Analysts reassured MPI’s earnings will pick up in 2HFY18

KUCHING: Analysts are reassured that Malaysian Pacific Industries Bhd’s ( MPI) earnings will pick up in the second half of financial year 2018 ( 2HFY18), following the group’s first quarter of FY18 (1QFY18) analyst briefing.

According to AmInvestment Bank Bhd (AmInvestment Bank), the earnings pick-up will be is expected to be driven by several new product introductions (NPIs) over the past three quarters, which are expected to translate into new job wins.

The research firm highlighted that larger orders from automotive and copper clip-related customers as their supply constraints on wafer moderate are also expected to drive earnings, along with greater demand for Dynacraft’s lead frames as customers lock in supply markedly ahead of time due to a shortage in the market.

AmInvestment Bank noted that the group continues to look for merger and acquisition ( M& A) opportunities to enhance manufacturing capabilities and patents related to sensor products, among others.

“We understand that automotive and sensor products command double- digit gross margin, consistent with the group’s objective to improve profitability,” it said.

“In addition, the group plans to invest in automated equipment to replace labour in manufacturing processes in a bid to beef up product quality and operational efficiencies.”