KUALA LUMPUR (Feb 3): The Bursa Malaysia Technology Index rose as much as 3.4% or 2.8 points to 85.18 points as tech counters were among Bursa Malaysia’s top gainers this morning.
Five tech counters touched record highs this morning on Bursa. They were Malaysian Pacific Industries Bhd (MPI), UWC Bhd, Mi Technovation Bhd, Inari Amertron Bhd and Pentamaster Corp Bhd.
At the time of writing, MPI was leading the pack as the top gainer, with the counter rising 5.25% or RM1.80 to a fresh high of RM36.10. Its market capitalisation stood at RM7.56 billion.
This was followed by UWC, up by 7.43% or 92 sen to a new high of RM13.30, valuing the counter at RM7.3 billion, Meanwhile, KESM Industries Bhd rose 1.46% or 24 sen to RM16.66, with a market value of RM721.78 million.
In the fourth place was Greatech Technology Bhd, which had announced that its unit was teaming up with US-based company Atlis Motor Vehicles (Atlis) in developing an electric vehicle (EV) battery pack assembly production line in Arizona. It saw its share price climb 13.51% or 77 sen to RM6.47, bringing its market capitalisation up to RM8.08 billion.
Meanwhile, Mi Technovation rose 8.03% or 40 sen to a fresh high of RM5.38; Inari Amertron saw an increase of 16 sen or 4.66% to a new high of RM3.59; and Pentamaster rose 4.09% or 26 sen to a fresh high of RM6.62.
In a research note today, TA Securities Research reiterated its “overweight” stance on the semiconductor sector by maintaining its “buy” call on Inari with a target price (TP) of RM3.95, followed by Unisem (M) Bhd (TP: RM9.42) and MPI (TP: RM40.65).
“Global semiconductor sales in December 2020 eased 2% month-on-month (m-o-m) [in line with the typical slowdown towards year end] but grew 8.3% year-on-year (y-o-y) to US$39.2 billion (RM158.7 billion). 4Q20 sales (for the fourth quarter of 2020) were the highest in over two years as it climbed further by 3.5% q-o-q and 8.3% y-o-y to US$117.5 billion. Overall, 2020’s numbers grew 6.5% to US$439 billion. This was ahead of the World Semiconductor Trade Statistics (WSTS) organisation’s forecast of a growth of 5.1% to US$433.1 billion, highlighting the sector’s resilience against the macroeconomic headwinds induced by the Covid-19 pandemic,” said the research house’s analyst Wilson Loo.
“Note that in line with the sector’s rerating, we took the opportunity to revise our valuation of Inari (previous TP: RM3.26; 33 times price-earnings [P/E]) upon pegging it at a higher P/E multiple of 40 times, which is +2.0 standard deviations (SD) to the stock’s five-year average. We opine that the higher PE multiple we ascribe relative to peers is justified by its above-industry average margin and ROE (return on equity),” he added.
Loo said TA Securities continues to favour outsourced semiconductor assembly and test providers, including Inari, Unisem and MPI, for their robust earnings growth prospects.
He said this is because their earnings visibility looks strong with their pipeline backed by emerging trends including global 5G roll-outs, increasing digitalisation amid the Covid-19 pandemic as well as prospects of a global economic recovery.
“Key downside risks include a prolonged Covid-19 pandemic weighing on economic growth and sentiment, a prolonged and heightened trade war, and weakening of the USD (US dollar) against the ringgit,” Loo added.