HLN Technologies

�� Story: HLN has shed 41% since July amid broad market correction. Although the stock has bounced off recent low of S$0.495, it has underperformed other small caps in price recovery despite strong interim results and intact fundamentals. �� Point: Our recent update with management indicated healthy business flows in general. Orders from Dyson have been stronger than expected which helps to mitigate a smartphone hiccup, where customer has to delay delivery due to a technical problem with service provider. As HLN’s customer is maintaining the projected lifetime volume and other businesses are gaining traction, there is no need to change our assumptions at this juncture. We believe HLN remains on track to meet our projected EPS growth of 75% and 99% for FY07 and FY08 respectively. �� Relevance: After the selloff, HLN is undemanding at 5.4x FY08 earnings and only PEG of 0.06x considering its strong earnings recovery and good growth potential. Maintain Buy with unchanged target price of S$1.21 based on 12x FY08 earnings.