Results

While 9MFY14’s revenue of RM970.0m came in within street’s estimate, core net profit of RM36.4m was below expectations, accounting for 67.7% of consensus’ full year forecast.

For 3QFY14, MPI registered revenue of RM323.0m (+12.8% yoy, +2.1% qoq), EBITDA of RM67.7m (+28.2% yoy, +7.1% qoq), and normalized PATAMI of RM10.5m (>100% yoy, +29.6% qoq).

For 9MFY14, MPI registered revenue of RM970.0m (7.8% yoy), EBITDA of RM207.3m (+33.1% yoy), and normalized PATAMI of RM36.4m (>100% yoy).

Deviations

Below expectations.

Dividends

Declared a second interim tax exempt dividend of 10 sen per share (3QFY13: 5.0 sen) with ex-date on 15th  May.

YTD dividend of 15.0 sen per share (9MFY13: 10.4 sen).

Highlights

3QFY14 revenue was higher by 12.8% yoy thanks to the improvements in Asia (+18%) and Europe (+19%) segments while USA segment was flat.

Sequentially, it was 2.1% higher as Asia and Europe segments grew by 8% and 14%, respectively, while partly negated by contraction in USA segment by 14%.

9MFY14 revenue grew 7.8% thanks to growth recorded in all segments where Asia, USA and Europe increased by 7%, 4% and 15%, respectively.

Effective shift to higher margin product lines coupled with appreciation of USD against RM have contributed positively towards 9MFY14’s EBITDA margin which came in at 21.3%, represent an expansion of 4.0-ppt yoy.

Excluding the one-off RM8m provision in 2QFY14, EBITDA margin would have been 22.2% (+4.9-ppt yoy) for 9MFY14.

Catalysts

• Improved consumer confident.
• Technological advancement and creation of new electronics applications.

Risks

FOREX and weak consumer demand.

Rating

Not Rated

Positives – Appreciation of greenback, proliferations of smartphones, tablets, wearable techs and hybrid / electric automobiles.

Negatives – intense competition from Taiwanese peers, higher input costs, challenging economic outlook which will eventually hampers consumer confident and stalemate in electronics innovation.  

Source: Hong Leong Investment Bank Research - 30 Apr 2014