Results

Although 3QFY13’s top line of RM286.3 was 3.1% lower qoq, MPI managed to derive a positive core net profit of RM1.8m (+125.2% yoy and +188.9% qoq) neutralizing the loss registered in 2QFY13, bringing 9MFY13 core net profit slightly above breakeven point to RM0.8m (+102.1% yoy).

However, overall results still shy of street’s expectation of full year PAT of RM10.5m as it only accounts for 7.6%. This great disappointment is attributable to weaker than expected top line.

Deviations

• Mainly due to disappointing sales.

Dividends

• 2nd interim dividend of 5.0 sen (3QFY12: 5.0 sen) per share tax exempt with ex-date on 14th May 2013.
• YTD dividend of 5.4 sen per share less tax and 5.0 sen per share tax exempt (YTD FY12: 10.0 sen per share tax exempt) has been declared.

Highlights

3QFY13 revenue was higher by 3.8% yoy as the improvements in USA (+26%) and Europe (+2%) segments more than sufficiently offset the contraction recorded by the Asia segment (-6%). However, it was 3.1% lower qoq as Asia and USA segments experienced order reductions by 7% and 4% respectively, offsetting the 5% growth in Europe segment.

9MFY13 revenue grew 3.4% thanks to 23% expansion in USA segment, overwhelming the contractions in Asia and Europe segments with -2% and -6% respectively. This has shifted the revenue mix for USA from 25% to 30% whilst both Asia and Europe lost share of revenue by 2.0- ppt and 3.0-ppt respectively.

Fruitful cost control measures and the shift to higher margin products have contributed positively towards 3QFY13’s EBITDA margin which came in at 18.5%, represent an expansion of 3.3-ppt yoy and 1.5-ppt qoq respectively. While, 9MFY13’s EBITDA margin of 17.3% also represents a great enhancement compared to previous year’s 13.2%.

Update of Amkor patent litigation: Amkor filed their response submissions concerning the remand proceedings with the ITC on 5th Feb and a response with the PTO on 12th Mar. Carsem to file its rebuttal within one month from the date of PTO.

Catalysts

Resolution of European debt crisis, improved consumer confident, innovation to further drive spending.

Risks

Intense competition from Taiwanese peers, contagion effect of European debt crisis, FOREX, weaker consumer demand and stalemate in electronics innovation.

Rating

Not Rated

• Positives – Proliferations of smartphones, tablets and hybrid / electric automobiles.
• Negatives – intense competition from Taiwanese peers, higher input costs and appreciation of MYR against USD along with challenging economic outlook which will eventually hampers consumer confident.

Source: Hong Leong Investment Bank Research - 30 Apr 2013