• Overview. 4QFY20 core profit grew 45.7% yoy in tandem with higher sales across all markets (Table 2). On qoq basis, core profit surged over 100% despite only 7.7% growth in revenue. This was underpinned by lower net opex and effective tax rate.
• Key highlights. Improvement in revenue was due to easing of movement control where MPI plants in Ipoh and China have operated at full capacity compared in 3QFY20 at 50%.
• Against estimates: inline. FY20 core profit grew 10% primarily on higher revenue contribution from Asia segment. Overall MPI’s FY20 core profit was inline with our and consensus’ expectations at 101% and 107% respectively.
• Outlook. We believe MPI’s earnings would grow strongly in FY21 supported by continued surge in demand for industrial (data centre) and recovery from automotive products. Besides, we expect MPI to benefit from US-China trade tension given its plants in Ipoh and China are able to freely serve customers from these two countries.
• Our call. Maintain BUY with higher EV/ROIC-derived TP of RM18.90 (WACC: 9%, g: 1%) (Table 3) as we rolled over valuation to FY21 and introduce our FY23F figure. Our valuation implying FY21/22F PE of 20x/19x.

Source: BIMB Securities Research - 1 Sept 2020