1QFY19 core earnings fell 21% yoy to RM56.8m in tandem on lower volume loadings from major sensor products. This was driven by an 8% revenue decline from the Singapore market which represent c.79% of total sales contribution. However, PBT margin improved slightly by 0.2ppts to 18.5% on better product mix and favourable forex. Overall, 1QFY19 core earnings were below ours and consensus estimates at 19% respectively.
On qoq basis, 1QFY19 earnings surged 81% on 18% increase in shipment volume to the Singapore market. We believe this could be due to the slew of new smartphone model launches during the 3QCY18 (Jun-Sep) period.
First interim dividend of 1.6sen (1QFY18: 2.3sen) was declared, implying an 84% payout. Our FY19 DPS forecast is based on 68% payout assumption.
We cut our earnings forecast for FY19-21F by 18-21% on the back of softer demand for RF testing business. This is largely due to the moderate outlook for smartphone sales amidst longer replacement cycle. Still, we are positive on the optoelectronics business (ie. iris scanner) which still makes up in c.25-30% of revenues as we expect demand for the product would pick up over the broader consumer segment.
Upgrade to BUY (from HOLD) with lower RM1.95 TP (from RM2.17). We believe the recent share price correction have fairly reflected the earnings risks for the RF business.
Source: BIMB Securities Research - 27 Nov 2018
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INARICreated by kltrader | Aug 12, 2024
Created by kltrader | Aug 12, 2024
Created by kltrader | Aug 09, 2024
Created by kltrader | Aug 09, 2024