RHB Equity 360° (MPI, Ta Ann, KLK, RCE, Gent Plant, IJM Land, IJM Plant, IJM Corp, Proton, Tan Chong, Mah Sing, Allianz, MCIL; Technical: UEM Land)

Top Story : MPI – Stronger Growth Ahead Outperform
Briefing Note
♦ MPI expects 4QFY06/10 revenue to register stronger qoq growth, given that 3QFY06/10 qoq growth of +2.0% which bucks the trend of a seasonally weaker quarter.
- Also, MPI expects 4QFY06/10 net profit to grow sequentially on the back of:
1) higher utilisation rate;
2) stronger contribution from MLP and high-density packages; and
3) margin expansion stemming from higher contribution of high-density packages and cost-cutting measures.
♦ We understand that overall utilisation rates have increased to 95% from 85% in 2QFY06/10. Note that utilisation rates for Ipoh, Suzhou, and Dynacraft plants currently stands at 95%, 100%, and 90% respectively (vs. 90%, 100%, and 85% in 3QFY06/10).
♦ Separately, with Ipoh and Suzhou plants currently running at full-capacity, we understand that MPI expects to raise capacity for these plants by 25% and 30% by Sep-10. Note that MPI is targeting to increase its higher-margin MLP capacity to 12m/day by end-FY10 (vs. 8m/day currently). In addition, management had stated that it will be using the spare capacity from the Advance Packages (AP) line to expand its MLP packages as well as high-density packages. Furthermore, given the capex of around RM3m for its new etch and strip plating capacity, MPI expects capacity for Dynacraft’ to increase by 20%.
♦ Maintain Outperform with a fair value of RM8.46/share.

RHB Equity 360°( MPI, Ta Ann, KLK, RCE, Gent Plant, IJM Land, IJM Plant, IJM Corp, Proton, Tan Chong,Mah Si...