KUALA LUMPUR: Malaysian Pacific Industries (MPI) is poised to sustain its growth into financial year 2023 (FY23) supported by healthy demand despite inflation challenges as well as manpower and material shortages.
RHB Research said in a note that MPI recorded a high revenue for FY22 of RM2.4 billion and core earnings of RM318.1 million.
This met expectations at 101.5 per cent and 99.2 per cent of RHB Research's and street's full-year estimates.
The stronger bottomline was supported by higher demand across all product segments and margin expansion, despite higher effective tax rate dues as certain mature packages were not exempted for tax, said the firm.
"Despite inflation challenges, and manpower and material shortages, we expect growth to sustain into FY23 amid healthy demand, especially in automotive and power management ICs, including silicon carbide packaging.
"The new M-Site (70,000 sq ft floor space) is expected to start production by early 2023 along with the additional 35,000 sq ft space at S-Site by second half of 2022 (2H22) to cater for unwavering demand for micro electro-mechanical system sensors and automotive products prior to commencement of the new Suzhou plant by 1H24," it said.
However, Suzhou may see temporary slowdown amid the material shortages due to the moving restriction in China and slowdown in demand for legacy packaging.
RHB Research tweaked FY23F-24 by -1.9 per cent and +4.6 per cent after updating FY22 numbers and certain cost assumptions.
It maintained "Buy" on the stock with a target price of RM44.40.
"We like MPI as it stands to benefit from its expansion plan, China's localisation efforts, and advanced packaging technology i.e. the power module in silicon carbide packaging and gallium nitride for the automotive electrification space.
"Downside risks include slower-than-expected orders, material shortages, and unfavourable foreign exchange movements," it added.