KUALA LUMPUR (Feb 13): Malaysian Pacific Industries Bhd (KL:MPI) could dish out a special dividend following the semiconductor services firm’s proposed sale of land in Penang, CIMB Securities flagged.

MPI’s finances are robust, CIMB Securities said in a note, highlighting a net cash balance of RM991 million, equivalent to RM4.72 per share, at the end of September 2024. The research house also pointed to the strong free cashflow yield of 6.1%-7.2% for the years ending June 2025 (FY2025) and FY2026.

“We believe the group’s existing cash flow is sufficient to finance its Ipoh and Suxiang expansion plans,” said CIMB Securities in a note to clients. If MPI distributes the entire net gain from the sale, the dividend per share for FY2026 could rise to 85 sen from 35 sen, according to its estimates.

On Wednesday, MPI announced that it is selling land measuring about 40,487 square metres to data centre operator Open DC PE2 Asset Sdn Bhd. A portion of the proceeds will be distributed to MPI, while the remaining balance will cover taxes and disposal-related expenses.

MPI expects to realise an estimated net gain on disposal of about RM99.2 million, according to its exchange filing.

TA Securities viewed the proposed sale positively, as it marks MPI’s full exit from lead frame manufacturing. The research firm noted that the move is a strategic decision to unlock asset value and strengthen the group’s cash reserves.

MPI shares have fallen over 14% on Bursa Malaysia since the start of the year, driven by weak sentiment in the technology sector amid concerns over US chip export restrictions in early January and questions over the need for pricey advanced chips following the emergence of Chinese startup Deepseek.

Both CIMB Securities and TA Securities maintained their ‘buy’ calls on MPI along with five other research houses covering the stock. Only CGS International rated the stock as ‘reduce’. The consensus target price is RM34.44, according to Bloomberg, implying a potential return of 64% in the next 12 months.

Shares of MPI fell 30 sen or 1.4% to settle at RM21.24 on Thursday, giving the company a market capitalisation of RM4.46 billion.

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MPI to see net gain of RM99.2m from Penang land sale