Period     3Q13/9M13

Actual vs. Expectations   The group reported a 3Q13 net profit (NP) of RM1.8m, bringing its total 9MFY13 results back into the black with a YTD NP of RM0.173m. However, the YTD NP still came in largely below expectations. Note that we are estimating MPI to record RM7.7m for its FY13 NP while the consensus is eyeing for RM10.5m.

Dividends    A second interim net dividend of 5.0 sen was declared, bringing the YTD net DPS to 10.4 sen, which represents >100% of the DPR.

Key Result Highlights     YoY, the 9MFY13 revenue merely inched up by 3.4% to RM900.0m as the decent revenue growth contributed by the USA segment (+23%) was offset by weaker revenues at both the Asia and Europe segments (-2% and -6% respectively). In terms of the regional market share contributions, the recovery in the USA has made its segment a larger contributor to the revenue at 30% in 9M13 vs. 25% in 9MFY12 while Asia and Europe both saw their shares of the revenue reduced by 2ppts and 3ppts respectively. Meanwhile, the YTD NP only barely registered a NP of RM0.2m as the decent growth at the PBT level (which improved significantly to RM7.0m vs. a LBT of RM33.9m in 9MFY12 buoyed by a higher revenue coupled with better cost control measures and a planned shift to a higher-margin product portfolio) was erased by a higher effective tax rate of 88.6% due mainly to the higher deferred taxation recognitions in 2QFY13 and 3QFY13.

QoQ, the 3QFY13 revenue decreased by 3.1% as lower revenues in both the Asia (-7%) and USA (-4%) segments erased off the decent revenue contribution by the Europe segment (5%). Despite the weaker top line performance, the group’s PBT soared by >100% to RM4.0m (vs. the mere breakeven position of RM0.3m in 2QFY13’s PBT), underpinned by better cost control measures and the positive effect from higher-margin products.

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

We believe the local semiconductor industry recovery is likely to be seen earliest in 2H2013, underpinned by a recovery in the global chip demand amid a better global economic condition.

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     Our TP remains unchanged at RM2.59 for now, which is based on a targeted FY14 PBV of 0.78x (approximately 1.0SD below the 3-year mean).

Risks      Adverse currency fluctuations.

Industry’s recovery may falter halfway.

Source: Kenanga