MPI - Challenging outlook

Period    4Q12/ FY12

Actual vs.  Expectations

 The full year net loss (NL) of RM19.8m came in better than expected as compared to ours and the consensus full year net loss forecasts of RM23.8m and RM50.6 respectively. Meanwhile, the revenue of RM1.19b was also slightly above (by 1.7%) ours and the street’s full year estimates of RM1.17b.

Dividends   An interim tax-exempt dividend of 5.0 sen was announced during the quarter. As expected, a total dividend of 10.0sen tax exempt has been anoounced for the full year thus far.

Key Result Highlights

 YoY, the FY12 revenue was lower by 15.8% to RM1.19b mainly due to the lower sales from the Europe segment (-27%) followed by Asia (-13%) and USA (-8%). Hence, the group’s revenue mix has shifted, with Asia and USA both gaining a higher share of the revenue by 2% to 48% (previously: 46%) and 26% (previously: 24%), respectively while Europe’s share declined by 4% to 26%. Besides that, the group had a positive tax charge of RM4.3m (vs. -RM8.7m in FY11), being tax refunds, which cushioned its net loss for the year.

 QoQ, following the industry recovery and inventory re-stocking after a typically weak 3Q12, the revenue increased by 16.5%. Meanwhile, the PBT has also improved by 185% QoQ to RM6.4m as a result of higher revenue as well as a much better GP margin (5.3% vs. 0.6%). In addition to that, the group also get some tax refund of RM7.5m during the quarter, thus boosting its NP to RM13.5m as opposed to a RM7.4 NL in 3Q12. 

Outlook   MPI anticipates the industry outlook to be moderate amidst a more challenging operating environment in the coming quarters.

 The semiconductor industry outlook may be affected by the continued uncertainty and bearishness in the global economy. Hence, this may negatively impact the company’s outlook going forward.

Change to Forecasts

 Maintaining our FY13E-FY14E earnings forecasts for now but with a downside bias pending today’s result briefing. 

  

Rating  Maintain OUTPERFORM (pending review)

Valuation    Our TP is maintained at RM3.50 (based on a targeted FY13 PBV of 1.0x) pending today’s result briefing. 

Risks   Foreign currency exchange rate.

 Industry recovery may falter halfway.  

Source: Kenanga