MPI: Bottom-line rose further

Result Update

For QE31/12/2014, MPI's net profit jumped 21% q-o-q or 198% y-o-y to RM24 million. PBT increased q-o-q due to higher revenue from the smartphone sector, strengthening of USD via-a-vis the MYR and lower material costs. Revenue increased from RM327.7 million to RM338.3 million while revenue mix shifted from USA & Europe (by 1% & 2% respectively) to Asia (which rose by 3%).


Table: MPI's last 8 quarterly results


Chart 1: MPI's last 32 quarterly results

Valuation

MPI (closed at RM5.50 yesterday) is now trading at a trailing PER of 17 times (based on last 4 quarters' EPS of 33 sen). The high multiple is supported by strong growth of 64% last 4 quarters (a result of the low base). If earning were to grow at a moderate rate this year (say at 15-20%), then the PER multiple of 17% is reasonable, though promising limited upside.

Technical Outlook

From Chart 2, we can see that MPI has been in an intermediate downtrend since August last year. In early January this year, MPI broke above the downtrend at RM4.80. It is now pressing against the horizontal line at RM5.50.


Chart 3: MPI's weekly chart as at Jan 22, 2015 (Source: ShareInvestor.com)

From Chart 3, we can see that MPI has broken above the long-term downtrend line at RM4.50 in May last year. Recently, this long-term downtrend line provided support to the share price- from where the stock rebounded back to the current level.


Chart 3: MPI's monthly chart as at Jan 22, 2015 (Source: ShareInvestor.com)

Conclusion

Based on the good financial performance, reasonable valuation and mildly positive technical outlook, MPI is a good stock for medium-term investment.

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.