• Overview. 3QFY20 core profit surged 88% yoy in tandem with higher revenue and net interest income. EBITDA margin expanded 1.5ppt despite increase in net opex. This was due to favourable mix of high margin products. On qoq basis, core profit slipped 50% due to seasonality factor.
• Key highlights. On yoy basis, improvement in revenue was underpinned by higher contribution from Asia (+25%) and US market (+9%) which offset the weaker contribution from Europe market (Table 2).
• Against estimates: inline. 9MFY20 core profit grew 9% primarily on higher revenue contribution from Asia segment. Overall 9MFY20 core profit was inline with our and consensus’ expectations at 76% and 77% respectively.
• Dividend. A second interim DPS of 17 sen (3QFY19: 17 sen) was declared, implying a dividend payout of 47% and brings its total FY20 DPS to 27 sen.
• Outlook. We remain positive on MPI’s business prospects despite concern over worldwide global semiconductor supply-chain disruption. MPI’s plants in China and Ipoh continue to run at full capacity even during lockdown and movement control order to meet customers’ orders as several other factories elsewhere were closed due to the spread of Covid-19.
• Our call. Maintain BUY with EV/ROIC-derived (based on GGM formula) TP of RM12.75 (WACC: 9.2%, g: 1%), implying FY20/21F PE of 18x/13x.

Source: BIMB Securities Research - 21 May 2020