KUALA LUMPUR (March 2): Shares in Malaysian Pacific Industries Bhd (MPI) continued to climb to hit a record high on a positive business growth outlook.

MPI, which was the top gainer today, jumped as much as RM2.56 or 6.23% to a record high of RM43.66.

At 10.45 am, the counter had pared some gains to RM41.86, still up 76 sen or 1.85%.

Analysts who attended MPI’s briefing yesterday wrote in their respective notes today that MPI was upbeat about its business outlook.

CGS-CIMB analyst Mohd Shanaz Noor Azam said MPI expects its healthy volume loading to be sustained in the third quarter ending March 31, 2021 (3QFY21), driven by robust demand for power management chips used in auto and data centres.

“Management is upbeat about the group’s long-term vision to be the leading outsourced semiconductor assembly and test (OSAT) provider for automotive semiconductors driven by an electrification strategy on the back of growing demand for sensor and silicon carbide (SiC) applications.

“Moreover, we gathered from management that the group is not expecting a material wafer shortage from its customers given that it expects to maintain its healthy volume loading in 3QFY21 in spite of the seasonally weaker and shorter operating period,” he said.

He reiterated his "add" call on the stock with a target price (TP) of RM42, based on 30 times 2022 forecast price-earnings ratio (PER).

“We see growing exposure to Chinese semiconductor customers, higher dividend payouts, and higher contributions from the automotive and industrial segments as potential rerating catalysts. Appreciation of RM/US$ (ringgit-US dollar) and a delay in end-demand application recovery are key downside risks to our call,” he said.

Meanwhile, TA Securities analyst Wilson Loo said he emerged from MPI’s 2QFY21 investors’ briefing more optimistic about its growth prospects, with the management guiding for the growth momentum in 2QFY21 to be sustained quarter-on-quarter (q-o-q) into 3QFY21.

“We raised our FY21 to FY23 earnings estimates by 8% to 13% after raising sales by 7% to 8% in view of the stronger order visibility,” he said.

Corresponding to the earnings upgrade, he arrived at a higher TP of RM54.35 (previously RM48.60) based on a PER multiple of 38 times against 2021 earnings per share (EPS).

“We continue to like MPI for its robust sales pipeline, backed by continued enhancement of its product portfolio, investment in new technologies and its robust balance sheet,” said Loo, who maintained his "buy" call on the stock.

However, AmInvestment Bank Research maintained its "hold" call on MPI with a higher fair value (FV) of RM36.05 per share, pegged at a 2022 PER of 21 times (previously RM28.99/share) after raising its FY21 to FY23 forecasts by 21% to 24% to account for expectations of robust earnings growth ahead.

“We continue to like MPI but opine that the stock is fairly valued at the current share price,” it said.