FPI Q4 FY19 Review

FPI Q4 FY19 revenue came in above our expectations, revenue rose 17.7% from previous year's corresponding qtr of RM149.0mil to RM175.3mil thanks to higher sales volume and change in sales mix.

However, Q4 EPS was slightly below our target (Forecast Q4 EPS: 3.82) bringing the cumulative EPS of FY19 to 16.9sen which is below our expected EPS of 17.02sen (15% improve from FY18).

Dividend payout has increased 1sen compared to previous year, which bringing DY to 6.7% (RM1.63 stock price). 

 FY 19 FPI recorded higher tax and other expenses compared to FY18. Higher revenue recorded in FY19 was mainly due to the speaker sales contribution from FPI's major shareholder (Wistron), accounting for 25% of its overall revenue. We believe that Wistron will continue to purchase speakers from FPI. 

Comment:

Demands for speaker system is directly related to the global economic conditions. The outbreak of the novel coronavirus (COVID-19) has disrupted the global supply chain. Moreover, the board is also cautious about the operating challenges due to the virus outbreak. Hence, we expect a slow down in Q1 FY20 revenue. Our forecast for Q1 FY20 EPS (2.88sen) is reduced by 10% to account for the slower demand and higher overhead cost of its production lines. Thus, Q1 FY20 TP to be RM1.41 (RM1.52-RM0.11) PE maintain at 10. 

Technical Analysis:

Short term:

Next support line: RM1.62 (Fibo 0.618). 

Although the price has shown a strong momentum of rebound to 0.236 level after heavy sell down to RM 1.52, the weak market sentiment due to virus outbreak might turn FPI into bearish.

Long term:

Stock price is still in bearish trend. The price touched Fibo 0.50 level twice but unable to break through, RM 1.78 is a strong resistance line for FPI to break into bullish trend.