$MPI / 3867 (MALAYSIAN PACIFIC INDUSTRIES BERHAD)

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*MPI 1QFY25 briefing keytakes (Venue: Wisma HL)*

*Date: 26 Nov 2024*

*Management: Manuel Zarauza*

- Segmental breakdown in 1Q25: Auto 36%, Industrial 45% (of which 8% comes from AI server), Consumer 13%, PC 5%, Others 1%.
- Auto: US, China and Europe are brutally hit
- Despite market uncertainties and a downturn in auto revenue, Carsem is doing alright.
- Rising costs impacting profitability – Energy, manpower and logistic costs
- Carsem continues to invest focussing mainly on sensors, RF, SiC/GaN
- Still investing, installing new machines for capacity expansion, hiring more people, invest in R&D, floor space expansion, i4.0, upskilling and looking for more anchor customers.
- Focus: Suzhou – RF Power, S-site – SiC/GaN, M-site – sensors
- YTD 2024 – Carsem revenue better than other major OSATs i.e. Amkor, ASE, Unisem
- Despite the market uncertainty, Carsem managed to keep double digit PAT/PATAMI margin YTD CY24.

*Outlook*

- Semicon poised for LT growth, but ST challenges – geopolitics, demand fluctuations, overcapacity, material price surge.
- To maintain a competitive edge in the rapidly evolving semicon, Carsem continues to invest in packages for Hydrogen cars, RE and AI.
- AI servers – power packages for AI server farms for data storage & rapid response Sensors – customised – for auto & 4G/5G communications
- Sensors and packaging tech will be pivotal in improving performance, reliability and device miniaturisation across robots, drones, medical devices, RE. With Carsem’s expertise in advanced packaging solutions, it is well positioned for sustainable LT growth.
- Robots – LIDAR sensors, IR sensors, vision sensors camera – packages – QFN, BGA
- Medical - key sensors – bio sensors, pressure sensors, optical sensors, temperature sensors – packages – flipchips
- Drones – LIDAR sensors, infrared sensors, IMU sensors / GPS modules – packages – QFN, BGA
- RE – Temperature, pressure and flow sensors – packages – QFN, TO-220-247, SiP.
- SiC – will continue to grow.
- Management is confident about its growth in future with the right portffolio positioning, competitive pricing strategy, continuous investment in growth areas, adequate capacity to absorb new biz, anchor customers & strong pipeline, robust cash position.
- Carsem is fully geared up to run as soon as market bounces back.

*Financials*

- Despite overall market uncertainty, 1QFY25 USD revenue growth +5% yoy
- PATAMI +82% to RM30.1m yoy
- Cash of >RM1b
- MPI is synonymous with dependability in these unstable time, 10sen dividend
- Global end market demand dips
- Forex component in 1QFY25 – forex losses - realised RM9.5m, unrealised RM8.2m
- Cash RM1b – might use RM200m for SuXiang.

*Summary*

- Effective portfolio positioning is driving growth on 1QFY25 USD revenue +5% yoy
- Despite rising costs & continued investments, PATAMI still increase by 82% yoy
- On a healthy orderbook for future Q despite uncertainty
- Continues to invest in new tech & machines to grab new opportunities
- Investing in capacity expansion – new factory in Ipoh and SuXiang
- Net cash of >RM1b for investment & M&A.

*Q&A*

- Mixed outlook for auto – some customers i.e. Infineon, Allegro are recovering, STM.
- 75% UR in Suzhou, but price competition is intense. Profitability takes time to recover.
- China for China strategy now.
- Doing a lot smaller packages.
- SiC will do a lot more better next year, probably doubling.

Thanks.