Saham: KLSE-MPI - PT. Malaysian Pacific Industries Berhad

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$MPI / 3867 (MALAYSIAN PACIFIC INDUSTRIES BERHAD)

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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.

$MPI / 3867 (MALAYSIAN PACIFIC INDUSTRIES BERHAD)

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♨️ Fresh From Oven ♨️

*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.

$MPI / 3867 (MALAYSIAN PACIFIC INDUSTRIES BERHAD)
Research Report by TA

$MPI / 3867 (MALAYSIAN PACIFIC INDUSTRIES BERHAD)
Research Report by RHB

$MPI / 3867 (MALAYSIAN PACIFIC INDUSTRIES BERHAD)
Research by RHB

Strong growth forecast for MPI on EV and chip demand

BIMB Research has resumed coverage on Malaysian Pacific Industries Bhd (MPI) with a “buy” call, expressing optimism about MPI’s future earnings prospects, citing strong demand for electric vehicles (EVs) and the expansion of data centres and Industry 4.0.

RHB TOP PICKS Q4 2024

$MPI / 3867 (MALAYSIAN PACIFIC INDUSTRIES BERHAD) $DAYANG / 5141 (DAYANG ENTERPRISE HOLDINGS BERHAD) $GCB / 5102 (GUAN CHONG BERHAD) $FOCUS / 0116 (FOCUS DYNAMICS GROUP BERHAD) $SIMEPROP / 5288 (SIME DARBY PROPERTY BERHAD)

$MPI / 3867 (MALAYSIAN PACIFIC INDUSTRIES BERHAD)
Research by CGS
REDUCE – TP RM27.40

"Stronger industrials to pad auto weakness”

■ 4QFY24 results missed expectations on extended auto weakness, offsetting stronger performance from servers and renewable energy.
■ We cut FY25-26F EPS by 10-13% to account for strengthening ringgit and as we tone down our recovery rate expectations for the automotive segment.
■ Maintain Reduce but with an unchanged RM27.40 TP as we roll forward our valuation. MPI’s 35.8x FY25F P/E looks steep vs. 10-year mean of 20x.

Analyst:
Shafiq KADIR
shafiq.abkadir@cgsi.com
Dharmini THURAISINGAM
dharmini@cgsi.com

$MPI / 3867 (MALAYSIAN PACIFIC INDUSTRIES BERHAD)
Research by TA
BUY – TP RM38.20

"Remain Sanguine on Medium to Long Term Prospects”

Post MPI’s 4QFY24 investors briefing, we maintain our Buy recommendation, albeit with a lower target price of RM38.20, following the earnings cut to reflect caution regarding the near-term outlook. Despite MPI seeing some slowdown in the automotive segment, the group will continue to adopt an automotive-centric strategy, as management firmly believes that the long-term outlook for the automotive market remains bright. On the other hand, the group will continue to focus on investments related to electric vehicles, silicon carbide and gallium nitride technologies, advanced packaging, 5G testing, and MEMS sensors, among others.

Analyst:
Chan Mun Chun
mcchan@ta.com.my

$MPI / 3867 (MALAYSIAN PACIFIC INDUSTRIES BERHAD)
Research by TA
Under Review - TP RM42.30

"Weaker-Than-Expected Recovery"

We put our call Under Review, pending an analyst briefing later, with an unchanged target price of RM42.30/share based on a PE multiple of 32.0x CY25F EPS and a 3% ESG premium.

Analyst:
Chan Mun Chun
mcchan@ta.com.my

$MPI / 3867 (MALAYSIAN PACIFIC INDUSTRIES BERHAD)
Research by RHB
Buy - TP RM44.80

"On a Commendable Recovery Path; Keep BUY"

Maintain BUY and MYR44.80 TP, 35% upside, c.1.4% FY25F (Jun) yield. Malaysian Pacific Industries’ FY24 core profit of MYR182m (+46% YoY) met our but exceeded consensus’ expectations. We expect the utilisation rate to improve heading into 2HCY and CY25 amid a strong products pipeline and recovery of the semiconductor sector. We continue to like MPI as one of the proxies for the semiconductor sector’s recovery and its improved efficiency following various cost rationalisation efforts.

Analyst:
Lee Meng Horng
lee.meng.horng@rhbgroup.com

$MPI / 3867 (MALAYSIAN PACIFIC INDUSTRIES BERHAD) $DUFU / 7233 (DUFU TECHNOLOGY CORP. BERHAD) $PENTA / 7160 (PENTAMASTER CORPORATION BERHAD) $VITROX / 0097 (VITROX CORPORATION BERHAD)