KUALA LUMPUR (September 6): RHB Investment Bank Research maintains its ‘overweight’ rating for the technology sector, with Q2 of 2022 on track for outsourced semiconductor assembly and test (OSAT) companies We said it was another period of stability because we were moving forward. Enjoy 3 consecutive years of semiconductor upcycling and make sure all the results are within your expectations.
In a note on Tuesday (September 6), the research firm said the sector as a whole saw some weakening in demand for consumer products, but that growth in certain sub-segments could linger.
According to RHB, most OSAT players are expected to grow at a modest pace, supported by increased tonnage capacity, improved average selling prices and margin growth, fueled by strong demand and certain supply chain bottlenecks. However, it is still posting healthy double-digit growth year-over-year. For semiconductor integrated circuits.
Datasonic Group Bhd and GHL Systems Bhd were disappointed.
“Despite posting significantly better year-over-year numbers, Datasonic’s first quarter 2023 results (the first quarter ended June 30, 2022) were marginally lower due to higher personnel costs and taxes. It was a big mistake.
“GHL, on the other hand, was impacted by margin compression in shared services due to intense competition and weakness in the solution services segment.”
On the outlook for the sector, the RHB said that overall, guidance from the companies it covers has been met with key challenges identified as labor and material shortages, inflationary pressures, demand uncertainty, and geopolitical tensions. , said it remains cautiously optimistic.
“Overall, demand for consumer products such as TVs, smartphones and personal computers has been hit hard by rampant inflation, geopolitical tensions, the impact of lockdowns in China and weakening in Europe.
“However, structural growth in 5G, vehicle electrification, servers, high-performance computing, the Internet of Things and artificial intelligence remains,” it said.
RHB said the current tight valuations remain attractive for investors to reposition themselves in the apolitical tech sector. The tech sector offers reasonable growth with a clear structural story and is a clear beneficiary of the strong US dollar.
Backed by healthy yields and a strong balance sheet, numbers and stocks typically pick up in the second half of the year, and domestically, the intensified sector turnover is re-directing funds to subsectors where flows have lagged. said it was possible.
“Malaysia Pacific Industries Bhd is a leading industry choice with its resilient pipeline, expanded capacity, exposure in automotive and China, and adoption of new advanced packaging technologies.
“CTOS Digital Bhd also has a leading position and growth prospects that reflect the digital economy, with high demand for its exposure to various digital solutions, analytical insights and financial technology.”
