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Malaysian Pacific Industries Bhd (+ve)
MPI (Fundamental: 1.8/3; Valuation: 2.4/3) is involved in the manufacture, assembly and testing of integrated circuits, semiconductor devices and electronic components.

MPI fell into the red in FY June 2012 with a net loss of RM19.8 million on revenue of RM1.2 billion, but recovered in FY2013 after exiting some legacy lines to concentrate on higher-margin businesses. The company also exited its loss-making stamped leadframe business in FY2014, which saw net profit rise to RM45.1 million with improved asset utilisation. For 1HFY2015, net profit grew an outsized 69.6% to RM44 million despite a modest 2.9% growth in revenue to RM666 million, thanks to higher contribution from the smartphone sector, the stronger USD and lower commodity prices.

Earnings growth from FY2012 onwards have pared down the company’s debt, turning MPI from net debt of RM159.3 million to net cash of RM18.7 million in 2QFY2015. The stock is trading at 1.44 times book and a trailing 12-month P/E of 18.1 times.

mpi_11Feb15_theedgemarkets

This article first appeared in The Edge Financial Daily, on February 11, 2015.

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