MI: Core Profit Soars on Robust Performance, Target Price Upgraded

A technology company recently concluded its financial year 2025 with an exceptionally strong performance, significantly
exceeding both its own and street expectations. The firm reported a core profit of RM115.1 million, marking a substantial
57% year-on-year (YoY) increase. This robust outcome surpassed full-year forecasts by 112% and 113% respectively,
prompting Public Investment Bank to raise its earnings forecasts for FY26-28F by 7-8% and reiterate an “Outperform”
(or Buy) recommendation with a revised target price.

Performance Review

The company’s fourth quarter of fiscal year 2025 (4QFY25) was particularly stellar, with revenue surging
38.4% YoY. This growth was primarily fueled by strong contributions from both the Semiconductor Equipment Business Unit
(SEBU) and the Semiconductor Material Business Unit (SMBU). SEBU sales saw a 19.5% YoY increase to RM61.3 million,
driven by heightened demand for its Mi Series Die Sorter machines in the mobility and wearables markets. Concurrently, SMBU sales
skyrocketed by 54.7% YoY to RM93 million, benefiting from stronger demand for solder balls within the same segments.

Stripping out exceptional items such as foreign exchange losses, impairment losses on investments in associates,
and fair value gains on investment properties, 4QFY25 core profit jumped from RM9.1 million in the prior year to RM25 million.
While SEBU and SMBU segments showed strong core profit growth of +7% YoY and +41.5% YoY respectively,
the Semiconductor Solution Business Unit (SSBU) recorded a loss of RM11.4 million for FY25, primarily due to
higher R&D headcount and associated development costs.

Strategic Outlook and Reorganisation

Looking ahead, the company has strategically restructured its SSBU into two new business units: the Semiconductor
Technologies Business Unit (STBU) and the Vehicle Technologies Business Unit (VTBU). STBU will focus on
SiC-based power semiconductor products, leveraging a Taiwan-based research team for chip design and strategic
foundries for wafer fabrication, particularly for renewable energy, electric vehicle, and AI infrastructure applications.
VTBU will concentrate on intelligent powertrain systems and autonomous driving platforms, working with industry
partners for core component development.

Management maintains a positive outlook for both the SEBU and SMBU segments, anticipating continued robust
demand from the HPC Memory and Mobility & Wearable sectors. The firm did not declare a dividend for the final
quarter, likely prioritizing reinvestment in growth and strategic initiatives.

Analyst’s Recommendation

In light of the stronger-than-expected results and promising future prospects, Public Investment Bank has
retained its “Outperform” call. The investment bank has raised its FY26-28F earnings forecasts by 7-8% and
set a higher target price of RM4.35, based on 33x FY26 EPS.