Period  1Q15

Actual vs. Expectations  Within expectations. The group reported 1Q15 core net profit (NP) of RM19.9.m (-7% QoQ, +12% YoY), which made up 27% of our, and 25% of the consensus’, FY15 NP estimates, respectively.

Dividends  As expected, a tax-exempted interim dividend per share (DPS) of 7.0 sen (1Q14: 5.0 sen NDPS) was declared for the quarter. We are expecting the group to declare a total DPS of 20.0 sen in FY15.

Key Result Highlights YoY, 1Q15 revenue decreased marginally by 1% as the decent growth in Asia segment (+20%) negated by weaker sales seen in USA (-33%) as well as Europe segments (-2%). Despite marginally weaker revenue, EBIT improved further by c.9%, driven by its better yielding products (such as MEMS impact pressure sensors for the Automotive segment and FEM volume production for the Smartphones/Tablets

(S/T) segment) coupled with lower commodity material prices and ongoing strengthening of USD against MYR.

 QoQ, 1Q15 revenue inched up by 2% as the weaker sales in USA segment (-25%) was offset by higher sales in the lion share revenue contributor namely the Asia segment (+13%) and Europe segment (+9%). While core PATAMI decreased by 7.5% due to higher taxation in the quarter (+2x to –RM5.5m), core PBT recorded a growth of 9% to RM26.8m with high margin products driving the yield.

Outlook  We believe that the group’s near-term outlook will still remain resilient with its: (i) technical edge and product exposure, which augur well for the current tech upcycle as well as the upcoming tech wave, and (ii) strategic product mix, which gives a balanced exposure of both cyclical and defensive segments.

Change to Forecasts  We maintain our FY15 and FY16 earnings estimates for now pending further details from the briefing today.

Rating Maintain OUTPERFORM

Valuation  Our TP of RM6.72 remained unchanged for now pending further details from the briefing today.

This is based on a targeted FY15 PER of 17.0x.

Risks to Our Call Adverse currency fluctuations.

 Industry’s recovery faltering halfway.

 Weaker sales in USA segment to erase the sales growth contributed by Asia segment.

Source: Kenanga