Stock Downgraded: Hi-P target price reduced to 0.8 by Citigroup!

Citigroup has reduced its target price for electronics contract manufacturer Hi-P International Ltd to 0.80 sgd from 1. 15 and lowered its earnings estimates for this year through 2008 by 12-21 pct. The brokerage said it cut its earnings estimates as it believes that earnings this quarter and next will remain weak due to a decline in handset volumes. It expects net profit to fall from 89 mln sgd last year to 74 mln this year, before improving to 95 mln sgd in 2007 and further to 110 mln in 2008. "Checks suggest Hi-P has seen handset volume decline rapidly, due to lost market share and a slowdown in end-market demand," Citigroup said in a note published on Tuesday. "Utilization at its Tianjin plant (in China) has now fallen to 30 pct from over 70 pct in the first quarter, thus second quarter and third quarter (earnings) look set to see consecutive sequential sales decline," it added. Apart from weaker sales in the handset market, Hi-P's margins are also under pressure, the brokerage said. At 9.30 am, Hi-P was down 0.01 sgd or 1.19 pct at 0.83 with 143,000 shares changing hands.