Kenanga IB Research maintains Outperform on MPI, ups target price to RM6.80

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KUALA LUMPUR (Nov 14): Kenanga IB Research has maintained its Outperform rating on Malaysian Pacific Industries Bhd (MPI) at RM5.03 with a higher target price of RM6.80 (from RM6.72) and said it went away from the MPI’s 1Q15 results briefing feeling Positive on its outlook as the strategic product mix (S/T: 35% and Automotive: 22% which give a balanced exposure of cyclical segment and defensive segment) augured well for MPI under the current tech upcycle as well as the upcoming tech wave.

In a note Friday, the research house said post-results, its FY15-FY16 earnings estimates had been increased by 1% for house-keeping purposes.

“We see more value emerging following its recent share price weakness (more than 10% since September amidst the weaker sentiment in the local equity market).

“Coupled with its resilient earnings prospects as well as the management’s foresight in the tech-cycle, we reiterate our Outperform recommendation with a higher target price of RM6.80 (from RM6.72).

“This is based on a targeted forward PER of 14.7x (with rolled-over valuation base year of FY16), a valuation which is broadly in line with the OSAT players in Malaysia,” it said.