Hiaptek - Best Yet to Come (BUY!)

Hiaptek (HTVB MK)

Its price has yet to move in a big way despite of hitting RM2.02 yesterday (2/1/08). I believe Hiaptek will go higher once it starts to generate income from the oil n gas pipes segment.

Key drivers:

1- Demand from domestic infra projects;

2- Higher margin for O&G pipes;

3- Higher plant utilisation rate.

Risks:

1- Slow implementation of 9MP;

2- Unexepected d/turn in steel price (which is unlikely at d moment);

3- High inventory level;

4- Highly-geared.

Recommendation:

BUY

Target Price:

RM1.94 (RHB), RM3.13 (Affin), RM3.36 (OSK), RM1.75 (Alliance), RM2.82 (AM),RM2.66 (Merill)