MPI registered a core loss of RM3.7m in 2QFY13 after staying in the black for twoconsecutive quarters. The results were below our and consensus’ expectations. The company did not declare a dividend for the period under review. Given the subpar performance, we are cutting our FY13/FY14 core earnings forecasts by 30%/15% respectively. Maintain NEUTRAL, FV unchanged at MYR2.70, based on 0.8x CY14 P/NTA.
Missing estimates. The group’s 2QFY13 revenue contracted by 7% (+6% y-o-y), falling short of management’s guidance for flat numbers at its last analyst briefing. This gave rise to a core loss of RM3.7m after two consecutive quarters of being in the black. On a cumulative basis, MPI’s 1HFY13 revenue expanded to RM613.7m (+3% y-o-y), which pared down its core loss to -RM3.3m from -RM28.7m a year ago. Even so, the group’s 1HFY13 results were still below our and consensus’ expectations. With the limited info on hand, we attribute the group’s subpar performance to its: i) weak top-line, ii) high operating leverage, and iii) lack of other operating income during the quarter. No dividends were declared for the period under review.
Downside surprise. During the quarter under review, MPI’s q-o-q revenue from Asia/Europe/US declined by 6%/8%/9% respectively, probably due to an unfavourable product mix. This took us by surprise as we had initially expected more upside to our projections based on data available up to November 2012, which showed that Oct-Nov 2012 global semiconductor sales in the Americas/APAC region grew 18%/4% from the July-Aug period.
Maintain NEUTRAL, FV unchanged at MYR2.70. In view of the subpar 2QFY13 results and the traditionally weaker performance expected in the next two quarters, we are cutting our FY13/FY14 core earnings forecasts by 30%/15% respectively. We are also rolling over our valuation to CY14, but keeping our FV at MYR2.70, based on 0.8x CY14 P/NTA. This represents a 40% discount to historical five-year sector average of 1.4x. Given the limited upside potential, we maintain our NEUTRAL call until we get an update from the company’s analyst briefing later today.
Missing estimates. The group’s 2QFY13 revenue contracted by 7% (+6% y-o-y), falling short of management’s guidance for flat numbers at its last analyst briefing. This gave rise to a core loss of RM3.7m after two consecutive quarters of being in the black. On a cumulative basis, MPI’s 1HFY13 revenue expanded to RM613.7m (+3% y-o-y), which pared down its core loss to -RM3.3m from -RM28.7m a year ago. Even so, the group’s 1HFY13 results were still below our and consensus’ expectations. With the limited info on hand, we attribute the group’s subpar performance to its: i) weak top-line, ii) high operating leverage, and iii) lack of other operating income during the quarter. No dividends were declared for the period under review.
Downside surprise. During the quarter under review, MPI’s q-o-q revenue from Asia/Europe/US declined by 6%/8%/9% respectively, probably due to an unfavourable product mix. This took us by surprise as we had initially expected more upside to our projections based on data available up to November 2012, which showed that Oct-Nov 2012 global semiconductor sales in the Americas/APAC region grew 18%/4% from the July-Aug period.
Maintain NEUTRAL, FV unchanged at MYR2.70. In view of the subpar 2QFY13 results and the traditionally weaker performance expected in the next two quarters, we are cutting our FY13/FY14 core earnings forecasts by 30%/15% respectively. We are also rolling over our valuation to CY14, but keeping our FV at MYR2.70, based on 0.8x CY14 P/NTA. This represents a 40% discount to historical five-year sector average of 1.4x. Given the limited upside potential, we maintain our NEUTRAL call until we get an update from the company’s analyst briefing later today.
Source: OSK
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