MPI- net profit continued to rise sequentially

Result Update

For QE30/9/2013, MPI's net profit jumped 67% q-o-q or more than 100-fold y-o-y to RM17.8 million. Net profit rose q-o-q due to the strengthening of the USD and lower direct material cost. In addition, the result for QE30/6/2013 was affected by start-up cost for Suzhou operation. However, it must be noted that revenue did not improve much; only inched up by 1% q-o-q or 4% y-o-y to RM331 million.


Table: MPI's last 8 quarterly results


Chart 1: MPI's last 27 quarterly results

Valuation

MPI (at RM3.15 as at 3.55pm) is now trading at a PE of 21 times (based on last 4 quarters' EPS of 15 sen). While the PE multiple is high, this multiple should ease off as the earning continue to improve.

Technical Outlook

From Chart 2, we can see that MPI has broken through its long-term downtrend line. The indicators are slowly turning upward.


Chart 3: MPI's monthly chart as at Nov 15, 2013_4.00pm (Source: Quickcharts)

From Chart 3, we can see that MPI has broken above the strong horizontal line at RM2.90 today. Its next resistance is at the horizontal line RM3.60.


Chart 3: MPI's weekly chart as at Nov 15, 2013_4.00pm (Source: Quickcharts)

Conclusion

Based on the improved profitability and mildly positive technical, MPI could be a good stock for a recovery play.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, MPI.