Company Background. Mi Technovation (Mi Tech) is principally involved in design, development and manufacturing of wafer-level chip scale packaging (WLCSP) sorting machines for the semiconductor industry. It operates under 3 main divisions: (i) semiconductor equipment business unit (SEBU), (ii) semiconductor material business unit (SMBU), and (iii) semiconductor solution business unit (SSBU). SEBU division sells semiconductor manufacturing equipment with AI visual inspection and smart factory automation, while SMBU division focuses on solder spheres, crucial assembly & packaging materials in the semiconductor industry.

Prospects. (i) Sales in SEBU remain robust due to its diversified solutions strategy, propelled by the surge in demand within the highperformance computing (HPC) segment. The newer state-of-the-art machine series - i.e. AI-enabled wafer-level advanced packaging & die-sorting machines, automated optical inspection and advanced laser bonding equipment - are expected to significantly contribute to overall revenue, (ii) SMBU, equipped with cutting-edge manufacturing technologies to produce micro-solder balls from a patented alloy, will continue expanding its market presence, and (iii) SSBU will seize growth opportunities in automotive and renewable energy, positioning itself within China's ecosystem, especially in the wide bandgap semiconductor renewable energy segment.

Financial Performance. In 1QFY24, Mi Tech posted a higher revenue of RM107mil (+39.4% YoY) with PAT of RM26.8mil (+4.2x YoY). This was mainly supported by an increase in the delivery of machines and spare parts, especially for EMI (electromagnetic interference) process equipment, better product mix, improved cost efficiency and favorable foreign currency exchange.

Valuation. Mi Tech is currently trading at an attractive FY26F P/E of 20.4x, which is lower than Bursa Technology Index’s 30.6x. As a comparison, ViTrox Corporation, which designs/develops/manufactures automated vision inspection equipment & systems for the semiconductor industry, trades at a much higher FY26F P/E of 30.3x.

Technical Analysis. Mi Tech may trend higher after it broke above the RM2.10 resistance with a long positive candle a few weeks ago. In view of the uncovered upside gap formed on 13 May with rising EMAs, the upward momentum is likely to pick up further. A bullish bias may emerge above the RM2.35 level with stop-loss set at RM2.05, below the 50-day EMA. Towards the upside, nearterm resistance level is seen at RM2.80, followed by RM3.00.

Source: AmInvest Research - 30 May 2024