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Mixed prospects for  MI 5286 MI TECHNOVATION BERHAD's SEBU in the coming quarters, CGS-CIMB Research said

Mi Technovation Bhd is looking at commercial electronics product development for household items with increasing technology content and features for the fourth business unit.

KUALA LUMPUR: Mi Technovation Bhd (MTB) is expecting mixed prospects for its semiconductor equipment business unit (SEBU) and semiconductor material business unit (SMBU) in the coming quarters, CGS-CIMB Research noted.

The research firm noted that the company sees a challenging outlook for SEBU due to cautious equipment spending from its customers amid uncertainty brought about by recent developments such as the ongoing Russia-Ukraine conflict, Covid-19 lockdowns in China and inflationary cost pressures.

Meanwhile, MTB foresees robust demand in SMBU, driven by multi-year growth in 5G mobile and network deployment, high-performance computing and Internet of Things (IoT) despite the China lockdowns and delays in the commercialisation of its Ningbo plant.

"Overall, we cut our FY22-24 earnings per share (EPS) by 15-18 per cent to account for lower equipment delivery and the delay in the commercialisation of the Ningbo plant from the first half (1H) of 2022 to the second half (2H) 2022," CGS-CIMB Research said in a note today.

On earnings, CGS-CIMB Research noted that MTB's revenue in the first quarter (Q1) 2022 jumped 64 per cent year-on-year (YoY) mainly due to the consolidation of Taiwanese firm Accurus Scientific Co Ltd under SMBU following the Accurus acquisition on April 21 for RM217.01 million.

The higher sales from SMBU helped offset the weaker contributions from SEBU, which fell by 17.6 per cent YoY.

MTB attributed the lower SEBU sales to weaker Chinese demand after completing the semi equipment purchase cycle in 2021 and a slow start in the US market, CGS-CIMB Research noted.

The research firm also noted that MTB plans to set up its third and fourth business units under the second phase of its 10-year roadmap (2019-2028) as part of its expansion plan to become a semiconductor and commercial solutions provider.

For its upcoming third business unit, MTB aims to develop a new advanced packaging technology platform and manufacturing process leveraging its expertise in the semi equipment and material businesses.

Meanwhile, MTB is looking at commercial electronics product development for household items with increasing technology content and features for the fourth business unit.

CGS-CIMB Research retains Add call for MTB with a lower target price of RM2.20.

The stock offers decent FY22-23 2.8-3.1 per cent dividend yields.

"We still like MTB's long-term aspiration to be a multinational diversified semiconductor solutions provider," it said.

https://www.nst.com.my/business/2022/05/793889/mixed-prospects-mi-technovations-sebu-coming-quarters-cgs-cimb-research-said

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