Malaysian Pacific Industries Berhad - Profitable for the 3rd Consecutive Quarter

Date: 
2024-02-22
Firm: 
TA
Stock: 
Price Target: 
32.35
Price Call: 
BUY
Last Price: 
30.86
Upside/Downside: 
+1.49 (4.83%)

Review

  • MPI’s 1HFY24 net profit of RM48.7mn came in at 30.5% and 35.1% of ours and consensus’ full-year estimate, respectively. We deem the results to be within expectation as we expect earnings recovery to sustain and further pick up in 2HFY24.
  • YoY, 1HFY24 net profit dropped 31.5% to RM48.7mn while revenue fell by 5.0% to RM1,036.0mn. The weaker earnings performance was largely dragged by softer semiconductor demand as a result of slowdown in the semiconductor global market.
  • QoQ, MPI stayed profitable for the 3rd consecutive quarter as 2QFY24 net profit surged 94.6% to RM32.2mn while revenue increased by 1.9% to RM522.8mn. We believe the stronger earnings performance was driven by higher loadings and the stronger USD versus Ringgit.

Impact

  • Maintain FY24 to FY26 earnings forecasts.

Outlook

  • Generally, we remain optimistic on MPI’s medium-to-longer term prospects, backed by its strengthening product portfolio and automotive centric strategy. The group will continue to focus on expanding the automotive segment, with the target for the automotive segment to contribute over 50% of group’s revenue over the next few years.

Valuation & Recommendation

  • We maintain our Buy recommendation on MPI with an unchanged TP of RM32.35 based on PE multiple of 28.0x CY24F EPS. We continue to like MPI for its automotive centric strategy as it seeks to capitalise on the promising prospects for content gains within vehicles, catalysed by the global shift towards electric vehicles and autonomous driving.

Source: TA Research - 22 Feb 2024

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