KUALA LUMPUR: Malaysian Pacific Industries Bhd (MPI) shares traded higher in early trade Thursday after it reported earnings that were in line with expectations.

The semiconductor manufacturer added 56 sen, or 1.16% to RM48.70 at 9.15 am.

For its first quarter ended Sep 30, 2021 (1Q22), MPI’s net profit rose 47.7% year-on-year (y-o-y) to RM81.68mil while revenue was up 32.7% y-o-y to RM584.53mil.

MPI’s board has declared a first interim single-tier dividend of 10 sen per share for the quarter to be paid on Dec 23, 2021.

Kenanga Research said MPI’s 1Q22 core net profit of RM81.7mil marked a new record as well as its sixth consecutive quarter-on-quarter climb which came in within expectations, making up 27%/26% of the house/consensus full-year estimates respectively.

It said MPI’s revenue climbed to a new high of RM584.5mil on strong loading volume for its packages used in data centres and the automotive space.

“With global chip demand still on the rise, the group is poised for another record FY22. Maintain outperform and target price of RM56.20,” Kenanga said.

TA Securities Research said while 1QFY22 earnings accounted for 25.6% and 26.3% of the house and consensus full-year estimates, respectively, it deem the result as slightly above expectations considering that the quarter did not reflect a fully restored workforce.

“For reference, during MPI’s 4QFY21 investors’ briefing in early September 2021, management guided that the group’s workforce capacity was recovering from the 60% limitation in June 2021, though it had only reached 75% then,” it said.

TA has revised itsFY22/FY23/FY24 earnings estimates by +6.9%/+4.2%/+1.6% upon raising sales assumptions for the corresponding period by 3.5%/2.2%/0.8% to reflect actual 1Q22 results.

“We remain sanguine on MPI’s near-to-medium term prospects which we expect to be driven by its strengthening product portfolio and automotive-centric strategy.

“Under the group’s recently unveiled 5-year plan (FY22 to FY27), key targets include revenue growing organically at a CAGR of 19.5% from US$481mil in FY21 to US$1.4bil by FY27, and the percentage of revenue from the automotive segment climbing from about 30% to over 50% by FY27,” TA said.

TA has maintained a “buy” call on MPI with a higher target price to RM64.15 from RM60.85 previously.

“We continue to like MPI for its robust sales pipeline backed by the continued enhancement of its product portfolio, strength and growing exposure to the automotive segment, expansion plans, and robust balance sheet,” it added.

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