The investment holding company, which is part of the Hong Leong Group, announced today that it recorded a net profit of RM53.1 million for the third quarter of its current financial year ended March 31, 2023 (Q3 2023) compared with RM248.3 million in the previous corresponding quarter.
In a filing with Bursa Malaysia, MPI said the weak demand for electronics has been felt at the consumer to commercial levels, resulting in elevated inventories in the supply chain.
It also cited higher energy cost as another factor that led to a reduction in the quarterly profit.
MPI’s revenue for the quarter was RM1.56 billion, down 13% from RM1.8 billion recorded in the previous corresponding quarter.
The setback was caused entirely by the Asia segment of MPI’s business. Revenue from Asia dropped 28% but was up 3% in the US and 18% in Europe compared with Q3 2022.
In its review of the company’s results, Kenanga Investment Bank Bhd attributed the poor performance to sub-optimal plant utilisation as a result of the Chinese New Year holidays and higher energy cost.
Kenanga also cut its net profit projection for the current financial year by 48% and the next year by 19%. However, it retains its target price of RM20 and maintains its “under-perform” call.
It said the prospects for order replenishment would remain “uninspiring” as customers in China remained hesitant about committing to larger orders.
AmInvest Bank Bhd has chosen to maintain its “hold” call but reduced its estimate of fair value to RM25.10 from RM28.10.
RHB Investment Bank Bhd (RHB IB) has kept its “neutral” call but lowered its target price from RM30.50 to RM25.70.
RHB IB said it has also cut its earnings projections based on a prolonged weakness in volume trading. “However, we believe the numbers will recover gradually in a seasonally stronger market in the second half of the year,” it said.
RHB IB said the near-term weakness could continue into Q4, especially for MPI’s China operations.
However, it said, in the medium term, prospects remained bright given its exposure to the power module in silicon carbide packaging and gallium nitride for automotive electrification.
MPI’s share price ended the day at RM25.70, which was RM2.10 or 7.55% lower than the previous day, giving it a market capitalisation of RM5.39 billion.
A total of 6,767 shares were traded today.