Share Price movement
MPI has been sliding continuously for the past 18 months, from a high of RM6.90 in April 2010 to a recent of RM2.93 (two days ago). In fact, if you go back a bit further, you would see that MPI traded at a high of RM11.02 in January 2007. So when we compared that with the present price, this stock has dropped more than 70%!
Chart 1: MPI's daily chart as at Oct 7, 2011_12.30pm (Source: Quickcharts)
Recent Financial Performance
The reason for the decline in the share price is due to lackluster financial performance. From the table and Chart 1 below, we can see that MPI reported small profit for QE30/6/2011 & QE31/3/2010 as well as reported sizable losses in QE31/3/2009 & QE31/12/2008. Will it be able to avoid slipping into the red in the latest QE30/9/2011? Only time will tell.
Table 1: MPI's last 8 quarterly results
Chart 2: MPI's last 22 quarterly results
Long-term Performance
Share Price movement
MPI dropped from its all-time high of RM50 in 2000 to the current low of about RM3.00. The all-time low was RM2.70 recorded in September 1998. Can MPI test its all-time low?
Chart 3: MPI's monthly chart as at Oct 3, 2011 (Source: Tradesignum)
Historical Financial Performance
MPI's annual turnover in FY2011, FY2010 & FY2007 nearly matched its peak turnover of RM1.5 billion recorded in FY2000 & FY2008. However, MPI's bottom-line has never come close to the high mark of FY2000 when it chalked up a net profit of RM461 million. From FY2001 to FY2011, MPI's net profit averaged about RM88 million. See Chart 4 below.
Table 2: MPI's last 15 annual results
I have appended below the share price chart & the Return on Assets ('ROA') & Return on Capital Employed ('ROCE'). We can see that ROA & ROCE were range-bound and averaged about 5.4% & 10.6%, respectively. The only financial years where a loss was incurred were FY2002 & FY2009. These are the two years when the U.S. economy entered into a recession. The way MPI is dropping, it could be due to fear of another loss-making year to come, due to anticipation of a U.S. recession.
The big question out there is whether the current price of MPI has fully factored in this risk. I personally believe that the current price of MPI has over-factored the risk of a loss-making year and as such, it could be a relatively safe stock to buy.
Chart 5: MPI's monthly chart as at Oct 3, 2011 & MPI's ROA & ROCE from FY1997-2011 (Source: Tradesignum)
Conclusion
Based on historical financial performance & share price performance, I believe that MPI is now trading at a very attractive level which could delivered outstanding return over a longer time horizon.
11 comments:
Alex,
MPI looking good to be a defensive and DY stock based on its current price..but its net profit in recent 2 quarters were sharply fell. Based on your observation, will it become red in next quarter since US economy is so poor at the moment.
Talking abt high dividend stock, can u analyze a bit about P.I.E, which is drop to RM3.28 on friday. It worth a buy for long term?
Hi Alex ,
Any comment on Tenaga ?
Tx!
Semiconductor might be going to take another beating when recession hit again. Probably MPI might have to revamp business model to make a reversal, just my opinion.
Hi Alex
Is there a website that provide daily technical data on Buy Rate? Thks.
Hi Yondaime
I don't quite get your question. Please rephrase.
Hi luckystock2,
No comment on Tenaga. Nobody knows what will happen, even though everybody knows that something ought to be done about its high cost of sales & low selling price. The new problem of gas supply is a strange problem. I am not convince that Petgas or Petronas is/are unable to resolve this problem.
Hi This is the day!
I am not familiar with P.I.E. It appears to be a fantastic performer in the bull rally of 2006-2007.
Since then, this stock has been prodding along & somehow managed to move into an uptrend. It is now testing that uptrend line at RM3.20. This also happens to be its strong horizontal line. Watch out for this stock closely. It may put in a decent rebound from here. On the other hand, if it break below this level, it will be bearish.
Hi Alex,
I'm using maybank2u trading website which show the usual B-Q, Buy, Sell, S-Q. The Buy Rate or B% is the percentage of transacted stock volume at the Sell Price. I guess it can be used to measure how many buyers bought at the Sell Price compared to sellers who sold at the Buy Price.
Hi Alex, 10s for the MPI post. Don't mind to comment also the Unisem n JCY stock as recently i can see uptrend through chart and volume.
Hi Alex ,
Mbfhldg
1)Daily chart- looks like it broke out of a flag formation.
Intraday- broken above previous high but faced resistance at 17feb10 high.
2)There seems to be a support around 0.785 which also coincide with with previous high on03oct10.
3)If it can break above o.785 convincingly, my target is 1.05 with immediate resistance at o.875
Please give your advice .
Hi Andy Lau
Both Unisem & JCY are still in a downtrend. While both have rebounded a bit off their recent low, I am more comfortable with Unisem as I can rely on the chart for some guidance. Unisem has a strong horizontal support at RM1.00 & RM0.88. JCY seems to have some support at RM0.40-0.41 but its price data is not sufficient for a reliable study.
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