THE tide of optimism seems to have shifted in favour of the technology sector once again.
MIDF Research has upgraded the tech sector to “positive” from “neutral” on the rationale that with most of the world’s population getting vaccinated, the macroeconomic environment will gradually recover while the technology sector thrives as the COVID-19 pandemic accelerates technology adoption and innovation.
“Semiconductor companies would still be facing challenges from the shortage of chips productions,” justified the research house in a sector update. “Nonetheless, chips supply will gradually expand throughout the 4Q CY2021 and benefit companies like D&O Green Technologies Bhd.”
Elsewhere, MIDF Research also opined that My EG Services Bhd which has ventured into healthcare-related services, AI (artificial intelligence) technology and cybersecurity will perform positively beyond FY2021.
“Our top pick for technology sector is Inari Amertron Bhd (“buy”; target price: RM3.65),” suggested the research house.
Besides its expectation of strong earnings in the coming quarters, MIDF Research also likes ESG (environmental, social and governance) practices in its business operations.
The research house also also upgraded Unisem Bhd to “buy” from “neutral” with an unchanged target price of RM8.62 given the company’s recent price weakness presents buying opportunities.
“Though its earnings for 1Q FY21 increased +761% year-on-year (yoy) and declined 15% quarter-on-quarter (qoq), Unisem expects sequential growth in US dollar sales in 2Q FY2021 on the back of strong demand for wafer bumping in its Chengdu plant which contributed 55% of its revenue,” noted MIDF Research.
“Besides, the Phase 3 expansion in Unisem’s Chengdu plant is expected to complete and start operation in 2H FY2022, hence able to provide earnings visibility from FY2022 onwards.”
Lastly, MIDF Research also upgraded Globetronics Technology Bhd to “buy” from “neutral” with an unchanged target price of RM3.22 as it expects the company’s smart sensor segment which contributes 80% to revenue to drive earnings growth.
“The segment is undergoing a factory expansion and expected to increase the capacity by 25% to 35% upon factory completion by August or September 2021,” projected the research house.
“Hence we opine that the current price correction provides opportunities for investor to accumulate the stock.” – June 30, 2021
