Research In Motion (RIM), a major customer of Hi-P surged 23% in after hours trading after it reported that 4Q ended Feb ’09 sales and net profit rose a better than expected 84% to $3.46bln and 26% to $518mln respectively.

RIM also forecast 1Q ending May ’09 profit of 88-97 cents a share, beating street estimates of 82 cents, while sales of $3.5bln is also ahead of estimates of $3.4bln, and is even stronger than the seasonally stronger Feb ’09 quarter of $3.46bln.

The stronger than expected results reflect better than expected subscription rate of 3.9mln users versus expectations of only 3.48mln, stronger than expected take-up of their new products such as BlackBerry Storm and Bold and still strong demand for older products such as BlackBerry Pearl and Curve.

In addition, the narrowing of price points between smart phones and normal mobile phones are also seeing increasing market share gains by RIM both from the corporate as well as consumer segments.

According to US analysts who cover RIM, profit margins which has been under pressure for the last 2 quarters have abated and in fact surprised positively with the launch of their new phones. Retail store checks in Feb and Mar this year shows that demand for RIM’s new and existing products remain strong which ties in with management’s bullish forecast.

Hi-P is a major supplier to RIM and has been seeing robust orders since 2008. The latest positive surprise from RIM suggests that Hi-P will likely surprise on the upside going forward. As shown from our table yesterday, Hi-P’s management is very confident in their prospects which is in turn reflected in their share buy back program accounting for close to 60% of the stock’s trading volume since they started their share buy back program on 2 March ’09.

More importantly, the company has only bought back 18% of their total allowable buy back mandate, suggesting more buy backs going forward. Despite having risen 60% since our upgrade to BUY in late Feb ’09, we maintain our BUY recommendation but acknowledge that technically, the stock may face some resistance as it approaches the 60-65 cents level.