Capacity expansion to support MPI’s growth ahead

KUALA LUMPUR: Malaysian Pacific Industries’ (MPI) capacity expansion is expected to support its growth going forward, analysts observed.

In a report, the research team at AmInvestment Bank Bhd (AmInvestment) said: “MPI’s pipeline remains intact and strong although it has shifted by a couple quarters amid the Covid-19 pandemic.

“PC/notebook revenue is expected to normalise, whereas automotive and industrial segments will continue to be key focus segments ahead.”

On its expansion,

AmInvestment noted that MPI plans to expand both its Suzhou and Ipoh operations as all its facilities are currently running at full or near-full capacities.

“The group is looking to embark on the second phase of expansion for its second level at its Suzhou factory by July 2021 as well as locate a new site by FY23.

“As for its Ipoh operations, the group is planning to utilise an additional building to become its production facility, where facilitation is targeted to be completed by end-2021,” it added.

Aside from that, the research team said MPI’s capex will also be needed to purchase more equipment at each site in order to increase productivity.

“MPI did not disclose the amount of capex required for both expansions. We maintain our capex assumptions as we have already factored in higher FY21F capex.

“The expansion plans are in line with the group’s strategy to invest hugely in MEMS sensors, 5G testing and silicon carbide technology,” it said.

All in, AmInvestment maintained its ‘hold’ call on the stock.

“The group’s positive prospects arise from its portfolio rationalisation strategy that focuses on highermargin specialised projects, its leading market position in the ultra-thin MLP and increased R&D in MEMS sensors, its move towards producing silicon carbide power products with applications in EVs, servers, and renewable energy, and its strong net cash position of RM918 million as at December 31, 2020 which allows for strategic investments and M&A opportunities.”