Semiconductor Sector Poised to Rebound? (May 2012)


According to the Semiconductor Industry Association (SIA), despite an annual decline of 7.9% in March, global chip sales increased 1.5% MoM to USD23.0bn as sequential growth resumed across all regions, especially in Europe and Japan. SIA expects seasonal moderate growth to continue in the 2Q and build momentum as 2012 progresses.




While there may be concerns on the sector’s outlook due to the EU’s descent into a recession and China’s economic slowdown, it was believe that the growth momentum of the semiconductor market is sustainable. In our view, the EU’s decline will be offset by the recovery in the US while chip demand from China should remain resilient, driven by the tech hungry consumers and the proliferation of the IT market.


Outlook for local players

Management of most companies under our coverage has turned more optimistic about the coming quarter as customers raised orders in March. Analysts do foresee some stability, although the sustainability will depend greatly on how the global economy pans out. We believe the tremendous growth of smartphone and tablet PC, coupled with easing HDD shortages and lean inventory level ahead will lead to the revival of the semiconductor industry.





RHBRI believe recent industry data and indications by the major tech players’ supports their view that the sector has reached the trough and is on the path to recovery. Thus, to reflect the beginning of the industry growth cycle, RHBRI have raised their benchmark forward P/BV to 1.2x (from 1x previously) which is 1 standard deviation above Unisem’s 5-year historical average forward P/BV. Fair value estimates for Unisem and MPI are raised to RM1.84/share and RM4.09/share (from RM1.53 and RM3.40) respectively. Thus, upgrading Unisem and MPI to Outperform (from market perform previously).




Meanwhile, TA Securities believe Unisem and MPI will benefit from an increase in orders arising from the consumer electronics and wireless communications sectors. With that, TA upgrade the Semiconductor Sector to OVERWEIGHT and reiterate a BUY recommendation for both Unisem and MPI with a target price of RM2.15 and RM3.90, respectively.


Source: RHB Research Institute report, TA Securities

Comments

Post a Comment

Popular posts from this blog

"You Can Keep Your Existing Health Insurance"

I wondered about this statement at the time Obama made it.  Clearly, by changing all the rules of health care insurance and mandating conformity, it was unlikely that the vast majority of Americans would not find themselves forced by 'The Affordable Care Act' to have to deal with a completely different health insurance plan and completely different set of health care providers. I now understand what Obama meant.   He was speaking to his immediate family and (politician) friends.  They are exempt from the "Affordable Care Act."  Clearly what he meant to say was: "if you are exempt from Obamacare, like me and my family, you can keep your existing health insurance."  He never meant to mislead.
Read more

Why Gold and Silver? Why Online Store?

Image
Are you first time gold and silver buyers? Why don't you invest in these popular metals? If you did so, you have had a wonderful investing experience after 2008 global financial crisis. But, do you really understand these metals? Were they really precious (especially now)? Traditionally, gold and silver were one form of exchange. Because of the invention of fiat money, they were being turned into some short of "back-up" currency , in case our fiat money system go burst. It's natural when things go wrong, gold and silver tends to appreciate in value. In other words, people hold precious metals to preserve the value of their assets. 3 Reasons Why Gold and Silver... Still hot in demand , especially by emerging affluent Chinese. Traditionally, Chinese loves gold. They bought it for events such as new born baby, new year, wedding and even funeral ceremony. Strengthening USD ??? Yes. It's a correct reason also. Why? Because of news that US going to stop QE3, USD is str...
Read more

Things We Now Know

The poor are losing ground in the new Obama world.  The facts are showing up even in the halls of collectivist extremes like the New York Times.  The rich are getting richer and poor are being locked in place.  Big government is throttling the economy and the hopes and dreams of lower and middle class Americans. Today's Wall Street Journal's article by Simon Constable lays out some of the simple and obvious facts of the Obama era: "The richest 20% of households account for 38% of spending, according to government data for 2011, the latest available.  Compare that with 2003 when the top earners spent 26% of the total."  The article goes on to say..."it could get even worse."  It will. Who really benefits when the regulators strangle the banks?  Do banks really need to get much more conservative in their lending practices?  Why does the government know best?  How far can you stretch the FDIC guarantees before American banking is simply a subsid...
Read more