Period

4Q15/FY15

Actual vs. Expectations

Within our but above consensus’ expectations. The group reported 4Q15 core net profit (NP) of RM34.3m (+14% QoQ; +59% YoY), bringing its FY15 core NP to RM108.5m (+65%) which made up 104% of our, and 107% of the consensus’, FY15 estimates.

Dividends

As expected, no dividend was declared for the quarter under review. To recap, total DPS of 20.0 sen has been declared for FY15 which implies a net dividend yield of 3.1%. Key Result

Highlights

YoY, FY15 revenue increased by 8% as the decent growth in Asia (+18%) and Europe (+23%) segments counterbalanced the weaker sales seen in USA segment (-22%). We were not overly concerned on the weakness in USA segment as we understand that this was due to the relocation of its customers’ base from USA to Asia and Europe. Meanwhile, EBIT surged 127%, 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 the strengthening of USD against MYR.

QoQ, 4Q15 revenue rose by 6% with better sales contributed by all its geographical markets. With better operational efficiency, PBT margin advanced by another 0.2ppts (to 12.7%), sending PBT to RM47.2m (+8%).

Outlook

World Semiconductor Trade Statistics forecasted global semiconductor sales to record 2-year CAGR of 3.4% in 2016 and further grow by 3.0% in 2017; with Communications and Automotive segments being the key drivers. Over the long-term, Smartphones are forecasted to register a 5-year high single-digit revenue CAGR.

We believe the group’s near-term growth will be sustained by both of these segments, where the group has a balanced exposure for both (c.38% for Smartphones and c.22% for Automotive segment as of 3Q15).

Change to Forecasts

We leave our FY16E earnings unchanged for now pending further details from the briefing today.

Rating

Maintain OUTPERFORM

Valuation

We maintain our TP of RM8.90 for now based on a targeted PER of 15.5x.

Risks to Our Call

Weaker than expected sales and margins.

Industry downturn

Adverse currency fluctuations.

Source: Kenanga Research - 25 Aug 2015