MI: Operational Efficiency Drives Strong Earnings Beat, Positive Outlook Maintained

A recent investment bank research report indicates a semiconductor solutions provider delivered a robust financial performance for the first nine months of FY25. The company’s core profit surged by 35.3% year-on-year, reaching RM87.7 million, after excluding a net foreign exchange loss of RM18.6 million. This result significantly surpassed both Public Investment Bank’s and consensus forecasts, accounting for 98% and 101.1% of their full-year projections, respectively.

Performance Review

The impressive earnings growth was primarily driven by strong contributions from the Semiconductor Equipment Business Unit (SEBU) and the Semiconductor Material Business Unit (SMBU). SEBU revenue nearly doubled to RM123 million, largely due to high demand for its Mi Series Die Sorter machines within the Mobility & Wearables markets. Concurrently, SMBU sales climbed 34.1% year-on-year to RM73.6 million, fueled by sustained demand for solder balls in the Mobility & Wearables, and High-Performance Computing (HPC) & Memory segments.

In the third quarter of FY25 (3QFY25), core profit achieved a record high of RM36.5 million, a substantial increase from RM22.3 million in the previous quarter. This surge was primarily attributed to a strong turnaround within the SEBU segment and a 30.4% year-on-year increase in SMBU earnings, which reached RM18 million. However, the Hangzhou-based Semiconductor Solution Business Unit (SSBU) faced challenges, continuing to incur losses of RM5.4 million due to elevated R&D and related development costs. Despite a 58.9% year-on-year increase in overall operating expenses, partly due to a RM5.3 million staff bonus provision, the 3QFY25 EBITDA margin positively swung to 22.5% from a prior negative margin. The 90%-owned Mi Korea segment also reported a loss of RM2 million during the period.

Future Outlook and Analyst View

Management maintains an optimistic outlook for 4QFY25, anticipating double-digit growth for the SEBU, particularly in the Mobility and Wearables segments. SMBU is also projected to sustain strong growth, driven by specialty alloys demand and continued momentum in Mobility and HPC-related markets. Furthermore, the SSBU segment has completed the first prototype for its new power module, with internal qualification and data collection progressing, setting the stage for penetration into energy-efficient power solutions in the automotive and industrial sectors.

The investment bank reiterated its “Outperform” recommendation, raising the target price to RM4.05 (from RM3.50) based on a higher 33x FY26 EPS. Analysts expressed increased confidence that the group is well-positioned to exceed the RM100 million profit mark for the full year. Additionally, an unexpected dividend per share of 2 sen was declared for the quarter, bringing the cumulative dividend to 3 sen.