KUALA LUMPUR (Feb 23): Mi Technovation Bhd opened slightly higher at RM1.62 on Thursday morning (Feb 23), before climbing 17.5% to RM1.88 per share as at 11.15am.

The counter closed at RM1.60 on Wednesday. As at the time of writing, the stock was actively traded, reaching a volume of 11.17 million shares. 

The group is principally involved in in-house design, development, manufacture and sale of wafer-level chip scale packaging sorting machines. 

Public Investment Bank now has an "outperform" call on the group, with a higher target price (TP) of RM2.05 from RM1.65 previously, after rolling over its valuations to its forecast for the financial year ending Dec 31, 2024 (FY2024) to account for the group’s multi-year growth. 

"The full-year results were in line with market expectations, though above ours, making up 101% and 119% of the full-year estimates respectively," said analyst Chong Hoe Leong. 

“SEBU (the semiconductor equipment business) is expected to see another prominent revenue stream in 2023, on the back of diversified solutions strategy and the promising aspects of the advanced die sorting and laser bonding technology that focuses on the HPC (high-performance computing) segment," it said. 

“On the other hand, the SMBU (semiconductor material business) segment will continue to focus on its core competencies, which are closely related to the new alloy and process development through the joint development with its core customers.” 

Chong also pointed out that the commercial operations of a new semiconductor material plant in Ningbo, China, will boost sales after China's market reopening.

"It is also worth noting that the company has significantly increased its inventory, up 29% to RM142.9 million, indicating the likelihood of seeing improved sales in FY2023, with correlating developments seen in previous years," he added. 

CGS-CIMB, meanwhile, maintained "hold" on Mi Technovation, with a higher TP of RM1.75 from RM1.24 previously, based on 18 times calendar year 2024 forecast price-earnings (P/E) and 1.5 standard deviation (SD) below the Malaysian semiconductor equipment sector's five-year mean P/E, versus 13 times at 2SD below sector means previously. 

This is in view of improving earnings prospects, driven by higher take-up of its advanced die sorting and laser bonding machines targeting the HPC chips segment. 

“We raise our FY2023-24 earnings per share (EPS) forecasts by 2% to 5.5% due to higher new equipment sales, and introduce our maiden EPS forecast for FY2025,” said analyst Mohd Shanaz Noor Azam. 

“The group is cautiously optimistic about a stronger FY2023 driven by resumption of domestic semiconductor ecosystem development in China and narrowing losses from overseas operations, especially in China and South Korea, following the commercialisation of its newer equipment portfolio.” 

He added that the group offers a 3.1% yield, backed by a healthy net cash position of RM336 million or 37 sen per share as at end-December 2022.