KUALA LUMPUR (Nov 26): Malaysian Pacific Industries Bhd (MPI) emerged as the top gainer in morning trade on Bursa Malaysia today, rising as much as RM2.04 or 8.64% to RM25.64, after the group registered all-time high quarterly earnings of RM55.3 million.
MPI declared a dividend of 10 sen per share, payable on Dec 24.
At 11.40am, the stock had pared some gains at RM25.56, still up RM1.96 or 8.31%. The counter saw 425,500 shares traded.
Kenanga Research analyst Samuel Tan said in a note today MPI had registered all-time high quarterly earnings as its core net profit for the first quarter ended Sept 30, 2020 (1QFY21) came in above expectations at RM55.3 million, representing 31% of his full-year estimate.
“We expect the group’s earnings to continue on an upwards trajectory on the back of rising demand for its power management chip packaging service for data centres and laptops due to higher usage of web computing,” he said.
He also said orders for radio-frequency front-end (RFFE) packaging modules are expected to remain elevated, thanks to fifth-generation (5G) network adoption in smartphones, along with China’s move to source components locally, benefiting its Suzhou plant.
He also opined that the group’s venture into silicon carbide (SiC) power modules offers promising prospects given the increasing popularity among electric vehicle (EV) manufacturers.
“We raise MPI's FY21 and FY22 core net profit [forecasts] by 7% and 8% to RM190.3 million and RM213 million respectively, representing growth of 24% and 12%,” he said.
Tan maintained his "outperform" call for the stock and revised up his target price (TP) to RM29, from RM18.80, based on a higher 27.3 times 2021 price-to-earnings ratio.
“We like MPI for its long-term mission to transform its portfolio into an automotive-centric one, a space which we believe offers bright growth prospects due to rising semiconductor content in automobiles,” he said.
Meanwhile, CGS-CIMB Research analyst Mohd Shanaz Noor Azam said in a note MPI's 1QFY21 core net profit beat his expectations at 33% of his full-year forecast due to higher-than-expected utilisation in the quarter.
He raised his FY21 to FY23 earnings per share (EPS) forecasts by 8% to 14% as he expects MPI to maintain its healthy sales growth momentum, driven by its strategy to ramp up: i) power management packages for EVs and servers in data centres; ii) RFFE modules; and iii) sensor products.
“Meanwhile, we think its Carsem Suzhou (CSZ) is primed to benefit from growing demand for local semiconductor service providers in China following the US-China trade war, which has forced major Chinese semiconductor players to source their components and services domestically,” he said.
He also expects MPI to benefit from a recovery in the automotive market from 2021 as the group derived 31% of its FY20 revenue from the automotive market.
He reiterated his "buy" call for the stock, but raised his TP to RM26.50 from RM23.60.
“We peg our valuation at a higher 26 times 2022 price-to-earnings, 1SD (standard deviation) above the Malaysian outsourced semiconductor assembly and test sector mean (versus +0.5SD previously), in view of stronger earnings prospects driven by a recovery in automotive and rising electronics content penetration in EVs,” he said.