Positive catch-up seen in coming quarters

PublicInvest Research expects earnings contribution of at least RM12mil from Accurus based on a pro-rated basis for FY21.

KUALA LUMPUR: Mi Technovation Bhd is confident of maintaining its profit after tax margin of over 20% of for the full financial year ending Dec 31 (FY21).

There is expected to be a strong catch-up in the subsequent quarters, driven by increasing semiconductor equipment sales and new earnings contribution from its recent acquisition of Taiwanese firm Accurus Scientific Co Ltd.

The company’s semiconductor equipment products are mainly focused on the telecommunication industry for smartphones, tablets and wireless wearable devices as well as Internet of Things (IoT) industry for bluetooth and sensor applications, which require high functionality and mobility.

PublicInvest Research expects earnings contribution of at least RM12mil from Accurus based on a pro-rated basis for FY21.

In the first quarter ended March 31(Q1’21), the group posted a lacklustre performance with a profit after tax margin of only 5.9% due to the typical purchase cycle as the Q1 is seasonally weak on the back of lower capex spending.

Raw materials for semiconductor equipment, which dominate operating costs, has increased significantly as mild steel prices have risen by more than 20%-25% over the last one month. To help mitigate the cost hike, the company has stocked up its inventories for the next two quarters, the research firm said.

Moving forward, the group plans to turn its Batu Kawan plant into the semiconductor material business, which is parked under Accurus Scientific, to cater for the South-East Asian markets and other semiconductor materials.

PublicInvest reaffirms its optimism on the stock by keeping an “outperform call” with an unchanged target price of RM6.27.

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