KUALA LUMPUR (June 10): Malaysian Pacific Industries Bhd (KL:MPI) is set to surf a wave of power semiconductor demand and deliver robust growth over the next three years, said CIMB Securities.
A boom in artificial intelligence (AI) will drive a “significant increase” in the amount of chips designed to manage high voltages and currents in data centres while accelerating the adoption of next-generation power delivery, the research house said in a note and kept its ‘buy’ recommendation.
“We believe MPI is well-positioned to benefit from this trend through its expanding exposure to power management and power semiconductor applications,” the house said.
CIMB Securities is raising its target price for Malaysian Pacific Industries to RM57.00, the highest among eight research houses covering the outsourced semiconductor assembly and test company.
The target price is also more than 30% above the consensus tracked by Bloomberg. There are two ‘buy’, five ‘hold’ and one ‘sell’ calls on the stock last traded at RM46.80.
Shares of Malaysian Pacific Industries have retreated from their all-time high near the end of May after rallying more than 50% since the start of the year. At its peak, the company's market capitalisation exceeded RM10 billion.
Despite the recent rally, the company is trading at about 32 times its forward earnings, still below its Malaysian peers’ five-year mean of nearly 37 times and well below its post–Covid-19 pandemic peak valuation of 46 times at end-2021, according to CIMB Securities.
“We view the recent tech sector pullback as an attractive opportunity to accumulate the stock,” the house said.
A new packaging solution targeting AI data centre applications, with mass production expected in the next financial year, will provide an additional growth avenue for its AI-related revenue, CIMB Securities said.
Growing adoption of ‘800 volts direct current’ server rack architectures to drive higher demand for wide bandgap power solutions is creating further content value opportunities, the house noted. AI-related revenue could contribute about 20%-25% of its annual revenue, it said.
All in all, Malaysian Pacific Industries could see an average 32% annual earnings growth over the next three financial years, according to CIMB Securities estimates. For the current year ending June 2026 (FY2026), the company is expected to see its earnings rise 44% to RM210 million.