KUALA LUMPUR: Malaysian Pacific Industries Bhd’s (MPI) flagging fortunes could be due for a reversal as demand for its electronic components is anticipated to regain momentum while global electronics players replenish their inventory in expectation of a revival in consumer demand for electronic items in the coming months.

“We expect the fourth quarter to be another quarter of losses, albeit a smaller one than the third quarter’s (3Q) RM53.85 million,” CIMB Investment Bank Bhd wrote in a note  issued ahead of MPI’s analyst briefing yesterday.

“Furthermore, MPI will benefit from the cost-cutting measures that it has been implementing. We concur with management’s view that the third quarter should mark the bottom,” it said.

MPI announced on Monday a net loss of RM53.85 million in its fiscal third quarter ended March 31, 2009 from a net profit of RM9.05 million a year earlier.

Revenue shrank 44.6% to RM201.33 million from RM363.28 million on waning global demand for electronic products.

Cumulative nine-month net loss came to RM40.79 million versus a net profit of RM84.49 million a year earlier, while revenue dipped 23.9% to RM888.95 million from RM1.17 billion. Sequentially, 3Q09 revenue was down 31.4% from RM293.5 million in the preceding quarter.

“MPI disclosed that business volume had seen a gradual recovery since the end of the third quarter and that the performance in the fourth quarter should be better,” said CIMB, which maintained its “trading buy” call on MPI shares with a target price of RM7.40.

The research house also kept its earnings and dividend forecast unchanged for MPI, which is part of conglomerate Hong Leong Group.

The RM7.40 fair value was derived from a 40% discount to MPI stock’s five-year historical price-to-book ratio average. The trading buy call was issued in anticipation of a re-rating in MPI’s fundamentals as the firm’s financials improve against the backdrop of a revival in consumer demand for electronic items.

MPI’s portfolio includes the production and assembly of integrated circuits, semiconductor devices and leadframes. MPI ended 10 sen higher at RM5.10 yesterday.