High-end equipment at the globetronics plant used for the production of Led modules.
KUALA LUMPUR: UOB Kay Hian Malaysia Research is positive on the Malaysian technology sector’s prospects and it has Buy call on Globetronics on the strong comeback of its sensor segment and it is upbeat on Inari and Inari for their near-term earnings growth and long-term prospects.
The research house had last Friday said Globetronics’s revenue visibility was due to the sensor segment’s product life cycle of three to four years with potential earnings upside on the commercialisation of products under development.
As for Inari and ViTrox, it pointed out the current valuations have largely factored in the foreseeable prospects.
It suggested a Buy on Inari and ViTrox on weakness. However, it also advised investors to watch out for companies with wild cards – Salutica, Elsoft and MMSV
To recap, UOB Kay Hian Research said homegrown companies have been raising their capabilities and diversity in product and service offerings in the past few years.
These companies will ride on the upcoming trends: a) proliferation of laser light applications, b) popularisation of industrial automation and Industry 4.0, c) evolution of the automobile sector, and d) other promising trends such as rising demand for radio frequency products, iris scanners and data centre related components.
“Our review of the technology sector’s evolution since 2000 suggests that homegrown technology companies have seen improving technical capabilities and diversity in high-value product and service offerings.
“Besides the near-term demand and earnings boost from various smartphone upgrades, these companies should see longer term earnings sustainability as they now have higher technical competencies that allow them to capitalise on the upcoming revolution in the global tech space,” it said.
UOB Kay Hian Research said Malaysian outsourced semiconductor assembly and test (OSAT) companies and equipment makers recorded consecutive sales growth in 2012 to 2016, with a four-year sales compounded average growth rate (CAGR) of 10% and 29% respectively, outperforming the respective global benchmarks’ 4% and 3% respectively for the same period.
“We expect companies such as Globetronics Technology (Globetronics), Inari Amertron
(Inari), ViTrox Corporation (ViTrox), Elsoft Research (Elsoft) and MMS Ventures (MMSV) to achieve record-high sales and earnings in 2017-2018,” it said.
The research house identified four global key trends that are relevant to local tech companies and pick out key potential beneficiaries.
The trends and potential beneficiaries are:
a) proliferation of laser light applications (Globetronics, Inari, Elsoft, MMSV, Salutica),
Limited time offer:
Just RM5 per month.
