STOCK FOCUS OF THE DAY
Malaysian Pacific : Earnings to pick up in 2HFY18 as NPIs come to fruition HOLD
We maintain our HOLD recommendation on Malaysian Pacific Industries (MPI) with unchanged forecasts and fair value of RM13.11/share. Our fair value is pegged to a CY18F PE of 13x, in line with the average of the semiconductor manufacturing sector. MPI's 1QFY18 core net profit came within our expectations and consensus at RM38mil (+12% YoY, -19% QoQ). The net profit accounted for 20%/19% of our/street estimates. Note that this is after stripping out net forex losses amounting to RM1.3mil (net of gains from hedging).
Going forward, we believe earnings will pick up in 2HFY18 as the company's new product introductions (NPIs) over the past three quarters translate into job wins. Note that it would typically take 9 months to 1 year to progress from NPIs to commercial production, should customers decide to engage MPI. The group declared a dividend of 10 sen per share during the quarter, in line with our projection. In spite of MPI's bright prospects, we believe the company is fairly valued at this price. MPI is currently trading at a CY18F PE of 13.5x, while the average of the semiconductor manufacturing sector is 13x.
Others :
Automobile : Myvi 3.0 to hit the streets soon NEUTRAL
STOCKS ON RADAR
D&O Green, Southern Steel, AirAsia, Pentamaster
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The information and opinions in this report were prepared by AmInvestment Bank Bhd. The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of AmInvestment Bank Bhd. Bhd may from time to time have a position in or with the securities mentioned herein. Members of the AmBank Group Bhd and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change without notice.
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