MPI: Earnings plummeted

Result Update

For QE31/3/2019, MPI's net profit dropped 57% q-o-q or 35% y-o-y to RM17 million while revenue dropped 17% q-o-q or 10% y-o-y to RM330 million. PBT dropped 58% q-o-q due to lower overall revenue which dropped across the board as follows: 11% in Europe segment, 19% in Asia segment and 22% in the America segment.


Table: MPI's last 8 quarterly results


Graph: MPI's last 44 quarterly results 

Financial Position

As at 31/3/2019, MPI's financial position is deemed healthy with current ratio at 4.2 times and gearing ratio at only 0.2 time.

Valuation

MPI (closed at RM8.80 last Friday) is now trading at a trailing PER of 12 times (based on last 4 quarters' EPS of 72 sen). At this PER, MPI is deemed fairly valued.

Technical Outlook

MPI is in a long-term uptrend line, SS at RM8.80. If this uptrend line is broken, MPI's next support will be at the horizontal line at RM8.30.


Chart: MPI's weekly chart as at May 24, 2019 (Source: Malaysiastock.biz)  

Conclusion

Despite the weaker financial performance, I would rate MPI as a HOLD based on healthy financial position, fairly attractive valuation & still positive technical outlook. However, if the share price were to breach the uptrend line, my rating will be revised from HOLD to REDUCE.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.