Hot stock: Hi-P shares down 7.4% as counter appears overvalued by market

HI-P International shares have taken a hit in Tuesday's early session following Maybank Kim Eng's call to downgrade the contract manufacturer's stock to"sell" with a target price of S$1.22, as it appears overvalued compared to its global peers.

DBS also noted that in light of the stock trending down since Monday, the daily moving average convergence divergence and 14-day relative strength index of Hi-P stocks is moving away from being overbought.In the Maybank Kim Eng report, analyst Lai Gene Lih noted that Hi-P has outperformed its Singapore-listed peers, gaining 47 per cent since posting its full-year results and April 8. The brokerage has recommended investors take profit following its recent rally.

Based on Monday's closing price of S$1.63, Mr Lai said that the stock appears overvalued at 14 times the FY2019 estimated earnings against its global peers' at 10.5 times, and is also one standard deviation above Hi-P's three-year mean of 12.3 times.

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