MPI returned into the black after posting three consecutive quarters of losses, bringing FY12 core net lost to RM26.3m (after reversing a one-off deferred tax gain and tax rebate amounting to RM6.5m). The results came in line with our expectation but beat consensus estimate. We put our forecasts, FV and recommendation under review pending the analyst briefing later today.

Better q-o-q but insufficient to offset 9M of losses. MPI reported a 16.4% q-o-q increase (-6.2% y-o-y) in revenue for its June quarter. This came from (i) the improvement in loadings after a seasonally weak March quarter and (ii) the better operational showing across all its geographical segments (+15%-18% q-o-q). Management noted that its leadframe business in Asia has also picked up momentum. The company's bottom-line returned to the black to the tune of RM13.5m (+ >100% q-o-q & y-o-y), aided partially by a one-time deferred tax gain and tax rebate of RM6.5m. Nonetheless, this was still insufficient to compensate for the three consecutive quarter of losses, bringing YTD reported loss to RM19.8m, down 133.6% y-o-y.

Profit margins improved, no dividends declared. During the quarter, gross margin was higher at 5.3% (+470bps q-o-q, +230bps y-o-y) as the USD strengthened against RM. However, this was still below the typical 11%-13% gross margins it used to command. EBIT margin showed a similar improvement (+460bps q-o-q, +50bps y-o-y) on the back of lower opex. The company has paid DPS of 10sen to-date.

Under review. Even though, results were in-line with our expectations, we put our forecasts, FV and recommendation under review, pending the analyst briefing later today. Recall the mixed guidance from major US principals for 3QCY12 and that the worldwide semiconductor sales remained flat at -0.1% m-o-m in June. Meanwhile, the book-to-bill ratio fell further to 0.87x from 0.93x in July. Our previous FV for MPI was RM3.64, premised on 1.1x FY13 P/NTA.

Source: OSK