• We visited Amtek’s Nan Hui plant in Shanghai after a well-attended corporate day in Singapore
• Amtek’s transformation has strengthened its market positioning and created a platform for solid earnings growth ahead
• Reiterate Buy on Amtek with TP of S$1.65

Overwhelming investors’ response.
Amtek met with over 40 investors during our Singapore corporate day. From the FAQs raised, we believe investors have not fully realized Amtek’s renewed growth potential. Post meetings, however, have left many with a positive impression of the group’s renewed business model and promising prospect.

FAQ 1: what has changed?
This 40- year old company has been revamped to 1)promote inter-co sharing of information and customer base; 2) scale up the value chain with expanded capability in industrial design etc; 3) move away from single part items to complex modular assembly; and 4) operate with a leaner structure after extensive cost restructuring (include plant shutdowns).

FAQ 2: growth drivers?
Automotive is a key growth driver expanding by 30-40% in the next two years, supported by various new programmes.
Electronics/electrical is another growth anchor, driven by a relocation of European MNCs to China. Thanks to superior technical strength, customers have been loading Amtek with multiple new projects, which could see the SBU grow 30-40%.

FAQ 3: how to manage rising costs?
Management believes there is room for further cost cuts via better work and engineering processes and a 10%
reduction in headcount. Its cost-plus arrangement and back-to-back order of required metal and raw material would lighten the burden of cost inflation substantially.

Reiterate Buy.
Amtek is inexpensive at 8-10x FY11/12 PE for 50-60% earnings CAGR and rising margins. Apart from 25% upside to our TP of S$1.65, the stock also pays 5% yield.