MPI’s FY13 core earnings of MYR11.2m (+ >100% y-o-y)  beat  our  and consensus  full-year  expectations.  No  dividends  were  declared  this quarter. We leave our forecasts unchanged pending the company’s analyst briefing later today. For now, we maintain our NEUTRAL stance on  the  stock,  with  a  FV  of  MYR2.66,  based  on  0.8x  CY14  P/NTA  (at  a 40% discount to historical five-year sector average of 1.4x). 
 
- Above  expectations.  MPI’s  FY13  core  earnings  of  MYR11.2m  (+ >100% y-o-y) came ahead of our and consensus full-year expectations. During the year, its EBITDA margin improved by 4.2ppt y-o-y, thanks to its  successful  transition  into  the  high-margin  businesses  of:  i)  high density  packaging,  ii)  micro  leadframe  packaging  (MLP),  and  iii)  test services. Also, its initiative to cut costs also helped to lift profitability. MPI did not declare any dividends as it typically distributes its payouts in 1Q and 3Q.

- Outlook.  During  the  last  analyst  briefing,  we  gather  that  three  new customers  were  added  to  its  smartphone  and  tablet  (S&T)  portfolio, primarily  dealing  with  radio  frequency  (RF)  applications.  Also,  to  further strengthen  this  segment,  MPI  has  developed  an  ultra-thin  quad-flat  no-leads (QFN) package as an alternative to wafer level chip scale package (WLCSP). Going forward, we expect this business to continue to flourish and generate good profit margins for MPI.

- Forecasts.  We  are  leaving  our  forecasts  unchanged  pending  the company’s analyst briefing later today.

- Risks.  The  key  risks  to  our  forecasts  include:  i)  strengthening  of  the MYR,  ii)  higher  raw  material  costs,  and  iii)  a  slowdown  in  the  S&T market. 

- Investment  case.  For  now,  we  continue  to  value  MPI  at  MYR2.66  FV, based  on  0.8x  CY14  P/NTA  (at  a  40%  discount  to  historical  five-year sector  average  of  1.4x).  We  remain  NEUTRAL  on  the  stock,  as  the sector’s visibility  outlook  remains  low  due  to  the  unfavorable  external environment.

Source: RHB