KUALA LUMPUR: Inari Amertron Bhd and Malaysian Pacific Industries
Bhd (MPI) are RHB Analysis’s prime choose for the know-how sector.
“Whereas we anticipated worth shares to take the entrance seat in 2022 amid an financial restoration and rotational performs in a rising charge setting and persistently excessive inflation, the steep de-rating of progress (know-how) shares to a degree unseen since 2019 was a shock – since sector fundamentals stay sound.
“This presents a fantastic alternative for buyers to purchase into high quality know-how shares, backed by structural progress catalysts, favorable FX charges, and wise valuations,” RHB mentioned, including that it has maintained its “chubby” name on the know-how sector.
The semiconductor business is anticipated to achieve US$613.5bil in worth, sustaining the expansion (+10.4%) into 2022, ie a 3rd consecutive yr of progress, in keeping with World Semiconductor Commerce Statistics (WSTS).
The sturdy fourth quarter 2021 numbers from the highest 10 foundries are anticipated to proceed into 1H22, main the expansion for the semiconductor sector, though provide chain bottlenecks and the appreciation in common promoting worth (ASP) are prone to persist, probably prolonging this upcycle.
RHB mentioned the influence from Russo-Ukraine disaster for now as Russia can be restricted for now as Russia was not a serious semiconductor producer, and accounts for simply lower than 0.1% of the US$556bil international semiconductor chip market.
“The steep correction of the Expertise Index (-24% YTD) has despatched the sector valuation to a compelling higher risk-reward degree at 25x P/E (5-year imply),” it mentioned.
The analysis home famous that the present sector valuation had de-rated to 2019 ranges regardless of the decrease progress on provide, rate of interest, MGS10YR and UST10YR.
In the meantime, the Nasdaq and SOX indexes are nonetheless a tad above 2019 ranges, given the strong outlook and upcycle of the semiconductor sector.
“This present dip presents a fantastic alternative for buyers to place into high quality know-how names with a aggressive edge and structural progress, at wise valuations.
“The capability bottlenecks and robust output from the foundries will proceed to spur progress for the outsourced semiconductor meeting and take a look at (OSAT) gamers, with sustained earnings progress going into 1H22.
“On a cautious notice, margin strain from increased materials costs, compliance prices and slower demand can be key factors to be careful for. Domestically, an export-oriented and apolitical sector resembling know-how will likely be in favor, amid political uncertainty and a powerful US greenback,” RHB mentioned.