Mi Technovation Berhad

$MI / 5286 (MI TECHNOVATION BERHAD)
Research by CGSI

$MI / 5286 (MI TECHNOVATION BERHAD)
Research by PBIV

$MI / 5286 (MI TECHNOVATION BERHAD)
Research by PBIV

$MI / 5286 (MI TECHNOVATION BERHAD)
Research by Public
Outperform – TP RM2.92

“Strong Earnings Momentum Continues"

Excluding the impact of i) foreign exchange (FX) gain (RM11.8m) and ii) losses from minority interest in 90%-owned Mi Equipment Korea (RM0.5m), Mi Technovation saw its 1HFY24 core earnings surge from RM15.1m in the preceding year to RM43m. Led by SEBU and SMBU, the commendable results surpassed our and consensus full-year expectations, making up 62.2% and 56.5%, respectively. On a more positive note, losses from the Korean operation had shrunken substantially. Despite the stronger-than expected results in 1HFY24, we make no changes to our earnings forecast as management plans to incur additional provision of RM8.8m for staff costs. Maintain Outperform with an unchanged TP of RM2.92 based on 33x FY25 EPS. The first DPS of 2.5sen was declared for the quarter (vs 2QFY24: 2sen).

Analyst:
Chong Hoe Leong
chonghoeleong@publicinvestbank.com.my

$MI / 5286 (MI TECHNOVATION BERHAD)
Research by PIB
Outperform – TP of MYR 2.92

“Primed to Benefit from AI Boom”

Following a recent meeting with MI Technovation’s management attended by Mr. Heng Kok Lin (CEO of SMBU) and Mr. Teo Chee Kheong (CEO of SEBU), we believe that the company is ready for a new business cycle for both smartphone and PCs as the evolving Artificial Intelligence (AI) development is set to impact both segments positively. The SMBU segment is also expected to benefit from higher demand for smaller solder balls in tandem with smaller chip packaging. In view of the positive sentiment, we maintain Outperform with a higher TP of RM2.92 based on a revised PE multiple of 33x FY25 EPS.

Analyst(s):
Chong Hoe Leong
chonghoeleong@publicinvestbank.com.my

Changes in Director's Interest (Section 219 of CA 2016) - MR HENG KOK LIN

DEALINGS IN LISTED SECURITIES (CHAPTER 14 OF LISTING REQUIREMENTS) : Dealings Outside Closed Period

Immediate Announcement of Changes in Treasury Shares

OTHERSMI TECHNOVATION BERHAD
Consolidation of Investment in Associate Company

Penang-based MI Technovation Bhd (MI Tech) was in the news recently after posting a four-fold increase in its profit for the first quarter ended March 31, 2024 (1Q24).

$MI / 5286 (MI TECHNOVATION BERHAD)
Research by CGS
Add – TP of MYR 2.90

“Upgrade to Add; factoring in SSBU numbers”

We upgrade Mi Tech from Hold to Add on its foray into new businesses whilst offering attractive valuations, with a higher GGM-based TP of RM2.90 as we raise our sustainable ROIC to 15.5% to capture EPS contribution from its new Semiconductor Solutions Business Unit (SSBU) in FY25-26F. With our 3-year FY23-26F EPS CAGR now at 33%, the stock offers an attractive PEG multiple of 0.8x vs. local peers’ 1.6x. Downside risks: weak equipment demand and slow ramp-up of its new venture SSBU. Re-rating catalysts: stronger-than-expected equipment and materials demand.

Analyst(s):
Shafiq KADIR
shafiq.abkadir@cgsi.com
Dharmini THURAISINGAM
dharmini@cgsi.com

General Meetings: Outcome of Meeting

@wsoh so the likes of $MI / 5286 (MI TECHNOVATION BERHAD) $JHM / 0127 (JHM CONSOLIDATION BERHAD) D&O and OSAT guys like $INARI / 0166 (INARI AMERTRON BERHAD) $UNISEM / 5005 (UNISEM (M) BERHAD) and maybe $PENTA / 7160 (PENTAMASTER CORPORATION BERHAD) ?

$MI / 5286 (MI TECHNOVATION BERHAD)
Research by CGS
Hold – TP of MYR 2.40

“1Q24: Decent start”

Following its 68% appreciation over the past 12 months, Mi Tech’s current valuation of 23.9x CY24F P/E is already at a 25% premium over its pre-Covid mean of 19.1x. Given its subdued FY24-26F ROEs of 8-9% (FY18-20 average: 14.3%), further stock re-rating is unlikely, in our view. As such, we keep our Hold call, but with a higher GGM-derived TP of RM2.40 as we ascribe a higher sustainable ROIC of 13.7% to capture its sustained growth into FY25-26F. Overall, we lift FY24-25F EPS by 8-10% as we account for higher shipment volumes for its equipment business. Downside risks are weak equipment demand and slow ramp-up of its new venture semiconductor solutions business unit (SSBU). Upside risks: stronger-than-expected equipment and materials demand, and a breakthrough at SSBU.

Analyst(s):
Shafiq KADIR
shafiq.abkadir@cgsi.com
Dharmini THURAISINGAM
dharmini@cgsi.com

$MI / 5286 (MI TECHNOVATION BERHAD)
Research by PIB
Outperform – TP of MYR 2.67

“Key Takeaways from Meeting”

At its post-result briefing, management stressed that it wants to adopt a more conservative approach as it remains doubtful over the long-term recovery of the industry due to various uncertainties. It is worth noting that more than 76% of its 1QFY24 revenue was linked to the smartphone industry, which is on track for recovery this year. Overall, we expect to see significant improvements this year on the back of a turnaround in regional operations and better earnings contribution from MI Equipment China. Maintain Outperform with an unchanged TP of RM2.67.

Analyst(s):
Chong Hoe Leong
chonghoeleong@publicinvestbank.com.my

KUALA LUMPUR: Mi Technovation Bhd could be seeing a rebound in its equipment business revenue on higher demand from the mobile wearables and high-performance computing industries, says CGS International Research (CGSI).

$MI / 5286 (MI TECHNOVATION BERHAD)
Research by PIB
Outperform – TP of MYR 2.67

“A Decent Start"

Excluding the impact of i) foreign exchange (FX) gain (RM10.5m) and ii) losses from minority interest in 90%-owned Mi Equipment Korea (RM0.4m), Mi Technovation saw its 1QFY24 core earnings surge +117.5% YoY to RM17.4m The encouraging results were in line with our and consensus full-year expectations, making up 22.6% and 23.4%, respectively. Losses from the Korean operations shrank substantially – we believe MI has successfully delivered the first laser assisted bonding equipment. Nevertheless, we lower FY24-26F earnings by 7%-9% after imputing a more conservative stance on equipment deliveries. Maintain Outperform with a new TP of RM2.67 after rolling over our valuations to FY25F. No dividend was declared for the quarter.

Analyst(s):
Chong Hoe Leong
chonghoeleong@publicinvestbank.com.my

KUALA LUMPUR: Mi Technovation Bhd’s first quarter ended March 31, 2024 (1Q24) core earnings were in line with Public Investment Bank Bhd (PublicInvest) and consensus full-year expectations, making up 22.6 per cent and 23.4 per cent respectively.

© New Straits Times Press (M) Bhd

MI Technovation Bhd (MI Tech) will continue to diversify and expand its scale in 2024 .

Quarterly rpt on consolidated results for the financial period ended 31/03/2024

Share Buy-Back Statement In Relation To Proposed Renewal Of The Authority For The Company To Purchase Its Own Shares In Accordance With Section 127 Of The Companies Act 2016

OTHERSMI TECHNOVATION BERHAD ("Company")
Material Litigation on Breach of Confidential Information, Copyright Infringement, Patent Infringement, Conspiracy to Injure and Unlawful Interference with Trade

OTHERSProposed Renewal of Authority for the Company to Purchase Its Own Shares

$MI / 5286 (MI TECHNOVATION BERHAD)


anticipating semiconductor materials to recover first during the recovery of semiconductor industry and on top of that, anticipating a multi year growth in materials segment.

$MI / 5286 (MI TECHNOVATION BERHAD)
Research by PB
Outperform – TP of RM2.57

“Turning Bullish”

We came away from Mi Technovation’s recent analyst briefing with some positive key takeaways as management sounded more bullish on its Semiconductor Equipment Business Unit (SEBU) outlook while also aiming to see a turnaround in its Korean operations by the end of this year. Should Ningbo’s losses subside substantially, it could potentially spring a surprise to our earnings forecasts. We reiterate our Outperform call on Mi Technovation with an unchanged TP of RM2.57 based on 30x FY24 EPS.

Analyst(s):
Chong Hoe Leong
chonghoeleong@publicinvestbank.com.my

$MI / 5286 (MI TECHNOVATION BERHAD)
Research by PB
Outperform - TP of RM2.57

"On the Dot"

Excluding the impact of i) foreign exchange (FX) gain (RM10m), ii) losses from  minority interest in 70%-owned Mi Equipment Korea (RM2.4m) and withholding  tax of RM3.6m in relation to the dividend received from its Taiwan subsidiary,  Mi Technovation posted core earnings of RM48.8m in FY23, down 11.1% YoY.

The results were in line with our full-year expectation but it missed market expectations, making up 100% and 90% of full-year numbers, respectively. The results would have been even better if not because of the start-up cost totaling RM1.5m incurred under Semiconductor Solution Business Unit (SSBU). On a positive note, the 4Q core results improved by 33% QoQ, a third consecutive quarterly growth. Maintain Outperform with an unchanged TP of RM2.57 based on 30x FY24 EPS. A second interim DPS of 2sen was declared for the final quarter.

Analyst(s):
Chong Hoe Leong
chonghoeleong@publicinvestbank.com.my

MI - Notice of Book Closure

Second Interim Dividend

Quarterly rpt on consolidated results for the financial period ended 31/12/2023

$MI / 5286 (MI TECHNOVATION BERHAD)
Research by Public Investment Bank
Outperform - 12-Month Target Price of RM2.57

"Eyeing Turnaround in Regional Operations"

Management recently highlighted in a meeting that they are confident of seeing a turnaround in Mi Equipment China soon while Mi Equipment Korea is expected to breakeven this year on the back of successful delivery of LAB and LCB prototype machines. We understand that it has received a purchase order with an estimated volume of at least 10 units. Meanwhile, the Group is also in the midst of setting up its SSBU office in Hangzhou to prepare for its silicon-based IGBT module venture. Management has set an aggressive sales growth target of 150% in 5 years for the semiconductor equipment sales segment and also stressed that auto and renewable energy segments would be the key growth drivers for the group. Maintain Outperform call with unchanged TP of RM2.57 based on 30x FY24 EPS.

Analyst:
Chong Hoe Leong
chonghoeleong@publicinvestbank.com.my