Mi Technovation 3Q pre-tax profit increases

PETALING JAYA: Semiconductor manufacturer MI Technovation Bhd has stated that declining turnover from its semiconductor equipment business unit (SEBU) led to it posting a 21.3% year-on-year (y-o-y) drop in its revenue for the third quarter ended Sept 30, 2022 at RM89.7mil, compared to RM114mil in the corresponding quarter of last year.

Mi Technovation, in a filing with Bursa Malaysia, revealed that SEBU contributed RM34.9mil to group top line for the quarter in review – or 39% of total revenue – but saw a fall of RM29.3mil, or 45.6% y-o-y, from the 2021 figure.

The company attributed the decrease to cautious capital expenditure by its customers due to the slowdown in the semiconductor industry, worsening geopolitical tensions and deferment in order delivery due to the slowdown in customers’ expansion pace, as well as a parts shortage for internal production.

Mi Technovation’s semiconductor material business unit (SMBU) saw a 10% y-o-y increase in turnover to RM54.8mil due to sustainable production volume, as well as seasonal ramping for launching of new products by its key customers, particularly in Taiwan and China, and higher average selling prices of its products compared to a year ago.

“Our key customers in the material business had also shown strong growth of market share in the mobile device, high performance computing and automotive industries,” Mi Technovation stated in its filing.

While revenue slid for the period, the company registered a pre-tax profit of RM22.1mil, which is a 7.7% y-o-y increase.

Cumulatively, Mi Technovation also saw a 12.9% y-o-y rise in its pre-tax profit for the nine months ended Sept 30 to RM56.8mil, compared to the same period of 2021 due mainly to foreign exchange gains resulting from the strengthening of the US dollar against a majority of Asian currencies during the quarter, the company reported.

Pre-tax profit margins also strengthened from 17.6% to 20.9% in the period.

Mi Technovation credited the resilience level of its business model, its wider range of customer base and product diversification for the marginal 4.6% y-o-y reduction in its cumulative revenue of RM272.3mil from January to September 2022 despite market disruptions caused by the Russia-Ukraine war, US sanctions on China’s semiconductor industries and China’s economic slowdown.

Mi Technovation expects its SEBU arm to continue experiencing a decline in sales for 2022, on the back of its customers taking a more cautious approach in production capacity investments and expansion plans.

“Despite uncertainties in the macro environment, such as the worsening Sino-US semiconductor sanction and conflicts, rising inflation and interest rates affecting consumer sentiment, as well as the adverse impact by geopolitical tensions on world economy, our key customers for SMBU had shown growth in market share.

“Hence, we expect a sales growth for SMBU in 2022,” its exchange filing noted.