TA: Strategic Acquisition Announced for Regional Expansion, Analyst Maintains Sell Rating
| Key Information | Details |
|---|---|
| Investment Bank | TA SECURITIES |
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
Malaysian Pacific Industries Berhad (MPI) has announced a proposal to acquire Infineon Technologies (Thailand) Ltd (IFTH) for USD78.0 million (approximately RM327.6 million). The acquisition aims to strategically expand MPI’s operational footprint and strengthen its market position in the semiconductor industry.
IFTH, currently an indirect wholly-owned subsidiary of Infineon Technologies AG (IFX), specializes in semiconductor assembly and testing services, operating a back-end manufacturing site in Nonthaburi, Thailand. The deal is expected to be completed by the second quarter of calendar year 2026.
Strategic Rationale
The proposed acquisition is anticipated to yield several strategic benefits. It is expected to strengthen MPI’s relationship with IFX, a significant existing customer, potentially leading to increased outsourcing and collaboration opportunities between the two entities. By working closely, both companies aim to identify synergies and develop more innovative packaging solutions. Furthermore, the acquisition will enable MPI to diversify its geographic presence beyond Malaysia into Thailand, effectively mitigating regional operational risks.
Financial Aspects and Outlook
Funding for the acquisition will be sourced through a combination of internal funds and borrowings. MPI’s robust balance sheet, bolstered by a strong net cash position of RM987.6 million as of the fourth quarter of fiscal year 2025, ensures that financing will not pose a significant challenge.
While IFTH has experienced a volatile earnings track record, including a net loss of THB57.2 million (RM7.6 million) in FY24 due to foreign exchange fluctuations, compared to a net profit of THB58.3 million (RM7.7 million) in FY23, the purchase consideration implies a reasonable Price-to-Book multiple of approximately 0.7x.
TA Securities has stated that its FY26 to FY28 earnings forecasts remain unchanged pending the completion of the acquisition. The investment bank maintains its target price at RM27.20, based on 28x CY26 earnings and a 3% ESG premium. With the stock’s last traded price at RM28.54, TA Securities reiterates a “Sell” recommendation on the stock.
