PETALING JAYA: Malaysia Pacific Industries Bhd’s (MPI) proposed sale of two properties in Penang is seen as a rational move to unlock asset value and will strengthen its cash reserves.
TA Research noted the plan to sell the two parcels of leasehold land, including buildings, in Bayan Lepas, Penang, for RM140mil cash will see MPI make a gain on disposal of RM99.2mil, which will add to the tech group’s robust balance sheet that showed a net cash position of RM990.7mil as at end Sept 30, 2024.
The properties were held by MPI’s wholly-owned subsidiary Dynacraft Industries Sdn Bhd (DCI), which ceased its lead frame manufacturing operations there early last year, and are being sold to Open DC PE2 Asset Sdn Bhd.
DCI plans to allocate RM125.4mil of the proceeds for distribution to its MPI.
TA Research maintained its earnings forecast for MPI’s financial year 2025 (FY25) to FY27 period, pending the completion of the proposed disposal.
It also maintained its “buy” call on the stock with a target price (TP) of RM35.80 a share, with the valuation based on an unchanged 30 times 2025 earnings per share.
CIMB Securities, meanwhile, believes the sale could help result in a special dividend given MPI’s substantial cash pile and it believes the MPI’s existing cash flow is sufficient to finance its expansion plans in Ipoh and Suxiang.
It also maintained a “buy” rating on MPI with an unchanged TP of RM35.50 a share, based on a 28 times 2026 price to earnings.
“We continue to like MPI for its unique silicon carbide and gallium nitride exposure and favour it as a proxy for the growing demand for power semiconductors in data centres,” the research house stated in a recent report on the company.
MPI shares closed the trading week at RM20.72, giving it a market capitalisation of RM4.35bil.
