CEO Morning Brief

Underpinned by Forex Gains, MI Technovation's 3Q Net Profit Rises 7% Despite Lower Revenue

Publish date: Tue, 08 Nov 2022, 08:43 AM
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TheEdge CEO Morning Brief
Underpinned by forex gains, MI Technovation's 3Q net profit rises 7% despite lower revenue

KUALA LUMPUR (Nov 7): Despite an over 21% decline in top line, MI Technovation Bhd’s net profit for the third quarter ended Sept 30, 2022 (3QFY2022) climbed 6.85% to RM20.25 million from RM18.96 million a year earlier, buoyed by favourable foreign exchange (forex) gains.

This was as a result of the strengthening US dollar against the majority of Asian currencies during the quarter, the semiconductor equipment and materials manufacturer said in a filing on Monday (Nov 7). Its earnings per share also rose to 2.26 sen from 2.24 sen.

Its revenue, however, fell 21.33% to RM89.66 million compared with RM113.97 million in 3QFY2021, owing to weaker contributions from the semiconductor equipment business unit (SEBU).

MI Technovation said its SEBU’s revenue contribution fell by 45.64% to RM34.9 million from RM64.2 million, due to cautious capital expenditure spending from customers due to the semiconductor industry’s slowdown, worsening geo-political tensions, and deferment in order delivery due to slowdown in customers’ expansion pace.

Meanwhile, the group’s semiconductor material business unit (SMBU) posted revenue contribution of RM54.8 million, 10.04% higher than the RM49.8 million logged a year ago, on the back of sustainable production volumes, as well as higher average selling price and demand.

For the nine-month period ended Sept 30, 2022 (9MFY2022), MI Technovation’s net profit grew 6.53% to RM51.75 million from RM48.58 million in the same period last year, while cumulative revenue declined 4.59% to RM272.33 million versus RM285.44 million.

Going into the final quarter of FY2022, MI Technovation said the group faces challenges in delivering results for the full year mainly due to the worsening Sino-US semiconductor sanction and conflict, rising inflation and interest rates affecting customer sentiments, as well as the adverse impact induced by geopolitical tensions on world economic growth.

“With our customers taking [a] more cautious approach in production capacity investment and expansion plan, we expect that SEBU will show a decline in sales in FY2022,” it said.

However, it expects its SMBU to record sales growth in FY2022, in view of the segment’s key customers having shown growth in market share.

“The group will deliver [a] more stable and consistent quarterly top line in FY2022 with less cyclical impact, as a result of business diversification where capital investment on equipment and production consumption ramping of materials are having different purchasing cycles,” MI Technovation added.

Source: TheEdge - 8 Nov 2022

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