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Semiconductor equipment maker, Mi Technovation Bhd is set for a further upside having touched an intraday high of RM1.91 on Dec 22. The stock will likely advance towards the RM1.94 recent high, followed by the next resistance at RM2.06 testing the year high of RM2.11 seen in March.

Financially, things are looking promising for Mi Technovation. Core earnings jumped 33% yoy to RM15 million in 3QFY23 from RM11.3 million while revenue rose 10% thanks to stronger sales from Semiconductor Equipment Business (SEBU). SEBU sales surged 46.5% yoy to RM51.1 million, boosted by higher number of machine deliveries to China, especially for electromagnetic interference process equipment.

On the other hand, the company saw weaker Semiconductor Material Business Unit (SMBU) sales mainly attributed to ongoing inventory adjustment in mobility & wearables segment in Taiwan. Its operating profit margin improved from 18.5% to 20.1% due to higher capacity utilization and favourable product mix in SEBU segment.

For the nine-month period, Mi Technovation posted core earnings of RM30.1 million, down 5.3% yoy. On a positive note, the 3Q core results improved by 69% qoq, marking a second consecutive quarterly growth.

Analysts are generally bullish on the counter with target price of RM2.57 based on 30x FY24 EPS. They are optimistic on SEBU and SSBU outlook. Its Si Series final test handler for optical sensor and automotive chip testing, which is locally designed and manufactured in its Suzhou plant, has received strong demand.

The company has express confidence that the Suzhou plant will turn around this year.

Meanwhile, its Ai Series bonding equipment, which are under the operations at Gyeonggi Korea factory, are gaining traction, driven by the boom in the HPC, Memory and Artificial Intelligence segments. It also expects to see stronger demand for its SMBU unit with new product launches from key customers in the area of mobility & wearables, automotive and AI.

Its Ningbo plant is currently undergoing a large-scale production qualification process.

To ride on the EV and renewable energy momentum, the Semiconductor Solution Business Unit (SSBU) has officially launched its investment in Hangzhou for a new R&D center and manufacturing facility for power modules and devices.

Its semiconductor equipment business involves producing wafer level chip scale packaging sorting machines, vision inspection machines, final test handlers, assembly machines, wafer fabrication tools and testing instruments.

Apart from Malaysia, it has a business presence in Taiwan, South Korea, China and the US. The company had in 2021 ventured into semiconductor materials business, involving in the the manufacturing of solder spheres, which are widely used in advanced packaging such as ball grid array and wafer level packaging in the semiconductor industry.

There are many reasons to like Mi Technovation given its focus in the semiconductor business.

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Here are the setup based on Daily Chart:

1. Reversal with high volume at the bottom

2. Moving into uptrend with pullback along with 20 & 40 MA
3. Recently break below 40MA and recover quick. May see a trend weakening and moving sideways