Sharing from remisier

$MPI / 3867 (MALAYSIAN PACIFIC INDUSTRIES BERHAD)

-

MPI 2QFY25 briefing keytakes (Venue: Wisma HL)

Date: 20 Feb 2025

Management: Manuel Zarauza (CEO), Rohit Kumar

Key takeaways:

- Semicon outlook – tough, global challenges getting worse eversince Trump’s in. Automotive and industrial chips impacted by inventory adjustments and shifting demand patterns.
- 6 Mar – new building in SuXiang – for Automotive + GaN
- MY strategic positioning as a semicon manufacturing hub – Chinese OSATS are ramping up in MY to serve US & EU. Taiwanese chipbond to expand operations in Penang soon. No recovery in 2025 for Automotive. Customer - 72% of market share.
- MPI could grow a lot more but market is bad. Customer asking for 40% price down on recent technology.
- Revenue: STM -22%, Allegro -11%, Infineon -9% yoy for 4Q24
- Semicon growth is fuelled by AI.
- 2QFY25 – Auto 35%, AI/servers, Industrial, Consumer comm 12% PC/Laptop, Other 2%. Auto 35%, Industrial 46%, Consumer 13%.
- Tough times now but a bright future ahead.
- To maintain a competitive edge, Carsem continues to invest in packages for Hydrogen cars, RE and AI servers. Wide band cap , AI servers and sensors.
- New factory opposite Carsem M site for wideband gap (WBG) – total 4 storeys at 75.8k sqft.
- Confident about its growth in future – right portfolio, competitive pricing, continuous investment in growth areas, adequate capacity, robust cash position

Summary

- Despite overall market uncertainty, 2QFY25 grown qoq by 3Q in USD
- PATAMI sequentially increased by 33% to RM40m in 2Q25
- Even during global slowdown, MPI continues to have a strong cash position at RM967m
- Carsem continues to invest in replacing old machines & new tech – 2Q RM143m
- Global end market demand drop, high inventory stock with customers and manpower constraints
- Automotive segment is facing a decline: Auto 35%, Industrial 46%, Consumer 13%. Aiming to get Auto revenue mix of 50%
- New capacity expansion – new factory in Ipoh for WBG and new factory in Suxiang China.
- Carsem CSX – construction completed, factory hand over Feb25, equipment move in & qualification – Mar25.

Q&A

- Outlook: 3Q a bumpy quarter, 4Q very good. Automotive China should be doing well. US and Europe auto market will stay weak.
- When tariff happens, cant charge more to customers. Infact all are asking for cost down.
- Automotive portfolio – Chinese still very small. Still downside to Automotive revenue.
- Customer I did do SiC burn-in services in house.
- No direct exposure to BYD but to Tier-2.

Thanks.