AFTER HE had covered details of his company’s stellar FY’08 performance, Mr Yao Hsiao Tung spoke about the challenges that lay ahead. They sounded all too familiar – order slowdown, increased competition, etc.
My ears perked up when I heard the words ‘fighting spirit’. Now, that sounded different.
“We will intensify our team fighting spirit,” said Mr Yao, executive chairman of Hi-P International, which has manufacturing sites in five countries.
“They have a fighting spirit, and I told them to cherish whatever business we have in hand, and we should put in tremendous effort to fight for new business.”
Mr Yao was born to Taiwnese parents and grew up in Taiwan, where earthquakes, typhoons and cross-straits tensions have strengthened the resilience of the people.
He spoke about the ‘fighting spirit’ when he briefed the media on his company’s FY ’08 results at Fullerton Hotel, and repeated his words when he briefed analysts later.
“We are determined to fight through the recession. After the recession is over, I believe Hi-P will reach a new height,” he said.
Mr Yao is 69, but his fighting spirit is as strong as it must have been about a quarter of a century ago when he took over Hi-P, a Singapore tooling firm suffering losses then and had just six workers.
His fighting spirit – and his ability to turn his men into fighters – must figure in anyone’s attempt to understand how Hi-P has grown to what it is today, employing more than 15,000 workers in five countries.
And its results last year were the best it had ever achieved.
Last week, Mr Yao announced that Hi-P had record sales of S$1.1 billion in 2008. Net profit was another record, at $102 million.
Final dividend: 2.2 cents a share (up 47%)
Hi-P has two Strategic Business Units – wireless telecommunications and consumer electronics - and 25 manufacturing plants globally.
It provides manufacturing services and electro-mechanical modules to customers in the telecommunications, consumer electronics & electrical, computing, life sciences/medical & automotive industries.
In comparison with FY2007, net profit attributable to shareholders in FY2008 increased by 70.5% on the back of a 10.3% revenue growth.
Gross profit margin improved by 500 basis points to 18.3% and net profit margin improved by 340 basis points to 9.5%.
Net cash generated from operations surged by a whopping 151% to S$164.8 million.
The economic slowdown affected results for the quarter ended 31 December 2008, when revenue decreased 13.2% year-on-year to S$272.1 million while net profit dipped 19.2% to S$25.0 million.
Aiming for same profitability in Q1
At the end of 2008, Hi-P had a strong balance sheet with net cash of S$125.9 million and a 1.0% gross gearing.
The board proposed a first and final dividend of 2.2 cents per share, which is 47% more than the 1.5 cents per share paid for FY2007.
While margins and cashflows were pleasant surprises to Nomura Singapore analyst Chitra Gopal, she has a ‘neutral’ call on Hi-P stock because of the company's customer concentration, and concerns over the broader smartphone industry, which cannot escape falling margins this year, she said.
Research in Motion accounted for 50% of Q4 sales of Hi-P.
How is Hi-P doing so far in the new year? Mr Yao said revenue is expected to be lower in the first quarter compared to the same quarter last year.
"However, the Group aims to maintain similar profitability through better cost control," he said. Now, that's some fighting spirit - and if the same profitability is indeed achieved, we are talking of $25 million. (see chart above)
