Although MPI’s 9M core loss of MYR39.2m narrowed from a year ago to MYR0.6m, its 3QFY13 results still missed our and consensus expectations by MYR1m-2m. It declared a second interim dividend of 5 sen/share. All in, we slash our FY13 and FY14 core earnings forecasts by 30% and 10% respectively. Maintain NEUTRAL, with our FV slightly lowered to MYR2.66, based on 0.8x CY14 P/NTA.

¨      Below expectations. The company’s 3QFY13 revenue edged down 3% q-o-q (+4% y-o-y) on seasonality while its EBITDA was flat q-o-q but improved 30% y-o-y. We attribute this to MPI’s successful transition into the high-margin businesses of: (i) high density packaging, (ii) micro leadframe packaging (MLP), and (iii) test services. 3QFY13 EBITDA margin expanded by 0.5ppt q-o-q and 3.5ppt y-o-y to 17%. This gave rise to core earnings of MYR3.9m. YTD, its topline grew 4% y-o-y and more impressively, it narrowed its MYR39.2m core loss from a year ago to MYR0.6m. Although MPI’s results were somewhat encouraging, it still came below our and consensus estimates by MYR1m-2m.

¨      Interim dividend of 5 sen/share. The group declared a second interim dividend of 5 sen/share (ex-date: 14 May 2013) during the period under review, bringing its YTD dividend payout to 10.4 sen/share. This was within expectations and we do not foresee any further dividend payment in 4QFY13.

¨      Maintain NEUTRAL, FV revised down to MYR2.66. We cut our FY13 and FY14 core earnings forecasts by 30% and 10% respectively, after lowering our profit margins assumptions. Consequently, we trim our FV from MYR2.70 to MYR2.66, based on 0.8x CY14 P/NTA (at a 40% discount to historical 5-year sector average of 1.4x). We are awaiting updates from the group’s analyst briefing later today. For now, maintain NEUTRAL given its limited upside potential.

Source: RHB