PETALING JAYA: Mi Technovation Bhd is expecting mixed prospects for its semiconductor equipment business unit (SEBU) and semiconductor material business unit (SMBU) in the coming quarters, according to CGS-CIMB Research.

       The brokerage noted the outlook for SEBU was challenging due to cautious equipment spending from Mi Technovation’s customers amid uncertainty brought about by recent developments such as the ongoing Russia-Ukraine conflict, Covid-19 lockdowns in China and inflationary cost pressures.

       Conversely, Mi Technovation’s SMBU could see robust demand, driven by multi-year growth in 5G mobile and network deployment, high-performance computing and Internet-of-Things in spite of the China lockdowns and delays in the commercialisation of its Ningbo plant.

       In view of the mixed prospects, CGS-CIMB Research cut its earnings forecasts for Mi Technovation for the financial years ending Dec 31, 2022 (FY22) to FY24 by 15%-18% to account for lower equipment delivery and the delay in the commercialisation of the Ningbo plant from the first half (1H) of FY22 to 2H22.The brokerage retained “add” on Mi Technovation, with a lower target price of RM2.20, based on a lower 20 times FY23 earnings. It noted the counter offers decent FY22-FY23 dividend yields of 2.8%-3.1%.

       “We still like Mi Technovation’s long-term aspiration to be a multinational diversified semiconductor solutions provider,” CGS-CIMB Research said. Mi Technovation 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, the brokerage noted.

       “For its upcoming third business unit, the group aims to develop a new Advanced Packaging technology platform and manufacturing process leveraging on its expertise in the semi equipment and material businesses.

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