Overview. MPI’s 1QFY22 core profit rose 43% yoy and 31% qoq to RM86m. This was in tandem with strong revenue reported during the quarter which marked the sixth consecutive record-breaking quarter with revenue hitting RM585, up by 33% yoy and 9% qoq. Improvement in core profit was also backed by lower net opex following MPI’s effective cost management which saw EBITDA margin expanded 3.6ppt yoy and 3.9ppt qoq to 31%.

Key highlights. All markets reported yoy improvement with Europe recording the highest growth (+43%), followed by the US (+31%) and Asia (+30%) (Table 2). Still, Asia market remains the main contributor to MPI’s revenue at 64% in 1QFY22.  Against estimates: inline. MPI’s 3MFY22 core profit was inline with our and consensus’ estimate at 29% and 28% respectively.

Dividend. A 10 sen first interim DPS (1QFY21: 10 sen) was declared. This implies a 23% dividend payout and 33% of our full year DPS forecast of 30 sen.

Outlook. We remain upbeat on MPI’s business prospects as we see continuous strong demand globally for its products i.e. automotive, consumer/communication and industrial (data centre), amid economic recovery coupled with a better cost management to provide MPI with solid earnings growth in FY22.

Our call. Maintain HOLD at TP of RM45.00, pegged at 30x PER on FY22 EPS of 150 sen.

Source: BIMB Securities Research - 25 Nov 2021