• Overview. 1QFY20 core earnings slipped 19% in tandem with 11% drop in revenue. On qoq basis, core earnings surged 24% supported by effective cost control where net opex to revenue was at 75% (4QFY19: 77%).

• Key highlights. On yoy basis, revenue fell mainly due to lower contribution from Asia and Europe market (Table 2). We believe this was due to the global slowdown in auto industry which resulted from the slowing in global economic growth.

• Against estimates: inline. Overall, 1QFY20 core earnings were inline with our and consensus’ expectations at 24%.

• Dividend. A 10 sen first interim DPS (1QFY19: 10 sen) was declared, implying a 55% dividend payout and representing 40% of our full year DPS expectations of 25 sen.

• Outlook. We remain cautious over MPI's prospects owing to the slowing global auto industry which we expect to persist in FY20.

• Our call. Our coverage on MPI is non-rated after it was excluded from the SC’s Shariah-compliant stock in Nov 2018. Management guided that necessary actions are underway to ensure MPI is being re-included in the Shariah list come Nov 2019 release.

Source: BIMB Securities Research - 27 Nov 2019