KUALA LUMPUR (Aug 15): Analysts are positive on the growth prospects of semiconductor maker Malaysian Pacific Industries Bhd (MPI), due to its strategic positioning in high growth segments such as communication, automotive and industry.

In a note today, Kenanga IB Research said the group’s strategic exposure in different segments and the respective growth potential of those segments, as well as its investment into automation, has reaffirmed the research house’s conviction on its positive rating.

“Post meeting, we maintain our positive conviction on the medium-term prospect of the group, given the greater visibility on its products and technology roadmaps, coupled with the right positioning in balancing its products portfolio,” the research house saod.

“While worldwide semiconductor market is expected to grow by only 2.7% in 2018, management is looking at a more optimistic USD top-line growth of 5.5%-7.5% in FY18 (vis-à-vis our conservative growth of 1%), which will be driven by its new products and strategic positioning in both high growth (Communication) and defensive (Automotive and Industry) segments,” Kenanga IB Research said.

At 10.48am, MPI’s shares were trading 42 sen higher at RM13.54, with some 47,300 shares traded, rising 83% year-to-date.

The stock, which traded at its all-time high of RM14.22 on July 28, saw it retreat on Aug 11, falling 11.4% lower to RM12.76, before rebounding again today.

“Besides top-line growth strategy, the group is also investing in higher automation (with better yield and higher efficiency), which will eventually evolve into Industrial 4.0,” the note added.

Kenanga maintained its outperform call on the stick, with a target price of RM14.85.

Meanwhile, CIMB Research also said in a note yesterday that MPI revealed its product pipeline over the next 12-18 months, which will boost its sales, stating it plans to start mass production of a new airbag sensor in the second quarter of 2018, and a new peripheral sensor in the first quarter of 2019, increasing its automotive sales.

“MPI is also in the midst of a transformation to increase automation. For example, the group plans to add 70 vision inspection machines by 2018, to reduce its dependency on human interface in its final testing processes,” CIMB said.

CIMB also said the group is exploring potential merger and acquisition (M&A) targets to expand its portfolio offerings, and opines any M&A activity will leverage on the group’s automotive engineering capabilities.

CIMB has maintained its Add call on the stock, with a higher target price of RM14.20.