MIDF Research has reiterated its “positive” stance on Malaysia’s technology sector even though the latter continues to be under pressure from interest rate hike and other macroeconomics issues.
The research house based its assessment on the prospects of demands from 5G, artificial intelligence (AI), electronic vehicle (EV)-related products and service elements which remain solid and deemed key enablers to ignite the digital economy world widely.
“The emerging technologies depends heavily on the semiconductor industry to provide the computing power necessary,” MIDF Research pointed out.
“Therefore, we retain our positive stance on this sector due to its robust mid- to long-term outlook in tandem with the increasing adoption and integration of smart technologies which encompass many sectors and applications.”
According to the latest Semiconductor Industry Association (SIA) report, the global semiconductor industry sales for May 2022 remained high at US$51.8 bil or +18% year-on-year (yoy) and +1.8% quarter-on-quarter (qoq) despite facing inflationary pressures as well as chip shortages.
Strong demands were recorded across all major regional markets and product categories with sales growth showing an uptrend in all regions on yearly basis, led by the Americas (+36.9%), Japan (+19.8%), Europe (+16.1%), Asia Pacific/All Other (+15.8%) and China (+9.1%).
Meanwhile on monthly basis, sales growth were seen in Japan (+3.9%), the Americas (+2.9%), China (+1.7%) and Asia Pacific/All Other (+1.1%) but fell slightly in Europe (-0.7%).
Moving forward, MIDF Research continues to favour Inari Amerton Bhd (“buy”; target price: RM3.65) as the group is adding more of its RF (radio frequency) testers in preparation to the upcoming US smartphone launch this September.
“This indicated that the company’s RF business segment will continue to see robust growth in tandem to the increasing demands for telecommunications products,” justified the research house. “Currently, the group’s utilisation rate is at circa 75% and is expected to increase gradually till circa 90%, as the launch date approaches.”
Elsewhere, MIDF Research also likes D & O Green Technologies Bhd (“buy”; TP: RM4.48) which is the top five light emitting diode (LED) manufacturer globally as the company is well-positioned to capture the explosive growth of electric vehicle (EV) market.
“This is thanks to its strong product innovation, extensive customer base and higher adoption of LED usage per car which are far outweighing the group’s product demands following current chip crunch,” noted the research house.
“On a side note, the shorter design in or design win process for EV cars, among others, bode well for their automotive LED segment, too. Moving forward, the management anticipated the smart LED to generate at least 10% of the group’s automotive LED sales volume by 2025.” – July 7, 2022
