HI-P (LIM&TAN)

S$0.605-HIPS.SI

? The company is likely to buy back its own shares should there be selling pressure resulting from news (more a clarification of claims made by China Labor watch ) about strike action by workers at its plant in Pudong, Shanghai.

? We fear this may not have the same effect as when Hi-P made two purchases earlier last month (129,000 shares on Nov 3rd at 60 cents and 306,000 shares on Nov 10th at 66 cents). Hi-P hit a high of 73 cents on Nov 14th.

? Hi-P has disputed numbers provided by CLW : a. it said only about 200 workers or 5% of the affected workforce took part in the strike on Nov 30th, vs latter’s claim of 1000; b. it said it did not lay off thousands of workers who took part in industrial actions for 10 days in July, as alleged by CLW.

? Investors in Singapore are not aware, until Friday’s statement by Hi-P, of the latest and what was alleged to have happened in July.

? Hi-P has 15 manufacturing plants, of which 5 are in China, with the rest spread across Thailand, Mexico, Poland and Singapore.

? The past few months have been somewhat tumultous for Hi-P: profit warning on July 1st and again on Oct 21st .

? Which likely would in turn help explain why the company stopped its high-profile and closely monitored buy-back program after the last on Feb .

? We would revert to HOLD as a result of the above.