Actual vs. Expectations     The group's full-year net profit was better than ours as well as the consensus estimate and accounted for 113.7% and 110.2% of both numbers respectively.

Dividends     A final tax-exempt dividend of 2.0 sen has been proposed, bringing FY12 net DPS to 3.0 sen, which implies a payout ratio of 16.1%.

Key Result Highlights     YoY, FY12 revenue soared by 30.4%, boosted by the higher orders in the last two quarters amid the Thai's flood recovery. However, its net profit merely inched up by 3.7%, offset by the property damage losses made in the 1Q12 during the Thai's flooding.

QoQ, 4Q12 revenue declined by 7.5% despite the normalised shipment of orders above as there were lower shipment of orders of late with a slowdown in sales being anticipated for the next two quarters. Nonetheless, the net profit was only reduced by 5.8% thanks to a lower effective tax rate of 13.9% (3Q12: 17.4%). The camera parts segment accounted for 57% of the group's total turnover (3Q12: 49%) followed by HDD (29% vs. 38%) and Industrial/Automotive (14% vs. 13%).

Outlook     Management believes that the growth in the camera segment going forward may continue to be dragged down by a softer demand due to 1) a weaker consumer spending; 2) the anti-Japanese sentiments in China and 3) a lacklustre traditional year-end spending due to the lack of demand.

The group expects a turnaround to only happen in 2HFY13 for the HDD sector as the industry is in the midst of a down-cycle after a short-lived post-flood recovery.

Change to Forecasts     We are maintaining our earnings forecasts pending more details from today's results briefing.

Rating    Maintain OUTPERFORM

Valuation      We are maintaining our TP for now. Our current TP of RM1.50 is based on targeted FY13 PER of 7.5x.

Risks     Foreign currency exchange rate.

Industry recovery may falter halfway

Lower orders from HDD customers

Source: Kenanga