BIMB Research believes MPI is well-positioned as a leader in the semiconductor industry.
PETALING JAYA: BIMB Research has resumed coverage on Malaysian Pacific Industries
Bhd (MPI) with a “buy” call, expressing optimism about MPI’s future earnings prospects, citing strong demand for electric vehicles (EVs) and the expansion of data centres and Industry 4.0.
The research house noted that these areas are expected to contribute significantly to MPI’s core profit, projecting a three-year compounded annual growth rate of 20% to reach RM331.2mil in the financial year ending June 30, 2027 (FY27), from RM189.9mil in FY24.
BIMB Research believes MPI is well-positioned as a leader in the semiconductor industry, driven by its continued investment in advanced packaging technologies, such as gallium nitride and silicon carbide (SiC), within the industrial and automotive electrification segments.
It said MPI aims to commence high-volume production of these advanced packaging technologies in FY25, allowing it to tap into growth opportunities in key markets such as renewable energy, industrial automation and high-performance computing.
The research firm said MPI also stands to benefit from Infineon Technologies AG’s investment over the next five years to expand its Kulim 3 semiconductor fab, projected to become the world’s largest 200 mm SiC power fabrication plant.
“Given MPI’s expertise in SiC technology, with investments since 2020, we believe the company will be able to leverage Infineon’s expansion, unlocking new business opportunities and increasing market penetration in the future,” it added.
BIMB Research sets a target price of RM40.36 on MPI, implying a price-to-earnings ratio (PER) of 38 times, in line with its three-year historical forward PER average, based on FY25 earnings per share of 106.2 sen.
“We believe this is fair given its strong earnings growth potential, particularly in the automotive and industrial sectors, coupled with its competitive advantage over its peers,” it said.
BIMB Research said MPI’s current 12-month forward PER of 23 times is at a discount and merits a higher valuation.
