KUALA LUMPUR (May 17): Shares of Malaysian Pacific Industries Bhd (KL:MPI) climbed to their highest in 15 months, as analysts flagged stronger quarters ahead following the semiconductor company’s return to the black.

MPI extended Thursday’s gain and rose as much as 74 sen or 2.2% to RM34.24, its highest since Feb 9, 2023. At 9.20am, the stock was still up 68 sen at RM34.18, valuing the company at RM7.17 billion on Bursa Malaysia.

At least two analysts upgraded their recommendations for MPI to “buy” amid rebound in global demand for semiconductors, even as the company missed market estimates.

“We are positive on its outlook as the recovery of the semiconductor sector trickles down from the frontend to the backend,” said Kenanga Investment Bank. The research house upgraded its recommendations for MPI to “outperform” from “market perform” call.

For the nine months ended March 31, 2024 (9MFY2024), MPI reported a 53% surge in to RM81.43 million when compared to same period last year on better foreign exchange rates, lower operating expenses and higher interest income. Still, that accounted for only 61% of the full-year consensus estimate.

Shares of MPI, which provides outsourced semiconductor packaging and testing services, have nevertheless racked up a 22% gain so far this year, along with smaller peer Unisem Bhd (KL:UNISEM) that climbed 27% year-to-date.

Following the latest analyst upgrades, MPI now has four “buy” calls with target prices ranging from RM37.70 to RM43.00, out of seven research houses covering the stock, according to Bloomberg. There another one “hold” and two “sell” calls.

“We expect the utilisation rate at Carsem Malaysia’s Suzhou plant to continue its uptrend amid a strong products pipeline and recovery of the semiconductor sector,” said RHB Investment Bank. “We continue to like Malaysian Pacific Industries as one of the proxies for the semiconductor sector’s recovery.”

Still, the research house kept its “buy” call on MPI, but flagged that “uneven recovery in the various end-applications will continue to undermine a full-blown sector recovery”.

On its part, the company expects the semiconductor industry to stay volatile and uncertain in the near future, despite gradual recovery in certain segments.

“The group remains committed to exploring new markets and enhancing customer service, while implementing operational efficiency measures to contain costs,” it added.

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