Lower Margin at Hong Leong Group’s Semiconductor Arm
Background
Founded in 1962, Malaysian Pacific Industries Berhad is an investment holding company. Its subsidiaries engage in manufacturing frames and packaging for integrated circuits.
They also provide assembling and testing of the frames, semiconductor devices and electronic components and serve customers worldwide.
Business Description
MPI is part of the Hong Leong Group, a large Malaysian conglomerate present in Southeast Asia in financial services, manufacturing, property development and hospitality.
The company has two major subsidiaries: Dynacraft and Carsem, with 95% of revenue coming from the latter. The two manufacture frames that organize semiconductors in chips which are sold to hardware and electronics manufacturers and to assembly contractors. MPI’s packaging is used in hardware present in the automotive, telecom, computer and consumer electronics industries. MPI supplies six of the top 10 largest automotive vendors in the world.
Carsem is one of the six largest semiconductor assembly subcontractors in the world. It produces over 100m units per week and 65% are tested in-house. Carsem has three facilities in Malaysia and it is a world leader in the manufacture of Micro Leadframe Package (MLP).
Dynacraft, with two plants in Malaysia, also engages in manufacturing semiconductor packaging and lead frames but at a smaller scale.
Leadership
Kwek Leng San has served as the Chairman of MPI since 2013. Furthermore, he is the Chairman of Hong Leong Industries Berhad (HLI MK), Hume Industries Berhad (HUME MK), and Southern Steel Berhad (SSB MK). He completed his education at the University of London, UK with a Bachelor of Science degree in Engineering and a Master of Science degree in Finance.
Manuel Zarauza Brandulas has held the position of Managing Director since 2016. He graduated with a Bachelor of Business in Finance and Marketing from the University of Westminster, UK, a Master of Business Administration from the University of Bath, UK, and a Master’s Degree in Leadership and Organization from Instituto de la Empresa, Spain.
World Class Benchmarking
Profitable Growth was ranked at #1 in 2014 but has fallen afterward. In the past 12 months, MPI ranked in the top 440 out of 1,100 medium-sized Info Tech companies worldwide.
Profitability has improved since 2014 and the latest rank stood at #3. Growth was top-ranked in 2014 and 2015 but has fallen since. In the most recent period, MPI’s Growth rank stood at a poor #8.
Asset utilization fell one step in rank to #5 in the most recent period after being consistently ranked at #4 from 2014 until 2017. Profit margin has stayed in the top 40% since 2015.
Sales growth has shown a falling trend since the #5 rank in 2015 and MPI ranked at #7 in the past 12 months. Margin change was great in 2014-2016 but has worsened in 2017 and the past 12 months.
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