Period    2Q13/1H13

Actual vs.  Expectations  The group's 1H13 net loss of RM1.6m came in below ours as well as the street's estimates.  Nonetheless, the 1H13 revenue of RM613.7m was in line, making up 49.3% and 47.9% of ours and the consensus' full year estimates respectively.

 Note that we are estimating MPI to record RM14.7m in net profit for the full year while the consensus is eyeing for RM23.4m.

 

Dividends   No dividend was declared for the quarter under review. 

 

Key Result Highlights  YoY, the 1H13 turnover grew by 3.2% to RM613.7m with decent revenue growth in the USA segment (+23%) being offset by weaker revenues in both the Asia and Europe segments (0% and -10% respectively). Noteworthy however is that the recovery in the USA has made the segment a larger contributor to the revenue at 31% in 1H13 as compared to 25% in 1H12 while Asia and Europe both lost their shares of the revenue by 2ppts and 4ppts respectively. Positively, the group also netted a positive overall PBT of RM3.0m (vs. a LBT of RM26.3m in 1H12) buoyed by a higher revenue coupled with better cost control measures.

 QoQ, the 2Q13 revenue was lower by 7.2%, no thanks to the weaker sales from all the segments which saw the Asia, USA and Europe segments down by 6%, 9% and 7% respectively. Meanwhile, the group's 2Q13 PBT also tumbled by 89% QoQ to RM0.3m as a result of lower revenue and thinner PBT margin (0.1% vs. 0.8%). 

 

Outlook   Although there was a mild improvement seen in the November's global chip sales data provided by the Semiconductor Industry Association, we remain cautious in light of the lacklustre demand in PC sales and prolonged global economic uncertainties. 

 We believe that the industry sentiment and the company's outlook will continue to be weighed down by the current frail economic conditions, especially if they persist. 

 

Change to Forecasts  We are leaving our earnings estimates unchanged for now pending further details from the company's results briefing today. 

 

Rating    Maintain MARKET PERFORM

Valuation    There is no change in our TP at RM2.78 for now, which is based on a targeted FY13 PBV of 0.85x (at -1.0 SD from the mean). Nevertheless, we are likely to revise our earnings forecasts as well as our TP downward post the results briefing. 

 

Risks   Adverse currency fluctuations.

 Industry's recovery may falter halfway.

Source: Kenanga