KUALA LUMPUR (Nov 16): Analysts expect Malaysian Pacific Industries (MPI) to earn stronger earnings for the next few quarters after its most recent results came within expectations.  

“Barring near-term headwinds, we remain optimistic about MPI’s medium-to-longer-term prospects, anchored by its strengthening product portfolio and automotive-centric strategy,” said TA Securities.  

TA Securities has maintained their ‘buy’ call on MPI with unchanged target price at RM32.15 based on price earnings (PE) multiple of 26 times forecast calender year of 2024 (CY2024) earnings per share (EPS).  

Meanwhile, Kenanga Research has maintained the ‘market perform’ stance on the group with a higher target price of RM27.20 (previously RM24.05) based on price-earnings-ratio (PER) multiple of 226 times CY2024f.  

“We are optimistic about the group's sustained recovery momentum, underpinned by its ability to rein in costs (such as labour reduction at the Suzhou plant, China) and optimise supply-chain efficiency” said Kenanga research.  

MPI, an outsourced semiconductor packaging and testing services player that also manufactures leadframes (a thin metal plate used in chip packages) reported a net profit of RM16.52 million on revenue of RM513.21 million for the first quarter ending Sept 30, 2023 (1QFY2024).

This marks the second consecutive quarter in which the company has recorded a net profit, according to its bourse filing on Wednesday.  

Comparatively, the year-on-year (y-o-y) profit declined by 68.65% from RM52.7 million in the same period last year which TA Securities attributed to due to softer global semiconductor demand alongside inventory correction and weaker end-market electronics demand amid macroeconomic headwinds.  

“On a brighter note, on a quarter-on-quarter (q-o-q) basis, its 1QFY2024 revenue climbed 6.4% while its core net profit more than doubled (albeit from a low base), indicating the recovery momentum has extended from 4QFY2023,” Kenanga research said.  

TA Securities and Kenanga research observed the result was within their expectations despite low contributions and anticipate improved q-o-q earnings recovery to sustain and pick up further in second half of financial year 2024 (2HFY2024) as global semiconductor demand recovers.  

In addition, both research houses have maintained their earnings forecast for the group.  

At time of writing, the share price of MPI was down eight sen or 0.29% at RM27.10, valuing the company at RM5.69 billion.