KUALA LUMPUR, Feb 13 (Bernama) -- CIMB Securities Sdn Bhd forecasts the Malaysian Pacific Industries Bhd (MPI) to issue a potential special dividend, given its strong net cash position of RM991 million as of September 2024.
It also expects the MPI to have a healthy free cash flow yield of 6.1-7.2 per cent for the financial year ending June 30, 2025-2026 (FY2025 - 2026).
CIMB Securities said that MPI’s wholly-owned subsidiary, Dynacraft Industries Sdn Bhd (DCI) plans to allocate RM125.4 million or 89.6 per cent of proceeds from its proposed land disposal in Bayan Lepas, Penang for distribution to MPI, while the remaining will cover taxes and disposal related expenses.
DCI proposed to dispose of two parcels of land along with the buildings situated on them to data centre (DC) operator, Open DC Sdn Bhd, for RM140 million, allowing it to record a net gain of RM99.2 million from the sale.
“If MPI distributes the entire net gain from the land disposal as dividends, FY2026 dividend per share could increase to 85 sen from 35 sen per share, translating to a 3.9 per cent dividend yield.
“The proposed disposal is subject to approvals from Penang Development Corporation and the Penang Land and Mines Office, with completion expected in the second half of 2025,” CIMB Securities said in a note.
The disposal marks MPI’s full exit from lead frame manufacturing.
MPI halted DCI’s manufacturing operations in January 2024 but retained its land assets, with the leasehold land still having approximately 45 years in the lease which expires in 2070.
CIMB Securities said it maintains a ‘buy’ rating on MPI, with an unchanged target price of RM35.50.
“We continue to like MPI for its unique silicon carbide (SiC) and gallium nitride (GaN) exposure and favour it as a proxy for the growing demand for power semiconductors in DCs,” it noted.
Nevertheless, it highlighted that the stock has fallen 17 per cent year-to-date, weighed by weak sentiment in the technology sector.
The current valuations also reflect the softer near-term demand for electric vehicles.
At 12.30 pm, the counter eased 54 sen or 2.5 per cent to RM21 with 110,400 shares traded.
-- BERNAMA
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