KUALA LUMPUR (Nov 14): CIMB Securities has raised its target price for Malaysian Pacific Industries Bhd (KL:MPI) to RM41, the highest in the market, implying a 30% upside from its current levels. The upgrade reflects expected strong growth in artificial intelligence (AI)-related revenue, supported by key partner Infineon’s rapid expansion in AI power electronics.

CIMB Securities expects MPI’s AI revenue to rise to about 15% by FY2026/FY2027, helped by new high-power Cu-clip packaging programmes for Infineon, ramping up in the second quarter of calendar year 2026 (2QCY2026). MPI remains a key outsourced semiconductor assembly and test (OSAT) partner for Infineon due to its expertise in high-thermal, high-power packaging.

Infineon raised its FY2026 target to €1.5 billion (RM7.18 billion) and expects the AI power market to reach €8-12 billion by 2030 after AI power revenue surged to over €700 million in FY2025, fuelled by high demand from Nvidia and hyperscaler application-specific integrated circuit projects.

CIMB Securities forecasts a 24% three-year core profit compounded annual growth rate, boosted by earnings from the Infineon Thailand acquisition starting from 3QCY2026.

MPI’s stock is trading at 26 times CY2026 forecast price-to-earnings ratio, which is lower than the sector’s five-year average of 34 times, making it relatively cheaper than its peers.

Out of eight analysts tracked by Bloomberg, only two have ‘buy’ ratings on MPI, including CIMB Securities. The other analyst with a 'buy' call has a target price of RM35 on the stock. Meanwhile, the average 12-month target among all analysts is RM29.37, below MPI’s current price of RM30.94. The stock has risen 19.46% year to date and is valued at RM6.17 billion.

CIMB Securities said potential catalysts for MPI’s stock include faster-than-expected growth in AI server contributions, new customer and design wins in silicon carbide (SiC) and gallium nitride applications, continued recovery in the automotive and electric vehicle markets, and possible earnings upgrades from analysts. 

On the downside, risks include slower automotive demand recovery, delays in capacity expansion for SiC customers, higher-than-expected start-up costs at MPI’s new Suxiang plant, and potential earnings pressure from a stronger Malaysian ringgit against the US dollar.