthen of baht.