PETALING JAYA: The acquisition of Infineon Thailand is likely to raise Malaysian Pacific Industries
Bhd’s (MPI) installed capacity by 15%, according to CIMB Research.
In a note, the research house said MPI would have additional headroom to expand Infineon Thailand’s production capacity, as the site still retains land that can be converted into new facilities.
“Importantly, expanding into Thailand broadens MPI’s manufacturing footprint beyond Malaysia and China, enhancing supply chain resilience.
“While Malaysia and Thailand face the same 19% US reciprocal tariff rate, geographic diversification strengthens MPI’s appeal to prospective customers seeking to mitigate concentration risk in North Asia.”
MPI is Malaysia’s second largest listed outsourced semiconductor packaging and testing services player with global manufacturing presence in China and Thailand.
The group is controlled by Hong Leong Manufacturing Group Sdn Bhd with a 57.8% equity stake.
It was reported in September that MPI is acquiring a 100% stake in Infineon Thailand for an estimated cash consideration of US$78mil.
Although Infineon Thailand recorded a net loss in the financial year of 2024 (FY24), MPI remains confident that it can drive an immediate turnaround, supported by a healthy memory market outlook and better cost control.
With the acquisition of Infineon Thailand, MPI will diversify its product portfolio into the NOR flash memory segment.
“Infineon is a major player in automotive and industrial-grade NOR flash memory, and we view MPI’s entry into this segment as timely given the surge in memory demand to support artificial intelligence (AI) infrastructure rollout,” said CIMB Research.
Meanwhile, TA Research said the MPI management highlighted that the deal to purchase Infineon Thailand is highly attractive and will open up new avenues for growth.
The plant is being acquired below book value or 0.7 times price-to-book value ratio based on the purchase consideration, according to the research house.
“The deal strengthens MPI’s strategic relationship with its key customer, Infineon, as both parties have entered into a long-term supply agreement in conjunction with the transition in Thailand,” it stated.
Looking ahead, CIMB Research said MPI expects healthy demand visibility going into the second quarter of FY26.
This will be supported by resilient general purpose and AI server demand as well as order replenishment in the Chinese auto market, according to the research house.
The industrial segment delivered 28% year-on-year sales growth in 1Q26, driven by higher content value gain from AI server packagers, which contributed 10% of MPI’s 1Q26 revenue.
Overall, AI-related revenue surged 54% y-o-y to RM63.5mil in 1Q26.
“We maintain our earnings forecasts and reiterate our ‘buy’ rating on the stock with an unchanged target price of RM41,” said TA Research.
“We project MPI to deliver a robust three-year core net profit compounded annual growth rate of 28%, supported by stronger contributions from the industrial segment and earnings uplift from the Infineon Thailand acquisition,” the research house added.
It raised its earnings forecasts for FY26 by 13.3%, followed by FY27 (13%) and FY28 (14%), after factoring in higher sales assumptions for the automotive and AI server segments.
“Together with the earnings revision, we tweaked the target price upwards from RM27.20 to RM33.
“Upgrade from ‘sell’ to ‘hold’ on the stock,” the research house added.
